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List of Figures List of Tables Preface Acknowledgments List of Abbreviations
x xii xiii xvi xvii
Prologue Chapter 1 The Delta Model: The End of Conventional Wisdom
Bonding: The Driving Force in Strategy How We Organized the Book
The Triangle: Strategy Based upon Bonding
Expanding the Strategic Options The Triangle: Three Distinctive Strategic Options The Bonding Continuum: The Various Degrees of Product, Customer, and System Bonding Bonding and the Triangle Reinterpreting Porter’s Five Forces Model through the Delta Model Reﬂections
29 30 32 40 42 48
The Best Product: Winning through Costs and Features
Achieving Best Product Positioning through Low Cost Achieving Best Product Positioning through Differentiation Reﬂections
51 57 62
Total Customer Solutions: Winning through Relationships
Achieving Total Customer Solutions by Redeﬁning Customer Experience
How to Redeﬁne the Customer Experience Other Illustrations of Redeﬁning Customer Experience Achieving Total Customer Solutions through Horizontal Breadth Achieving Total Customer Solutions through Customer Integration Reﬂections 67 67 69 76 80
System Lock-In: Winning through Complementors
Achieving System Lock-In through Proprietary Standards 83 Achieving System Lock-In through Dominant Exchange 93 Achieving System Lock-In through Restricted Access 98 Using Direct Channels to Achieve System Lock-In and Total Customer Solutions – The Case of Unilever in India and Mexico 102 Reﬂections 104
Creating a Strategic Agenda: The Case of Motorola Semiconductor
The Delta Model in Practice: The Semiconductor Product Sector of Motorola
Execution is not the Problem: Aligning Execution with Strategy Is!
The Adaptive Processes: Linking Strategy with Execution The Alignment of Adaptive Processes with the Chosen Strategic Position The Role of Operational Effectiveness as an Adaptive Process The Role of Customer Targeting as an Adaptive Process The Role of Innovation as an Adaptive Process Arriving at a Strategic Position: Critical Success Factors Prioritizing the Adaptive Processes Reﬂections
121 123 124 128 134 139 140 141
Delta.com: Reinterpreting the Internet Industry
Content E-commerce One Vertical Market: Multiple Strategies Network Infrastructure Incumbent Strategies Reﬂections
145 148 151 154 164 174
Measuring Success: Aligning Strategy, Processes and Metrics
Some Reﬂections on Metrics Metrics and the Delta Model The vPOST Business and Cause–Effect Diagram Reﬂections
175 178 187 190
Chapter 10 Managing by Averages Leads to Below Average Performance: The Need for Granular Metrics
The Delta Model and Granular Metrics Cost De-averaging: Using Granular Metrics to Drive Performance Customer Targeting: The Example of Capital One Reﬂections
196 203 218 222
The Restructuring of the Electric Utility Industry: Applying the Delta Model to an Industry in Transition
Deregulation in the Electric Utility Industry Difficulties in the Deregulation Process Parallels with the Computer Industry The Effect of Deregulation in Electric Utilities The Generation Companies The Transmission Companies The Distribution Companies The Service Companies Power Brokering The Strategic Positioning of the Horizontal Segments The Role of the Adaptive Processes in the Horizontal Segments Performance Metrics in the Horizontal Segments Creating a Strategic Agenda Granular Metrics Reﬂections
225 226 226 230 231 232 232 233 233 234 239 242 245 247 250
Toward a Uniﬁed Framework of Strategy
Porter’s Competitive Positioning Framework The Resource-Based View of the Firm The Delta Model: An Integrated Framework for Strategy Reﬂections
251 254 258 266 269
We have to serve the customer in a distinctive way if we expect to enjoy superior performance. They are the ultimate repository of all the ﬁrm’s activities. and suppliers that has changed the drivers of proﬁtability and. The most obvious manifestation of this networking is the Internet. satisfy. making limited attempts to recognize and satisfy individual customer needs. through mass distribution channels. certainly. at the heart of strategy. Bonding:The Driving Force in Strategy A ﬁrm owes itself to its customers. Frequently. They pit competitor against competitor in a rivalry where the outcome is determined by who has the best product. The conventional method for doing this is to offer a superior product – through some combination of cost. and speed. Companies in the old economy tend to commoditize the customers by offering standardized products. A fundamental force in these transformations has been the emergence of the networked economy. There is often a product-silo mentality that permeates the organization. consequently. It grew from our conviction that the world of business has been experiencing transformations of such magnitude that the existing managerial frameworks have become either invalid or incomplete.CHAPTER 1 The Delta Model: The End of Conventional Wisdom The Delta Model encompasses a set of frameworks and methodologies that we have developed in recent years to help managers articulate and implement effective corporate and business strategies. old economy companies are typically consumed by a product-centric mindset. features. the landscape of strategy. the point of contact with the client organization is the client’s purchasing department 7 . At the heart of management and. resides the customer. Classic strategy frameworks emphasize a product orientation. and retain the customer. complementors. The name of the game is to attract. Consequently. quality. Networks have enabled a degree of bonding between customers.
Whether you are in the old or new economy. the customer and complementor should be at the center of your strategy. among others. However. or indirectly formed through the complementors that the customer wishes to access. . These are external to the product itself and are enabled by a networked economy. customized interfaces to the product. The bright light of technology blinds them from the customer or complementor. This institutes an arm’s length relationship that inhibits any deep knowledge being nurtured and developed. we ﬁnd companies so intoxicated by the new technology that they are lulled into a false sense that the technology is the strategy. rather than a powerful tool that can enhance bonding. and the value proposition is also product based. These bonds can be directly formed with the customer. At the same time. incorporating customer-speciﬁc data. We have observed that most companies.8 The Delta Project through a conventional salesforce (its own or another’s) commissioned to sell products or services. Both are powerful sources of margin and sustainability. we discovered that this new business model opened up a world of intelligence and information that could be put to use in offering customized solutions to key customers that could have not been generated under the old distribution scheme. The Delta Model enables this positioning by providing a management framework that sets strategy which incorporates bonding. independent of the product. A business can establish an unbreakable link. The physical nature of distribution channels themselves present barriers that block the ﬁrm from its ﬁnal consumers. The investments include things such as learning how to use the product. Bonding emerges as a central force in shaping strategy. The intimacy and connectivity of a networked economy offer opportunities to create competitive positions based upon the structure of the customer relationship itself. deep knowledge. or they are so absorbed in a product-centric mindset that it can be a challenge to relate to this kind of strategic thinking. Michael Dell thought that he was simply reducing costs when he decided to skip the wholesale and retail channels and deal directly with the customers. The bonds represent investments made by customers and complementors in and around the business’ product. even those in consumeroriented industries. and close relationship that we refer to as customer bonding. lack the intimate customer knowledge needed to address this issue properly. With this understanding comes a recognition that competition based upon the product alone misses entirely a primary force driving profitability.
Performance is concentrated. and Granular Metrics and Feedback (Table 1. the total model constitutes a new approach and a new discipline for strategic management. Adaptive Processes. explain. This should capture the essence of how the ﬁrm competes and serves customers in its relevant marketplace. and act Aggregate Metrics Measuring success Good ﬁnancials do not always lead to good results Granular Metrics and Feedback Discovering performance drivers Managing by averages leads to below average performance The Delta Model: A Brief Overview We believe that the Delta Model offers four major contributions essential for addressing the new economy. If taken as a whole. The four contributions are the Triangle.1 Contribution: The Triangle 9 Contributions of the Delta Model Implication: The best product does not always win Method: Three distinct strategic options: Best Product s Total Customer Solutions s System Lock-in s Goal: Opening the mindset to new strategic positions Linking strategy with execution Adaptive Processes Execution is not the problem.The Delta Model: The End of Conventional Wisdom Table 1. to detect variability.1). Aggregate Metrics. linking to strategy is Execution is captured through three Adaptive Processes: s Operational Effectiveness s Customer Targeting s Innovation whose roles need to change to achieve different strategic positions Aggregate performance metrics need to reﬂect each of the Adaptive Processes and their role based upon the strategic position s Product performance s Customer performance s Complementor performance Business is nonlinear. learn. Granular Metrics allow us to focus on underlying performance drivers. particularly when it involves bonding. The Triangle: Opening the Mindset to a New Set of Strategic Options Our foremost concern in deﬁning the strategy of a ﬁrm or business is to decide on the relevant strategic positioning. .
