E-Business Value Matrix

A strategic planning technique

Research has shown that the two most important dimensions in respect to driving competitive advantage in e-business.

1. Practice Innovation2. Business Criticality

The businesses should strive for initiatives high on both dimensions. Generally, each discipline can be evaluated in terms of the level of risk an organization is willing to take on, as well as the level of reward it hopes to secure.

Quadrant Relationship with E-conomy

Definition Attributes; Risk Characteristics

New Fundamentals

Rule Taker The “Web-ified” versions of existing applications are lower risk, less critical, and have more modest returns.

Cost SavingsWeb-ificationExperience BuildingLow Risk

Rational Experimentation

Rule Shaker The firm attempts to breakaway from existing business model. Initiatives attempt to create new markets and revenue growth.

New Market SegmentsBusiness Model ShiftNew Revenue SourceLow/Moderate Risk

Breakthrough Strategies

Rule Breaker Emphasis on processes and initiatives that impact competitive advantage.

Market CreationNew Business ModelShift Industry DynamicsHigh Risk

Operational Excellence

Rule Maker Internet initiatives focus on transforming mission critical processes and product features for sustained competitive advantage.

ReengineeringLeveraging StrengthEfficiency FocusedHigh Risk

By mapping the roles of rule makers, rule breakers, rule takers, and rule shakers against the E-business Value Matrix, certain conclusions about the characteristics of these roles are revealed:Market dominant players tend not to be rule breakers, because they are usually more risk averse and see no incentive in disturbing a business model that is perceived to work. Rule breakers are usually born on the Web. Rule shakers are second- or third-tier companies or companies in tangential markets, because these companies have less to lose. Rule makers, who tend to be early adopters, usually end up with higher market share and higher margins.

Companies that play in the upper half of the matrix tend to display or capture a competitive advantage. Although market forces exert a counter clockwise pressure, the matrix reinforces the notion that mapped e-business strategies are not static and “versioning” or constant innovation are critical in keeping firms competitive in the new economy.

Business managers can use the E-Business Value Matrix to assess initiatives by partners and competitors. This function helps the firm perform a gap analysis to keep pace and leapfrog ahead.

The matrix also assists in resource allocation among possible initiatives by reinforcing the fact that the higher an initiative is on the matrix, the higher the corresponding risk and return.

The matrix helps in one final forward-looking way – it allows managers to monitor the evolution of e-business initiatives over time.

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