session 02 - strategy & delta model (edited)
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CENTRO DE INNOVACIÓNTECNOLÓGICO DE MONTERREY
http://paradygnamics.wordpress.com
1
Daniel Pandza, M.A.
Centro de Innovación
Tel 01-(33) 3669 3000 ext. 2266
www.gda.itesm.mx/innovar
INNOVACIÓN DE MODELOS DE NEGOCIO
SESSION 02 The Delta Model – Setting the strategic Direction for achieving competitive advantage
FACULTY TEAM
Ing. Jorge Valdez Simancas
Ing. Angel Tonatiuh Flores ([email protected])
CERTIFICADO EN INNOVACIÓN
G2 - ENERO-MAYO 2009
Basic Assumptions:
Strategy is About:1. Searching for New Sources of
Competitive Advantage,
2. Being Unique,
3. Creating Wealth:
Reduce Risk, Investment and Time,
4. Inventing New Rules and New Games
Strategy is About Discovery of Wealth
Source: C.K. Prahalad
Competitive Advantage over Time
GAP
Time
Re
turn
s
Competitive Advantage Gap– Distance from closest competitors
–New, better features
–Lower prices
–Superior customer service
Competitive Advantage Period– Barriers to entry
–Market share dominance
–Blocking patent
–Switching costs
–Brand loyalty
CAP
Mo
ore
(20
02
) Liv
ing
on
the
Fa
ult L
ine
. Harp
er B
usin
ess P
ress
CAP highlow
GAP
low
high
GAP/CAP matrixWhere are Your Offers on this Grid?
Sustainability
Dif
fere
nti
ati
on
Competitive Advantage, Resource Based View,
Delta Model
Source: www.valuebasedmanagement.com
DELTA MODEL
The model on the right
represents the Hax´s point
of view regarding the
development and
implementation of the
corporate strategy.
1. Strategic positioning
2. Define Mission
3. Competitive positioning & assessment of the industry structure
4. Select strategic agenda (i.e. value discipline)
5. Repeat iterations as the competitive environment changes
A Dynamic View of Strategy
Markides (1999). A Dynamic View of Strategy. IEEE Engineering Management Review. Winter 1999.
URL: http://ieeexplore.ieee.org/iel5/46/17508/00808247.pdf?arnumber=808247
Markides (1999)
reinforces the
importance of
viewing the stra-
tegic manage-
ment agenda as
a dynamic pro-
cess that is di-
rected for con-
tinously explo-
ring New Emer-
ging competitive
Positions!
The Delta Model | Three Distinct Strategic Options
Option 1: Best Product
Best ProductProduct Economics
Value chain of the product
Intrinsic value (Standard)
Faceless customers
Mass distribution channels
- First to market
- Dominant Design Rivalry
Diferenciación:
• Sony Wega
• Rolls Royce
Costos bajos:
• Southwest
• Nucor
MEJOR PRODUCTO
Competencia basada en
economía del producto
The Delta Model | Three Distinct Strategic Options
Option 1: Best Product
The Supplier-Customer Relationship:
Traditional and New Economy Structures
ESTRATEGIAS NATURALES Y DE MIGRACION
III IV
I II
Valuación de
los clientes
Uniforme
Necesidades del cliente
Uniforme
Altamente
diferenciado
Expander el set de necesidades
Inte
racti
vid
ad
y e
ficie
ncia
de c
osto
Mercadotecnia
de frecuencia
(Cuentas Claves)
Mercadotecnia
masivaMercados meta
nichos
Mercadotecnia
1 a 1
Altamente
diferenciado
MAPA ESTRATEGICO
III IV
I II
Altamente
Diferenciado
Flexibilidad
en las
comunicaciones
Flexibilidad de Produccion, Logistica y servicios
Uniforme
Necesidades de los consumidores
Valoracion de los
consumidores
H-P Competencias
Usuario Final
Consumidores
Implicit Assumptions
1. Value is Created by the Firm
2. Value is Exchanged between the Firm and a Customer
3. Value is embedded in Products and Services
4. Innovation is about technologies/products/processes
5. Customers have a choice- to buy or not to buy;
Managers’ job is to persuade them to buy
1. All Customers are not alike in their: • Levels of Sophistication
• How they want to dialogue
• Tolerance for problems
• View of switching costs
• Propensity for Personalization
• Role as Individuals in a Social Network
2. Personal Experiences (Value) around identical
physical products can vary significantly.
