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Where and
How to build
a Competitive
Advantage?
Segmentation
Customer
Convenience
Integration
Alternatives
& Expansion
Emergents
A2 Market Edges
B1 Proximity
Where To
Focus?
⍺
D1 Substitutes D2 Expansion
C2 Adjacents
C
1
V
a
l
u
e
S
t
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e
a
m
B
2
S
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C
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a
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A
1
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d
-
M
a
r
k
e
t
E
2
N
e
w
M
a
r
k
e
t
s
E1 Trend M
arkets
F2 Product
Differentiation
G1 Customer
Intimacy
How To
Compete?
I1 Proprietary
Ecosystem
I2 Unique
Enablers
H2 Dom
inant
Exchange
H
1
E
x
c
l
u
s
i
v
C
h
a
n
n
e
l
G
2
A
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e
d
V
a
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u
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F
1
C
o
s
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L
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s
h
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p
J
2
C
o
n
c
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p
t
u
a
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I
n
n
o
v
a
t
i
o
n
J1 Disruptive
Innovation
Best Product
Customer
Bonding
Transaction
Control
Unique
Advantage
Innovative
Value
Where To Focus?
How To Compete?
Where to Focus
for building a
Competitive
Advantage?
The 10 choices.
Segmentation
A1 Mid-Market
Focus on a niche
market segment of
specific customer
needs that are
underserved.
Option 1:
Choices about Where To Focus?
Focus on either
a few high-end
customer needs, or
on the commodity
needs of the many.
Option 2:
Segmentation
A2 Market Edges
Choices about Where To Focus?
Focus on whoever
needs easy and
quick access to
your products, or
to your locations.
Option 3:
Customer
Convenience
B1 Proximity
Choices about Where To Focus?
Focus on the sales
channel, to reach
more customers via
proxies, or to bypass
customer proxies.
Option 4:
Customer
Convenience
B2 Sales Chain
Choices about Where To Focus?
Extend business
upstream or
downstream, for
better integration
and new customers.
Option 5:
Integration
C1 Value Stream
Choices about Where To Focus?
Focus on other needs
of your current
customers and get
a bigger share
of their wallet.
Option 6:
Integration
C2 Adjacents
Choices about Where To Focus?
Focus on needs of
new customers that
can be satisfied by
adapted versions of
your products.
Option 7:
Alternatives
& Expansion
D1 Substitutes
Choices about Where To Focus?
Focus on needs of
customers in new
territories with same
needs as those of
current customers.
Option 8:
Alternatives
& Expansion
D2 Expansion
Choices about Where To Focus?
Focus on overserved
needs of marginal
customers requiring
more simplicity
and affordability.
Option 9:
Emergents
E1 Trend Markets
Choices about Where To Focus?
Focus on needs
of non-customers
that they were
unaware of before
you addressed them.
Option 10:
Emergents
E2 New Markets
Choices about Where To Focus?
Now, look again:
Segmentation
Customer
Convenience
Integration
Alternatives
& Expansion
Emergents
Problems
To Solve
⍺
A2 Market Edges
Vanity, Top-tier Market
Problem: Exceptional class belonging
Commodity, Long-tail Market
Problem: Afordability to buy
B1 Proximity
Physical Proximity
Virtual Proximity
Problem: Quick & easy buyer’s access
D1 Substitutes
Industry Cross-Adoption
Problem: Imperfect legacy solutions
Customer Jobs Replacement
Problem: Obsoleting legacy buyer needs
D2 Expansion
Globally-Local Markets
Problem: Foreign buyer needs intimacy
Global Sales Channel Expansion
Problem: Foreign buyer needs
C2 Adjacents
Complementary Customer Jobs
Problem: Related buyer needs
Counter-Disruption Engine 2
Problem: Defend against disruption
C1 Value Stream
Upstream Integration
Downstream Integration
Problem: VS cost reduction
B2 Sales Chain
Sales Chain Refocus
Problem: Deproxying buyer relations
Franchise Network
Problem: Proxy-focused scaling
A1 Mid-Market
Specialty & Affinity Segmentation
B2B or B2C
Problem: Niche buyer needs
E2 New Markets
New Customer Jobs
Problem: New needs innovation
BOS Marginal Buyers
Problem: Mostly unsolved needs
E1 Trend Markets
Over-served Customer Jobs
Problem: Unsophisticated buyer needs
Technology Early Adopters
Problem: Novelty quest needs
10 Strategic Choices categories:
Where to focus?
