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Strategic Analysis of High-Tech Industries. Define Webs. Assess Position in Web. Examine Distribution of Profit. Assess Opportunities/ Threats. Webs Provide Foundation for New Approach to Strategic Analysis. Define Market/ Industry. Based on Use, Not Structure.
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Define Webs Assess Position in Web Examine Distribution of Profit Assess Opportunities/ Threats Webs Provide Foundation for New Approach to Strategic Analysis Define Market/ Industry Based on Use, Not Structure
SOHO Market Different From Business Market Not Everyone Plays Everywhere Webs are Unique to Markets & Geography
Joystick Browser Browser Graphics Processor PC POP PC POP CPU Connection Connection Transport Transport Consumer Information 3-D Simulation First, Define Levels of Abstraction and Boundaries... Product/Service Type Determines Appropriate Level of Detail
Visualization Engine Browser Internet Backbone Page Manager PC POP eCom Platform Data Warehouse CIS Connection Transport Info Sources Customer Service Provider …Then Move Customer In, Product Out An Internet-Based Provider of Consumer Information Things Required to Provide Service, Not Run Business
Core Products, Services Core Products, Services Channels Channels Complementary Products, Services Complementary Products, Services Training, Support, Servicing Training, Support, Servicing Integration Services Integration Services Defining Value Web is Straightforward, but Highlights Issues and Opportunities
Hub Applications Enablers Infrastructure Spoke There are Two Strategic Positions in a Web Pace of Change
Engine Drive-Train Head Gasket Piston Sub-Component Graph When Assessing Position in Web, Focus on Application, Not Components Car
Roads Gasoline Needs Graph When Assessing Position in Web, Focus on Application, Not Components Use Car for Transportation Car Specify the Minimum Set of Things Required to Achieve Desired Outcome (Enablers, not Extenders)
Embeddedness & Criticality are Keys to Long-Term Success in a Web • Embed • To Make Dislodgment or Change Difficult (Webster’s) • Critical • Key Point of Focus in Web Architecture
Internet Applications Information e-Commerce Internet Application Enablers Browser CyberCash Java Internet Enablers Backbone TCP/IP Embeddedness Determined by Frequency of Use and Switching Costs
Embeddedness Provides Support for Many Keys to Success • Develop & Maintain First Mover, Selection and Information Advantages • Provides Time-to-Market Advantage • Improves Knowledge of Technology Domain & Market • Increases Likelihood of “Information Contagion” • Actively Manage Growth Drivers • Builds Brand Identity • Generates Network & Learning Effects • Increases “Attractiveness” • 3rd Party Providers • Prospective Employees • Leverage Customer Base • Provides/Increases Customer Base • Sell Add-Ons, Upgrades and Services in Current Market • Leverage Customer Base into Other Markets
Chronometer Display Alarm Power Source Legend Component Need Criticality Determined by Concentration of Needs and Number of Sources Alarm Clock
Alarm Clock Power Source PC O/S Printer Rules-Based Routing Software Application Software ACD IVR Switch Criticality Determines Profit Distribution Within Web Analyze Neighborhood Only
Renewal E2, E3 E2, E3 Web Formation E1 Growth and Expansion “Maturity” Obsolescence E1: Emergence of Key Component Standards E2: Improvement in Key Component E3: Introduction of New Component That Extends Web E4: Discontinuous Change in Key Component Transfiguration E4 Must Also Include Assessment of the Current State of the Industry Web Position and Industry State Determine Strategic Agenda
DesktopComputer DesktopOperatingSystem DesktopApplicationSoftware DesktopPrinter ... Microsoft’s Move into Desktop Apps Coincides with Transition to GUI Intra-Web Moves Leverage Customer Base
DesktopComputer DesktopOperatingSystem DesktopApplicationSoftware DesktopPrinter ... NetworkOperatingSystem NetworkServer ... ... ... Microsoft’s NT Push Coincides with Decreasing Growth in Windows Sales Inter-Web Moves Leverage Product Platform
ROLM Enters Military Computer Market (1969) Technological Parity, Price Competition (1982-) ROLM Enters PBX Market (1975) Increasing Returns Drive Market Performance (1975-1980) 300 Interconnect Distributors (1973) ROLM Changes Hands (1983-1989) PBX Evolution Constrained (1981) Carterphone Decision (1968) ROLM Demonstrates Industry State Transitions Transfigures Technology Web, Builds Value Web Revenue: $0-$295M Market Share: 0%-23% Gross Margins: 19%-8% Time Attributional Shift Doesn’t Materialize Disaggregation of Technology Web Explosion of “Species”