• Consumers specify the price (auctions)
Customer Heterogeneity
Typical Response:
Good News & Bad News
Richness of Features
and Functions
But not necessarily
Experience Variety
Product Variety means:
Technologies used for
creating Product Variety
can be used to Create
Experience Variety.
We have to Think of
Technologies as
Experience Enablers
Eventos de compra independientes
Clientes
contactados
Necesidades
satisfechas
Total Customer Solutions- Customer Economics
- Strong customer bonding (relationship)
- Solving a wide range of customer needs
- Alternative, non traditional and direct channels.
- Share of wallet.
- Cutting finer
- Improve Customer Cost position, incomes and profits.
The Delta Model | Three Distinct Strategic Options
Option 2: Total Customer Solutions
Eventos de compra condicionales
Clientes
contactados
Necesidades
satisfechas
Soluciones completas para los clientes
Hay tres maneras de lograr la solución total al cliente:
Redefinir la experiencia con el cliente.
Alterar la relación con los clientes desde el punto de adquisición hasta el final
de la vida del producto o servicio.
Saturn
Disney
Amplitud horizontal.
Proveer un conjunto completo de productos y servicios acerca de las
necesidades del cliente.
Amazon
Wal Mart.
Home Depot
Integración en el cliente. Esto es una forma de outsourcing facilitando
actividades que antes las hacia el cliente.
Dell
Transferir trabajo del cliente a la empresa o de la empresa al cliente.Aquí se transfiere trabajo al cliente a cambio de una reducción de costos.
Autoservicio en las gasolineras
Business
Solutions
Product
Solutions
Knowledge Capital Dynamics
Transactions
Partnering
Working with the customer to jointly
craft business opportunities that
would not have been possible without
a deep mutual understanding / trust
Shaping/ configuring an array of
benefits and features services to
provide the value creating
functionality required by a customer
Selecting/ proposing an “augmented”
product/ service in response to an
expressed customer need
One time sale of a product/ service
The Delta Model | Three Distinct Strategic Options
Option 3: Dominant System
Sistema dominante
• La opción estratégica de “Sistema dominante” tiene el mayor Valor
agregado posible.
• En vez de enfocarse estrechamente en el producto o en el cliente,
la compañía considera a todos los jugadores principales en el
sistema que contribuyen a la creación de valor económico.
• Hay tres condiciones necesarias para crear un sistema dominante:
– Efecto network.
– Feedback positivo
– Efecto de aprendizaje
• La compañía está particularmente preocupada en el desarrollo,
atracción y conservación de los llamados “complementos”.
• Un complemento no es un competidor sino un proveedor de
productos y servicios que mejora directa o indirectamente nuestra
oferta.
Hay tres formas de lograr un sistema dominante:
1. Estándar propietario. Tiene un network extenso de complementadores
dedicados a trabajar para nuestros productos.
2. Intermediación dominante. Una empresa posicionada como
intercambio dominante provee una interface entre compradores y
vendedores, o entre las partes que desean intercambiar informaciónón o
bienes. Cuando este tipo de negocios logran una masa critica es muy
difícil desplazarlos.
3. Acceso restringido. Los competidores son bloqueados de llegar a
los clientes porque el canal tiene capacidad limitada para manejar
múltiples proveedores.
Sistema dominante
Reducción de costos de servir
a clientes o incremento de
ventas / utilidades.
Competencia basada en
economía del cliente:
Costos bajos o
diferenciación.
Competencia basada en
economía del producto.:
SISTEMA
DOMINANTE
MEJOR
PRODUCTO
• “Complementor look in” .
• “Competitor look out”,
• Estándar de Tecnología
propietario.
