Contents

1 The Need for Reinventing Strategy . . . . . . . . . . . . . The Dangers of the Conventional Denition of Strategy Strategy as Rivalry . . . . . . . . . . . . . . . . . . . . . . . Reject Commoditization The Essence of Strategy Is to Achieve Customer Bonding . . . . . . . . . . . . . . . . . . Managing in the Large and in the Small The Extended Enterprise and the Individualized Customer . . . . . . . . . . The Selection of a Strategy and the Identication of the Required Competencies A Preview of the Delta Model . . . The Strategic Tasks of the Delta Model . . . . . . . . . . . . Task 1 Customer Segmentation and Customer Value Proposition (Chapter 3) . . . . . . . . . . . . . . . . . . . Task 2 The Existing and Desired Competencies of the Firm (Chapter 4) . . . . . . . . . . . . . . . . . . . . . . . . . . Task 3 The Mission of the Business (Chapter 5) . . . . . . Task 4 The Strategic Agenda (Chapter 6) . . . . . . . . . . Task 5 Monitoring the Strategy Execution (Chapter 7) . . . The Haxioms . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Delta Model: Creating New Sources of Growth and Protability in a Networked Economy . . . . . . . . . . . . . . . . . . . . . . . . How to Achieve Customer Bonding: The Three Major Strategic Options in the Delta Model . . . . . . . . . . Best Product . . . . . . . . . . . . . . . . . . . . . . Strategic Positions of the Best Product Option . . . Total Customer Solution . . . . . . . . . . . . . . . . Redening the Customer Experience . . . . . . . . System Lock-In . . . . . . . . . . . . . . . . . . . . . Three Ways to Get System Lock-In . . . . . . . . . The Various Dimensions of the Triangle: A Summary .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 1 2 3 4 5 8 9 9 9 10 10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15 15 15 17 19 20 23 24 28

xv

xvi

Contents

3 Customer Segmentation and Customer Value Proposition: The First Critical Task of Strategy . . . . . . . . . . . . . . . . . . Behind the Customer Segmentation Process . . . . . . . . . . . . . . Who Is the Customer? . . . . . . . . . . . . . . . . . . . . . . . . Why Are Customers Different? . . . . . . . . . . . . . . . . . . . The Generic Dimensions of Segmentation . . . . . . . . . . . . . . . Segmentation According to Attitudes and the Willingness to Do Business with Us . . . . . . . . . . . . . . . . . . . . . . . . . . The Case of Castrol . . . . . . . . . . . . . . . . . . . . . . . . . Reections on Segmentation Based on Customer Attitudes . . . . . Segmentation According to Different Degrees of Value Added . . . The Case of the Waste Management Company . . . . . . . . . . . Reections on Segmentation Based on Different Degrees of Value Added . . . . . . . . . . . . . . . . . . . . . . . . . . . Segmentation According to Customer Life Cycle . . . . . . . . . . . The Case of the Investment Retail Company (IRC) . . . . . . . . . Reection on the Segmentation Based on Customer Life Cycle . . Segmentation According to Varying Buying Patterns . . . . . . . . . The Case of Singapore Airlines . . . . . . . . . . . . . . . . . . . Reections on Segmentation Based on Varying Buying Patterns . . Segmentation According to Alignment with the Distribution Channel The Case of Unilever Food Services . . . . . . . . . . . . . . . . . Reections on Segmentation According to Alignment with Distribution Channel . . . . . . . . . . . . . . . . . . . . . . Some Pitfalls from Conventional Customer Segmentation . . . . . . The Mobile Phone Business The Case of Singapore Telecommunications (SingTel) . . . . . . . . . . . . . . . . . . . The Mobile Phone Business The Case of Telefnica Mviles de Colombia . . . . . . . . . . . . . . . . . . . . . . . . Corporate Banking The Case of Bank of Tokyo-Mitsubishi . . . The Steel Business The Case of Termium . . . . . . . . . . . . . The Test of the Quality of the Customer Value Proposition . . . . . . Who Is the Most Attractive Customer? . . . . . . . . . . . . . . . The Need for a Customer Database . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Firm as a Bundle of Competencies: Understanding the Depth and the Breadth of Our Capabilities . . . . . . . . . . . . . . . . . . . . Identifying the Bundle of Competencies in Practice . . . . Investment Retail Company as a Bundle of Competencies Singapore Airlines as a Bundle of Competencies . . . . Delta Model and Competitiveness: A New Approach to Competitor Analysis . . . . . . . . . . . . . . . . . . .

