Lecture 10 – “The Big Finish” . Steve Montgomery. Introduction To The Business Environment. What to do when someone’s not telling you what to do Topics covered: Course introduction and Overview of corporate structure (1 session) Fundamentals of business strategy (2 sessions)
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Baseball’s #2 dead-ball era hitter
3rd Army rampaged across Europe
What current items aren’t generating value in proportion to the effort?
New Value Creation
Which current items are considered frivolous or unnecessary?
New features? New combinations? New segments?
Which items are substandard?Four Actions Strategy: In General
Goodness /= high. High price, for example, is bad
Badness /= low. Low price, for example, is good.
Chart the target firm and its competition in these terms. Where do they line up? Where are there gaps?The Strategy Canvas
Level of Offering: Low to High
Product or Industry Attribute
6. Look across time
Ideally: Product and message are co-designed so as to optimize *both*
Company & Collaborators
Get paid here
Money Lost Here
Competition intense here
Company & Collaborators
Create a local monopoly (by offering much more than anyone else)
Your offering delivers real and perceived value
Essence of Blue Ocean Strategy = differentiationIdeally…
Customers, Company & Collaborators
Bottom line on Simple: Pack as much information as possible into as little space as possible!
Unexpected: Deliver a calculated surprise to hold the viewers attention, then insert a new schema with the association you want
Concrete ideas create a “shared ‘turf’ on which people can collaborate”
Credibility comes from tangibility, and relating this to your target. Think of credibility as “try before you buy”
Emotional appeals need to make people care – appeal to more than Maslow’s Basement (Because everyone else always goes there first)
Stories are like mental flight simulators. Your audience gets to fly along with you.
A – L = SE
Period 0 (Today)
Initial InvestmentVisualizing NPV
NPV = PV(Cash flows) – Initial Investment
KE = Cost of equity
iG = Avg. return of govt. bonds (~5.3%)
SE = Risk premium of stocks (~6.4%)
= Stock Beta (firm performance multiplier)
TD Ameritrade/E*Trade disrupted Charles Schwab
Fidelity disrupted traditional stock brokers with Mutual Funds
ETFs are disrupting Fidelity
Southwest/JetBlue disrupted hub-based airline
Honda/Toyota disrupted GM/Ford
Kia/Hyundai are disrupting Honda/Toyota
The desktop PC disrupted mainframes
Laptops disrupted desktop PCs
Netbooks are disrupting LaptopsExamples of Disruptive Innovation
Life is about strategy!