The Value of Business Analytics: Identifying the Path to Profitability

BUSINESS ANALYTICS AND THE CUSTOMER VIEW

A final perspective on strategic planning is to put the customer at the forefront of strategy. Within this context, competitive advantage comes from establishing a high level of customer bonding, thereby discouraging them from moving to the competition.

Wilde and Hax’s Delta Model

Successfully achieving this level of bonding comes through three possible strategies:

1. Best product

2. Total customer solutions

3. System lock-in

These represent points on a spectrum, as shown in Figure 2.5.

Figure 2.5 Wilde and Hax’s Delta Model.

Source: Adapted from Alfonso Hax, The Delta Model (New York: Springer, 2010).

Best product is closely aligned to Porter’s generic strategies; using this strategy requires achieving either a high level of product differentiation or becoming the cost leader. This competitive advantage may stem from innovation, economies of scale, or any other number of commonly cited economic factors.

A key criticism against this approach is that differentiation is dynamic and rarely sustainable in isolation—once a product is available in the market, it is often only a matter of time until competitors duplicate its value proposition. Ongoing dominance through differentiation requires a culture of continuous innovation, something that is frequently hard to develop. This perspective therefore suggests that the outcome is more often ...