The customers are generic.10 The Delta Project There are three distinct strategic options.1). The liability of this Competition based upon system economics: Complementor lock-in. The Best Product (BP) positioning builds upon the classical form of competition. which introduces unique features that the customers value and for which they are willing to pay a premium. or due to its Differentiation. Innovation is centered on the internal product development process. but also because it represents the letter Delta. Competitive advantage rests upon product economics and the internal supply chain. which provide the engine for efficient product production. Proprietary Standard System Lock-In Total Customer Solutions Best Product Competition based upon customer economics: Reducing customer costs or increasing their proﬁts Competition based upon product economics: Low Cost or Differentiation Figure 1.1 Business model: three distinct strategic options . which means transformation. The customer is attracted by the inherent characteristics of the product itself. who we are trying to equal or surpass. They are depicted graphically through a triangle (Figure 1. The central focus of attention is the competitor. The products tend to be standardized and unbundled. We have chosen the Triangle to display the different strategic positions not simply because it is a visual icon that is easy to remember. which provides a price advantage to the customer. and faceless. either due to its Low Cost. numerous. which offer very different approaches to achieve customer bonding. competitor lock-out.
we seek to develop an integrated supply chain that links us with key suppliers and customers. but may also be internal to the corporation. customer economics is our guide. What would you rather do. Instead of concentrating inwardly on our own supply chain. we redeﬁne the ways to capture and serve the customer by putting together an overall set of corporate capabilities. That is why a System Lock-In strategy has to start with the full corporate scope – not just for one product or business – and has to continue with the identiﬁcation and incorporation of all the key external players that can become complementors. the worst of all situations. it is by far the most widely adopted. particularly in large and diversiﬁed organizations. it is love with our customers. Instead of commoditizing the customer. The System Lock-In (SLI) strategic option has the widest scope. Its obsessive concern with competitors often leads to imitation and price war. and most importantly. resulting in rivalry and convergence.The Delta Model: The End of Conventional Wisdom approach is that it generates a minimal amount of customer bonding. not just the supply chain for our product. They are typically external. We are outwardly driven. and the default position for those businesses that do not deliberately consider other strategic options. the customers. also sourcing from proper external parties. hence making the incumbent firms most vulnerable to new entrants. The customer continues to be the central focus. The richness and depth of complementors supporting your product or 11 . A complementor is a firm engaged in the delivery of products and services which enhance our own product and service portfolio. that enhance our product offering. The key to this strategic option is to identify. Strategy is not war with our competitors. and harness the innovation percolating throughout the system as a whole. Instead of focusing on competitors and imitating them. it includes the extended enterprise – the ﬁrm. The Total Customer Solutions (TCS) strategy is a complete reversal from the Best Product approach. attract. we seek to provide a coherent composition of products and services aimed at enhancing the customer’s ability to create their own economic value. Instead of developing and marketing standardized and isolated products. We look at the overall system supply chain. but now we extend the enterprise to the fullest. we seek a deep customer understanding and relationship that allows us to develop value propositions that bond to each individual customer. it is aimed at initiatives with our key customers for the joint development of distinctive products. and nurture the complementors. make war or make love? The innovation process is not oriented toward the design of standardized products. the complementors. the suppliers. These complementors are rarely detected and exploited effectively. In spite of the inherent limitations of this strategic position.
The system tolerates no meaningful second place. competitors can be locked out. This leads to a self-reinforcing value proposition. you had better write your application to work ﬁrst (or only) with Windows because it is the operating system on the most computers. if you are a software company that wants to reach the most customers. In a System Lock-In position. the value proposition to the customer is enhanced by interaction with other . a System Lock-In position is not always possible. In a Total Customer Solutions position. particularly for old economy companies. If you want to use the latest or most esoteric software. Distribution channels are often a key consideration for System Lock-In positioning. applications providers choose Windows to reach the most people. motivating the retailer to give Coca-Cola more shelf space. there are necessary conditions. there are additional challenges to a System Lock-In position: how to sustain it and exercise this power in an ethical way that does not create excesses of monopolistic behavior. eBay is valuable because it is used by the vast majority of online auction buyers. Correspondingly. further improving its turnover. However. There are several routes to System Lock-In. you had better have Windows on your computer. and so on. By owning or restricting access to distribution channels.12 The Delta Project service lock your product into the system and lock-out the competition. Over 100. After attaining it. In a Best Product position the value proposition to the customer is the product and its attributes are independent of the customer. it became the clear choice.000 applications are designed to work with Windows. which further enhances the brand. Foremost among these is that the value of the product to a customer should signiﬁcantly increase as the product is used by others. Coca-Cola creates higher turnover for retailers than lesser brands. the Yellow Pages is valuable because it is used by most shoppers. De facto Proprietary Standards are one way to achieve System Lock-In. A company that achieves this position exercises an enormous amount of power. Microsoft is the most public example. whereas Apple’s Macintosh operating system has one quarter that number. This creates a powerfully positive and self-reinforcing feedback loop – people choose Windows to gain access to the most applications. Microsoft is valuable primarily because it is used by the majority of the PC users. Once Microsoft achieved a slight edge. and the list goes on. Personal computer users are compelled to buy Microsoft’s Windows operating system because it has the widest selection of available software applications. Brands can be a means to this end. which leads to bonding with existing customers. the value proposition to the customer is enhanced by the interaction between the customer and the product.
The results are shown in Table 1. The Delta Model applies to companies pursuing different options in their different business units. we pulled them from the sample. our sample is selected from established (and hence old economy) ﬁrms with longstanding records of performance in order to avoid the speculative and volatile valuations that are a current part of the Internet marketplace at the time this book was written. On this measure. Bonding reﬂects externalities beyond the product itself. In other words. which leads to bonding with existing and new customers. Moreover. The acid test in terms of the merits of each option is the economic value that the companies are able to create for their shareholders. which. on average. Fortune magazine and The Journal of Applied Corporate Finance use it as the leading gauge of ﬁnancial attainment. Our sample included the examples used in this book plus additional ﬁrms drawn from the Fortune 500 whose corporate-wide strategies could be clearly categorized as emphasizing one of the three alternatives in the Triangle. the strategy and execution of the business has a multiplier effect that creates the additional value. This metric has received increasing currency as a key indicator to rank performance. Obviously.5 times the MVA of Best Product organizations. and very popular. but because such companies have blended the overall performance measures which then resist clear analysis. We collected empirical evidence from over 100 companies occupying a range of strategic positions. 13 Value Creation by Each Strategic Option: Empirical Evidence Economic returns differ markedly by strategic position. Market value added measures the difference between a company’s total market value of equity and debt and its book value. The empirical data shows that the System Lock-In companies have an M/B ratio that is on average twice as large as . System Lock-In businesses produce an MVA. which is the total amount that investors of equity and debt have contributed to the company. We use two common. is over four times that of Best Product companies. In particular. then the market-to-book ratio is 2. Total Customer Solutions firms generate over 1. measures of performance: market value added (MVA) and market-to-book ratio (M/B).2. if a total of $1 million has been invested in a business that today is valued at $2 million.The Delta Model: The End of Conventional Wisdom customers. The market-to-book ratio compares the value that shareholders place on the business based upon their assessment of the expected future cashﬂows relative to the past resources that have been committed to the business.
