Game Changers: How market leaders discover a distinct advantage and make their competitors irrelevant
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You can approach strategy defensively and fight with competitors. Or approach it offensively and make them irrelevant. Tim uses relevant and well known case studies to show business leaders how they can leverage a distinct advantage through value innovation, holistic study of your customer experience, and the elimination of wasteful spending. The most important thing to remember is that strategy is not about you or your capabilities. It’s about your chosen customer and their journey.
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Game Changers: How market leaders discover a distinct advantage and make their competitors irrelevant
- 1. @PraxentSoftware Game Changers How market leaders discover a distinct advantage and make their competitors irrelevant.
- 2. @PraxentSoftware Why strategy? Strategy is all about difference. But most of the thinking out there is focused on getting stuff done – which leads to sameness.
- 3. @PraxentSoftware A case study Movie Rental Industry
- 4. @PraxentSoftware Price Diverse Selection Convenient Location Neighborhood Feel High Low Vulcan Video Friendly Service Video Factory Achme Movie A strategy analysis Movie Rental Industry
- 5. @PraxentSoftware But what’s the hair on fire problem with the customer experience?
- 7. @PraxentSoftware High Low Vulcan Video Video Factory Achme Movie A strategy analysis Movie Rental Industry Hot Title Inventory Blockbuster Video Price Diverse Selection Convenient Location Neighborhood Feel Friendly Service
- 8. @PraxentSoftware What was the hair on fire problem with the customer experience at Blockbuster? Blockbuster takes in almost $800 million in late fees, which accounts for roughly 16% of its revenue One customer in California was fined $40 by Blockbuster for being late in returning “Apollo 13.”
- 10. @PraxentSoftware High Low A strategy analysis Movie Rental Industry Hot Title Inventory Blockbuster Video Penalty Free Instant & Unlimited Netflix Price Diverse Selection Convenient Location Neighborhood Feel Friendly Service
- 11. @PraxentSoftware Redbox – failed to kill itself
- 12. @PraxentSoftware Self-service kiosks • Redbox deployed self-serviceinternet connected kiosks • Eliminate real estate and labor costs of movie rental storefronts • 1,950 discs per min • $1.9B in sales • 52% market share (DVD) • 42k kiosks worldwide
- 13. @PraxentSoftware Netflix 2.0 – killed themselves
- 14. @PraxentSoftware Defensive: Take the structure of the industry as given, and position the company to match its strengths and weaknesses to it. Offensive: Alter the underlying structure and forces of the industry, thereby altering the competitive environment itself. You can approach strategy defensively and fight with competitors. Or approach it offensively and make them irrelevant.
- 17. @PraxentSoftware Know Your Customer: Segment customers by circumstance, not by attribute.
- 18. @PraxentSoftware
- 19. @PraxentSoftware Segmenting your customers By attribute • Working professional male • Age 28-36 • Lives in the suburbs • Married with 1.6 kids • $90k-$120khousehold annual income By circumstance • Busy guy who hates to shop, needs the perfect fit for an upcoming interview • Needs a father’s day gift for a busy guy who hates shopping • New dad who has no time just hit weight loss goal; needs new clothes for work
- 20. @PraxentSoftware It all begins with a job to do
- 21. @PraxentSoftware #looking for an escape
- 23. @PraxentSoftware Value Innovation: Increase buyer value by removing all the barriers in their way.
- 24. @PraxentSoftware Where they are now. Where they want to be. Mind the Gap What separates your customer from the value? • Time • Distance • Financial • Bundled offer • Negative emotion • Hard work • Relational friction • Reliance on a human
- 25. @PraxentSoftware Case study Netflix • Removed distance with DVDs by mail • Removed relational friction with no late fees • Went on to remove time and introduced unlimited streaming entertainment
- 26. @PraxentSoftware Case study Sparefoot • Removed work with it’s no-lift, no-lug storage service • Eliminates idle space in half-used storage units • Remote storage locations cost less
- 27. @PraxentSoftware Case study Carmax • Removed the relational friction from the haggling that usually accompanies used car buying
- 28. @PraxentSoftware Case study Hyundai • Hyundai removed fear from the process of buying a new car. • Lose your job? Return your Hyundai. No credit impact. No negative equity.
- 29. @PraxentSoftware Case study Sunnova • Sunnova removed financial distance from the process of buying solar residential energy. • Homeowners lease solar panels which produce energy for less than they pay today.
- 30. @PraxentSoftware Case study iTunes • Apple unbundled music purchasing by introducing the $0.99 song.
- 31. @PraxentSoftware Examine the entire customer experience Before purchase During purchase After purchase Look for and eliminate all points of friction: • Time • Distance • Financial • Psychological • Hard work • Relational • Reliance on a human
- 32. @PraxentSoftware Is your industry penalizing it’s customers? • Silvercar has built an $XX business by removing the penalties from the industry.
- 33. @PraxentSoftware Value Innovation: Reduce costs by reducing, disrupting or removing low value factors.
- 34. @PraxentSoftware Decrease cost. How? Look for wasteful spending across the industry and reduce or eliminate it by a massive factor. • Labor • Real estate • Capital / Assets • Manufacturing COST
- 35. @PraxentSoftware Crowd Sourcing Leverage crowd sourcing to reduce the labor cost of design, engineering, problemsolving. 10k contests per month, $142m paid out to designers 185k data scientists competing to solve your problem
- 36. @PraxentSoftware Leveraged assets & time • Eliminated cost of real estate and labor from the hospitality industry by leveraging the unused real- estate of others • 2M listings (90X more per employee) • 640k hosts • 500k stays per night • $25B valuation • Owned properties? Zero.
- 37. @PraxentSoftware 3D Printing • Local Motors reduced cost of manufacturing by 1000x by leveraging 3D printing • 5-22x faster process for a car to produce (depending on vehicle)
- 38. @PraxentSoftware Leveraged assets • Eliminated cost of assets from the taxi transportation industry by leveraging the cars and desire for independence of everyday drivers
- 39. @PraxentSoftware Remember…Strategy is about difference and being different requires tough choices Factor A Factor B Factor C High Low Factor D X-Factor COST BUYER VALUEDare to be bad… So that we can be great.
- 40. @PraxentSoftware Tough choices? Kodak has a digital moment • Steve Sasson invents the first digital camera in 1973 at Kodak
- 41. @PraxentSoftware Innovator’s Dilemma It’s much harder to create a disruptive innovation as an industry giant
- 42. @PraxentSoftware How do we apply these ideas to Praxent?
- 43. @PraxentSoftware Remember…Strategy is about difference and being different requires tough choices Factor A Factor B Factor C High Low Factor D X-Factor COST BUYER VALUEDare to be bad… So that we can be great.
- 44. @PraxentSoftware
- 45. @PraxentSoftware Strategy Canvas Curves International Price Amenities Equipment Variety Workout Time Availability Of Instructors Motivating Environment Non-threatening Same Sex Environment Convenience Traditional health club High Low Curves
- 46. @PraxentSoftware A case study BUYER BENEFIT • Comfortable, non- threatening environment • Friendly group classes create accountability, builds community • Convenient: Located nearby with plenty of parking
- 47. @PraxentSoftware A case study COST • Small 2,500 sq ft facilities in strip centers (vs. 15,000 sq ft gyms) lowers real estate costs • One class at a time lowers labor costs
- 48. @PraxentSoftware Increase Buyer Value. How? Eliminate points of friction between your customer and the benefit. BUYER VALUE
- 49. @PraxentSoftware Rule #1 Strategy is not about you or your capabilities. It’s about your chosen customer and their journey.