Step #2: Defining Strategic Focus Based on Power Shifts

Thursday, March 26th, 2009 at 8:43 am

Step #1 entailed analyzing value and sustainability. Starting with a completed power grid, step #2 will help us to develop the strategic direction for our firm, Acme Financial, and to anticipate the strategic moves of otherconstituents in the grid.
Opportunists, plotted in the power grid’s upper-left quadrant in Figure 5.10, are providing critical value to the overall solution, yet their position is weak in nature and constantly threatened by newcomers to the game. In our example, we see service providers as the constituent group that finds itself in the opportunist quadrant. Service providers in our brokerage example are companies that enable or facilitate the transaction, for example by making available the network infrastructure required to buy or sell securities and settle accounts. Although providing critical add-on functionality to the overall solution, that functionality is usually not unique or sophisticated enough to keep at bay imitators that provide substitute offerings.
The opportunist is successful at identifying and providing a critical element to the total solution, but unless he develops a strategy to distinguish himself from other members of his constituent group, his position isfeeble, requiring the company to continuously refresh its offerings in a never-ending chase for survival. Thus, the appropriate strategy for the opportunist is to move from the upper-left to the upper-right quadrant. A set of strategic initiatives would primarily aim at identifying how the opportunist can attain a stronger foothold in the market via differentiation.

Low value and low staying power describes the commodity players, located in the lower-left corner of the power grid. Clearly situated in the least desirable position from the perspective of a company aiming to lead
its market’s Value Web, companies with commodity player status must make every effort to shift out of their low-margin corner or risk being pushed out of the market altogether. If they are providing a product or service, their contribution to the solution is not valued by the Web, nor is their staying power significant enough to allow them continued viability. Constituents located in this quadrant are at great risk of being displaced by stronger members of the network. Strategic actions include both a reevaluation of the company’s product or service offering in an effort to increase their value-add, and deliberate tactics to increase the company’s staying power (such as those attained through the creation of meaningful strategic
alliances). In our example, we observe that both the consumer constituency and affinity groups are located in this quadrant, indicating their low power position in the brokerage industry. Both consumers and affinity groups are not strong enough to control the environment; their bargaining power is limited, forcing them to passively accept the offerings presented as opposed to actively shaping them.

Taken From : Enterprise Guide to Gaining Business Value from Mobile Technologies