HarperCollins

Paper & eBook format

Release Date: Sept 6, 2011

2

Time

Rev

enue

Gro

wth

GrowthCategories

MatureCategories

DecliningCategories

Indefinitely elastic middle

End of Life

Fault Line!

EDCBA

Technology AdoptionLife Cycle

Category Maturity Life Cycle

EmergingCategories

Figure 2.1

3

Portfolio ManagementThe Growth/Materiality Matrix

HighGrowth

LowGrowth

Material

NotMaterial

Emerging

MatureGrowth

Declining

1

2 3

4

Figure 2.2

Typical Portfolio Pattern

High GrowthCategories

Low GrowthCategories

Material to Current Financials

Not Material

1

2 3

4

Figure 2.3

Managing a Portfolio The Three Horizons Model

Horizon 10 to 12 months

Horizon 212 to 36 months

Horizon 336 to 72 months

Current Businesses

Generate today’s cash flow

High Growth Businesses

Today’s revenue growth + tomorrow’s cash flow

Growth Options

Options on future high-growth businesses

Expected Window of Returns

Acc

umul

ated

Tot

al R

etur

ns

Figure 2.4

Ho

rizo

n 2

Horizon 1

Horizon 3“H

ori

zon

0”

Three Horizons Model Mapped to Growth/Materiality Matrix

HighGrowth

LowGrowth

Material

NotMaterial

Figure 2.5

7

Goals, Metrics, and the Three HorizonsDifferent Metrics for Each Horizon

TIME FRAMEHORIZON 1(0 - 12 mos)

HORIZON 2(12 - 36 mos)

HORIZON 3(36 - 72 mos)

Create aCategory

Maximize Economic Returns

Become aGoing Concern

DrivingGoal

Key Performance

Indicators

Revenue vs. plan

Bookings

Contribution margin

Market share

Wallet share

Target accts vs. plan

Sales velocity

Deal size

Segment share

Time to tipping point

Name-brand customers

Deal size

Name-brand partners

PR buzz

Flagship projects

“Opex” “Timex” “Capex”

Figure 2.6

8

Achieving Escape VelocityFocus on Competitive Separation

Competitor 2*

Competitor 1*

Competitor 3*

YOU*Gain bargaining power by getting separation from your competitive set

*

Competitive Set

Failure to separate means lower revenues or profit margins or both

COREAn

Unmatchable Offer

Figure 3.1

Two Business ArchitecturesComplex Systems vs. Volume Operations

ComplexSystems

VolumeOperations

SweetSpot

SweetSpot

Complexity Volume

Effe

ctiv

ene

ss

SmallBusiness

GovernmentPrograms

SocietalEntitlements

Enterprise Consumer

100 101 102 103 104 105 106 107 108 109

Number of Customers

Figure 3.2

1. Target Customer

2. Compelling Reason to Buy

3. Whole Offer

4. Partners and Allies

5. Sales Strategy

6. Pricing Strategy

7. Competition

8. Positioning

9. Next Target

Key sponsor

Complete solution

Function of wholeproduct complexity

Legitimate alternatives

Next growth segment

Core problem

Needed for whole product

Value based

Differentiation

9-Point Market Strategy Framework

Figure 4.1

FailedAttempts

Waste

Return on Innovation

Differentiation Neutralization

Optimization

Figure 5.1

12

The Six LeversFree Resources Trapped in Context Tasks

1. Centralize. Bring operations under a single authority to reduce overhead and create a single point of control to manage mission-critical risk.

2. Standardize. Reduce the variety and variability of processes delivering similar outputs to eliminate costs and minimize risks.

3. Modularize. Deconstruct the system into its component subsystems and standardize interfaces for future cost reductions.

4. Optimize. Eliminate redundant steps, automate standard sequences, streamline remaining operations, substitute lower-cost components, or otherwise cost- and resource-reduce.

5. Instrument. Characterize the remaining processes in terms of the variability of key parameters and develop monitor-and-control systems to manage their performance.

6. Outsource. Drive processes out of the enterprise entirely to further reduce overhead, variabilize costs, and minimize future investment. Incorporate vendor use of monitor-and-control systems into Service Level Agreement.

Figure 5.2

Price/Benefit SensitivityHow Customers Internalize Value

Pri

ce S

ensi

tivi

ty

Benefit SensitivityHI

HI

LO

LO

PREMIUM

PERFORMANCECOST

CONVENIENCE

Figure 5.3

Value Disciplines andPrice/Benefit Sensitivity

Pri

ce S

ensi

tivi

ty

Benefit SensitivityHI

HI

LO

LO

Pro

duct

Le

ader

ship

Customer Intimacy

Operational Excellence

Figure 5.4

Creating the Unmatchable OfferThe Core/Context Model

CoreUnmatchableDifferentiation

ContextNeutralizingInnovations

MissionCritical

Enabling

1 2

3 4

Figure 2.1

The Arc of ExecutionComplex Systems Enterprises

Playbooks

Projects Products

Figure 6.1

Invent

Deploy

Optimize

The Arc of ExecutionVolume Operations Enterprises

Partners

Products Processes

Figure 6.2

Invent

Deploy

Optimize

Catalyzing Escape VelocityThe “Tipping Point” Role of Programs

Deploy

Invent Optimize

TransitionProgram

TransitionProgram

TippingPoint

TippingPoint

Figure 6.3

Four Modes of Execution

Execution Mode Invention Deployment Optimization Transitions

Type of LeaderVisionary Inventor

Pragmatic Deployer

Conservative Optimizer

Pragmatic Orchestrator

Core Competence Creativity Competitiveness Control Collaboration

Core Attribute Spontaneous Tough-minded Prepared Empathetic

Decision Style Intuition Experimentation Deliberation Consensus

Functions Most in Alignment

R&D, Creative Services

Sales, Engineering

Finance, Operations

HR, Marketing, Customer Suppt

Figure 6.4