THIRDGENERATION STRATEGY

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THIRD-GENERATION STRATEGY
Prof. Horst O. Bender, Ph.D. Rotterdam School of
Management Erasmus University (NL) THESEUS
Institute (F) hobender_at_B2B-MSI.com
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THE ESSENCE OF SUCCESS VALUE, COST AND SPEED
CUSTOMER
VALUE/ SPEED
VALUE/ SPEED
COST/ SPEED
COMPE- TITOR
COMPANY
DIFFERENTIAL ADVANTAGE ? VALUE ? COST ?
SPEED
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THE INTERNET TURBOCHARGES THE COMPETITITVE CYCLE
Globali
-
zation
Quality Value
INTERNET
Price
Innovation
Costs
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THE CUSTOMERS EXPECTATION- To receive perfect
quality products, - in the exact quantities
needed,- at the precise time needed,- at the
lowest total delivered cost, - every time

• THE SOLUTION COMPETING SMARTER !!!
• In the company
• In the supply chain

THE APPROACH ? Innovation and entrepreneurship ?
Elimination of non-value- adding
activities ? Use of time to achieve
competitive advantage
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COMPETING SMARTER
? Value, Price
Profit
Profit
Costs
? Costs
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COMPETING SMARTER THIRD-GENERATION STRATEGY
GENERATION OF STRATEGY
Incrementalism
I
Industry Analysis, Portfolio Models
II
Strategic Ambition Value, Cost and
Speed Innovation and Risk-taking Alignment
III
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THIRD-GENERATION STRATEGY THE 4 2 FORMULA FOR
SUCCESS

• Successful firms excel in four categories...
• Clearly stated, focused strategy
• Performance-oriented culture
• Fast, flexible, flat company structure
• Flawless operational execution
• ...and in two of four additional categories
• Develop innovations that transform your
  industry
• Hold on to people who show talent and find more
  of them
• Keep leadership committedto the business
• Make growth happen with mergers and partnerships

Study of 200 management practices (Joyce,
Nohria and Robertson, 2003)
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COMPETING SMARTER HOW CAN WE INNOVATETO CREATE
VALUE, REDUCE COSTS AND GENERATE SPEED?
DIFFERENTIAL ADVANTAGE ? VALUE ? COST ?
SPEED
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COMPETING SMARTER INNOVATION
Innovation A change in the process by which an
organization transforms labor, capital,
materials, and information into products and
services? Product Innovation - The creation of
a better product - The substitution of a cheaper
material in an existing product F Major
product innovation a non-linear improvement in
the firms ability to create customer
value (10X) ? Process Innovation - Improved
business or manufacturing processes F Major
process innovation a non-linear improvement
in the firms ability to eliminate costs (-30
or more) ? Service Innovation - Improvement in
service performance ? Systems Innovation - The
improvement of an existing system or the
establishment of a new one? Marketing
Innovation - A better way of marketing,
distributing or supporting a product or
service? Management Innovation - An improvement
in the way the organization is managed ??
Innovation means turning creativity into bottom
line results!!!
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COMPETING SMARTER CREATING ALIGNMENT
Suppliers
Company
Distributors
Consumers
Customers
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SUMMARY ATTITUDES OF THE THIRD-GENERATION FIRM
Customer value orientation Elimination of
cost Time-based competitor Competes 'beyond
technology' on the basis of superior
value Proactive/early mover Thinking 'small'
(swift and nimble) Lean management
style Innovation focus product, process,
service, systems,marketing, management Process-ba
sed management continuous improvement
philosophy Capabilities RD, design, systems,
service Exploits digitization as an
opportunity Partners with world-class suppliers,
customers and complementors
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DIAGNOSTICS
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ASSESSING INNOVATION CAPABILITY
Rate your capability to innovate
Negligible
Incremental
Radical
Product innovation
0
5
10
Process innovation
0
5
10
Service innovation
0
5
10
Systems innovation
0
5
10
Marketing innovation
0
5
10
Management innovation
0
5
10
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ASSESSING 4 2 FORMULA FOR SUCCESS STATUS
Clearly stated, focused strategy
0
5
10
To what degree do you excel in the four main
categories?
Flawless operational execution
0
5
10
Performance-oriented culture
0
5
10
Fast, flexible, flat company structure
0
5
10
Innovations that transform the industry
0
5
10
To what degree do you excel in the four
additional categories?
Ability to attract and keep talent
0
5
10
Leadership committed to the business
0
5
10
Achieving growth through mergers and partnerships
0
5
10