Competencia basada en
economía del sistema:
SOLUCIONES TOTALES
PARA LOS CLIENTES
The Delta Model | Three Distinct Strategic Options
SUMMARY
The Delta Model
Options for Strategic Positioning
System Lock-In
Total Customer
SolutionsBest Product
Dominant Exchange
Exclusive Channels
Horizontal Breadth
Redefining the
Customer Relationship
Customer
IntegrationDiferentiation
Proprietary Standard
Low Cost
Expanding Your Mindset:
Summary for Strategic Decision Making 1|2 STRATEGIC FOCUS RELEVANT BENCHMARKING
VALUE PROPOSITIONINNOVATION
Extended
EnterpriseProduct
Network
Customers Competitors
Complementors
Customized
product bundle
Standardized
Products
Product & Service Portfolio
Extended by
Complementors
Joint with
Customers
Internal Product
Development
Open Architecture -
Complementors as Key
Expanding Your Mindset:
Summary for Strategic Decision Making 2|2
Extended Suppliers,
the Firm, The Customers
SUPPLY CHAIN CHANNELS
Targeted
Direct
Generic
Mass
Massive | Direct
Internal
System - Extended &
Complementors
Customer &
Supplier Support
THE ROLE OF IT DEGREE OF CUSTOMER BONDING
Potentially
high customer
lock-in
Very SmallDepending on
ProductCharacteristics
Highest! Competitor Lock-Out
Internal
Support
Total Network Support
Incremento de valor agregado
Ventaja de ser el primero:
Atributos.
Servicio.
Precio.
Diseño
Dominante
Producto
Clientes
Look in
Aprendizaje del cliente.
Producto Customizado
Activos Colaterales.
Marcas
Estructura de precios.
Asegurar al
cliente
Producto
Clientes
Distribución del espacio en
el anaquel.
Marcas.
Innovaciones implacables.
Patentes.
Bloquear a la
competencia
Producto
Clientes
Distribuidores/ Proveedores
Desarrollo de redes de complementos de 3as
partes para incrementar el atractivo del
producto.
Posición de apalancamiento como líder en
participación de mercado en la atracción de
complementos.
Los clientes buscan los productos que tenga
el mayor numero de complementos.
Algunas veces los clientes pueden ser el
complemento, como en el caso de
intercambios.
Retro
alim
enta
ció
n
positiv
a
Estándar
propietario
Complementos
Producto
Clientes
Valor agregado
SISTEMA DOMINANTE
MEJOR PRODUCTO
SOLUCIONES TOTALES PARA
EL CLIENTE
Integración en los clientes
Amplitud Horizontal
Redefinición de la
experiencia del
cliente
Diferenciación
Costos bajos
Estándar PropietarioIntercambio Dominante
Acceso Restringido
Complementos
Producto
Clientes
Producto
Clientes
Producto
Clientes
Competencia basada en economía
del cliente:
Reducir costos de clientes o
incrementar su rentabilidad
Competencia basada en economía
del producto:
Costos bajos o
diferenciación
Competencia basada en economía del sistema:
Aseguramiento de complementos, bloqueo de la
competencia, estándar propietario.
THE CHALLENGES TO
TRANSFORM THE
ORGANIZATION FROM BEST
PRODUCT TO TOTAL
CUSTOMER SOLUTIONS
1. Fight the product-centric mindset
The Best Product Positioning is not necessarily
the most profitable or best way to serve your
customer.
2. The transformation is not straightforward
The alternative to a Best Product positioning are not
always easy to define or to accept .
(The case of Codelco and the International Copper Assoc.)
3. You have to redefine the game you are playing.
It is not that your products are unimportant; it is not that
you should ignore the efficiency of product delivery - it is
simply that often this is not enough.
(The case of CSN.)
Transforming the focus of the CSN Organization
From Support Units To Strategic Marketing Units
• Steel (e.g. processor, • Automotive
rerollers, etc.) • Civil construction
• Export • House appliances
• Mining • Packaging
• Energy
• Ports
4. The Challenge: “Commodities only exist
in the minds of the inept.”
Product differentiation, as technology gets more
mature, is very hard to achieve. If your product
becomes a commodity, you are deprived from
superior financial performance, from serving your
customer splendidly, and from having fun. (You
violate the three tenets.)
Do not sell products; sell customer solutions:
customization, learning, and services bundled with
products as a unique customer offering. (The Case
of National Starch).
Use all the corporate capabilities supported by key
complementors. This is a corporate strategy. (The
case of Siemens USA.)
