More than two decades ago, the leaders at Heinz food company tried something new to solve a pricing problem. They created what is now called price-based costing to address the profitability of their 9-Lives cat food brand.
Typically, the price for products, like cat food or any food or pet product, is based on the costs required to produce it. The retailer pays the wholesale price and adds a markup.
Faced with a price point consumers were unwilling to pay, Heinz leaders worked backward from the price they believed consumers would afford and then figured out how to produce the product at a profitable cost. This approach continues to influence how companies all over the world think about setting a price for goods.
Today, when designing a new customer process, Amazon starts with a customer end state in mind, and then works backward to create the features and solutions that produce it. Working backward to solve a common problem that defies new solutions has allowed Amazon to innovate in ways the world has never seen before.
In yet another example, the inventors of the increasingly popular protein bar Fulfill worked backward to create a better nutrition bar. Instead of trying to make a protein bar taste good, the inventors of Fulfill made a chocolate bar more healthy. They figured out that beginning with the end in mind produces very different thinking.
Most puzzles benefit from the traditional approach of working from start to finish — analyzing the problem and then creating effective ways of solving it. But when a longstanding riddle is a mystery to solve, working backward, instead of forward, can break the logjam of pedestrian thinking. Some problems are so wickedly complex they can’t be solved with anything other than a backward process. As it turns out, backward thinking isn’t so odd after all.
A Daily Dispatch from the Front Lines of Leadership.