33 33 34 34 35 35 35 38 39 39 42 44 44 47 49 49 51 53 53 58 60 60 62 64 65 67 70 70 73

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

75 77 77 79 82

. . . . . .

Contents

xvii

Sony Video Conferencing: An Analysis of Its Competencies A Comparison of Polycom and Sony Video Conferencing: A Contrast of Competencies . . . . . . . . . . . . . . . . . . Using the Delta Model to Assess the Merits of Possible Mergers and Acquisitions The Case of Cognos and IBM . Lessons from the Delta Model . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Mission of the Business: Capturing the Strategic Transformation . . . . . . . . . . . . . . Strategy Means Change . . . . . . . . . . . . . . . . . The Mission of the Business . . . . . . . . . . . . . . . Planning Horizon . . . . . . . . . . . . . . . . . . . The Description of the Changes in the Business Scope The Mission Statement . . . . . . . . . . . . . . . . Strategic Transformation: What Others Have Done . . . The Case of the Chemical Coatings Company . . . . Mission Statement of the Chemical Coatings Company . The Mission Statement . . . . . . . . . . . . . . . . Statement of Products Scope and Services Scope . . . Statement of Customer Scope . . . . . . . . . . . . . Statement of End-User Scope . . . . . . . . . . . . . Statement of Distributor Scope . . . . . . . . . . . . Statement of Complementor Scope . . . . . . . . . . Statement of Geographical Scope . . . . . . . . . . . Statement of Unique Competencies Scope . . . . . . The Case of Singapore Airlines . . . . . . . . . . . . . The Mission Statement . . . . . . . . . . . . . . . . Statement of Product Scope . . . . . . . . . . . . . . Statement of Services Scope . . . . . . . . . . . . . . Statement of Customer Scope . . . . . . . . . . . . . Statement of Complementor Scope . . . . . . . . . . Statement of Geographical Scope . . . . . . . . . . . Statement of Unique Competencies . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 The Development of the Strategic Agenda: A Call to Action . . . . . . . . . . . . . . . . The Identication of the Strategic Thrusts . . . The Components of the Strategic Agenda . . . Strategic Thrusts . . . . . . . . . . . . . . . Organizational Structure . . . . . . . . . . . Business Processes . . . . . . . . . . . . . . Performance . . . . . . . . . . . . . . . . . Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82 84 87 91 91 93 93 94 94 94 96 96 96 98 98 99 99 100 100 101 101 102 102 102 103 103 103 103 104 104 105 107 107 108 109 109 109 110 110

xviii

Contents

The Strategic Agenda as the Integrator of Strategy, Structure, Process, Performance The Case of Chemical Coatings Company Identifying the Priorities of the Strategic Thrusts . . . . . . . . Test for the Quality of the Strategic Agenda . . . . . . . . . . . The Case of Singapore Airlines . . . . . . . . . . . . . . . . . . Strategic Challenges and Opportunities . . . . . . . . . . . . . Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Monitoring the Strategy Execution . . . . . . . . . . . . . . The Intelligent Budget A Requirement for Proper Strategic Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Balanced Scorecard . . . . . . . . . . . . . . . . . . . . . Strategy at the Center of the Balanced Scorecard . . . . . . . The Delta Model and the Balanced Scorecard . . . . . . . . . The Delta Model and the Adaptive Process . . . . . . . . . . The Adaptive Processes and Aggregate Metrics . . . . . . . . The Balanced Scorecard of the Chemical Coatings Company Value Creation by Each Strategic Option: Empirical Evidence . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Putting It All Together: How to Integrate the Critical Tasks of Strategy An Illustration . . . . . . . . . . . . . The Case of DMK International . . . . . . . . . . . . . . . Customer Segmentation and Customer Value Proposition of DMK . . . . . . . . . . . . . . . . . . . . . . . . . . The Firm as a Bundle of Competencies . . . . . . . . . . The Challenges from the Existing and Desired Bundle of Competencies . . . . . . . . . . . . . . . . . . . . . . The Mission of DMK . . . . . . . . . . . . . . . . . . . Challenges from Changes in the Mission of DMK . . . . The Strategic Agenda . . . . . . . . . . . . . . . . . . . The Intelligent Budget and the Balanced Scorecards . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Managing Small- and Medium-Sized Enterprises (SMEs) Lessons from the Delta Model . . . . . . The Importance of SMEs . . . . . . . . . . . . . . . The Challenges of Managing SMEs . . . . . . . . . The Best Product Strategy . . . . . . . . . . . . . . The Low-Cost Positioning . . . . . . . . . . . . . The Differentiation Strategy . . . . . . . . . . . . The Total Customer Solutions Strategy . . . . . . . Redening the Customer Experience . . . . . . . Customer Integration . . . . . . . . . . . . . . . Horizontal Breadth . . . . . . . . . . . . . . . . . The System Lock-In Strategy . . . . . . . . . . . . Restricted Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

. . . . . .

