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Key Strategies for Winning in the New Economy

Key Strategies for Winning in the New Economy. Vance Williams LaVelle Senior Vice President, Chase One Chase Plaza, 14th Floor New York, NY 10081 212-552-7557 vance.lavelle@chase.com May 1, 2000. Topics for Discussion. Emerging Trends New Customer-centric Business Models

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Key Strategies for Winning in the New Economy

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  1. Key Strategies for Winning in the New Economy Vance Williams LaVelle Senior Vice President, Chase One Chase Plaza, 14th Floor New York, NY 10081 212-552-7557 vance.lavelle@chase.com May 1, 2000

  2. Topics for Discussion • Emerging Trends • New Customer-centric Business Models • Customer Experience and Brand • Implications to the Organization • Key Strategies to Win

  3. 2000 Market Observations • The B2B market opportunity is rapidly expanding • Getting the infrastructure up to speed will cost billions ($600 million $4 billion) • Content will continue to proliferate: broadband, wireless and satellite • Cost savings will be promoted all down the line Source: Bear Stearns & Co.

  4. 2000 Market Observations • Consolidation is in the cards - real and virtual • Products and services ripe for digital distribution win • Many companies will win through turbo charged databases and data mining intelligence • Reliable, quality products - once a differentiator - are now merely the point-of-entry

  5. 2000 Market Observations • Branding and, especially, service have become the key drivers in purchase behavior • Gaps between service quality and service expectations are widening • Consumers have easier access to information • Consumers are vastly more empowered than ever before

  6. Decreasing available time Increasing information and choice Increasing responsibility Simplify daily life End-to-end convenience and speed Reliable customer service 29% of on-line users and >50% of all on-line transactions Consumer demand is causing change…. LIFE’S PRESSURES... …CREATE DEMAND for SIMPLIFICATION Source: Andersen, Yankelovich, McKinsey

  7. And the Internet Changes Everything Sellers in control Buyers in control Before Net After Net Price complexity Price transparency Limited alternatives Choice Broad Segmentation Customer Personalization Physical Speed Virtual Speed Meaningful entry Low entry barriers barriers Geographic Virtual communities communities

  8. New business models have emerged making it possible to earn higher returns by delivering more broadly on customer intentions. Value Based Alliances focused on Customer Needs Customer Managed Relationship Customer Relationship Management Product Management • Product Focus • P&L Product • Sales Focus • Volume • Customer is King • P&L by Customer & Product • Customer Lifetime Value • Maximize Customer Interactions to Enhance Bond • Similar to CRM • Customer Empowerment • Evolved form In-depth understanding of customer drives offers • Speed to market and “Best of Breed” define partner alliances • Revenue sources expand

  9. In migrating from a product-driven to a customer relationship management business model, superior customer insight capability is imperative to deliver relevant offers.

  10. The Customer Relationship Management model is quickly giving way to a new model where the customer is in the driver’s seat.

  11. Innovative players are forging a new business model by forming strategic alliances to better meet customer needs.

  12. These value based alliances can generate new sources of revenue and superior customer insights for those who integrate. * includes development, bounty fees & royalties = New revenue sources Source: Andersen

  13. Increasingly, the customer experience is the brand. “The difference between products and services blurs to the point that the distinction is a trap. Winners provide an offer that is both product and service simultaneously.” 1 • Requires a branding strategy that can: • deliver the experience with credibility • create loyalty and trust • attract the best alliance partners • support the evolving business model 1 Source: Blur, Stan Davis and Christopher Meyer

  14. To measure the customer experience and continually build the brand, determine the most important events for high value customers and take appropriate actions. Acting on Opportunity • Opportunity driven, not campaign focused communications..... • Many parallel communication strategies, across multiple channels with diverse, yet, coordinated messages..... • Relevance and timing are critical..... Event Opportunity Tailored Tracking Stream Communication Stream “Imbedded Customer Intelligence”

  15. The advanced business models create “stickiness” through personalizing the customer experience… • Put service in every product • Personalize and customize the interactions to deepen relationships and create repeat purchases • Anticipate customer desire or intention • Get smarter with each use - both customer and the offer • Let customers do anything at any time

