strategy and your stronger hand
TRANSCRIPT
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Company
LOGOStrategy and Your Stronger Hand
Ref: Jeff Moore
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Learning Objectives
1. What’s a Business Model?
2. Complex System Model
3. Volume Operations Model
4. Rx to avoid mixed-model failures
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An Orgn can excel at only one model:
Volume Operations
Complex Systems
Serving many customers through frequent, low price transactions, for instance, Amazon.com, Proctor & Gamble, and Microsoft
Serving a few large enterprises through infrequent, high price customized solutions e.g.: CISCO, Goldman Sachs
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Vol Ops vs Complex Sys
Few $s
$ 1+ mn
1000smillions
$ 1 bn
SameRevenue
No. of Customers
Cost/ Transaction
B2B vs B2C?
Cultivatingrelationships
Systemizingtransactions
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Descriptions
“Complex System Model” is geared toward delivering customized solutions to demanding and deep pocketed customers.
“Volume-Operations Model” is designed to package a company’s proprietary strength( its core technology, which may or may not be high tech),into standard products that meet the generic needs of mass markets.
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“Handedness”
• There are two ways of doing business, and any given company is as adroit at the one as it is awkward at the other.
• Understanding your own organizations handedness will guide you to the right strategic moves
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SolutionSales
Consulting &Integration Services
Solution Architecture
3rd PtyElemnt
Element1
Element2
3rd PtyElemnt
Technology Architecture
Integration Platform
Legacy System
Target Customer
Complex System Model
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BRAND ADVERTISING
DISTRIBUTION CHANNEL
SHARED INFRASTRUCTURE
Offer Offer
Offer
TECHNOLOGY
Volume Operations Model
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The Business Models
Value Creation Complex Sys Volume Ops
Research Qualitative Scenarios Quantitative Analysis
Design Intgrn of modular comps Modules that integrate
Source At the margin At the mean
Manfture Adaptive methodologies Deterministic Processes
Market Relationship Mktg Branding & Promotion
Sell Hi-touch persuation Low-touch distribution
Service Open-ended consultation
Discrete transactions
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Bad Marriages
• Compaq & DEC
• Charles Schwab(Retail Broker) & US Trust ( institutional banker)
• Time Warner( entertainment giant) & AOL( internet marketer)
The best strategic moves for a company are ones that supplement rather than complement the company’s current dominant business model.
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Health Insce Co.- 2 Tier
Complex Sys Approach
Hi tech patient building of customer relationships to sell employee benefits to large companies
Volume Ops Approach
To service those programs as client companies’ employees utilize them
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Xerox, Kodak, HPPrinting & Copying Divisions
ConsumerProducts
EnterpriseSystems
Hi End Lo End
Both are drawn to each other’s turf
Lines between the markets they serve is blurry!
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Shaking Hands vs Holding Hands
Right with Right Right with Left
Which is to be preferred?
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Rx – to avoid mixed model failures….
1
Text2
3
Text
Acquire or merge with costhat use same businessmodel you use
In a two tier industry establish separate, autonomousbusiness units for parts that use diff.business models
Consider partnering externally for servicesRequired from your non-dominant business model
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Complex Sys & Vol Ops
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Complex Sys or Vol Ops?Or two tier??
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Fox or Hedgehog?
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Approaching the challenges from opposite sides
Complex Systems
Focus on dramatically differentiated offerings and make them as cost effective as they can
(First effectiveness then efficiency)
Volume Ops
Focus on dramatically cost effective offerings that they try to make as differentiated as they can
(First efficiency then effectiveness)
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Skills
Complex Systems
Consultative & Adaptive
Volume Ops
Systems & automation oriented
Men are from Mars, Women are from Venus! - John Gray
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Same Term – Different Meanings
Complex Sys Volume Ops
Customer Intimacy
Deep domain expertise & developed relationships with decision making executives in key accounts
Pseudo Intimacy:•My Yahoo•Amazon.com’s book recommendations•AOL “you’ve got mail”
Pricing Price specific to a consumer based on situational dynamics. Pricing strategy more qualitative than quantitative
Price is the primary driver of the overall system
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Airliner – customized & complex
Avionics Galleys Seating Lights
VolumeOps
VolumeOps
VolumeOps
VolumeOps
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Staying ahead of the Pack
Volume operations commoditize categories created by complex systems
Complex systems respond by creating the next level of complexity