The ARENA Genome: Harmonic Strategic Planning

1. The ARENA Genome: Harmonic Strategic Planning Refinement Stages: Arena, Focus, Action Create Strategy A R E N A F O C U S A C T I O N Arena Layers: Corporate, Business Function- Define Hierarchy • Corporate Layer: Portfolio Businesses Maximize Value • Business Layer: Positioning Products by Market Strategy • Function Layer: Process, Project and Product Agile value drive • Arena actors: Partners, Threats; Current, Future Tailored Patterns. • Filter Criteria Prioritize attention Manage Control span • Dynamic Vectors: Vision, Venture, Value. Act, Review, Revise

2. Quality BMW $ Hyundai Focus Death Valley Juggernaut # Institutions Size Bank size and Product-market strategy Business Arena Stuck In the Middle Tata RR

3. Orange Matsushita VHS Sony Beta 486 Cellcom Skim Ampex $50K Pelephone Cost Sales Niche Distributors Advantage Chasm Follower Leader Mass Market Hong Kong Effect IBM Effect Time Time/Quantity Attack angle: Skimming (Type I disruptive Innovation) • Focus: Returning R&D investment, Constrained production capacity, Limited demand P III Non-recurring Niche Products Satellite Iridium` Skeptics: Technology Supporters: Product Skeptics: Market Supporters: Company Generalists Specialists

4. 2.Follower: IBM effect Open Architecture Outsourcing 3. Me Too:No Name Hong Kong Effect 2. Generic 1. Ethical Viagra Prozak Compaq Devoted Follower 1.Leader: Apple Closed Architecture Self sufficient Patent Umbrella Pricing Price 1st 50% 2nd 50% Multilyte European Patent Office Protogene Laboratories Time Oxford Gene Technology Affymetrix Incyte Genomics Gen Logic HyseQ Applied Biosystems Nanogen Motorola Synteni Attack angle: Storming • Focus: Maximizing revenues during patent duration; Rigid demand Affymetrix, microarray Gene Chip producer: quarterly report, Nov. 2000, 5 years after launch: • The company may lose customers unless it improves its ability to manufacture its products and ensure their proper performance • Researchers: chips with spurious results, delivery months beyond schedule • No real competitors to lose customers: 400 < ssued and pending patents • License agreements with 20 companies – restrict to arrays 1/10 affymetrix genetic probes • Competitors: Patents on own designs: Incyte Genomics: use robots to deposit up to 10,000 pre-synthesized genetic probes onto a glass slide. Motorola holds the probes inside a thin slab of gel. • Nicholas Naclerio, head Motorola’s BioChip division: “if we want to make a medical diagnostic with 40 genes on it, and 20 companies hold patents on those genes, we may have a big problem”.

5. Sony: $279+ RealNetworks Nintendo: Dolphin IBM+3D by ArtX MS Xbox $299.99 ($125) Launch: 800K games, 1.5M@2001 $500M marketing budget Ford Levittown Diners’ Zara IKEA McDonalds 1. Client Navigator Sony 1. Server Navigator Acrobat 2.Toyota Honda 2. Explorer NT CR3: Market share Stage 1 Opening Consolidation vs. Death based on 25,000 companies Stage 2 Scale New/deregulated/Privatized Industry Stage 3 Focus Stage 4 Balance&Alliance 100% Defense Automatic controls Tobacco 80% Distillers Shipbuilding Shoes Aircraft OEMs 60% Aerospace suppliers Soft Drinks Truck builders Toys Automotive OEMs Rubber & Tire prod. Food 40% Railway Steel makers Breweries Restaurants &Fast food 1.IBM White planes Telecom Chemicals 20% Airlines Pulp & Paper Services Drugs Utilities 25 Years Insurance Banks Automotive Suppliers 0% Attack angle: Flooding • Focus: Market share leadership (Eyeballs, Hits); Lock-in+Oligopoly+Value added • Cost of ownership - CoO

6. 2.Red Hat Toyota, Honda, Nissan Komatsu Korean 1.Shareware: fusion Copy Left: Gnu, Ada Attack angle: Piercing / Guerilla (Type II disruptive Innovation) • Focus: Penetrating through niche, transforming non-entity into recognized brand C H A S M Lexus Acura Infinity