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The Delta Model

Reinventing Your Business Strategy

Arnoldo C. Hax

Publisher: Springer-Verlag, 2010 , 235 pages

ISBN: 978-1-4419-1479-8

Keywords: Strategy

Synopsis:

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Strategy is the most central issue in management. It has to do with defining the purpose of an organization, understanding the market in which it operates and the capabilities the firm possesses, and putting together a winning plan. There are many influential frameworks to help managers undertake a systematic reflection on this issue. The most dominant approaches are Michael Porter’s "Competitive Strategy" and the "Resource-Based View of the Firm," popularized by Gary Hamel and C.K. Prahalad. Arnoldo Hax argues there are fundamental drawbacks in the underlying hypotheses of these approaches in that they define strategy as a way to achieve sustainable competitive advantage. This line of thinking could be extremely dangerous because it puts the competitor at the center and therefore anchors you in the past, establishes success as a way of beating your competitors, and this obsession often leads toward imitation and congruency. The result is commoditization - which is the worst outcome that could possibly happen to a business.

The Delta Model is an extremely innovative view of strategy. It abandons all of these assumptions and instead puts the customer at the center. By doing that it allows us to be truly creative, separating ourselves from the herd in pursuit of a unique and differentiated customer value proposition. Many years of intense research at MIT, supported by an extensive consulting practice, have resulted in development of powerful new concepts and practical tools to guide organizational leaders into a completely different way of looking at strategy, including a new way of doing customer segmentation and examining the competencies of the firm, with an emphasis on using the extended enterprise as a primary way of serving the customer. This last concept means that we cannot play the game alone; that we need to establish a network among suppliers, the firm, the customers, and complementors — firms that are in the business of developing products and services that enhance our own offering to the customer. Illustrated through dozens of examples, and discussion of application to small and medium-sized businesses and not-for-profits, the Delta Model will help readers in all types of organizations break out of old patterns of behavior and achieve strategic flexibility — an especially timely talent during times of crisis, intense competition, and rapid change.

Table of Contents:

