What Business are You Really In? Competitive Strategy for Business Leaders

praxent.comtim@praxent.com@PraxentSoftware
I can’t tell you the key to
success, but the key to
failure is trying to please
everyone
-Ed Sheeran
“

Tim Hamilton
Introduction
Company
Digital product & platform
development
Founded in 2000
Ofﬁces in Austin, TX
Tradition: Formal Fridays
Background
Born in South Africa
Wife: Christy
Son: Graham
Studied Economics &
MIS at UT Austin

Colonel John Boyd
Military Strategist
Invented OODA Loop

“When our circumstances change, we
often fail to shift our perspective and
instead continue to try to see the world
as we feel it should be.”
– The Tao of Boyd: How to Master the OODA Loop
OBSERV ORIEN DECID ACT

Google Self-Driving Car

OBSERVE ORIENT DECIDE ACT
What
business
are you
really in?

“Strategy is not a lengthy
action plan. It is the evolution
of a central idea through
continually changing
circumstances.”
Jack Welch

What’s your customers’
hair on >ire problem?

Spam
blockers
CAN-SPAM
Act
Tivo
Netﬂi
x
Pay-
per-
view
Pop-up
blocker
s
Non-
solicit
call
lists
Sirius/
XM
Radio

The most important
person in strategy is…
the customer.

Before… After…

1Research from IAG Consulting.
2The Standish Group International Inc. 2002.
64% of software features
are never or rarely used2
and…
68% of enterprise
software projects
fail1

AHA! We’re not in the
software development
business. We’re in the
software certainty
business.
…what business are you
in?
Hint:It’s about
difference&relevance

Who, therefore are
we selling to?

Pick
Your
Mental
Model

“What is
Strategy”
–Michael Porter

We have
confused
operational
effectiveness
for strategy.
Operational
effectiveness
Strategy

Total Quality
Management
Six
Sigma
ProductivitySupply Chain
Management
Objectives Based
Management
Just-In-Time
Inventory
Lean
Operational
effectiveness

Operational effectiveness is
about being better.
Strategy is about
being different.
vs
Sustainable
advantage
“Strategy is the creation of a unique and valuable position,
involving a different set of activities.”

Variety-based Needs-based Access-based
Model: Strategic Positioning
– Michael Porter, Havard Business Review
Performing different activities from rivals, or
performing similar activities in different ways.

Serving few needs
of many customers.
…a choice of product or service
varieties rather than customer
segments.
Variety-based

Variety-based
…does not rely on any
customer differences.

Serving broad needs
of a few customers.
…some groups of customers need
different amounts of info, support,
and services…and have different
price sensitivity.
Needs-based

Luxurious
show-room?
No
Best-in-class
quality?
No
Helpful
sales staff?
No

Bessemer Trust
Co.
Citibank
Minimum $5M $250K
Clients :
Advisors
3:1 125:1
Meetings On yacht / ranch In bank
Advisor-focus
O&G, aircraft,
racehorses
Loans
Needs-based

…they picked a different who.
Needs-based

Serving broad needs of
many customers in a
narrow market.
Hint: The key here is about
access to that market.
Access-based

Access could mean: geography,
customer scale or anything else that
requires you to reach that customer in
a different way.
Access-based

…like variety-based,
doesn’t rely on
differences between
customers.
Access-based

Unique subset of
services / products.
Speciﬁc group with
unique needs.
Exploit access to
unique markets.
Recall: Strategy is
about difference.
Variety-based Needs-based Access-based

Notice they all center
around customer needs.

Jobs to be Done
–Clay Christensen

“Strategy is just a matter of picking
what problems you want to work on
in the future…success simply means
you get better problems.”
- Ari Weinzweig, Zingerman’s Deli

Organizational
Psychologist and
author of The
Hierarchy of Needs.

