Getting to Plan B

CHAPTER 5

Trimming the Fat

Your Operating Model

LET’S RETURN TO JOHNNY’S lemonade stand. Surprisingly, Johnny stuck with it. By the time he was sixteen years old, he was targeting $500 in revenue from stands all over town. His gross margins had grown to 70 percent. One of the ways Johnny increased his gross margin was by asking his genius friend Louise to devise a new recipe for his lemonade. Her goal? Reduce the number of lemons and sugar needed (i.e., reduce COGS).

Louise delivered. At the same time, she vastly improved the lemonade’s taste. Johnny’s lemonade was a hit! Johnny was ecstatic—until Louise sent him an invoice for $150 for the time ...