How to Compete
for building a
Competitive
Advantage?
The 10 choices.
Gain an unrivaled
cost advantage
based on operational
excellence and
flexible supply chain.
Option 1:
F1 Cost
Leadership
Best Product
Choices about How To Compete?
Build a significant
advantage based
on differentiating
product attributes
and features.
Option 2:
F2 Product
Differentiation
Best Product
Choices about How To Compete?
Gain a significant
advantage by
providing a
differentiating
customer experience.
Option 3:
Choices about How To Compete?
G1 Customer
Intimacy
Customer
Bonding
Build a significant
advantage through
added value services
or one-stop-shop
horizontal breadth.
Option 4
Choices about How To Compete?
G2 Added
Value
Customer
Bonding
Develop a unique
advantage by raising
competitive barriers,
or by gaining privileged
access to customers.
Option 5
Choices about How To Compete?
H1 Exclusiv
Channel
Transaction
Control
Build a dominant
platform to reach
a critical-mass of
transactions between
buyers and sellers.
Option 6
Choices about How To Compete?
H2 Dominant
Exchange Transaction
Control
Build an ecosystem
of value-adding
complementors to
your success product
set as standard.
Option 7
Choices about How To Compete?
I1 Proprietary
Ecosystem
Unique
Advantage
Build a new value
proposition upon
your differentiating
capabilities or your
VRIN* resources.
Option 8
Choices about How To Compete?
I2 Unique
Enablers
Unique
Advantage
* Valuable, Rare, Inimitable, Non-substituable
Use technology to
provide a simpler,
ubiquitous, more
affordable alternative
to an existing product.
Option 9
Choices about How To Compete?
J1 Disruptive
Innovation
Innovative
Value
Build a higher-value
but lower-cost
value proposition with
competitive factors
never used before.
Option 10
Choices about How To Compete?
J2 Conceptual
Innovation
Innovative
Value
Now, look again:
How To Compete?
10 Strategic Choices cathegories:
Solutions
to Deliver
Best Product
Customer
Bonding
Transaction
Control
Unique
Advantage
Innovative
Value
F2 Differentiation
Quality & Functionality Enhancement
Solutions: Develop product differentiation
Sustaining Innovations
Solutions: Product innovative enhancements
G1 Customer Intimacy
Optimized Customer Experience
Solutions: Optimize customer CX curve
Advanced Customization
Solutions: Serve the market-of-one
I1 Proprietary Ecosystem
De-facto or Industry Standard
Solution: Turn product’s success into a standard
Value-Adding Complementors
Solution: Develop a network of complementors
I2 Unique Enablers
Building on Unique Capabilities
Solution: Turn unique capabilities into new products
Building on VRIN Resources
Solution: Use the VRIN resources for new products
H2 Dominant Exchange
Multi-sided Platform
Solution: Control the value exchange
Transaction Brokerage
Solution: Become the customer proxy
H1 Exclusive Channel
Entry-Barrier Constraints
Solution: Block competitor’s access
Exclusivity or Licensing
Solution: Gain exclusive access
G2 Value-Adding
One-Stop-Shop
Solution: Develop a horizontal portfolio
Services to Products Add-on
Solutions: Add-ons to enhance products
F1 Cost Leadership
Operational Excellence
Solutions: Lower internal costs
Lower External Costs
Solutions: Lower external costs
J2 Conceptual Innovation
Capture New Customer Jobs
Solution: Conceptually new products
Break Value-Cost Trade-Off
Solution: 4-way framework for new products
J1 Disruptive Innovation
Functional Simplification
Solution: Incumbent products made accessible
Lower Specifications Solution
Solution: Lighter versions of existing products
This library of choices types
is mostly used as
a Cognitive Reference Model
for defining the
Strategic Choices of our Strategy.
