Balanced

Scorecard
Strategic choices and capabilities

Shirley Villanes, Systems Engineer, MBA, IT Director Master, PMP

Session 3
 Who is the
customer?

WHAT IS THE MOST VALUABLE

FOR CUSTOMERS?
First, we must IDENTIFY SOMETHING THAT
CUSTOMERS TRULY NEED.

Then, find the real benefits customers

are looking for.
Second, WE MUST VALIDATE which are our
CAPABILITIES to accomplish it.

In order to bring a product or service that provides a

real value for customers.
“People don’t want a quarter-inch
drill, they want to buy a quarter-
inch hole”
Theodore Levitt, 1962
 1
Understand 3
the customer
Competitive
advantage
(How to win) 4
2 Linking the
Value capabilities to
proposition strategy
(How to win?)
 Understand the
customer
Session 1
HOW TO IDENTIFY
WHAT CUSTOMERS
TRULY NEED?
 Positive outcomes
that customers want
to achieve

Jobs that
Gains customers are
Customer Jobs to be
trying to get
CUSTOME done
profiling R done

Pains Functional
Negative outcomes Emotional
that customers want Social
to avoid
 Gain Increase or
creators maximize
benefits that
customer
Value Products expects
and VALUE
mapping services
MAP

Pain Release or
relievers minimize
customer pains
Create products and services Supported on a value proposition
that customers want that make sense to customers

FIT
The elements
of value
pyramid
Products and services deliver
fundamental elements of value that
address different needs.

The more elements provided, the

greater customers' loyalty and the
higher the company's sustained
revenue growth
OFFER CUSTOMERS WHAT REALLY
NEED!

Offering Customer profile

Notes:
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 Value proposition
(How to win)
Session 2
HOW CAN WE COMMUNICATE
AND ENGAGE CUSTOMERS
WITH OUR OFFERING?
A value proposition is a PROMISE OF VALUE to be delivered,
communicated, and acknowledged. It is also a belief from
the customer about how value (benefit) will be delivered,
experienced and acquired.

"Strategy is based on a differentiated customer value proposition. Satisfying

customers is the source of sustainable value creation.“
Kaplan and Norton
Value proposition
Unique mix of products,
It results from the
services, benefits, offered to
strategic analysis
customers, which make the (result of external
difference in the market. analysis)

It is the reason given to the

customer to buy and consume
the offered product or service.
PROMISE
Some value propositions…
“Friendliness, “The ultimate driving “Warmth and excellent
cleanliness, machine" customer service.
consistency, and Personalized attention,
convenience” Assortment of
Products. Online
attention”
 Competitive
advantage
(How to win)
Session 3
WHAT ARE THE CAPABILITIES
REQUIRED TO PROVIDE THE
VALUE PROPOSITION?
Required capabilities
depend on the
COMPETITIVE Product leadership
(the best product)
STRATEGY that
value proposition is
related to
Customer intimacy
Cost leadership
(the best service or
(the lowest cost)
solution)
COST LEADERSHIP PRODUCT CUSTOMER
LEADERSHIP INTIMACY
Doing things well
No waste Creativity, ability to commercialize Service tailored, personalized
No rework innovative ideas very quickly, Advice
Process excellence continuously seek new solutions. Development of solutions.
 COST LEADERSHIP PRODUCT CUSTOMER
LEADERSHIP INTIMACY
“McDonalds stands for “The ultimate driving “Warmth and excellent customer
friendliness, cleanliness, machine" service. Personalized attention
consistency, and convenience” Assortment of Products. Online
attention”

 The company is engaged in an  Representation of status and  Organizational culture.

extensive utilization of economies of achievement.  Strong brand.
scale to achieve the cost advantage.  Effective design and features
 The company is famous for the speed integrated to each model of the brand.
of customer service without  Competitive post-sales service.
compromising the quality of the
service.
 Product tastes almost all over the
world due to the use of the same
ingredients in the same quantities and
application of the standardized ways
of cooking around the globe.
 Competitive
advantage

Thus, we must have

specific strong
Lower cost Differentiation
capacities to compete advantage advantage

without
disadvantages
The best
The best
customer
features and
intimacy service
functionalities
or solution
WHAT DOES MEAN
COMPETITIVE ADVANTAGE?
 A COMPETITIVE ADVANTAGE is
WHAT MAKES AN ENTITY'S GOODS
OR SERVICES SUPERIOR to all of a
customer's other choices.

this approach works fine for any organization, country, or

individual in a competitive environment.
Competitive advantage model
DISTINCTIVE
RESOURCES CAPACITIES
CAPABILITIES
 Customer database, full  Advanced Analytics  Deep customer knowledge
records Development  Timely understanding of
 Partnerships with social  Integration with external industry trends
networks platforms
 Financial capability  Faster delivery
 Good reputation  Data based culture
 Big Data platform
 Experienced data scientists VALUE
PROCESSES
DIFFICULT TO
INPUT IMITATE
PEOPLE
 Why capabilities-driven
strategy works?

