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Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap

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APPENDIX C

Puretone Ways to Play

Since 2008, we have conducted an ongoing research effort to identify the value propositions of
companies around the world. This often involves deconstructing the ways to play of particular
companies: breaking down the value they provide to customers into common strategic archetypes. We
have identified fifteen of these puretone archetypes, as we call them. They are prevalent in
companies around the world. Most companies combine two or more of them into a more distinctive
strategy. You can use the puretones to identify another companys value proposition, or to design your
own.
To illustrate and clarify each puretone way to play, we have long used the examples listed here.
They are meant to demonstrate each concept with real-life, generally understood examples. Some
companies are listed under more than one puretone; their value proposition is bespoke to them, unlike
any other, all distinctive variations on the archetypal puretone themes. Nonetheless, in looking at the
list of examples, the essence of each value proposition may be easier to grasp.
Table C-1

Puretone ways to play


Puretone way
to play (value
proposition)

Definition

Examples of companies that


incorporate these puretones

Comments

Amazon

Aggregator

Apple (through its App Store and iTunes)


Provides the
convenience and W.W. Grainger Inc
simplicity of a
one-stop solution Any peer-to-peer e-commerce business,
where people exchange rooms, rides,
goods, or services

These companies pull together multiple


suppliers or sources under one common
experience.

Most of the supercompetitors described


in chapter 6
Coca-Cola
Maintains top
market share in a
Category leader
category and uses Danahers member companies
that position to
Frito-Lay
shape and
influence
Intel
downstream
channels and
LOral

These companies often develop mass


marketing capabilities that provide broad
market appeal, combined with a high level
of influence on both the value chain and
the retail channels of the entire category.

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upstream supply GE
markets, gaining
Pfizers consumer healthcare business in
leverage and
customer loyalty 2001 2006 (as described in this book)
Starbucks
Walmart

Consolidator

Dominates an
industry through
acquisitions
(rolling up an
industry) to
provide either a
value benefit to
consumers or
access to a
platform with
products and
services that
otherwise would
not be possible

Danaher
GE

Consolidators acquire rivals and offer


customers access, technology, or prices
Many tech companies that use acquisition that no smaller or less comprehensive
to build and maintain a platform, including company can provide.
Apple, Cisco Systems, Google, Microsoft,
and Oracle.

Burger King (with its have it your way


campaign)

Customizer

Companies that build electronics and


Leverages insight computer systems to order
and market
Frito-Lay (assortments tailored to the retail
intelligence to
stores)
offer tailored
products or
Most B2B software development
services
companies

The internet, with its interoperability,


automation of customer insight, global
reach, and lowered transaction costs, has
made it easier to succeed as a customizer.

Haier
Inditex
Helps customers
bypass
unreachable or
more expensive
distribution
channels and
Disintermediator parts of the value
chain, thereby
providing access
to otherwise
inaccessible
services and
products

NAPA Auto Parts (Genuine Parts


Company)
Priceline
3PLs (third-party logistics firms)

To deliver its way to play, a


disintermediator must provide enhanced
value for its customers, usually by cutting
costs or aggregating volume. For example,
the 3PLs provide on-demand
transportationin consumer packaged
goods, these firms can take over an entire
distribution chain, with capabilities they
deploy on behalf of all their clients.

Apple
Hotel chains with a design-based or
specialty value proposition

Unlike premium players, these businesses

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Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap

IKEA
Lego

Experience
provider

Builds enjoyment,
engagement, and
emotional
attachment
through strong
brands or
experiences

McDonalds
Sports car makers
Natura

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can be viable at all price segments. In


many US communities, for the price of a
Happy Meal, McDonalds provides the
most accessible and engaging indoor
playground available. Experience providers
can also include those manufacturers who
make the use or purchase of their product
feel like a noteworthy event.