Founder & CEO, Joie De Vivre Hospitality. Modiﬁed
Maslow’s model of human psychology for use at Joie
De Vivre and authored a book about it called “Peak.”
Chip Conley

3 Maslow Pyramids in
Every Business
Customers
Employees Investors

Customer Pyramid
Creates customer
satisfaction
Creates customer
commitment
Creates customer
evangelismMeets customer’s
unrecognized needs
Meets customer’s
desires
Meets customer’s
expectations

Employee Pyramid
Creates
employee base
motivation
Creates
employee loyalty
Creates employee
inspiration
The work I do is
meaningful beyond proﬁt.
I value being recognized
for my contributions to
my company.
I feel that I am fairly
compensated for
the value that I
produce.

Investor Pyramid
Transaction
alignment creates
trust
Relationship
alignment creates
conﬁdence
Leaving a legacy
creates pride of
ownershipI’m proud to be contributing to a
purpose that matters - making an
important difference in the
market.
I am aligned with the values and
approach of the company and enjoy
my relationship with the management
team.
My investment makes
an acceptable return.

The Discipline of
Market Leaders
No company can succeed
today by trying to be all things
to all people.
Choose your customers &
narrow your focus.
We must instead ﬁnd an
uncommon value that to deliver
to a chosen market.

Build & manage systems
and facilities for high
volume repetitive
tasks.
ID, attract and build
relationships with customers.
Conceive of attractive
new products & services
and commercialize
them.
Product
Innovation
Operational
Excellence
Customer
Intimacy

Focus: invention, product development,
and market exploitation
Product Leadership
Innovation
Knowledge-
Management 
Collaboration
• Providing products / services that
continually redeﬁne the state of the art.
• Kill their babies.
• Key core competencies are innovation
and quality control.
• Strive to be the best.
• R&D & talent management.

• Total solution, not just a product or
service.
• Focus on what the customer wants, not
what the market wants.
• Cultivate relationships, not one time
transactions.
• Specialize in satisfying unique needs.
• Customer needs trump operating
systems and processes.
• Go the extra mile.
Customer Intimacy
Focus: total solution development, results
management and relationship management
Relationship
Management
Knowledge
Management

• Low cost offer (blend of high convenience
and low price).
• Broad market focus.
• Not product / service innovator; instead
delivery innovators.
• Do not cultivate 1:1 customer relationships.
• Execute extraordinarily well.
Operational Excellence
Focus: product supply and basic service,
streamlined to minimize cost and provide hassle-
free service.
Quality
Cost
Speed

While productivity is a goal, originality
and quality are the goals.
Creative
interactions
Quality
management
Retaining & hiring the
best
Knowledge
management
Push decisions down to the
lab
Employee
centered
Product Leadership Example

Best price? Hardly.
Best products? Nope.
Latest technology? Negative?
Customer Intimacy Example

It’s all about the total solution and
the customer relationship.
Security
monitoring
System
maintenance
Cost
managementMobile strategy Maintenance &
support
Network management Redundanc
y
Planning new
apps.
Customer Intimacy Example

Cultivate 1-on-1 relationships? Negative?
Low cost, most convenient offer? Deﬁnitely.
Product innovator? Nope.
Delivery innovator? Heck yeah!
Key competency? Capital allocation & execution
Operational Excellence Example

What business you’re in has
nothing to do with you!

A Case Study

Democratize the skies!
They picked the 85%.
3LF’s:
Low Fares.
Lots of ﬂights.
Lots of Fun.
Needs-based

They made trade-off decisions…
no meals unassigned
seats
no interline baggage
checking
no ﬁrst or business-
class service
only offers direct
booking
only 737’s
no booking
software
Short-haul ﬂights only

But a strategic position is not
sustainable unless there are trade-
offs with other positions.
Trade-offs occur when activities
are in-compatible.

What makes strategy so hard?
Straddler’s Dilemma

You can say no when you
have a really powerful yes.
–Unknown
“

Thank you
http://bit.ly/1QK7Qag
tim@praxent.com

What Business are You Really In? Competitive Strategy for Business Leaders

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What Business are You Really In? Competitive Strategy for Business Leaders