Premium Products
Specialty Products
Specification Products
Competitive Driving ForcesProduct Differentiation
Product
Technology
Source: Castrol
Competitive Driving ForcesProduct Differentiation
Source: Castrol
“The technology is mature …
less opportunity to differentiate”
Before Future
Serv
ice
s
Source: Castrol
Competitive Driving ForcesService Differentiation
Significantly Differentiated
Occasionally Differentiated
Responsive
Minimum Required to Maintain Businesses
Competitive Driving ForcesService Differentiation
“Customers are demanding
more than just products”
Before Future
Source: Castrol
5. De-commoditize your customer.
1. Start with segmentation:
segment your markets,
your customers,
your customers’ customers, and
customers’ attitudes (productivity, cost, and price
consciousness). (The case of Castrol.)
2. Do not treat every customer equally.
You could not and should not provide everyone the
same degree of attention.
3. Select your customers.
4. Do not let your customers select you.
Market Segmentation: BEFORE
Food &
Beverage
Mining
Glass Cement
Sugar
Pulp &
Paper
TextileWood
Source: Castrol
Productivity Conscious Customers
Market Segmentation: AFTER
These customers are
conscious of total costs
and new production
yields higher sales
Source: Castrol
Cost Conscious Customers
Market Segmentation: AFTER
Source: Castrol
These customers are conscious of total costs but
new production does not necessarily yield higher
sales or economies of scale
Price conscious customers
Market Segmentation: AFTER
Source: Castrol
These customers
are not necessarily
conscious of total
costs and generally
buy on price/unit
6. Rethink the customer engagement process.
You are not selling products by the ton, or by the
gallon, or by the drum.
You are selling documented improvements in your
customer costs and productivity.
Use an executive team as part of the customer
management process.
“Sales are too important to be left to the sales force.”
(The case of Castrol.)
What is Castrol Logic?
A customized lubrication solution involving
products and services that results in documented:
Cost Reductions & Productivity Improvements
Customer ExperienceHow do we deliver cost savings?
Source: Castrol
Documentation
Client Engagement
Process
Continuous
Improvement
Initial Information
Exchange
Management
Survey
ProposalImplementation
7. Prevent the customer from commoditizing you.
Your customers might feel they benefit from
standardizing the product offering of their suppliers,
and move the bargaining power in their favor.
The problem is “You get what you pay for.”
(The case of Eastman Chemicals Coating Business.)
Case: The Paint and Coating Industry
Paint and Coating
Manufacturers
Distributors
Eastman Chemicals End Users
Tier 1- Preferred strategic
solution seekers
Tier 2- Large price
seekers
Tier 3- Least attractive
price seekers
Tier 4- Local
manufacturers
Tier 5- Specific targeted
companies
Tier 1- Full alignment with EC
Tier2- Large power bargainers
Tier 3- Fragmented local
agents
Tier 4- Specialty distributors
• Architectural
• Automotive
• Industrial maintenance
• Building products
• Appliances
• Metal office furniture
• Solvents
• Resins
• Additives
• Colorants
8. Channels are essential, they “own” the customers.
Ownership or control of the channels is
critical to the pursuit of a Total
Customer Solutions strategy.
Generic channels are only effective for
the “average customer. They are
unsatisfactory for the very poor and the
very rich. (The case of Hindustan
Lever and Unilever de México.)
If you cannot own the channels, use a
“pull” strategy. (The case of Unilever
Bestfoods Food Service.)
The Food Service Industry
Unilever Bestfoods
Food Service Distributors Operators Final Consumer
• Corporate broad line
(e.g. Sysco)
• Specialized
distributors
• Other
national,regional and
local distributors
Tier 1- 100 chains
Tier 2/3- 1500 chains
Tier 4/5- Thousands of
independents
push
pull
9. Use technology wisely: This is a very hard task.
Joint development with our customers is an effective
mechanism to get customer lock-in.
Product technology is not enough, add service technical
support.
Effective IT infrastructure is imperative: e-Business
allows the implementation of the integrated value chain,
e-Commerce allows access to massive fragmented
customers.
Technology-based system lock-in is very hard to achieve,
if you can do it is a dream. (The case of Advanced Micro
Devices.)
10. Beware of the organizational structure implications
You have to change dramatically
the way you manage, assign
responsibilities, reward people,
monitor the business progress,
and most important, the way you
“sell”. (The case of Motorola
Semi-Conductors.)
THE DELTA PROJECT:
DISCOVERING NEW SOURCES OF
PROFITABILITY IN A NETWORKED ECONOMY
Arnoldo C. Hax and Dean Wilde
Palgrave, 2001
http://www.palgrave.com
http://www.amazon.co.uk