26 22. Best practices are a by-product of a product-centric mentality. as there are excellent companies which are truly extraordinary in every conceivable dimension of performance which are part of that vertex of the Triangle. and so on.29 11.2 2. a Best Product position.15 Standard deviation 16.6 4. We are not suggesting that a Best Product strategy cannot be the most appropriate one. while there are striking rewards that can draw you to new strategies.2 Value creation by each strategic option: empirical evidence Market Value Added Number of ﬁrms Best Product 74 Mean 14. we are not implying that the strategic answer for all companies is the same.14 48.98 Standard deviation 9.0 1.4 makes clear the consequences of adopting.0 Market-to-Book Value Mean 5. reengineering. Furthermore. . What we want to warn against is the passive adoption of this strategy without considering other alternatives.38 57. there are important caveats. it does not account for those that have attempted and failed. Many companies implicitly follow the practices of the Best Product position.0 1. We have found a signiﬁcant ﬁnancial premium for companies that can achieve a Total Customer Solutions position.57 28. benchmarking.7 5. without much reflection.88 7. The Total Customer Solutions companies have an average M/B that is 20% higher than that of the Best Product ﬁrms (Table 1. In fact.0 Total Customer Solutions 67 System Lock-In 16 the Best Product companies. The Various Dimensions of the Triangle – Beware the Productcentric Mindset Table 1. and a further enhanced premium for those attaining System Lock-In. However. These include total quality management. There may be added risk and greater difficulty in reaching for the brass ring of System Lock-In or the annuities attached to Total Customer Solutions. Table 1.67 Index 1.14 The Delta Project Table 1.86 Index 1.2).3 provides a summary of the managerial differences among the three strategic positionings of the Triangle.33 7. time-based competition. these actions are often praised as ‘best practices’ that should be applied by all companies. This conclusion reﬂects the performance of companies that have successfully arrived at these positions.
.g.g. its customers. the ﬁrm. the customers. If.3 Competitive Positioning Strategic Focus 15 The various dimensions of the Triangle Total Customer Solutions Corporation The ﬁrm. e-system Best Product Product The business. and its suppliers Customers Customer focus Customer economics Customized bundle of products and services Integrated supply chain Suppliers. and the complementors Channels to complementors and customers Brands harmonized around the system System economics Open architecture. complementors as key investors Total network support E. you are supposed to care for all the innovation issues across all the products in your company and it .The Delta Model: The End of Conventional Wisdom Table 1.g. its customers. SAP IT Role Degree of Customer Bonding Very small Depends exclusively on the product characteristics Potentially the highest Reinforced by competitor lock-out and complementor lock-in The danger of ‘functional silos’ is well known. the ﬁrm and the customers Targeted direct channel System Lock-In The extended enterprise The ﬁrm. By their very nature they are obliged to exercise a high degree of synergy in an organization. in a functionally structured company. The fact of the matter is that functions rarely act as silos. its suppliers. and its complementors Complementors System focus System economics Portfolio of products and services extended by complementors System supply chain Suppliers. you are in charge of R&D. its Industry and its competitors Competitors Product focus Product economics Standardized products Internal supply chain Relevant Benchmarking The Customer Value Proposition Product Offerings Relevant Supply Chain Relevant Channels Generic channels. mass distribution Product orientation Brand explosion Impact on Brands Brands harmonized around the customer Coherent portfolio of brands Joint product innovation with customer Customer and supplier support E. e-business and ecommerce Potentially high Reinforced by customization and mutual learning Innovation Focus Internal product development Internal support E.
this position is enabled. manufacturing. In the end. the channels are targeted and direct. human resources. and so forth. With this perspective in mind. if not dependent. if you are in charge of ﬁnance. the customer value proposition is dictated by the internal product economics. the relevant supply chain includes the customer. the channels are generic and massdriven. The ﬁrm beneﬁts from innovation by the customer as well as from their own efforts. the innovation process emphasizes joint development with the customer. rather than standardized. rather than to use proprietary internally oriented software. the innovation process is self-centered.3 under the ‘Best Product’ column. the product orientation leads to an explosion of disconnected brands. If you look at Table 1. as well as the supplier. the role of IT is to use the broadly available Internet protocols and infrastructure to inextricably link the customer to the ﬁrm. the relevant benchmarks are of the customer’s activities. the relevant supply chain is internal. In contrast with the Best Product strategy. This is an outwardly oriented strategy. not wholesale through mass channels. These often represent parochial territory that prevent a ﬁrm from intelligently using all its capabilities and creatively serving the customer as effectively as it could. the customer value proposition is dictated by the customer’s economics. the product offering is often customized. the IT role. you can see how this is totally divorced from a network-based Internet economy. It is a fundamentally inwardly oriented strategy. not just a single product or business. this brings a feeble degree of customer bonding and a rather conventional view of the business. with its outside view centered on competitors. likewise. You can envision the significant enrichment in scope and content that takes place. which might limit creativity. The strategic focus is the single product. centered on the customer. the product offering is standardized. not just the competitors’. Contrast the Best Product option with the Total Customer Solutions positioning. not just the typical stand-alone R&D center. As a result.16 The Delta Project is hard to do otherwise. on the network-based Internet economy. the customer solution orientation leads to a harmonization of brands. The strategic scope now looks across the corporation. which is so critical to management today. Product-centric business units are the prevalent silos in today’s organizations. . not just the product’s internal economics. deals with internal information. these actions create strong bonds to existing customers and generate assets and skills for the customer and the ﬁrm that are unique to that relationship. the relevant benchmarks are the competitors. you can immediately visualize the narrow cascade of responses that are associated with this option.
Our research suggests that the primary obstacle in execution is not working harder. not just on what the product does on its own. the system is bonded to the product. faster. direct and indirect because our share will dominate the system. or . The strategic scope now covers the entire system including complementors that accompany. a la Intel inside or Microsoft compatibility. A System Lock-In position can best develop when the industry is undergoing major transition. the brand is harmonized around the system. and System Lock-In. efficiency. the innovation process harnesses the creative juices of a multitude of complementors. and compatibility of the complementors. the relevant benchmarks necessarily encompass the complementor. the role of IT is to support the integration. ‘How to make it happen’ depends ﬁrst and foremost on the proper alignment of the core activities of the business with the chosen strategy. decide what to do and making it happen. ninety percent of the job is making it happen. the relevant supply chain also includes the complementors.The Delta Model: The End of Conventional Wisdom When we adopt the System Lock-In strategic positioning. the product offering entails the portfolio of applications extended by complementors. the traditional integrated competitors often become disaggregated into component pieces. When you are running a company execution becomes everything. Each strategic position of the Triangle generates a different set of tasks and activities.’ To guide managers in the ‘what to do’ question. augment. the Triangle dramatically expands the sources of proﬁtability to describe three distinct choices for strategic positioning: Best Product. with less error. deregulation. even though they may not be in the same ‘product’ industry. This strategy is centered on the system. Total Customer Solutions. the past Chairman of CitiGroup. In these situations. we have to extend our perspectives even further. In the end. And. the entire system beneﬁts from a common network interface. New standards and exchanges then emerge to help reconnect the newly fragmented elements. Reed. 17 The Adaptive Processes – How to Genuinely Link Strategy and Execution John S. once said:1 ‘A CEO has just two jobs. It attracts new customers to the product as well as adhering to existing customers. and globalization. the channels to customers and complementors are massive. Alignment is the operative term. the customer value proposition is focused on the system. particularly the complementors. such as induced by new technology. or enhance your product.
