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

  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. 17