Creating Profit Through Alliances - business models for collaboration E-book | Page 19

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hamburgers, but its formula offers short waiting
times and, above all, a guarantee concerning
the product's quality. This saves the customer
time in searching and trying out. By
standardising the business processes and even
the premises, McDonalds keeps its own costs
down.
Product leadership: supplying the best product.
This is not the same as product differentiation.
There is a host of suppliers of sports shoes, and
their products differ to quite an extent. Only a
company such as Nike manages to stay one step
ahead with new innovations, such as the Nike
Air, a new type of fastener or its collaboration
with Apple.
Customer intimacy: adjusting your business
operations around a certain customer group,
and supplying it with all required products. This
is similar to Porter's focus strategy. An
important aspect in this respect is good
customer relationship management and being
able to adjust your products and services to
their wishes. This strategy demands
decentralisation of competencies in dealing with
customers.

Treacy & Wiersema indicate that each of the three
aspects should be present at a minimum level, but
that you should differentiate with respect to one
aspect only (see Figure 8). For instance, a consultancy
agency may decide to focus on a select customer
group and offer it a tailor-made range of services
(focus on customer intimacy). Nevertheless, it is still
important to execute jobs efficiently and at
reasonable rates (operational excellence) and to
introduce new knowledge or concepts on a regular
basis (product leadership).
Product
Leadership

Minimum
level

Operational
Excellence

Customer
Intimacy

Figure 8. Three strategies according to Treacy & Wiersema

A relatively limited study 7 among the 25 most
important American Internet companies provides us
with an initial picture of the success of each of the
Treacy & Wiersema strategies. Among other things,
the study looked at turnover development in the
years 2005 and 2006. The group of companies with a
customer intimacy strategy and a product leadership
strategy both experienced an average annual growth
of 20%, while the companies with an operational
excellence strategy experienced an annual growth of
approximately 8%.

Whereas Porter and Treacy & Wiersema provide tips
for individual business activities, the Boston
Consultancy Group matrix is particularly popular when
making choices within a portfolio of activities. The
underlying assumption of this matrix is that having
several activities within a single company is a means
to secure a more stable flow of income and that you
can move money from one activity to the other.
If a product is relatively new, the market for that
product will still have to grow, while the increase in
production and distribution demands a lot of money.
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