Create an imperative to innovate and “jump the s-curve”
Alpha and Beta risks – Alpha risk is missing an emerging opportunity. Beta risk is failing to capitalize on the opportunity.
Value chain – often used to talk about what to outsource, which is usually aimed at solving our problems. But that isn’t what we’re talking about – we’re talking about partnering to solve customer problems.
Let’s apply “Partnership Thinking” to a simple sales model.
April 20th, 2012BLINDED BY THE LIGHT:INNOVATING INSIDEGROWTH COMPANIESGREG HOPPER
NetApp’s Original BEMIYou could attach specialized data storage devices – filers – to anetwork NAS = Network Attached StorageInternal operating system is called Data ONTAP® and isoptimized for storage requirements
TodayData ONTAP® 8• Continuously improved and enhanced• Excellent technology• Cluster-mode just releasedBut…• Technology evolves• Product life cycles accelerate
In other words……we need to invest more in new, breakthrough innovations.
Financial $uccessis a trailing indicatorof innovation success.
Three Phases of Value Migration • Limited competition • High growth Talent, resources, and • High profitability customers leave at an accelerating rate • Competitive stabilityMarket Value/Revenue • Stable market share • Stable margins 2 1 • Competitive intensity • Declining sales • Low profits Value Inflow Stability Value Outflow
Example: PhotographyMarket Value/Revenue 2 1 Value Inflow Stability Value Outflow
Characteristics of the Transition Volume is high. Revenue is growing. Customers are happy. Strong repeat business. Focus on superior execution – this is the “comfort zone”. But…your time here is limited, and the stability phase is getting shorter.
High Growth Businesses Today’s revenue growth +Accumulated Total Returns Horizon 3 tomorrow’s 36 to 72 months cash flow Current Businesses Horizon 2 Growth Options Generate 12 to 36 months today’s cash Options on flow future high-growth businesses Horizon 1 0 to 12 months Expected Window of Returns
TCG Horizon Model HIGH LOW GROWTH GROWTH MATERIAL TOCURRENT EARNINGS NOT MATERIAL TOCURRENT EARNINGS
Another view HIGH LOW GROWTH GROWTH MATERIAL TOCURRENT EARNINGS NOT MATERIAL TOCURRENT EARNINGS
TCG Horizon Model HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Horizon 2 NOT MATERIAL TOCURRENT EARNINGS Horizon 3
TCG: Innovation Opportunity HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Horizon 2 TCG Advisors noted a “Horizon 2 NOT MATERIAL TO vacuum” in most companies.CURRENT EARNINGS Horizon 3
Two Transitions to Manage HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Horizon 2 Two distinctly NOT MATERIAL TOCURRENT EARNINGS different transitions; managing them is key Horizon 3
Totally Different Transitions HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS β Horizon 2 NOT MATERIAL TOCURRENT EARNINGS α Horizon 3
Two Different Questions: First HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Horizon 2 NOT MATERIAL TOCURRENT EARNINGS Is there a business? Horizon 3
Two Different Questions: Second HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Is there a BIG business? Horizon 2 NOT MATERIAL TOCURRENT EARNINGS Is there a business? Horizon 3
Two Different Skill Sets HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Operations Horizon 2 NOT MATERIAL TOCURRENT EARNINGS Entrepreneurial Horizon 3
NetApp’s Focus HIGH LOW GROWTH GROWTH Horizon 1 MATERIAL TOCURRENT EARNINGS Create Customer Value Through Partnerships Horizon 2 NOT MATERIAL TOCURRENT EARNINGS Horizon 3
Partnership Thinking:Completing the Whole Product
“The Whole Product” The minimum set of products and services necessary to ensure that the target customer will achieve his or her compelling reason to buy.5/1/2012 Week 11 35
PremiseSuccess is achieved by: – Engaging the right resources, – At the right cost, time, and place, according to the – Buying behavior of the customer.5/1/2012 Week 11 37
What do you mean by“resources”?Original Equipment Manufacturer (OEM)Distributors – Volume vs. Value AddedResellerIntegratorsSolution ProviderRetailersSales AgentsDirect SalesInfluencers5/1/2012 Week 11 38
Types of Partnerships Acquire Joint Venture/Equity Stake R&D/Technology Transfer OEM/Licensing/Private Label Joint Marketing/Distribution5/1/2012 39
Simple Sales Cycle Model Close Demand Pre- Deplo the Support Generation Sales y Deal
Demand Generation Close Demand Pre- the Deploy Support Generation Sales Deal Providing information to prospective customers or end-users • Advertising • Press • Direct mail • Promotions • Loyalty programs5/1/2012 41
Pre-Sales Close Demand Pre- the Deploy Support Generation Sales Deal Provide information on: • Pricing • Availability • Terms and conditions • Configuration options • Specifications • Competitive information Key element: Understand prospect’s wants and needs (pain points)5/1/2012 42
Close the Deal Close Demand Pre- the Deploy Support Generation Sales Deal Get the order! Activities include: • Final negotiations • Sign the contract • Complete financial arrangements • Immediate payment • Terms (i.e. Net 30)5/1/2012 43
Deploy Close Demand Pre- the Deploy Support Generation Sales Deal Receive and fulfill the customer’s order Activities include: • Order processing and confirmation • Shipment and installation • Customization, integration, and training5/1/2012 44
Support Close Demand Pre- the Deploy Support Generation Sales Deal Ensure the proper operation of the offering and the customer’s ongoing level of satisfactory performance Look for opportunities to make the customer more successful5/1/2012 45
Imagine Virtually Anything: FlexPod Cisco NetApp VMware One Vision for Unified Infrastructure Jointly Validated Solutions New Cooperative Services and Support Mutual, Open Partner Ecosystem
SummarySuccessful growth organizations need to allocate resourcesacross current, emerging, and new areas of customer valueThree Horizons Model offers a resource allocation model androadmap.NetApp has chosen a partnership-based model to turn Horizon 2opportunities into Horizon 1 businesses to deliver new customervalue quickly and efficiently.