Collectively we call them Adaptive Processes. we identiﬁed the three business processes that capture the essential tasks of execution. to emphasize the changing nature of the tasks.2 represents the interactions that exist between the Triangle which is critical to deﬁne the changing role of each Adaptive Process and among the processes themselves. The core activities of the ﬁrm are embodied in three processes: 1. but is failing to align the activities of execution with the speciﬁc requirements inherent in the desired strategic position of the business.18 The Delta Project smarter. Innovation (I) – the process of new product development. Business Model Innovation Operational Effectiveness Customer Targeting s s The process of new product development Should ensure a continuous stream of new products and services to maintain the future viability of the business s s s s 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 s 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 Figure 1. since each one inﬂuences the other. Figure 1. To accomplish this goal.2 The Adaptive Processes: linking strategy with execution . Customer Targeting (CT) – the management of the customer interface. 3. 2. Operational Effectiveness (OE) – the production and delivery of goods and services.
What we ﬁnd particularly alarming is that in practice most managers implicitly define each process according to a Best Product strategy. Figure 1. and Innovation seeks the speedy development of the ﬁrm’s products aided by appropriate platforms and ﬁrst-to- Innovation . Namely.2 summarizes these roles.4 Role of the Adaptive Processes in supporting the strategic options of the Triangle S T R AT E G I C Best Product Best Product Cost s Identify product cost drivers s Improve standalone product cost Target Distribution Channels s Maximize coverage through multiple channels s Obtain low-cost distribution s Identify and enhance the proﬁtability of each product by channel s Maximize product share Product Innovation s Develop family of products based on common platform s First to market. Operational Effectiveness seeks to establish an internally efficient cost infrastructure. as well as customers s Consolidate high share with complementors ADAPTIVE Customer Targeting PROCESS Customer Service Innovation System Innovation s Identify and exploit joint s Create customer and development linked to the system lock-in. Customer Targeting seeks maximum coverage through distribution channels.The Delta Model: The End of Conventional Wisdom Table 1. and customer value chain competitive lock-out s Expand your offer into the s Design proprietary and customer value chain to open architecture improve customer economics – Complex interfaces s Integrate and innovate – Rapid evolution customer care functions – Backward compatibility s Increase customer lock-in s Facilitate complementor through customization and as well as customer learning innovation on our platform Strategy is not effective if kept at an abstract level. or follow rapidly – stream of products Operational Effectiveness POSITIONING System Lock-In 19 Total Customer Solutions Best Customer Beneﬁts Best System Performance s Improve customer economics s Improve system s Improve horizontal linkages performance drivers s Integrate complementors in the components of total solutions to improve system performance Target Customer Bundles s Identify and exploit opportunities to add value to key customers by bundling solutions and customization s Increase customer value and possible alliances to bundle solutions s Select key vertical markets s Examine channel ownership options s Maximize customer share Target System Architecture s Identify leading complementors in the system s Expand number and variety of complementors s Establish channels to complementors. The Adaptive Processes spell out in detail their unique supportive role for each of the three strategic positions in the Triangle.
In the TCS strategy. Now Operational Effectiveness is concerned with enhancing the overall system performance.5 provides a summary of a selected set of generic metrics according to Adaptive Processes and strategic options. First. Customer Targeting attempts to consolidate a harmonized system architecture through a network of complementors and complementor interfaces. Innovation aims for the development of a composition of customized products jointly with the customer. we need Aggregate Metrics to give us the overall. Once more. we need Granular Metrics that will allow us to decipher the fundamental performance drivers. facilitating a broad range of applications.20 The Delta Project market expectations. and recognizes that these metrics will be fundamentally different depending on the strategic position they intend to support. a primary objective is to raise the awareness of the productcentric mentality and to expand the alternatives open to managers. and this can only be achieved through consideration of the combined value chain of the firm and its customers. and monitoring of the desired strategy. integrated view of the business and the ﬁrm’s performance. they also serve as guidelines to deﬁne the strategy performance. Rivalry and competition may not be the winning strategies. In the SLI strategic position the role of each process again changes. Performance measurements and quantiﬁable indicators are essential for the development. execution. There are two types of metrics. Aggregate Metrics Just as activities need to vary by strategy. often by consolidating strong partnerships with complementors. Table 1. so do the measures of success. the key objective of Operational Effectiveness is the maximization of customer value. the situation is starkly different when the Adaptive Processes support the TCS and the SLI strategic options. The ultimate goal of Innovation is to develop and appropriate an industry standard. The Aggregate Metrics we will highlight are a direct by-product of the Adaptive Processes. Second. The Delta Model aligns performance metrics to the strategic options selected.4. Customer Targeting is aimed at developing individual customer bonds. Since these processes are the instruments for the execution of each strategic option. by structurally enhancing the interface with the customer and by creating assets in the customer’s knowledge of your product or services. . As recognized in Table 1.
such as return on equity (ROE). The Aggregate Metrics intrinsic to the Adaptive Processes stand in contrast to the conventional measures of success. which focus on ﬁnancial measures. earning before taxes and interest (EBIT). Granular Metrics (discussed next) are necessary to understand the performance drivers and are indicators of future performance. Correspondingly. potential bundling s s s System market share Our share of complementors – % of investments tied to our proprietary standard Our proﬁt by complementor Switching costs for complementors and for customers Rate of product development Cost of competitors to imitate standard s s s Innovation (renewal drivers) s s s s s s s s Of course. adhering to your standard competitors s System performance drivers s s s Operational Effectiveness (cost drivers) Customer Targeting (proﬁt drivers) s s s ADAPTIVE s s Customer share Customer retention Our proﬁtability by customer – individual and by segment Customer bonding – switching costs Relative involvement in customer value chain Percent of product development – from joint development – customized Degree of product scope – current vs. Financial metrics are the ultimate manifestation of overall past performance and are critical. and so on. While not yet broadly applied in industry. the Aggregate Metrics inherent in the Adaptive Processes reﬂect the top line performance of execution.5 Performance metrics for the business drivers of the Delta Model S T R AT E G I C Best Product s Cost performance – Unit cost – Life cycle cost – Variable and total cost s Cost drivers s Quality performance s Degree of differentiation Product market share Channel cost Product proﬁt – by product type – by offer – by channel Proﬁt drivers Rate of product introduction Time to market Percent of sales from new products Cost of product development R&D as % of sales POSITIONING 21 PROCESS Total Customer Solutions System Lock-In s Description of system s Customer value chain infrastructure – total cost – total revenue and proﬁt s Total system s Customer economic costs/revenues s Complementor’s drivers s Impact on customer proﬁt investments and proﬁts s Complementor costs of due to our service vs. the idea of incorporating nonﬁnancial metrics is well established. The Delta Model provides an inte- . return on assets (ROA).The Delta Model: The End of Conventional Wisdom Table 1. but they are poor predictors of future performance and provide few clues regarding the performance of the tasks of execution. speciﬁc tailor-made metrics could and should be introduced in each individual business situation.