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  1. The Need for Reinventing Strategy
    • The Dangers of the Conventional Definition of Strategy — Strategy as Rivalry
    • Reject Commoditization — The Essence of Strategy Is to Achieve Customer Bonding
    • Managing in the Large and in the Small — The Extended Enterprise and the Individualized Customer
    • The Selection of a Strategy and the Identification of the Required Competencies — A Preview of the Delta Model
    • The Strategic Tasks of the Delta Model
      • Task 1 Customer Segmentation and Customer Value Proposition (Chapter 3)
      • Task 2 The Existing and Desired Competencies of the Firm (Chapter 4)
      • Task 3 The Mission of the Business (Chapter 5)
      • Task 4 The Strategic Agenda (Chapter 6)
      • Task 5 Monitoring the Strategy Execution (Chapter 7)
    • The Haxioms
  2. The Delta Model: Creating New Sources of Growth and Profitability in a Networked Economy
    • How to Achieve Customer Bonding: The Three Major Strategic Options in the Delta Model
    • Best Product
      • Strategic Positions of the Best Product Option
    • Total Customer Solution
      • Redefining the Customer Experience
    • System Lock-In
      • Three Ways to Get System Lock-In
    • The Various Dimensions of the Triangle: A Summary
  3. Customer Segmentation and Customer Value Proposition: The First Critical Task of Strategy
    • Behind the Customer Segmentation Process
      • Who Is the Customer?
      • Why Are Customers Different?
    • The Generic Dimensions of Segmentation
    • Segmentation According to Attitudes and the Willingness to Do Business with Us
      • The Case of Castrol
      • Reflections on Segmentation Based on Customer Attitudes
      • Segmentation According to Different Degrees of Value Added
      • The Case of the Waste Management Company
      • Reflections on Segmentation Based on Different Degrees of Value Added
    • Segmentation According to Customer Life Cycle
      • The Case of the Investment Retail Company (IRC)
      • Reflection on the Segmentation Based on Customer Life Cycle
    • Segmentation According to Varying Buying Patterns
      • The Case of Singapore Airlines
      • Reflections on Segmentation Based on Varying Buying Patterns
    • Segmentation According to Alignment with the Distribution Channel
      • The Case of Unilever Food Services
      • Reflections on Segmentation According to Alignment with Distribution Channel
    • Some Pitfalls from Conventional Customer Segmentation
      • The Mobile Phone Business ‐ The Case of Singapore Telecommunications (SingTel)
      • The Mobile Phone Business — The Case of Telefónica Móviles de Colombia
      • Corporate Banking — The Case of Bank of Tokyo-Mitsubishi
      • The Steel Business — The Case of Termium
    • The Test of the Quality of the Customer Value Proposition
      • Who Is the Most Attractive Customer?
      • The Need for a Customer Database
    • Notes
  4. The Firm as a Bundle of Competencies: Understanding the Depth and the Breadth of Our Capabilities
    • Identifying the Bundle of Competencies in Practice
    • Investment Retail Company as a Bundle of Competencies
      • Singapore Airlines as a Bundle of Competencies
    • Delta Model and Competitiveness: A New Approach to Competitor Analysis
    • Sony Video Conferencing: An Analysis of Its Competencies A Comparison of Polycom and Sony Video Conferencing: A Contrast of Competencies
    • Using the Delta Model to Assess the Merits of Possible Mergers and Acquisitions — The Case of Cognos and IBM
    • Lessons from the Delta Model
    • Notes
  5. The Mission of the Business: Capturing the Strategic Transformation
    • Strategy Means Change
    • The Mission of the Business
      • Planning Horizon
      • The Description of the Changes in the Business Scope
      • The Mission Statement
    • Strategic Transformation: What Others Have Done
      • The Case of the Chemical Coatings Company
    • Mission Statement of the Chemical Coatings Company
      • The Mission Statement
      • Statement of Products Scope and Services Scope
      • Statement of Customer Scope
      • Statement of End-User Scope
      • Statement of Distributor Scope
      • Statement of Complementor Scope
      • Statement of Geographical Scope
      • Statement of Unique Competencies Scope
    • The Case of Singapore Airlines
      • The Mission Statement
      • Statement of Product Scope
      • Statement of Services Scope
      • Statement of Customer Scope
      • Statement of Complementor Scope
      • Statement of Geographical Scope
      • Statement of Unique Competencies
    • Notes
  6. The Development of the Strategic Agenda: A Call to Action
    • The Identification of the Strategic Thrusts
    • The Components of the Strategic Agenda
      • Strategic Thrusts
      • Organizational Structure
      • Business Processes
      • Performance
      • Culture
    • The Strategic Agenda as the Integrator of Strategy, Structure, Process, Performance — The Case of Chemical Coatings Company
      • Identifying the Priorities of the Strategic Thrusts
      • Test for the Quality of the Strategic Agenda
    • The Case of Singapore Airlines
      • Strategic Challenges and Opportunities
    • Conclusion
  7. Monitoring the Strategy Execution
    • The Intelligent Budget — A Requirement for Proper Strategic Execution
    • The Balanced Scorecard
      • Strategy at the Center of the Balanced Scorecard
      • The Delta Model and the Balanced Scorecard
      • The Delta Model and the Adaptive Process
      • The Adaptive Processes and Aggregate Metrics
      • The Balanced Scorecard of the Chemical Coatings Company
    • Value Creation by Each Strategic Option: Empirical Evidence
    • Notes
  8. Putting It All Together: How to Integrate the Critical Tasks of Strategy — An Illustration
    • The Case of DMK International
      • Customer Segmentation and Customer Value Proposition of DMK
      • The Firm as a Bundle of Competencies
      • The Challenges from the Existing and Desired Bundle of Competencies
      • The Mission of DMK
      • Challenges from Changes in the Mission of DMK
      • The Strategic Agenda
      • The Intelligent Budget and the Balanced Scorecards
    • Notes
  9. Managing Small- and Medium-Sized Enterprises (SMEs) — Lessons from the Delta Model
    • The Importance of SMEs
    • The Challenges of Managing SMEs
    • The Best Product Strategy
      • The Low-Cost Positioning
      • The Differentiation Strategy
    • The Total Customer Solutions Strategy
      • Redefining the Customer Experience
      • Customer Integration
      • Horizontal Breadth
    • The System Lock-In Strategy
      • Restricted Access
      • Dominant Exchange
      • Proprietary Standard
    • Final Comments
  10. The Challenges of Managing Not-for-Profit Organizations
    • Who Is the Customer?
    • Which are the Competencies?
    • Reflecting on the Strategic Challenges of the Not-for-Profit Organization
    • Best Product Strategy
      • Administrative Efficiency
      • Differentiation
    • The Total Customer Solutions Strategy
      • Attraction and Development of the Customer
      • Knowledge Transfer
      • Total Breadth of the Offering
    • System Lock-In Strategy
      • Channels of Delivery
      • System Support
      • Intellectual Value
    • The Unconventional Dynamics of Evolution of the Not-for-Profit Organizations
    • The Case of Singapore Economic Development Board — An Application of the Delta Model to a Not-for-Profit Organization
      • Customer Segmentation
      • EDB’s Existing and Desired Competencies
      • EDB’s Mission
      • EDB’s Strategic Agenda
      • Monitoring the Strategy Execution
      • The EDB Culture
    • Conclusion
    • Notes
  11. A Comparison Among the Three Strategic Frameworks: Porter, the Resource-Based View of the Firm, and the Delta Model
    • Porter’s Competitive Positioning Framework
    • Low Cost or Differentiation — Michael Porter’s Only Two Strategic Options
      • Porter’s Winning Formula
    • The Resource-Based View of the Firm
      • Unique Competencies
      • Sustainability
      • Appropriability
      • Opportunism and Timing
    • Core Competencies and the Resource-Based View of the Firm
    • The Resource-Based View of the Firm’s Winning Formula
    • A Practical Framework of the Application of the Resource-Based View of the Firm
    • Some Caveats to the Resource-Based View of the Firm
    • Comparisons Among Porter, the Resource-Based View of the Firm, and the Delta Model Frameworks
    • Reinterpreting Porter’s Five-Forces Model Through the Delta Model: Thinking Out of the Box
      • Search for the 10X Force
      • Generate Barriers Around Your Customers
      • Your Competitors Are Not the Relevant Benchmarks
      • Develop and Nurture the Intrated Value Chain
      • Add a New Player; the Complementors
      • Fragmented Industries Offer Big Opportunities
    • Notes

Reviews:

The Delta Model

by Roland Buresund last modified 2012-03-27 19:41

Rating: **** (Mediocre)

I thought maybe this would be a more strict and down-to-earth description of the Delta Model/Project. I was sorely mistaken. It is more academic in outlook, but never manages to lift-off. The only interesting parts are the comparisions and critiques of the Porter and Hamel/Prahalad world-views.

It is not really bad, but you wont miss anything by not reading it, and you may miss something by spending time on it.


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