
16 • e Process Mind
customer demand. e basic vertical integration was perceived to be
successful because it increased the amount produced, thereby, allowing
for signicant average unit cost reductions. And, low cost was the way to
win because, generally, costs go down by about 15% when volume dou-
bles.
7
However, we are now living in a twenty-rst-century world where
variety rules; there are an estimated 10 billion product oerings in the
world and speed is everything. Now, the equation has changed; although
costs may go down when volume grows, costs go up by 20 to 35% when
variety doubles.
8
erefore, we need a business model to accommodate ...