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Entrepreneurs Create Strategy by Bridging the Old with the New!


One of the few things everyone can agree on is that the business environment is constantly changing. Certainly the landscape has drastically changed from when I first entered the business arena in the 70’s to the business environment facing new entrants today.

For new entrepreneurs, or ones who are considering becoming an entrepreneur, who fall into a more ‘seasoned’ age group, formulating a business strategy is daunting. These entrepreneurs are discovering that the way they thought about business in the past is somewhat still true…but with a twist.  That twist is developing a business in a “networked” environment, as noted in one of my favorite books, The Delta Project  by Arnoldo C. Hax and Dean L. Wilde II, which requires an altered approach then in the pre-internet technology.

Although Michael Porters, Five Forces Model – Suppliers, Buyers, Substitutes, and Entry Barriers is still one of the most influential competitive strategic frameworks, which emphasizes competition and product, today’s entrepreneur should shift the Porter Framework to emphasize customer, suppliers and complementors. The strategy is not competition but how to generate cooperation, and bonding to ‘lock-in’ in your customers, and achieve ‘System Lock-in’.  The spotlight is not solely on your product/service but also customers and complementors.

Let me explain complementors.  Mr. Hax and Mr. Wilde II define complementors as any “…firm engaged in the delivery of products and services which enhance your own product and/or service”. These are usually external to your company.  

It is impossible to completely explain the Delta Projects Strategic Model in this short space. So I will do my best to synthesize the thrust of the thesis.  Creating customer ‘lock-in’ is achieved with the goal of ‘System Lock In”.  Please note the triangle below:

Allow me to briefly explain what comprise each part of the triangle. The triangle represents three options you can pursue with your strategy.

Triangle3

Three Strategies

Best Product

If your strategy is to have the best product you are engaging in a strategy that is fast paced and one which requires excellent competitive intelligence because you must always seek and find the competitive advantages to your product or service. Basically you are in a race with your competition.

Total Customer Solutions

This strategy is a little less manic than the Best Product strategy. This is less manic because you want to focus upon building relationships with your customers. The question is  how are you going to enhance their experience and perceived value of your product or service?

System Lock-In

Attract complementors by providing mutually beneficial opportunities that enhance system performance. By doing this you will ‘lock-in’ customers and keep out your competition. The system lock-in makes it difficult for a customer to switch from your product/service to another.  By achieving this level your business has become one of collaboration, good will, and superior value creation.

The most important aspect of the Delta Project is that with today’s ability to communicate in a nano second with suppliers and customers the business owner must include and take advantage of this ability to bond with complementors and customers. Building this bond in the form of processes, communication, and value will create an environment for the customer that in their mind will find it much too difficult, either financially, emotionally or both, to switch to another product or service.

Your goal as an entrepreneur is to develop a strategy that includes actions that enhance the opportunity to develop relationships with your customer. If you strictly develop a strategy based from a product, which you can, but you will find you will always be trying to stay one step ahead of your competition.

What you base your strategy upon is certainly up to you. However, creating strategies that are based on the current climate you are operating within and one eye on the future will serve you well. The past really is the past and has little place in creating strategies for today’s business climate.

Lastly, I highly recommend the Delta Project book by Hex and Wilde II.  You may not agree with everything in the book, but they offer insights that expand your view of strategic possibilities.

I look forward to your comments on this blog.

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October 4, 2010 Posted by | Entrepreneur | , , , , , | 6 Comments