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HarperCollins
Paper & eBook format
Release Date: Sept 6, 2011
2
Time
RevenueGrowth
Growth
Categories
Mature
Categories
Declining
Categories
Indefinitely elastic
middle
End of
Life
Fault Line!
EDCBA
Technology Adoption
Life Cycle
Category Maturity Life Cycle
Emerging
Categories
Figure 2.1
3
Portfolio Management
The Growth/Materiality Matrix
High
Growth
Low
Growth
Material
Not
Material
Emerging
MatureGrowth
Declining
1
2 3
4
Figure 2.2
Typical Portfolio Pattern
High Growth
Categories
Low Growth
Categories
Material to
Current
Financials
Not Material
1
2 3
4
Figure 2.3
Managing a Portfolio
The Three Horizons Model
Horizon 1
0 to 12 months
Horizon 2
12 to 36 months
Horizon 3
36 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
AccumulatedTotalReturns
Figure 2.4
Horizon2
Horizon 1
Horizon 3 “Horizon0”
Three Horizons Model Mapped to
Growth/Materiality Matrix
High
Growth
Low
Growth
Material
Not
Material
Figure 2.5
7
Goals, Metrics, and the Three Horizons
Different Metrics for Each Horizon
TIME FRAME
HORIZON 1
(0 - 12 mos)
HORIZON 2
(12 - 36 mos)
HORIZON 3
(36 - 72 mos)
Create a
Category
Maximize
Economic Returns
Become a
Going Concern
Driving
Goal
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 Velocity
Focus 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
CORE
An
Unmatchable
Offer
Figure 3.1
Two Business Architectures
Complex Systems vs. Volume Operations
Complex
Systems
Volume
Operations
Sweet
Spot
Sweet
Spot
Complexity Volume
Effectiveness
Small
Business
Government
Programs
Societal
Entitlements
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 whole
product complexity
Legitimate alternatives
Next growth segment
Core problem
Needed for whole product
Value based
Differentiation
9-Point Market Strategy Framework
Figure 4.1
Failed
Attempts
Waste
Return on Innovation
Differentiation Neutralization
Optimization
Figure 5.1
12
The Six Levers
Free 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 Sensitivity
How Customers Internalize Value
PriceSensitivity
Benefit Sensitivity
HI
HI
LO
LO
PREMIUM
PERFORMANCECOST
CONVENIENCE
Figure 5.3
Value Disciplines and
Price/Benefit Sensitivity
PriceSensitivity
Benefit Sensitivity
HI
HI
LO
LO
Product
Leadership
Customer
Intimacy
Operational
Excellence
Figure 5.4
Creating the Unmatchable Offer
The Core/Context Model
Core
Unmatchable
Differentiation
Context
Neutralizing
Innovations
Mission
Critical
Enabling
1 2
3 4
Figure 2.1
The Arc of Execution
Complex Systems Enterprises
Playbooks
Projects Products
Figure 6.1
Invent
Deploy
Optimize
The Arc of Execution
Volume Operations Enterprises
Partners
Products Processes
Figure 6.2
Invent
Deploy
Optimize
Catalyzing Escape Velocity
The “Tipping Point” Role of Programs
Deploy
Invent Optimize
Transition
Program
Transition
Program
Tipping
Point
Tipping
Point
 
Figure 6.3
Four Modes of Execution
Execution Mode Invention Deployment Optimization Transitions
Type of Leader
Visionary
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

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Escape Velocity Illustrations

  • 1. HarperCollins Paper & eBook format Release Date: Sept 6, 2011
  • 2. 2 Time RevenueGrowth Growth Categories Mature Categories Declining Categories Indefinitely elastic middle End of Life Fault Line! EDCBA Technology Adoption Life Cycle Category Maturity Life Cycle Emerging Categories Figure 2.1
  • 3. 3 Portfolio Management The Growth/Materiality Matrix High Growth Low Growth Material Not Material Emerging MatureGrowth Declining 1 2 3 4 Figure 2.2
  • 4. Typical Portfolio Pattern High Growth Categories Low Growth Categories Material to Current Financials Not Material 1 2 3 4 Figure 2.3
  • 5. Managing a Portfolio The Three Horizons Model Horizon 1 0 to 12 months Horizon 2 12 to 36 months Horizon 3 36 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 AccumulatedTotalReturns Figure 2.4
  • 6. Horizon2 Horizon 1 Horizon 3 “Horizon0” Three Horizons Model Mapped to Growth/Materiality Matrix High Growth Low Growth Material Not Material Figure 2.5
  • 7. 7 Goals, Metrics, and the Three Horizons Different Metrics for Each Horizon TIME FRAME HORIZON 1 (0 - 12 mos) HORIZON 2 (12 - 36 mos) HORIZON 3 (36 - 72 mos) Create a Category Maximize Economic Returns Become a Going Concern Driving Goal 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. 8 Achieving Escape Velocity Focus 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 CORE An Unmatchable Offer Figure 3.1
  • 9. Two Business Architectures Complex Systems vs. Volume Operations Complex Systems Volume Operations Sweet Spot Sweet Spot Complexity Volume Effectiveness Small Business Government Programs Societal Entitlements Enterprise Consumer 100 101 102 103 104 105 106 107 108 109 Number of Customers Figure 3.2
  • 10. 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 whole product complexity Legitimate alternatives Next growth segment Core problem Needed for whole product Value based Differentiation 9-Point Market Strategy Framework Figure 4.1
  • 11. Failed Attempts Waste Return on Innovation Differentiation Neutralization Optimization Figure 5.1
  • 12. 12 The Six Levers Free 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
  • 13. Price/Benefit Sensitivity How Customers Internalize Value PriceSensitivity Benefit Sensitivity HI HI LO LO PREMIUM PERFORMANCECOST CONVENIENCE Figure 5.3
  • 14. Value Disciplines and Price/Benefit Sensitivity PriceSensitivity Benefit Sensitivity HI HI LO LO Product Leadership Customer Intimacy Operational Excellence Figure 5.4
  • 15. Creating the Unmatchable Offer The Core/Context Model Core Unmatchable Differentiation Context Neutralizing Innovations Mission Critical Enabling 1 2 3 4 Figure 2.1
  • 16. The Arc of Execution Complex Systems Enterprises Playbooks Projects Products Figure 6.1 Invent Deploy Optimize
  • 17. The Arc of Execution Volume Operations Enterprises Partners Products Processes Figure 6.2 Invent Deploy Optimize
  • 18. Catalyzing Escape Velocity The “Tipping Point” Role of Programs Deploy Invent Optimize Transition Program Transition Program Tipping Point Tipping Point   Figure 6.3
  • 19. Four Modes of Execution Execution Mode Invention Deployment Optimization Transitions Type of Leader Visionary 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