customer oriented. TCS. Granular Metrics and Feedback To fully appreciate the necessity of Granular Metrics in a management framework for the new economy we should return to the fundamental force enabling new strategic positions – bonding. For example. most ﬁrms today only concentrate their attention on product-oriented opportunities. system oriented. The same feedback can occur in the individual bonding to a customer. For example. Notice that the various processes assume metrics related to their deﬁned charters: Operational Effectiveness is the depository of the cost drivers. of the proﬁt drivers. suppliers. eBay is the beneﬁciary of buyers wanting to shop at the market exchange with the most sellers. If only four people used this exchange to buy and sell there would be the possibility of twelve different transactions (each user can buy or sell from the three others). Nonlinearity is evident in the eBay exchange example. From feedback emerge three distinctive properties – nonlinearity. such as adding money wiring or bill paying vendors. from checking and credit cards to charitable donation services. and sensitive dependence. There are a variety of popular terms used to describe this phenomenon ranging from increasing returns to viral effects. Customer Targeting. Also notice that the BP options are product oriented. Bonding is remarkable because it is self-reinforcing. The essential characteristic is a positive feedback loop among market participants (end-users. Adding another user expands the number of possible transactions to twenty (possible transac- . leaving little room for competitors to occupy the same space. Where cost-based competition grows more difficult with each incremental improvement (and exhibits diminishing returns). of the renewal drivers. and SLI. It is yet another manifestation of the pervasive product-centric mindset. However. further enhancing the unique bond between the customer and Schwab. and sellers preferring the exchange with the most buyers. customers using Schwab’s One Source account learn how to use a range of its services. This learning and customization further induces the customer to invest even more in the Schwab service. This is a positive feedback loop that creates a Dominant Exchange. They also customize these services as they use them. complementors) that is inherent in certain strategic positions. and Innovation. concentrations. growth in users creates an exponential growth in the value of the exchange. bonding is an attractive force that naturally accelerates under its own power.22 The Delta Project grated framework that naturally gives rise to the appropriate metrics and describes how these change according to the distinct strategic positions.
Nonlinear systems exhibit massive concentrations. managing by averages is at best misleading. multiplied by n – 1. the number of users. Granular segmentation is central to the effectiveness of the Adaptive Processes because it enables one to focus. Concentrations in cost. where a small number of key complementors are central to the value proposition of the system. The forces of the new economy take us full circle. and so on. and complementor. which is so critical to secure bonding. They represent the performance drivers. Granular Metrics are necessary to succeed in this environment: s 23 s s They can identify the natural economic concentrations and inherent variability in business. or in collateral assets. learn from it. Feedback creates an exponential (n2). eight to ﬁfty six. . as seemingly minor and detailed factors are magnified through a nonlinear system to yield huge consequences. Contrast this to a conventional retailing relationship where each additional shopper visiting a store simply adds one more transactional possibility. these concentrations are subject to sensitive dependence. from bonding as strategy to Granular Metrics as the tools to manage bonding. Six users expand the possibilities to thirty. where a small portion of activities drives a disproportionate amount of effort. or in proﬁts. and act. There are profoundly new strategic positions for a business to consider. They enable a customized response at a customer and complementor speciﬁc level. Our research shows that a management framework must integrate the large with the small. or nonlinear relationship. and at worse dysfunctional. which often occur at the detailed intersection of the three dimensions highlighted in the Delta Model: product.The Delta Model: The End of Conventional Wisdom tion pairs equal n. explain it. seven expand the possibilities to forty-two. and execution must wrestle with speciﬁc details to realize these new sources of proﬁtability. the number of users addressable by any one user). detect variability. In a nonlinear world. customer. where a small number of customers account for a vast majority of the earnings. This in itself constitutes a response mechanism that is an important part of each Adaptive Process and is necessary in order to continually adapt strategy and to self-direct the day-to-day tasks of execution. Furthermore.
Chapter 2 describes the Triangle and contrasts it with the most inﬂuential and current management frameworks. They are correct. Alignment of strategy with execution is a fundamental element of the Delta Model. we look at a case example to understand how to set a Strategic Agenda. The case diagnoses the current situation. Incumbent ﬁrms are entrenched in the product-centric mindset. 4 and 5. Competing as a Best Product is achieved through Low Cost or Differentiation. The networked economy has made bonding a pervasive force. Bonding is a continuum and leads to eight distinct ways of achieving the strategic positions in the Triangle. Horizontal Breadth. and Customer Integration. Fifteen years ago Motorola was the leading corporation in the world for the semiconductor industry. and the required Strategic Agenda. Porter’s framework of Competitive Advantage and the Resource-Based View. and this is essential when attempting to reposition a business to take advantage of bonding and the forces of a networked economy. we begin to link execution with strategy. The case describes the transformation that is taking place within Motorola to recapture its leadership. We have observed three ways to achieve Total Customer Solutions: Redeﬁning Customer Experience. By 1997. There are also three ways to achieve a System Lock-In position: Restricted Access. Since a key message of the Delta Model is the need for an integrated plan of attack. and Proprietary Standard. We deﬁne the three Adaptive Processes and analyze extensively the changing role of . the traditional options in strategy. deﬁnes the new strategic position of the business.24 The Delta Project How We Organized the Book The book is organized to take the reader step by step through the Delta Model. and the Delta Model is a necessary complement. they had dropped to number 5 with a mere 6% of the market share. describes the mission statement. this is a critical chapter to show how the pieces come together to yield more than the sum of its parts. The Delta Model is the driving intellectual force behind this strategic repositioning. In Chapter 6. Dominant Exchange. It demonstrates how the Delta Model can be implemented in a complex and high stakes situation. processes. In Chapters 3. a legacy of the industrial era. and the eight ways to achieve them. This ﬁrst chapter provides a brief overview of the integrated framework. and shifting position requires a change in activities. but incomplete. we describe in detail the strategic positions in the Triangle. The current frameworks for business strategy are rooted in the old economy and did not anticipate the changes to the competitive landscape wrought by the forces of networking. and metrics. In Chapter 7.
With the strategy deﬁned and the tasks aligned. so you have to structure the business to learn systematically from them. and System Lock-In. it enhances our knowledge and improves the odds of success. the more relevant dimensions from a strategy (and proﬁtability) perspective are Best Product. In Chapter 8 we examine the Internet industry through the lens of the Delta Model.coms and the incumbents. We learn important lessons for the dot. Complex businesses cannot be run with a handful of Aggregate Metrics alone. At the same time. This transformation brings us into unknown territory full of risks and uncertainty. they are not enough. Not surprisingly. that is. The Delta Model is particularly suited to the demands of the new economy. as is the case when attempting to move from one vertex to another vertex in the Triangle. This transition is similar to the one 25 .The Delta Model: The End of Conventional Wisdom each process to support each strategic position. Failures are rife in the design of any grand plan. The transformation of the electric utility industry is being initiated by deregulation. whether or not the Internet is central to the transformation. metrics. Whereas many categorize companies as ‘content’. in Chapter 9 we address the question of how to measure success. and Innovation processes in order to respond to the market. The Delta Model presents a complete set of Aggregate Metrics that cover dimensions well beyond the financials. or ‘B2C’ (business to consumer). they all recognize the new infrastructure as a clear and persistent threat to the incumbent ﬁrms who do not adopt some e-business strategy. Total Customer Solutions. Chapter 11 describes the transformation of an entire industry. The Delta Model can generate profound and deep change in a company. Without denying the significance of Aggregate Metrics. The alignment of the strategic position with the processes points to the proper design of aggregate measures. we uncover that the common interpretation of the processes implicitly assumes that they are intending to support the Best Product strategy. We show how companies integrate Granular Metrics into experimental feedback mechanisms as part of their Operational Effectiveness. In Chapter 10 we introduce Granular Metrics to close the loop on bonding. although technological forces also play a role. Granular Metrics are necessary to identify the natural concentrations of value. to reﬂect the underlying performance drivers. Experimentation and testing are imperative when facing fundamental transformation. and to customize the bonds with individual customers and complementors. This stands in stark contrast to the very different nature of the processes when properly pursuing a Total Customer Solutions or System Lock-In strategy. or ‘infrastructure’. or ‘B2B’ (business to business). Most analysts admit that they do not know how many companies in the Internet industry will make money. Customer Targeting.
as is evident from the Delta Model. New companies enter each level of the value chain. Note 1. The most celebrated and influential frameworks of strategy – Porter’s Competitive Advantage and the Resource-Based View of the firm – are insightful guides to developing strategy. fragmenting them and rotating the industry from a vertical to a horizontal structure. Deregulation and technology apply a 10X force to the existing monolithic entities. . 1998. Each new business is best suited for very different strategic options. but they are fundamentally incomplete. Chapter 12 uniﬁes the various frameworks of strategy. ﬁnancial services. Standards and exchanges often emerge to facilitate the interoperability of the disaggregated parts.26 The Delta Project that has occurred in other industries including the computer industry. They fail to explain the new sources of proﬁtability and do not serve as an effective guide to deﬁne superior strategic options in our new and complex environment. MIT Tech Talk. The Delta Model complements the perspectives of the existing frameworks. and provides the integrative glue that results in a uniﬁed framework. April 29. and telecommunications. extends them to encompass new economic forces. competing with the fragmented residual businesses of the established participants.