Source: Strategic&
Remember,
customers do not Customers buy products or
necessarily buy a services that satisfies their
competitive need or gives them value...
advantage so we HAVE to work in a
strategy to achieve it!
Examples
 IKEA
Distinctive capabilities
IS THE WORLD’S o Deep understanding of how customers live at home
LEADING FURNISHING o Price conscious and stylish product design
o Efficient, scalable, and sustainable operations
BRAND. o Customer-focused retail design

Functional and stylish home

furnishing at very low prices
with a high level of customer
engagement.
 STARBUCKS
HAS ONE OF WORLD’S
MOST ICONIC BRAND
AND IS KNOWN FOR THE
AMBIENCE IN ITS RETAIL
STORES.
Distinctive capabilities
o Stewardship of a globally available consumer experience
o Distinctive delivery of product and service
o Design and development of a premium product line
o Recruiting and managing a cadre of dedicated employees

The “third place” for

conviviality – a center for
human activity after home and
work
 APPLE
HAS CONSISTENTLY
RANKED AS THE MOST
WORLD’S INNOVATIVE
COMPANY.
Distinctive capabilities
o Consumer insight
o Intuitively accessible design
o Technological integration
o Breakthrough integration

Hub of a single digital system

that enable customers to easily
manage media production,
consumption and
communication
 AMAZON
Distinctive capabilities
IS THE WORLD’S o Retail interface design
LARGEST ONLINE o Back-end supply chain management
o Rapid and effective online merchandising
RETAILER. o Customer-relationship management
o Advanced technological innovation
Seemingly endless variety of
products and services in a
one-stop online shopping
experience
LET’S DEVELOP THE STRATEGY!

Competitive Competitive
Value proposition
strategy advantages

Notes:
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 Linking the
capabilities to
strategy
Session 4
 Define the
STRATEGIC CORPORATE GOALS 1 strategic
corporate
goals

STRATEGIC CHOICES 2
Define the strategic
choices

Determine the
3 capabilities system
to support the
CAPABILITIES SYSTEM strategic choices
Strategic choices
STRATEGIC CHOICES is about the intersections of two
critical dimensions: “where to play” and “how to win”

MARKET BOUNDARIES COMPETITIVE FACTORS

(WHERE TO PLAY) (HOW TO WIN)

WHERE TO PLAY HOW TO WIN

Geography, customer segments, channel, A distinctive way to win (less
product categories, stages of production structural, not categorical)

SECTOR / INDUSTRY, VALUE PROPOSITION

SEGMENT More than CRITICAL SUCCESS FACTORS
Strategic choices
MARKET BOUNDARIES COMPETITIVE FACTORS
(WHERE TO PLAY) (HOW TO WIN)

 Improving market targeting  Improving customer products & processes

 Creating new markets  focusing on customer experience
 Extending the market integration  Extending the transaction control
 Focusing on customer convenience  Leveraging unique advantages or complements
 Leveraging corporate resources  Creating disruption or new value

The mix of STRATEGIC CHOICES define a STRATEGIC POSITIONING

Each major product/service line of a company requires a specific strategic choice mix (MB+CF).
Because they may be different for each product service line.

Don’t forget Critical Success Factors and VUCA strategies to define Strategic Choices!
 STRATEGIC CORPORATE GOALS

STRATEGIC CHOICES

Capabilities that Capabilities that

Capabilities that
support the support the
support the
required CRITICAL SUCCESS
required VUCA
COMPETITIVE FACTORS CAPABILITIES SYSTEM
STRATEGIES required to support
ADVANTAGES fulfillment
the STRATEGIC
CHOICES
LET’S LINK THE CAPABILITIES TO
STRATEGY!

Corporate goals Strategic choices Capabilities system

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→ Create an account in Stormboard.
End of session!