Industry Data & Market Research

Strategic Planning with the Delta Model Framework

Delta Model is a technique that enables better strategic planning in business.

The Delta Model is a customer-based approach to strategic management. Compared to a philosophical focus on the characteristics of a product (product economics), the model is based on customer economics. It revolves around the concept of bonding and contains four central themes:

Strategic Planning Delta Model The best product doesn't always win
Three distinct positions can all lead to long term success:
  • Best product - Low cost or differentiation
  • Total customer solution - Reducing customer costs or increasing their profits
  • System lock-in - Complementor lock-in, competitor lock-out, or proprietary standard

The System Lock-In and Total Customer Solutions options offer new ways to compete that deviate substantially from conventional strategic positioning.

Execution is not the problem; linking it to strategy is:
Most companies implicitly execute as if they were pursuing a Best Product commodity strategy. No degree of competent execution can save them from this never-ending treadmill. The core processes of the company need to be aligned to the chosen strategy in order to make progress against their strategic agenda and avoid a commodity-like outcome. The Delta Model identifies the core processes of the business and provides a guide for how they need to function differently to achieve different strategic positions.

Managing by averages leads to below average performance:
The popular wisdom today is that the success of a business can be managed by focusing on several key top-line variables. While these averages are helpful, our research has shown that the true performance drivers can only be identified by de-averaged granular metrics. The challenge then is to isolate these detailed metrics, measure the concentrations of cost, revenue and profitability, and learn how to harness these underlying performance factors to improve the profitability of the enterprise as a whole.

Plans are not made to be followed:
Success in today's ever-changing world comes not from creating one perfect plan but rather from adapting as the environment changes. This requires incorporating feedback mechanisms and structured experimentation into the company's processes and improving through a structured process of segmentation, testing, learning and execution.

Other Strategic Planning Frameworks

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