27 Banyan. 140 Role of. 89. 70 Benchmarking.. 72 Adaptation. 150. 55. 159 Wireless. 135 Appropriability. 137. 130. 27–49. 242. 166. 92 Best Product. 22. 36 American Energy Systems (AES). 70 Bell Operating Companies. 143. 179. 151.B. 19 Advanced Micro Devices (AMD). 114. 14. Brown & Boveri (ABB). J. 256 ARPAnet. 149. Adam M. 203 Betamax. 186. 104 Brands. 120–42. 240. 227 Macintosh. 164. 39. 120. 143 Aether. 150. 161. 157. 160. 144. 78. 153 Instant Messenger. 159 Aligning Strategy. 156. 201–3 Adaptive processes. 9. 155. 96. 10. 170–4 Continuum. 66 Boeing. 184. 175–91. 49 Barriers. 74. 263 Bonding. 40.. Kenneth. 89. 138. 16. 15. 163. 7–8. Processes and Metrics. 264–5 Electric utility. 125. 259 Apple. 9. 168 Application interfaces. 31. 88 Bezos. 45–6 Bessemer Securities. 227 ANS. 95. 124. 84 Barnes & Noble. 130. 159 Amazon. 101 269 . 90. 125 Altera. 93 Bell South. 75. 265 Akamai. 146. 21. 163 Bell Atlantic. 221 Brandenburger. 240 Priorities of. 166. 60 AT&T. 168 Aggregate metrics. 201. 148. 233. 30–42. 150 America Online (AOL). 44. 20–2. 157 Asea. 72 Apollo Program. 138 B Baan. 263 Broadband. 146 Acquisition. 64. 231 American Express. Jeff. 15. 144. 96 Andersen Consulting. 37. 163 AG Edwards. 139. 74 BMW. 84. 140. 129. 218 Automobile industry. 164 Barney. 45 Bear Stearns. 48–9. 70. 29. 164. 133. 144. 69. 196. xiv. 164. 163 AT&T Universal card. 30. 141. 171.INDEX A A&W. 134. 161 American Airlines. 17–20. 15. 82. 135. 32–42 Boulding. 174–91 Alliances. 98 ABC. 138 Advanced Research Project Agency (ARPA). 164 Z Shop. 131. 150. 40–2. 50–62.
Warren. 136. 126. 226 Business drivers. 37 Infrastructure. 12 Mix. 112. 60 Broadband. 120–42 Business scope. 159 Commodity mentality. 42. 131 Chaparral Steel. 86. 147. 145. 57 Choice Cellular. 31 Business processes. 82. 147. 148 CNET. 138. 57–62 Strategy. 44. 81. 154 Access. 80 British Steel. 229 Conrades. 87. 136. 167 Cisco. 145 Bundling. 124. 135 Burroughs.270 Index British Airways (BA). 215. see Schwab . 107–9. 159 Cable & Wireless. 64. 174 CERN. 116. 51. 257 Correnti. 72 B2B. 226–9 Disaggregation. 72 Christenson. John. 156 Consistency corridor. 227 Competitive position. 165 Christie’s. 146 Coca-Cola. 238 Carrier. 81–104. 259 Cause–effect diagram. 135 Compaq. 203–14 Drivers. 142. 104. 204–11 Infrastructure. 33. 12. 263 Codelco. 156. 187–90 CBS. 128 Complex Instruction Set Computing. 36–8 Complementors. 252. 137. 150. 155–60 Positioning in the Triangle. 155. 145. 133. 98–102.com. 157 CitiGroup. 44. 82. 228 Integration. 11. 258–60 Butterﬁeld & Butterﬁeld. 259 Capital One. 147 CNN. 68 Caterpillar. 52 Charles Schwab. 231 Canon. 43 Château Laﬁte. 17. 60. 130. 166 Interface. 21 Business model. xiii. 37. 179–80 Business vision. 72 Computer industry. 146 Cerf. 144 Buffet. 73. 261 Business segmentation.com. Clayton. 43 Competitor Lock-out.com. 90. 51 Cost Cutting. 262 Competitor. 169 CISC. 17 CNET. 74 of Products. Vinton. 164. 61 Comcast. 88. 169 Buyers. 157 IP backbone. 82. 82. 30. 203 Granular segmentation of. 128 Market share. 174 B2C. 172 Distribution. 128. 21. 140 Core competencies. 146 CNNSI. 18. 46–7. 125 C Cable. 170. 149 CBSsportsline. 141 De-averaging. see CISC CompuServe. 218–22. 146. 155 Brooks Fiber Properties. 15. 144. 57–62 Common platform. 67. 10. 44. 135. 57. 155 Calpine. 176. 143 Channels. George.
68 Digital subscriber line access multiplexing (DSLAM). 69. 258–68 and Granular metrics. 10. 40. 19. 210 Value chain activities. 178–87 Overview. 96 Industry. 138. 204–8 Type of defects. 132 in the Total Customer Solutions strategy. 160 Provider. 218–22 Customer experience Redeﬁning. 194. 78. 33. 209 Location. 184. 63 Infrastructure. 194 Individual workers. 173 Customer value proposition. 41. 37. 160 Digital Equipment Corporation (DEC). 8. 97. 34 Cusumano. 42. 139 Customer Bonding. 40. 212. 50. 170. 57. 133. 32. 9 Framework. 159. 154. 251–68 Deregulation. 179 Contributions of. 159 Direct channels. 159 Cox. 208–9 Process activities. 195. 171. 232–3. 254–5 Manpower productivity. 135 Retention. 122. 128 Platform. 170. 64–9 Customer interface. 32–4. 207 Type of equipment. 106 Dean and Company. 203 Cost behavior. 143–74 Delta Model. 129 Critical success factors. 225–6 of Electric utilities. 8. 134. 15. 146. 15. 132 Customer relationship management (CRM). 196–203 and Metrics. 73 Segmentation. 104 271 D DARPA (Defense Advanced Research Project Agency). 41. 57 Dominant Design. 230. 159 Credit cards. 200 Variability. 105–19 Uniﬁed framework of strategy. 170 Lock-in. Michael. 147 Dell. 204–8 Covad. 227 . 165 Distribution channels. 77. 18. 151. 74 Economics. 251–68 Business drivers of. 236–7 DoCoMo. 34–6 Market share. 226 Digital Island. 21 Complete framework. 102 Disney. 64. 64. 147 Disruptive technologies. 133 Delta. 229. 128 in the Best Product strategy. Michael. 174 Dataquest. 248 Dell. 64. 63 Share.com. 50. 48. 7–23 in Practice. 163 Instant Messaging. 40. 128 Distribution companies. 161 Dom Perignon. 155. 217–18.Index Nonlinearity. 35. 172. 159 Digital subscriber Loop (DSL). 69 Targeting. 76–80. 128–33. 64. 164. 230–4 Differentiation. 40. 135. 12. 103. 44. 28. 64 Customization. 41. 125 Integration.