Starbucks
Virgin Airlines and other Virgin companies
(Virgin Group)

Fast follower

Leverages
foundations laid Generic pharmaceutical manufacturers
by innovators to
quickly introduce Google (with Android)
competing
Hyundai
offerings, often at
greater value or to Chinese shan zhai (innovative knock-off
a broader base of manufacturers)
consumers

Many successful innovations (e.g., the


steamboat, electric power, television,
personal computer) were spread through
fast followers that successfully marketed
someone elses innovation.

Apple
Haier

Innovator

Introduces new
and creative
products or
services to the
market

Inditex
Leading-edge biotech companies
Procter & Gamble
Philips (Koninklijke Philips N.V.)

These are not just introducers of new


products or services, but companies whose
ongoing innovative capability enables them
to consistently win and hold customers.
There are many types of innovators, and
the most successful ways to play clearly
define the type of innovation and why it
distinguishes a particular company.

Salesforce.com
Under Armour
Electric power utilities
Lego
Microsoft (with Windows)

Platform
provider

New York Stock Exchange


Operates and
oversees a sharedFedEx
resource or
infrastructure
Conrail (CSX and Norfolk Southern
Railway)

These companies create a platform or


resource that others can share by doing
business with them. Whether they are
heavily regulated or not, they have an
implicit role as stewards of the resource
they manage.

Back-office transaction processors


Natural resource providers (oil, natural gas,
forest products, and mining companies)
Herman Miller
Offers high-end

Luxury automakers such as BMW

Customers pay for both status and


perceived value: customer service

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Strategy That Works: How Winning Companies Close the Strategy-to-Execution Gap

products or
Premium player services

Regulation
navigator

Nordstrom
Premium hotel chains such as Ritz-Carlton

Pfizers consumer healthcare business in


Offers access to
2001 2006 (as described in this book)
otherwise
unreachable
Health insurance companies
products and
services by
China National Off-Shore Oil Corporation
managing within (government owned)
government rules
and oversight, andIndustrial and Commercial Bank of China
(government owned)
by influencing
them
Some trading companies (Mitsui)

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(Nordstrom), artistry (Herman Miller),


performance (BMW).
These companies are viable in nations and
sectors where governments control or
regulate a large percentage of business
activity. The CEO of a Turkish company
once remarked that in a pre-deregulation
environment, it was important to operate in
many product lines, to have allies in
multiple ministries, because pleasing the
government was more important than
pleasing customers. These companies can
be vulnerable if regulation frameworks
change.

CostCo

Reputation
player

Financial services companies with


The reputational attribute is not necessarily
reputations for probity (which many have altruistic, but it is tied to a value other than
struggled to retain or rebuild since the mid- saving money. Volvos reputation for safety
As a trustworthy 2000s)
was arguably a compelling factor in its
provider, charges
2010 purchase by the Chinese company
Natura
a premium or
Geely Motors. This way to play can
gains privileged
backfire if a company lacks the capabilities
Pfizers consumer healthcare business in
access to
or attention to follow through and its
2001 2006 (as described in this book)
customers
reputation erodes (BP, Enron, Honda and
Toyota all experienced this), and it often
Tata
depends on close connection with a
dedicated, affiliated group of customers.
Seventh Generation
Volvo (Geely Automotive)
Commodity hedge funds

Risk absorber

Mitigates or pools
Risk absorbers enable others to extend
New hybrid health care providers-payers,
market risk for its
entrepreneurially or help them navigate
following the Kaiser Permanente model
customers
uncertainty.
Many insurance companies

Solutions
provider

Provides bundled Ahlstrom (Oyj)


CEMEX
products and
services that fully
Haier
address customer
needs
Lockheed Martin

This group is also known as integrators,


because the way to play depends on the
capability to fit together disparate
technologies and practices, including those
from customers.

IKEA
JetBlue

Value player

Offers lowest
McDonalds
prices or
tremendous value Ryanair
for comparable
Southwest Airlines
products and
services
Tata Motors (with the Nano)

Also known as low-cost producers,


successful value players have the
capabilities to sustain their position without
falling into a commoditization spiral of
price-based competition.

Walmart

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