We get something like this:
F1 F2 G1 G2 H1 H2 I1 I2 J1 J2
A1
A2
B1
B2
C1
C2
D1
D2
E1
E2
B2G2
D1H1
B1I2
Solutions-to-Deliver
Problems-to-Solve
Strategic
Choices
Types
Strategic
Positioning
Mix
The Penta Model
of
Strategic Choices

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The Penta Model of Strategic Choices (summary)

  • 1. Where and How to build a Competitive Advantage?
  • 2. Segmentation Customer Convenience Integration Alternatives & Expansion Emergents A2 Market Edges B1 Proximity Where To Focus? ⍺ D1 Substitutes D2 Expansion C2 Adjacents C 1 V a l u e S t r e a m B 2 S a l e s C h a i n A 1 M i d - M a r k e t E 2 N e w M a r k e t s E1 Trend M arkets F2 Product Differentiation G1 Customer Intimacy How To Compete? I1 Proprietary Ecosystem I2 Unique Enablers H2 Dom inant Exchange H 1 E x c l u s i v C h a n n e l G 2 A d d e d V a l u e F 1 C o s t L e a d e r s h i p J 2 C o n c e p t u a l I n n o v a t i o n J1 Disruptive Innovation Best Product Customer Bonding Transaction Control Unique Advantage Innovative Value Where To Focus? How To Compete?
  • 3. Where to Focus for building a Competitive Advantage? The 10 choices.
  • 4. Segmentation A1 Mid-Market Focus on a niche market segment of specific customer needs that are underserved. Option 1: Choices about Where To Focus?
  • 5. Focus on either a few high-end customer needs, or on the commodity needs of the many. Option 2: Segmentation A2 Market Edges Choices about Where To Focus?
  • 6. Focus on whoever needs easy and quick access to your products, or to your locations. Option 3: Customer Convenience B1 Proximity Choices about Where To Focus?
  • 7. Focus on the sales channel, to reach more customers via proxies, or to bypass customer proxies. Option 4: Customer Convenience B2 Sales Chain Choices about Where To Focus?
  • 8. Extend business upstream or downstream, for better integration and new customers. Option 5: Integration C1 Value Stream Choices about Where To Focus?
  • 9. Focus on other needs of your current customers and get a bigger share of their wallet. Option 6: Integration C2 Adjacents Choices about Where To Focus?
  • 10. Focus on needs of new customers that can be satisfied by adapted versions of your products. Option 7: Alternatives & Expansion D1 Substitutes Choices about Where To Focus?
  • 11. Focus on needs of customers in new territories with same needs as those of current customers. Option 8: Alternatives & Expansion D2 Expansion Choices about Where To Focus?
  • 12. Focus on overserved needs of marginal customers requiring more simplicity and affordability. Option 9: Emergents E1 Trend Markets Choices about Where To Focus?
  • 13. Focus on needs of non-customers that they were unaware of before you addressed them. Option 10: Emergents E2 New Markets Choices about Where To Focus?
  • 14. Now, look again: Segmentation Customer Convenience Integration Alternatives & Expansion Emergents Problems To Solve ⍺ A2 Market Edges Vanity, Top-tier Market Problem: Exceptional class belonging Commodity, Long-tail Market Problem: Afordability to buy B1 Proximity Physical Proximity Virtual Proximity Problem: Quick & easy buyer’s access D1 Substitutes Industry Cross-Adoption Problem: Imperfect legacy solutions Customer Jobs Replacement Problem: Obsoleting legacy buyer needs D2 Expansion Globally-Local Markets Problem: Foreign buyer needs intimacy Global Sales Channel Expansion Problem: Foreign buyer needs C2 Adjacents Complementary Customer Jobs Problem: Related buyer needs Counter-Disruption Engine 2 Problem: Defend against disruption C1 Value Stream Upstream Integration Downstream Integration Problem: VS cost reduction B2 Sales Chain Sales Chain Refocus Problem: Deproxying buyer relations Franchise Network Problem: Proxy-focused scaling A1 Mid-Market Specialty & Affinity Segmentation B2B or B2C Problem: Niche buyer needs E2 New Markets New Customer Jobs Problem: New needs innovation BOS Marginal Buyers Problem: Mostly unsolved needs E1 Trend Markets Over-served Customer Jobs Problem: Unsophisticated buyer needs Technology Early Adopters Problem: Novelty quest needs 10 Strategic Choices categories: Where to focus?
