Adaptive Processes: Linking Strategy with Execution

Transcription

1 Adaptive Processes: Linking Strategy with Execution

2 Contributions of the Delta Model Contribution: Goal: Implication: Method: The Triangle Opening the mindset to new strategic positions The best product does not always win Three distinct strategic options Total Customer Solutions System Lock-In Adaptive Processes Linking strategy with execution Execution is not the problem, linking to strategy is Execution is captured through three Adaptive Processes: Operational Effectiveness Customer Targeting Innovation whose roles need to change to achieve different strategic positions Aggregate Metrics Measuring success Good financials do not always lead to good results Aggregate performance metrics need to reflect each of the Adaptive Processes and their role based upon the strategic position Product performance Customer performance Competitor performance Granular Metrics and Feedback Discovering performance drivers Managing by averages leads to below average performance Business is nonlinear. Performance is concentrated, particularly when it involves bonding. Granular Metrics allows us to focus on underlying performance drivers, to detect variability, explain, learn, and act

3 The Adaptive Processes: Linking Strategy with Execution Business Model Innovation Operational Effectiveness The process of new product development Should ensure a continuous stream of new products and services to maintain the future viability of the business Customer Targeting The management of the customer interface Identification and selection of attractive customers and enhancement of customers performance Should establish best revenue infrastructure for chosen strategy The production and delivery of products and services to the customer Should produce the most effective cost and asset infrastructure to support the chosen strategic position of the business

4 Operational Effectiveness: This process is responsible for the delivery of products and services to the customer. In a traditional sense, this includes all the elements of the internal supply chain. Its primary focus is on producing the most effective cost and asset infrastructure to support the desired strategic position of the business. In a more comprehensive sense, operational effectiveness should expand its external scope to include suppliers, customer, and key complementors,, thus establishing an extended supply chain. This process is the heart of a company s productive engine as well as its source of capacity and efficiency.

5 Customer Targeting: This process addresses the business-to to-customer interface. It encompasses the activities intended to attract, satisfy, and retain customers, and ensures that customer relationships are managed effectively. It s primary objectives are to identify and select attractive customers and to enhance their performance, either by helping to reduce their costs or increase their revenues. The ultimate goal of this process is to establish the best revenue infrastructure for the business.

6 Innovation: This process ensures a continuous stream of new products and services to maintain the future viability of the business. It mobilizes all the creative resources of the firm- including its technical, production, and marketing capabilities- to develop an innovative infrastructure for the business. It should not limit itself to the pursuit of internal product development, but should extend the sources of Innovation to include suppliers, customers, and key complementors. The heart of this process is the renewal of the business in order to sustain its competitive advantage and its superior financial performance.

7 System Lock In The Changing Role of Operational Effectiveness In supporting the chosen Strategic Position Strategic Position Total Customer Solutions Focus of Attention Internal Value Internal and customer value chain Description of the Role Output Internal cost infrastructure Combined internal and customer infrastructure Objective Cost Maximum customer value System Lock-In Internal, customer, and complementor value chain System infrastructure Enhance system performance

8 System Lock In The Changing Role of Customer Targeting In supporting the chosen Strategic Position Focus of Attention Distribution channel generic customer Description of the Role Output Channel mix Objective Maximize product volume and product market share, minimize distribution cost Total Customer Solutions Targeted customer Target market intelligence, Customer interface Maximize share of each customer System Lock-In Relevant business system Network of complementors, Complementor interfaces Maximize share of complementors

9 Companies Take a Horizontal Market Cut, Total Customer Solutions Businesses Take a Vertical Market Cut Customer Segments A B C D E F Product Items , emphasis on Channel 1 Channel 2 Product 1 Product 2 Direct Channel 1 Channel 3

10 The Traditional Customer Interface in the Best Product Strategy Rest of the organization Salesforce Buyers Rest of the organization Supplier Customer Source: Patrick Preux, Customer Targeting, Sustainable Competitive Advantage, and he Competencies

11 The Traditional Customer Interface in the Total Customer Solutions Strategy Line Executives Line Executives R & D R & D Manufacturing Manufacturing Marketing and Distribution Marketing and Distribution Finance Finance After Sales After Sales Source: Patrick Preux, Customer Targeting, Sustainable Competitive Advantage, and he Competencies

12 System Lock In The Changing Role of Innovation In supporting the chosen Strategic Position Focus of Attention Common product platform Description of the Role Output Family of products Objective First to market, dominant design Strategic Position Total Customer Solutions Customer s s platform Joint development Enhance customer s results Customized bundle of products Integrate into customer s s activities System Lock-In Open platform Manage proliferation of complementors Breadth/range of applications Application interfaces Harmonized system architecture

13 The Role of Adaptive Processes In supporting the Strategic Positioning of the Business Strategic Positioning Adaptive Process Objectives Operational Effectiveness Customer Targeting Cost Maximize Product Volume, Low Distribution Cost Maximum Customer Value Customer Share Best System Performance Complementor Share Innovation First to Market, Dominant Design Customized Bundle Of Products Harmonize System Architecture Total Customer Solutions System Lock-In

14 The Role of Adaptive Processes In supporting the Strategic Positioning of the Business Strategic Positioning Cost Product Innovation Identify product cost drivers Improve stand alone product cost Target Distribution Channels Maximize coverage through multiple channels Obtain low cost distribution Identify and enhance the profitability of each product by channel Develop family of products based on common platform First to market, or follow rapidlystream of products Total Customer Solutions Best Customer Benefits Improve customer economics drivers Improve horizontal linkages in the components of total solutions Target Customer Bundles Identify and exploit opportunities to add value to key customers by bundling solutions and customization Increase customer value and possible alliances to bundle solutions Select key vertical markets Examine Channel ownership options Customer Service Innovation Identify and exploit joint development linked to the customer value chain Expand your offer into the customer value chain to improve customer economics Integrate and innovate customer care functions Increase customer lock-in through customization and learning System Lock-In Best System Performance Improve system performance drivers Integrate complementors in improving system performance Target System Architecture Identify leading complementors in the system Consolidate a lock-in position with complementors Expand number and variety of complementors System Innovation Create customer and system lockin, and competitive lock-out Design propriety standard within open architecture - Complex interfaces - Rapid evolution - Backward compatibility

15 The Priorities of Adaptive Processes in Each Strategic Position Strategic Positioning Total Customer Solutions System Lock-In Product Economics Customer Economics System Economics Operational Effectiveness 1. Cost 2. Best Customer Benefits 3. Best System Performance Adaptive Processes Customer Targeting 3. Target Distribution Channels 1. Target Customer Bundles and Customization 2. Target System Complementors Innovation 2. Product Innovation 3. Customer Service Innovation 1. System Architecture Innovation