1. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Welcome to Business Strategy and Policy John A. Hengeveld week 3 class 1

2. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM AGENDA Microsoft Case final thoughts B&E Ch 4-6 Innovators Solution Ch 6

3. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Microsoft Multimedia Final Thoughts

4. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM IS Ch 6 - Commoditization IS View of Commoditization Process 1.Company Develops Proprietary product that while not good enough is better than others 2.To Keep ahead of competitors, Company overshoots the functionality and reliability that customers in the lower tiers of the market can use. 3.This causes a change in the basis of competition in the market which 4.Creates and evolution to modular architectures 5.Facilitates the de-integration of the industry 6.Eliminates differentiators in performance or cost.

5. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Decommoditization 1.Low cost strategy of modular product assembly is only viable when high cost suppliers are moved out of the low end, after they leave, you must move up market. 2.(+3) Performance becomes key differentiator again in the modules 3.Changing the nature of competition in having customers of modules deliver increased performance in the end use products 4.Leading providers of modules make solid profits “arming all sides” 5.The next cycle of commoditization begins

6. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Discussion of Figure 6-1

7. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM Core Competence and ROA Spiral This is on my list of the top 3 most important AHHA’s in this book. “Competitiveness is about doing what customers value far more than doing what you think your good at” Back to the CVD model of profitability Profit centers where performance is not good enough.

8. SCHOOL OF BUSINESS ADMINISTRATION TECHNOLOGY COMMERCIALIZATION PROGRAM B&E Discussion What happened at NewWave (ch 4) Relate the concept of diversification shown in ch4 to the innovators solution approach? Southwest Airlines Discussion