The ARENA Genome: Harmonic Strategic Planning Refinement Stages: Arena, Focus, Action Create Strategy Arena Layers: Corporate, Business Function- Define Hierarchy Corporate Layer: Portfolio Businesses Maximize Value A R E N F O C U S A C T I O N Business Layer: Positioning Products by Market Strategy Function Layer: Process, Project and Product Agile value drive Arena actors: Partners, Threats; Current, Future Tailored Patterns. Filter Criteria Prioritize attention Manage Control span AMEV vs. Drucker, Roadshow cloud vs. Robner (analysts) Warren Buffet (Berkshire Hathaway): Financial vs. Business understanding Management-by-exceptions, by-walking-around. Jack Weltch, Stock market fluctuations, share splits. Hierarchy: accounting -> Hypertext: zoom in/out: resolution management. Professional, geographic concentration. Arena: Focus Action Dynamic Vectors: Vision, Venture, Value. Act, Review, Revise

Business Arena Sustainable Competitive Advantage Low Cost Differentiation Market Scope Mass Market Cost Leadership Niche Cost Focus Focused Differentiation Deep Products $ Quality Hyundai BMW Stuck In the Middle Tata RR # Institutions Size Focus Death Valley Juggernaut Bank size and Product-market strategy

Attack angle: Skimming (Type I disruptive Innovation) Focus: Returning R&D investment, Constrained production capacity, Limited demand PC Processors $ D Time/Quantity Cost Leader Follower Advantage IBM Effect P III 486 Hong Kong Effect Non-recurring Crossing the Chasm $ D Chasm Cell Phone $ D Beeper Matsushita VHS Orange Sony Beta Cellcom Skim Niche Niche Products Ampex $50K Pelephone Satellite Iridium` Time Sales Mass Market Distributors Chasm Haaretz, Yuval dror, 29.4.01, G6: Typical processor launch price>$600. Nov. 2000 P4 Launch $/1000 units: 1.4GHz@$644, 1.5GHz@$819. Last week: 1.7GHz@$352: -58% (1.5Ghz more expensive@$519!)+0.18μ(micron) much more expensive. First Quiriat Gat then 2 plants in US. AMD Q12001sales@$1.2B=increase of 9% vs. last year. Intel market share: 81.5%->77.1, AMD: 17.1%->22.2%. Q42001: Intel@2GHz.2001 Fab investment: $7.5B, R&D: $4.2B. Price of Ampex VCR>$50,000 W.C. Kim and R. Mauborgne, “Knowing a winning business idea when you see one, HBR Sept-Oct 2000: “In 1998, motorola rolled out a product that was supposed to redefine the world of mobile telephony. The iridium, declared the company, would be the first mobile phone to provide uninterrupted wireless communication anywhere in the world, no matter what the terrain our country. …Heavy, needed a host of attachments, couldn’t be used in a car or building. Price: $3,000. Kodak Fortune, 29.3.99 Power struggle. Intel: Pentium from ’93. Celeron vs. AMD, Cyrix. Xeon: modified Pentium II for servers&workstations. AMD K6 & K6-2 K6-3for sub$1,000 PCs: Compaq, HP, IBM, NEC. Cyrix MII (subsidiary of NAS). Power Skeptics: Technology Supporters: Product Skeptics: Market Supporters: Company Specialists Generalists

Attack angle: Storming Focus: Maximizing revenues during patent duration; Rigid demand Storming Pharmaceutical $ D Chasm Storming $ D SensorExcel (+60%) Mach3 +35% Atra Storming $ D 2.Follower: IBM effect Open Architecture Outsourcing 3. Me Too:No Name Hong Kong Effect 2. Generic 1. Ethical Viagra Prozak Compaq Devoted Follower 1.Leader: Apple Closed Architecture Self sufficient Time 1st 50% Price 2nd Patent Umbrella Pricing Affymetrix, microarray Gene Chip producer: quarterly report, Nov. 2000, 5 years after launch: The company may lose customers unless it improves its ability to manufacture its products and ensure their proper performance Researchers: chips with spurious results, delivery months beyond schedule No real competitors to lose customers: 400 < ssued and pending patents License agreements with 20 companies – restrict to arrays 1/10 affymetrix genetic probes Competitors: Patents on own designs: Incyte Genomics: use robots to deposit up to 10,000 pre-synthesized genetic probes onto a glass slide. Motorola holds the probes inside a thin slab of gel. Nicholas Naclerio, head Motorola’s BioChip division: “if we want to make a medical diagnostic with 40 genes on it, and 20 companies hold patents on those genes, we may have a big problem”. Affymetrix: Sciam Feb2001p.24 “Patently Inefficient” by. WWG European Patent Office Nanogen Motorola Oxford Gene Technology Applied Biosystems Affymetrix Multilyte Protogene Laboratories Incyte Genomics Gen Logic Synteni HyseQ

Attack angle: Flooding Focus: Market share leadership (Eyeballs, Hits); Lock-in+Oligopoly+Value added Cost of ownership - CoO Ford Levittown Diners’ Zara IKEA McDonalds Flooding $ D Sony: $279+ RealNetworks Nintendo: Dolphin IBM+3D by ArtX MS Xbox $299.99 ($125) Launch: 800K games, 1.5M@2001 $500M marketing budget Dumping $ D Sony 1. Client Navigator Leveraged Dumping $ D 1. Server Navigator Acrobat 2. Explorer NT Stage 1 Opening Consolidation vs. Death based on 25,000 companies Stage 2 Scale New/deregulated/Privatized Industry Stage 3 Focus Stage 4 Balance&Alliance 0% 20% 40% 60% 80% 100% Railway Telecom Services Utilities Insurance Banks Airlines Chemicals Drugs Automotive Suppliers Pulp & Paper Restaurants &Fast food Breweries Food Steel makers Automotive OEMs Rubber & Tire prod. Toys Truck builders Aerospace suppliers Aircraft OEMs Shipbuilding Distillers Defense Automatic controls Tobacco Shoes Soft Drinks 25 Years CR3: Market share 1.IBM White planes Hybrid Car Dumping $ D 2.Toyota Honda Market Consolidation: Graeme K. Deans, Fritz Kroeger and Stefan Zeisel, HBR, “The Consolidation Curve”, 2002 p. 20 based on A.T.Kearney’s Value-Building Growth database of 25,000 companies Amdox problem with small carriers who grow: SAP Haaretz, 20.5.01, G8” War games: MS vs. Sony”, Xbox: Intel: 733MHz, 8GB Disk. Merrill: $-125/box. IDC: Sony will probably reduce price to $279. “how to charge money from kids?”: Monthly payment for game channel.MS: 200 developers, Sony:300 experienced.

Attack angle: Piercing / Guerilla (Type II disruptive Innovation) Focus: Penetrating through niche, transforming non-entity into recognized brand Toyota, Honda, Nissan Japanese Guerilla $ D OEM S.E. Asian Guerilla $ D Komatsu Korean 1.Shareware: fusion Copy Left: Gnu, Ada Linux Guerilla $ D C H A S M Lexus Acura Infinity 2.Red Hat Skinning the cat