169 ebone. 168. 82. 47 FreeMarkets. 176–7 First to market. 238 Egghead. 83 Ford Jr. 164. see Digital Subscriber Loop Duke Energy. 9. 147 General Electric (GE). 22–3. 211. 64. 234–6 Ghemawat. 164. 231–2. 137 Gateway. 135 Federal Energy Regulatory Commission (FERC). 227 ESPN. 265 Extended enterprise. 134. 40. 46. 148. 36 Gates. 40. 256 Generation companies. 68 Dr. 50 Old. 154. 162. 256. 155. 153 Go. 104 Enron. 163 Financial metrics. 155. 42. 133. 60 e-mail. 146 Goizueta. 160 Experimentation. 235. 35. 151–2 DRAMS.com. 46. 39. 38 Ford. 234 Electric utility industry. 101. Henry. 225–50 Deregulation of. 120–42 Exodus. 39. 98 DrPaula. Pepper. 230–4 Electrolux. 174 Positioning in the Triangle. 211–14 Mechanism. 144. 56. 95. 145. 152. 57. 157. 172. 134. 146 GoGuardian. 11 F Fairbanks. 160 Enrico. 81.com. 161. 164. 45 Ericsson. 46. 41.com.com. 142 General Motors (GM). 148–51. 51. 73. 234 Execution Aligning with strategy. Roberto. 147. 164 Enterprise Resource Planning. 147 G Galvin. 65 Fragmented industries. 37. 143 EMC. 149 E eBay. 144 e-commerce. 234. Richard. 259 Ford. 55. 187–90 Fidelity. 179. 51 Economy New. Roger. 225 Feedback. 187. 146. 79. Pankaj. 149. 40. 219 Family of products. 50 EDS. 265 Granular metrics. 64. 56. 149. 51. 100 Google. 150. 150 El Paso Energy. 60. 9. 265 . 22. 51. 244 Online. 43. 176. 145. 82. 44. 93–8.coms. 201–3. 51. 83. Bill. 144 Dow Jones. 149. 192–24. 146 ESPN. 135 Food and Drug Administration (FDA). 42. 157 e-business. 120–42 Linking with strategy. 170 Dot. 64. 268 Go.272 Index Dominant Exchange. 230. 138 DSL. 148 E*TRADE. 34. 170 Economist. 164 Excite. 22–3. see ERP Entry barrier.. 149 Supply chain. 218–22. Bob. 150. 57 Granular metrics. 145. 247–9. 161 ERP. 220. Henry.
95. 122. 162 Hypertext Markup Language. Arnoldo C. see HTTP J J. 167 iMaternity. 268 HDML. 253. 138. 168. xiii. 251. 18. 152–3. Power and Associates. 32. 134–9. 17. 157. 262 Imperial Chemical Industries (ICI). 160. 66 Joint development. 134. 37. 162. 86. 226. see HDML Handheld Device Transport Protocol. 90 Green. 65. 155 ISPs. 161. 135 KME. 30. 250. 268 Handheld Device Markup Language. 15 Informix. 157. Rob. 166 IBM/Motorola. 64. 15. 137. 136 Instinct. 92 Honda. 214–18 Graser. 135 JVC. 60 Internet. 170. 82. 86. 152–3 273 H Hamel. 45. 227 PC. 137. 162 HDTP. 143. 135 Incumbent strategies. Ken. 225. 88 I iBaby. 162 Hewlet-Packard. 138 HMOs. 60 Knology. 156. 152 I-Beam. David J. 257. 157 . 256 Home Depot. Gary. 76. 90. 49. 155 International Copper Association (ICA). 41. 80 Kimberly Clark.Index Granular segmentation of Cost. 134. 83. 144 Industry. 79. 162 Harvard Business School. 151. 166 InterNAP. 102 Hitachi. 159 IP Backbone. 39. 159 IBM. 262 Information Technology (IT) Role. 84. 164 HTML. 85. 153 Intervu. 29. 162 HTTP. 249 Access. 85. 147 Innovation.. 27 Hax. 172 Iverson. 152 K Kilonback. 45. 158 Cable & Wireless. 159 Kodak. 146. 96 Intel. 56. 35. 204–11 of Proﬁt. 168 Infoseek. 81. 184 Source of. 143–74 Initial Public Offers (IPOs). 142. 80 Grove. 159. 259 KPNQwest. see HTML Hypertext Transmission Protocol.D. 165 Komatsu. 259 Horizontal breadth. 103. 148. 154.. 69–75. 53 iVillage. 137. 136. 164–74 Industry structure. Heather. 155. 64. Andy. 138. see HDTP Handspring. 155 UUNet. 167 Hindustan Lever. 50. 89. 39 Hold-up. 19.
29. 96. 136. 261 Statements.R. 83–88. 163 Market-to-Book ratio (M/B). 41. 50 New York Times. 66 Licklider. 93 Marbles. 178–87 as a Source of learning. 233 Lean manufacturing. 72. 146 Windows. 163. 51–6. 13. 155 Massachusetts Institute of Technology (MIT). 136. 127 Network Access Points (NAPs). 150 LDDS. 138 Netscape. 35. 191 MasterCard. 171 MIPS. Barry J. J. 69. 10. 73. 109–12. 135.274 Index L Land’s End. 72 MFS. 127. 166 Microsoft. 234 Nike. 90. 32. 42. 30. 134. 154–5 Networked economy. 131 Noyce. 104 NASA. 66 Merck. see LDDS Low Cost. 222 New economy. 242 Media One. 35. 268 Mapress. 153 NetWare. 159 Long Distance Discount Service. 138. Y. 46. 126.. 48. 84. 157 Network Infrastructure. 238. 14 Market value added (MVA). 72 MGS. Nicolas S.C. 96 National Starch (NSI). 85 NPR. 42. 175–8. 45 Merrill Lynch. 48. 144. 131 Local Exchange Companies. 163 DOS. 30. 127. 192 Northpoint. 39. 77 Nokia. 82. 166 Explorer. 64. 92. 167 Mission. 147 NEC. 161. 70 McDonald’s. 28 Moore. 40. 76. 160. 105. 30. 250 PowerPC chip. 12. 218 McCaw. 85 Moore’s Law. 137. 69 Mindspring. 137 MBNA. 92 Local Area Networks (LANs). 260 NASDAQ. 104 M Majluf. 40. 17. 36. Gordon. 70–4. 168 Semiconductor. 64 MCI WorldCom. 161. 28. 164. Bob. 105–19 Mylonadis. 34. 36. 164 Metrics. 263 NBC. 82. 154 Mercedes. 37. 127. 142. 14 Martha Stewart Living. 110 Monopolistic rents. 97.. 143 Lindsay. 72 N Nalebuff. 98. 138. 141 Leap. Robert. 96 NGC-Chevron/Electric Clearinghouse. 127 System. 39. 241. 48. 13. 85. 177–8 Metromedia. 147 Nextel. 161 Lexus. 39. 12. 90 . 159 MediaMetrix. 50. 155. 64... 163 Nonlinearity. 85 Motorola. 26. 162 Microstrategy. 265 and the Delta Model. 144. 233. 159 Novell.