  • 15. How to Compete for building a Competitive Advantage? The 10 choices.
  • 16. Gain an unrivaled cost advantage based on operational excellence and flexible supply chain. Option 1: F1 Cost Leadership Best Product Choices about How To Compete?
  • 17. Build a significant advantage based on differentiating product attributes and features. Option 2: F2 Product Differentiation Best Product Choices about How To Compete?
  • 18. Gain a significant advantage by providing a differentiating customer experience. Option 3: Choices about How To Compete? G1 Customer Intimacy Customer Bonding
  • 19. Build a significant advantage through added value services or one-stop-shop horizontal breadth. Option 4 Choices about How To Compete? G2 Added Value Customer Bonding
  • 20. Develop a unique advantage by raising competitive barriers, or by gaining privileged access to customers. Option 5 Choices about How To Compete? H1 Exclusiv Channel Transaction Control
  • 21. Build a dominant platform to reach a critical-mass of transactions between buyers and sellers. Option 6 Choices about How To Compete? H2 Dominant Exchange Transaction Control
  • 22. Build an ecosystem of value-adding complementors to your success product set as standard. Option 7 Choices about How To Compete? I1 Proprietary Ecosystem Unique Advantage
  • 23. Build a new value proposition upon your differentiating capabilities or your VRIN* resources. Option 8 Choices about How To Compete? I2 Unique Enablers Unique Advantage * Valuable, Rare, Inimitable, Non-substituable
  • 24. Use technology to provide a simpler, ubiquitous, more affordable alternative to an existing product. Option 9 Choices about How To Compete? J1 Disruptive Innovation Innovative Value
  • 25. Build a higher-value but lower-cost value proposition with competitive factors never used before. Option 10 Choices about How To Compete? J2 Conceptual Innovation Innovative Value
  • 26. Now, look again: How To Compete? 10 Strategic Choices cathegories: Solutions to Deliver Best Product Customer Bonding Transaction Control Unique Advantage Innovative Value F2 Differentiation Quality & Functionality Enhancement Solutions: Develop product differentiation Sustaining Innovations Solutions: Product innovative enhancements G1 Customer Intimacy Optimized Customer Experience Solutions: Optimize customer CX curve Advanced Customization Solutions: Serve the market-of-one I1 Proprietary Ecosystem De-facto or Industry Standard Solution: Turn product’s success into a standard Value-Adding Complementors Solution: Develop a network of complementors I2 Unique Enablers Building on Unique Capabilities Solution: Turn unique capabilities into new products Building on VRIN Resources Solution: Use the VRIN resources for new products H2 Dominant Exchange Multi-sided Platform Solution: Control the value exchange Transaction Brokerage Solution: Become the customer proxy H1 Exclusive Channel Entry-Barrier Constraints Solution: Block competitor’s access Exclusivity or Licensing Solution: Gain exclusive access G2 Value-Adding One-Stop-Shop Solution: Develop a horizontal portfolio Services to Products Add-on Solutions: Add-ons to enhance products F1 Cost Leadership Operational Excellence Solutions: Lower internal costs Lower External Costs Solutions: Lower external costs J2 Conceptual Innovation Capture New Customer Jobs Solution: Conceptually new products Break Value-Cost Trade-Off Solution: 4-way framework for new products J1 Disruptive Innovation Functional Simplification Solution: Incumbent products made accessible Lower Specifications Solution Solution: Lighter versions of existing products
  • 27. This library of choices types is mostly used as a Cognitive Reference Model for defining the Strategic Choices of our Strategy. We get something like this: F1 F2 G1 G2 H1 H2 I1 I2 J1 J2 A1 A2 B1 B2 C1 C2 D1 D2 E1 E2 B2G2 D1H1 B1I2 Solutions-to-Deliver Problems-to-Solve Strategic Choices Types Strategic Positioning Mix