Kunal Shah, founder of Freecharge proposed a theory that if understood correctly may help many businesses in various fields and help them prosper. Here’s a glimpse of what Δ4 is all about.
Efficiency
The Conventional law we follow is, All efficient things exist in the future, and all inefficient things exist in past the rate at which this is changing is really really fast. Evidently, if your business is moving consumers from their current state to a more efficient state(like FreeCharge with recharging/paying bills) you unlock the pot of gold.
Efficiency Scoring: Any business upgrade we do, which is efficient as compared to the previous business model/product makes getting back to a previous way of business moderately irreversible. an example is Online and Brick & Mortar shopping or online ticket booking compared to booking at a railway station. To compare all this with the scoring system from 1–10 is Efficiency Scoring for any business.
The efficiency score can be calculated by calculating the % of people who adopted your business divided by the number of people who stick around after a specific period of time. An example can be buying mobile phones online compared to buying them in stores. A fairly large number of people have accustomed to buying a mobile phone online compared to a brick-and-mortar store. Right there, they got offered efficiency and people adapted to it. the people who offered efficiency have found their pot of gold(Sachin & Binny Bansal, Flipkart).
The Theory
Kunal says,
If Efficiency Scoring (Number of customers who adapts the new model and those who sticks to the old one) is more than 4, It carries a huge potential to be successful
Mathematically represented as:
Once the business or a product reaches this stage its irreversible growth which leads to the success of the product.
1. What businesses should keep in mind or do to increase the Δ4?
- Affordability: No one would take a train if they can afford a flight everywhere.
- Readiness: WhatsApp wouldn’t be popular if smartphones were not affordable and accessible.
- Learning effort: English- as a language compared to any other more efficient language.
- MicroConfigurations: Setting up preferences like address before you checkout, making the transaction more efficient
- Collective participation: getting users used to your product. e.g, WhatsApp
- Branded lanes/verbs: using WhatsApp me or google it, instead of texting me or searching for it on the web.
2. UBP>USP
UBP stands for Unique BragWorthy Proposition: With a little bit of psychology in it, everybody who had tried the newly efficient state would BRAG about it to others in the inefficient state, Example given is of TrueCaller. who never relied on advertising for their growth.
This works provided Δe = >4.
Kunal also states there is HIGH tolerance among customers accustomed to the new efficient model as they have no better option at that point.
Thus, any product or service offers Δ4(Delta-4) creates enormous wealth.
Every time the Δ is less than 4, it may result in reversible behavior. There would be no UBP with no tolerance.
He also claims, if Δe = >2 but <4, Business becomes unstable and you may need to pour in more money(can be referred to OLA CABS or give discounts) to increase the delta.
if Δe = <2 The business is not worth doing.
Conclusion:
Before starting with your business or implementing an idea, make sure that your business will be at least Δe = 4. Make it BragWorthy.
This is to save all the entrepreneurs from making growth horizontally upward in the new markets open to the world, Instead of going for Vertical Intense growth which by far, very few personalities have achieved.