E. 197–8 Metrics. 128 Product offerings. 18. 117 Indicators. 112. 64. 51. 168. 162. 135 Operational effectiveness. 150 Proctor & Gamble (P&G).. 101 Performance. 133. 42–4. 42–4. 42. 233–4. 214–18 Variability. 195 De-averaging. 19. 21. 263 Competitive Positioning Framework. 136. 49. 153 ParentWatch.com. 251–8 Q Qualcom. 161 Palm OS. 164 Public Utility Commissions. 160 RCN. 112. 92 275 O Office. 138. C. 127. 78 Palm. 39. 85. 153 Parents’ Place. Patrick. 14 Product market share. 41. 138. 82. 161 Parcel Plus. 195. 111. 161. 49 Pentiums. 163 Open platform. 33. 12. xiii. 230. 163 Palm. 37. 157 R RAID.com. 37.Index NSFNet. 32. 87.. 168. 161 Quest. 28. 69. Michael. 95 Parent Soup.. 162. 159 Real Networks. 169 Orange.. 211 Oracle. 166 Industry. 35 Omnisky. 255 Phone. 257. 162. 163 Organizational structure. 227 Pepsi-Cola. 17 Reengineering. 161 Nucor. 242–5 Peteraf. 151. 50 Olson. 82. 134 Product-centric mindset. 155. 251–4. 90. 215 Proﬁt drivers. 90 Proprietary standards. 156. John S. 83–93. 152. 184. 136. 15 Product share. 78. 237 Purdy. 127. 82. 69 Products Family of. 99. 122. 29. 116 P Pack Online. 27. 155. 79. Margaret A. 42–7 Power brokers. 98. 51–4. 238 Prahalad. 124–7. 214–17 Progressive Networks. 42. 128. 268 Pratt & Whitney. 214–18 Granular segmentation of. 49. 161. 39. 134 Porter. 153–4 Patents. 149. 129. 155. 137 . 38–9. 137. 49. 162 Platform. 21 Research & Development (R&D). 134. 92. 82. 141 Renewal drivers. 137 PDA. 133. 135 Proﬁt Behavior. 34. 132 Priceline. 149 Old economy. 131. 253 Reinterpreting. 143 NTT DoCoMo. 163 Penrose. 91 Reduced Instruction Set Computing. Ken. see RISC Reed. 38 PC.net. xiii. 42. 80 Preux. 39 PeopleSoft.K. 141 Porter’s Five Forces Model.
161 Standard. 81. 151 Strategic thrusts. 125 System Lock-In. 201 System platform. 43 Sun Microsystems. 15. 163. 47. 130. 141 SPARC. 148. 57 Sotheby’s. 149. 151. R. 64–7 SBC. 28. 166 Steere. 51. 82. 73. 28.276 Index Resource-Based View. 29. 104 Royal Crown. 118 Sperry Rand. 22. 98–102. 237–8. 64. 164. 196. 37 Scheinkman. 162 Sony Wega. 104 Stephens. 112–18. 264 Restricted Access. 40. 105. 10. 183. Patricia. 219 Singapore Post. 49 RISC. 113 Process of deﬁning.. 223 Sellers. 88. 127. 125. 103 Strategic agenda. 254–8. 263–4 Component of. 226 Sports Illustrated. David. 120–42 Linking with execution. 251. 30–42. 168. 40. 256 SMS Corporation. 129. 27. 245–6. 138 ServCo. 81–104. 117 Strategy Aligning with execution. 161 Seven-Up. 222. 106. 29–42 Strategic positioning. 98 Scient. 133. 15 SureTrade. 136–9. 167 Rolls-Royce. 167. 146 Sprint. 161. 120. 40. xiii. 165. 114. 150. 133. 96. 230. 233 Service companies. 34 System architecture. 177 Substitutes. 64 Strategy execution. 167 Suppliers. 17. 104 Semiconductor industry. 9–17. 53 Software industry. 112. 157. 245–6 724 Solutions. 141. 224 Schwab. 178–91 Slack. 98 Ruiz. Dan. 98 Siemens. 41. 119 Strategic Business Units (SBUs). Tom. 55–6. 51. 21. 126–7. 171 Schweppes. 167 T Targeted customer. Jose. 227 Sony. 29 Ricardo. 128 . 51. 43 Supply chain. 166. 159 Restructuring. 11. 134. 169 Southwest Airlines. 153. 120–42 Strategy. 141 Reuters. 60 Signet Bank. 106 Strategic focus. 51. 165 Switching costs. 139 For one vertical market. 120–42 Stretch. 170. 149. 147. 82. 150. 34. Hector. 57. 160 Ricardian rents. 169 Saturn. 15 Strategic options. 56. 256 Sustaining technologies. 55. 169 Self-organization. 227 Sapient. 38–9 Stanford University. 233. 179. 135 System infrastructure.com. 156. 163 Rhythm. 159. 80 Rosenbloom. 150 Sustainability. 14. 137 S SAP.
37. 64. 179. 15. 96. 252. 201. 230. 120. 10. 150 Visa.. 102–3. 139. 42. 126. 262 Time Warner Cable. 159. 135 Unilever de México. 134. 170. 125. 78 USAA. 63–80. 105. 11. 30. 214–17 Drivers of. 200. 130. 21. 82. 155 277 V Value-added resellers (VARs). 181. 196. 127. 177 Walton. 141. Jack. 162 Verizon. 45. 30. 157. 155. 70.S. 143 US Internetworking. 160 Telecommunications. 225. 14. 97. 166 UNIX. 30–42. 95 Transmission companies. 103 Unique competencies. 49 Williams Telecommunications. 211–14. 69 U. 172. 14–17 Wireless positioning. 262 Integrated. 142. 131 Value chain. 144 Triangle. 9–17. 13–14 Variability Act from. 171 . 131. 82. 79 Wernerfelt. 140. 144 Web browser. 151 VHS. 182–4 Task-driven metrics emerging from the business strategic agenda. see Transport Control Protocol/Internet Protocol Telocity. 65 Tradesafe. 198–200. 62. 55. 64. Eric. 171. 211–14. 174. 64. 82. 258–60 Broadband positioning. 148. 72 Windows. 214–17 Learn from. 201. 44. 161 Utterback. 83 U Unilever. Industry. 136. 167. 226 University of California at Berkeley. 12 Winstar. 155. 110. 72. 146 Welch. 159. 151–4 Strategic positions for. Defense Department. 101 Wang. 101. 197 Explain. 51. 155 Total Customer Solutions. 137. 16. 133. 163 Vertical Market. 157. 129. 138. 17–49. 64. 236–7 Transport Control Protocol/ Internet Protocol (TCP/IP). 160 WilTel.Index Task-driven metrics emerging from the adaptive processes. James N. 145. 82 WalMart. 232. 98. 109. 254. 217–18 Detect. 51. 159 TCP/IP. 76. 168 U. Sam. 174 UUNet. 83. 181–2 TCI. 142. 68 Wall Street Journal Interactive (WSJI). 164 IP Backbone. 144 10X force. 164. 153. 255 Univac. 155 Various dimensions of. 201 Toyota. 134. 135. 46 Value creation. 130. 217–18 VCRs. 125. 128.. 136 vPOST. 149 Wintel. 160. 133. 72. 137 Von Hippel. 149. 253. 180–1 W Wall Street Journal (WSJ). 68 Walls. B.S. 226 Washington Post. 88 Victoria’s Secret.
39. 161 Wireless Markup Language (WML). 155 Yellow Pages. 162 Woodford. 224 World Wide Web. 57. 94. 147 . 130 X Xerox. 64. 95. 78. 137. 259 Y Yahoo.278 Index Wireless Application Protocol (WAP). 95. 153. 93. 162 Wireless Infrastructure. 38. 161–4 Positioning in Triangle. 82. Michael. 75. 12. 143 WorldNet. 147. 222. 149.
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