While reading Kaplan & Norton's book "The Strategy Focused Organization" for a consulting assignment, I came a across a paragraph about three different strategies an organization can use to differentiate itself in the marketplace. These strategies developed by Treacy and Wiersema in their book "The Discipline of Market Leaders" are:
While I wasn't aware of Treacy and Wiersema's book, these three trajectories of differentiation strongly reminded me of John Hagel's work on "Unbundling the Corporation". As I already described in an earlier blog on unbundling in the mobile phone market, Hagel believes that companies will focus on one of three specific types of businesses:
In a nutshell, [...] most enterprises today are an unnatural bundle of three very different kinds of businesses – infrastructure management businesses, product innovation and commercialization businesses and customer relationship businesses.
I applied Treacy & Wiersema's as well as Hagel's thinking to my business model framework which is composed of 9 generic business model building blocks. The outcome is illustrated in the graphic above:
- The first model outlines the 9 generic building blocks of a business model which make it possible to describe the business logic of a company.
- The second model outlines a company that follows a product/service leadership strategy. The most important building block for this strategy are naturally the value proposition, which is highlighted i red.
- The third model outlines a company that follows a customer relationship leadership strategy. Companies persuing this strategy focus on the building blocks, distribution channel, target customers and customer relationships
- The third model outlines a company that follows an infrastructure/operations leadership strategy. Companies persuing this strategy focus on cost and concentrate on the building blocks, value configuration (activities), core capabilities, partner network and cost structure.
In general I find it an interesting exercice to describe a company's business model with the described framework and then reflect on which strategy it follows...