111 114 116 117 118 118 121 121 125 126 128 129 130 133 135 141 143 144 144 153 155 156 157 158 160 165 167 167 167 168 168 169 171 171 174 174 175 177

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contents

xix

Dominant Exchange . . . . . . . . . . . . . . . . . . . . . . . . . Proprietary Standard . . . . . . . . . . . . . . . . . . . . . . . . . Final Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Challenges of Managing Not-for-Prot Organizations . Who Is the Customer? . . . . . . . . . . . . . . . . . . . . . . Which are the Competencies? . . . . . . . . . . . . . . . . . . Reecting on the Strategic Challenges of the Not-for-Prot Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . Best Product Strategy . . . . . . . . . . . . . . . . . . . . . . . Administrative Efciency . . . . . . . . . . . . . . . . . . . Differentiation . . . . . . . . . . . . . . . . . . . . . . . . . The Total Customer Solutions Strategy . . . . . . . . . . . . . Attraction and Development of the Customer . . . . . . . . . Knowledge Transfer . . . . . . . . . . . . . . . . . . . . . . Total Breadth of the Offering . . . . . . . . . . . . . . . . . System Lock-In Strategy . . . . . . . . . . . . . . . . . . . . . Channels of Delivery . . . . . . . . . . . . . . . . . . . . . System Support . . . . . . . . . . . . . . . . . . . . . . . . Intellectual Value . . . . . . . . . . . . . . . . . . . . . . . The Unconventional Dynamics of Evolution of the Not-for-Prot Organizations . . . . . . . . . . . . . . . . . . . The Case of Singapore Economic Development Board An Application of the Delta Model to a Not-for-Prot Organization Customer Segmentation . . . . . . . . . . . . . . . . . . . . EDBs Existing and Desired Competencies . . . . . . . . . . EDBs Mission . . . . . . . . . . . . . . . . . . . . . . . . . EDBs Strategic Agenda . . . . . . . . . . . . . . . . . . . . Monitoring the Strategy Execution . . . . . . . . . . . . . . The EDB Culture . . . . . . . . . . . . . . . . . . . . . . . Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

178 179 179 183 183 184 186 186 187 187 188 188 189 189 190 191 191 192 193 195 196 198 200 201 203 203 204 205 207 208 212 215 216 217 217 217 218 218 218

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 A Comparison Among the Three Strategic Frameworks: Porter, the Resource-Based View of the Firm, and the Delta Model Porters Competitive Positioning Framework . . . . . . . . . . . . . Low Cost or Differentiation Michael Porters Only Two Strategic Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . Porters Winning Formula . . . . . . . . . . . . . . . . . . . . . . The Resource-Based View of the Firm . . . . . . . . . . . . . . . . . Unique Competencies . . . . . . . . . . . . . . . . . . . . . . . . Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appropriability . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opportunism and Timing . . . . . . . . . . . . . . . . . . . . . . Core Competencies and the Resource-Based View of the Firm . . . . The Resource-Based View of the Firms Winning Formula . . . . . .

xx

Contents

A Practical Framework of the Application of the Resource-Based View of the Firm . . . . . . . . . . . . . . . Some Caveats to the Resource-Based View of the Firm . . . . Comparisons Among Porter, the Resource-Based View of the Firm, and the Delta Model Frameworks . . . . . . . . . Reinterpreting Porters Five-Forces Model Through the Delta Model: Thinking Out of the Box . . . . . . . . . . . . . . . . Search for the 10X Force . . . . . . . . . . . . . . . . . . Generate Barriers Around Your Customers . . . . . . . . . Your Competitors Are Not the Relevant Benchmarks . . . . Develop and Nurture the Intrated Value Chain . . . . . . . Add a New Player; the Complementors . . . . . . . . . . . Fragmented Industries Offer Big Opportunities . . . . . . . Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

219 219 220 222 223 224 224 224 225 225 226 227 229

About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

http://www.springer.com/978-1-4419-1479-8