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CREATING OPTIONS FOR FUTURE COMPETITIVE ADVANTAGE AND
PROFITABILITY
Horizon 3
Seed options for future
growth business
Horizon 2
Drives growth in
emerging new business
Horizon 1
Defend and extend
current business
Profit
Time
Tactical
probing


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IMPROVISATION AND SIMPLE RULES
Just as Jazz musicians can improvise
when they play together because they
follow a set of simple rules ...
... corporations can become more
flexible by allowing improvisation
under a set of simple rules
Simple rules
Customer is always right
Always run highest profitability
products
Never


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TACTICAL PROBING OPERATIONAL TACTICS CAN BECOME STRATEGICALLY
IMPORTANT
Though some initia-
tives failed, several
enabled Charles
Schwab to further
differentiate itself
from its bare-bones
competition
Merrill lynch
discount initiative
E* Trade
Charles
Schwab
Tactical initiatives
Futures – trading
Simplified mutual-fund offerings
Internet products services
Credit cards
Outline mortgage


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STAGING AND PACING IN THE REAL WORLD
Source: S. Brown and K. Eisenhardt, Competing on the Edge: Strategy as Structure Chaos (Boston: Harvard Business School Press, 1998)
British Airways
“Five years is the maximum that you can go without refreshing the brand ... We did it
(relaunched Club Europe Service) because we wanted to stay ahead so that we
could continue to win customers”
Emerson Electric
“In each of the last three years we’ve introduced more than 100 major new products,
which is about 70% above our pace of the early 1990s.
We plan to maintain this rate
and, overall, have targeted increasing new products to (equal) 35% of total sales”
Intel
The inventor of Moore’s Law stated that the power of the computer chip would
double every 18 months.
IBM builds a new manufacturing facility every nine
months.
“We build factories two years in advance of needing them, before we have
the products to run in them, and before we know the industry is going to grow”
Gillette
40% of Gillette’s sales every five years must come from entirely new products (prior
to its acquisition by P&G).
Gillette raises prices at a pace set to match price
increases in a basket of market goods (which includes items such as a newspaper,
a candy bar, and a can of soda).
Gillette prices are never raised faster than the
price of the market basket.
3M
30% of sales must come from products that are fewer than 4 years old


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