  16. … And challenge traditional businesses to build new capabilities for information intensive marketing. • Put emotions and personality into every offer and all aspects of business • Cultivate communities to extend relevance • Extract information from each exchange • Learn to partner… learn to split

  17. Traditional businesses have similar goals to the emerging business systems, yet their reliance on customer information may vary. Goals Increase market basket and customer value while optimizing the cost to serve and service quality More frequently the right offer is delivered in near real time through the preferred channel How? Translating customer information into insights that are actionable Creating rules-based decisions to action learning Integrating business processes and systems to deploy tailored offers and communications Measuring effectiveness in rapid cycle to quickly learn and deploy new insight

  18. Traditional businesses use three main organizational structures for eBusiness. eBusiness Organizational Structures • Integrated • eBusiness contained within existing lines of business (LOB) • Charles Schwab • American Express • Bank of America • Separate LOB • eBusiness as a separate unit or stand-alone line of business (LOB) • Citibank • Espn.com • Dell • Separate Entity • eBusiness as a separate entity (i.e., spin-off, carve-out, tracking stock) • Lucent from AT&T • Marketwatch.com from CBS • Macy’s.com from Macy’s Source: Andersen

  19. Organizations must be more nimble to effectively operate in a rapidly changing environment. • Organization is part of the economy, same rules, organic • source funds from external vs. internal • virtual teams and free agents • Strong employment brand - promise and deliver the employee experience • mass customization to meet individual needs and interests • create commitment • Effective knowledge facilitation to generate and share ideas with impact • Streamlined decision processes to respond quickly to opportunities and work at internet speed • Seek diversity and variety

  20. The organizational competencies needed to be successful are changing... • effective technical skills to integrate software and systems • strong analytical skills with acute learning abilities • passionate focus on the customer and their potential value and needs • ability to find comfort and generate confidence in high ambiguity • develop mastery in emotional intelligence to manage self and relationships effectively (e.g. teamwork, collaboration, empathy, influence, adaptability)

  21. … And will continue to evolve with the digital age journey. • Show a deep understanding of traditional marketing elements - product, price, promotion, positioning and distribution • Embrace the simple to highly complex data analysis methods to formulate decisions for prescribing customer interactions • data mining for customer insights • decision rules to tailor experiences • infrastructure deployment for implementation • dynamic merchandising to deliver fresh content with frequent assortment changes • Recognize and rely on teamwork to deliver the brand promise

  22. As the Chief Information Officer and Chief Technology Officer roles morph to meet the needs of the new business systems... • Rising status of CIO role(s) - stronger support from top management regarding IT standards, enterprise systems & centralized IT policy • Engaging actively in strategy development • strategic direction • organizational structure • culture • marketing and financial decisions • Maintaining operational responsibilities (outsourced or direct) • data center operations • network uptime • help desk service • systems development • Harnessing new roles of “change master” and “strategy maker” • begin with reengineering projects • process changes • people changes • business acumen • leadership skills

  23. …the challenge increases to attract and develop expert talent. • Suggests background in technology with general management perspective • business executive first, technologists second • Increasing complexity in the environment - open architectures integrated well with proprietary systems (data, voice, video) • One school of thought suggests two roles may emerge • CIO for strategy, change and information resources • CTO for technology policy, infrastructure planning and operations

  24. Assume business model adoption is organic. Facets of organizations will be quicker to migrate. This may lead to information and infrastructure challenges due to lack of parity in a multi-business enterprise as new standards and supporting architecture continuously evolve. Focus on: • a specific set of capabilities (e.g. web collaboration, data warehousing, etc.) • in a specific channel(s) • for a limited number of customers • and a targeted set of customer transactions to produce early economic value • limit scope to specific product/service offers • consider outsourcing functions for speed and scale Build simply and quickly — Identify the projects that require the least effort to implement and provide the greatest payback • Assess difficulty to implement • Greenfield space (i.e. Internet, Web enabled projects)

  25. Summary Points • Assess the challenges in your industry or newly redefined industry • Determine the business model(s) most likely to succeed and a practical pace to guide a transformation • Position your brand for success through customer experience management • Evolve the organizational structure, infrastructure and competencies to support the strategy • Focus on what can get done vs. aspirationally what is desired • Build environment to create a rapid learning cycle

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