@PraxentSoftware

Game ChangersHow market leaders discover a distinct advantage

and make their competitors irrelevant.

@PraxentSoftware

Why strategy?

Strategy is all about difference. But most of the thinking out there is focused on getting stuff done –which leads to sameness.

@PraxentSoftware

A case study

Movie Rental Industry

@PraxentSoftware

Price DiverseSelection

ConvenientLocation

NeighborhoodFeel

High

Low

VulcanVideo

FriendlyService

VideoFactoryAchmeMovie

A strategy analysis

Movie Rental Industry

@PraxentSoftware

But what’s the hair on fire problem with the customer experience?

@PraxentSoftware

@PraxentSoftware

High

LowVulcanVideoVideoFactoryAchmeMovie

A strategy analysis

Movie Rental Industry

HotTitleInventory

BlockbusterVideo

Price DiverseSelection

ConvenientLocation

NeighborhoodFeel

FriendlyService

@PraxentSoftware

What was the hair on fire problem with the customer experience at Blockbuster?

Blockbustertakesinalmost$800millioninlatefees,whichaccountsforroughly16%ofitsrevenue

OnecustomerinCaliforniawasfined$40byBlockbusterforbeinglateinreturning“Apollo13.”

@PraxentSoftware

@PraxentSoftware

High

Low

A strategy analysis

Movie Rental Industry

HotTitleInventory

BlockbusterVideo

PenaltyFree

Instant&Unlimited

Netflix

Price DiverseSelection

ConvenientLocation

NeighborhoodFeel

FriendlyService

@PraxentSoftware

Redbox – failed to kill itself

@PraxentSoftware

Self-service kiosks

• Redbox deployed self-service internet connected kiosks

• Eliminate real estate and labor costs of movie rental storefronts

• 1,950 discs per min

• $1.9B in sales

• 52% market share (DVD)

• 42k kiosks worldwide

@PraxentSoftware

Netflix 2.0 – killed themselves

@PraxentSoftware

Defensive:

Take the structure of the industry as given, and position the company to match its strengths and weaknesses to it.

Offensive:

Alter the underlying structure and forces of the industry, thereby altering the competitive environment itself.

You can approach strategy defensively and fight with competitors. Or approach it offensively and make them irrelevant.

@PraxentSoftware

Conventional strategy

LOWCOST

DIFFERENTIATED

@PraxentSoftware

Costsavingsaremadebyeliminatingandreducingthefactorsanindustrycompeteson.

Buyervalueisliftedbyraisingandcreatingelementstheindustryhasneveroffered.

Value Innovation

Source:BlueOceanStrategy

@PraxentSoftware

Know Your Customer:Segment customers by circumstance, not by attribute.

@PraxentSoftware

@PraxentSoftware

Segmenting your customers

By attribute

• Working professional male• Age 28-36• Lives in the suburbs• Married with 1.6 kids• $90k-$120k household

annual income

By circumstance

• Busy guy who hates to shop, needs the perfect fit for an upcoming interview• Needs a father’s day gift for a

busy guy who hates shopping• New dad who has no time just

hit weight loss goal; needs new clothes for work

@PraxentSoftware

It all begins with a job to do

@PraxentSoftware

#looking for an escape

@PraxentSoftware

#happy memories with my kid

@PraxentSoftware

Value Innovation:Increase buyer value by removing all the barriers in their way.

@PraxentSoftware

Where they are now.

Where they want to be.

Mind the GapWhat separates your customer from the value?

• Time

• Distance

• Financial

• Bundled offer

• Negative emotion

• Hard work

• Relational friction

• Reliance on a human

@PraxentSoftware

Case study

Netflix• Removed distance with

DVDs by mail

• Removed relational friction with no late fees

• Went on to remove time and introduced unlimited streaming entertainment

@PraxentSoftware

Case study

Sparefoot• Removed work with it’s

no-lift, no-lug storage service

• Eliminates idle space in half-used storage units

• Remote storage locations cost less

@PraxentSoftware

Case study

Carmax• Removed the relational

friction from the haggling that usually accompanies used car buying

@PraxentSoftware

Case study

Hyundai• Hyundai removed fear

from the process of buying a new car.

• Lose your job? Return your Hyundai. No credit impact. No negative equity.

@PraxentSoftware

Case study

Sunnova• Sunnova removed

financial distance from the process of buying solar residential energy.

• Homeowners lease solar panels which produce energy for less than they pay today.

@PraxentSoftware

Case study

iTunes• Apple unbundled

music purchasing by introducing the $0.99 song.

@PraxentSoftware

Examine the entire customer experience

Beforepurchase

Duringpurchase

Afterpurchase

Look for and eliminate all points of friction:

• Time

• Distance

• Financial

• Psychological

• Hard work

• Relational

• Reliance on a human

@PraxentSoftware

Is your industry penalizing it’s customers?

• Silvercar has built an $XX business by removing the penalties from the industry.

@PraxentSoftware

Value Innovation: Reduce costs by reducing, disrupting or removing low value factors.

@PraxentSoftware

Decrease cost. How?

Look for wasteful spending across the industry and reduce or eliminate it by a massive factor.• Labor• Real estate• Capital / Assets• Manufacturing

COST

@PraxentSoftware

Crowd Sourcing

Leverage crowd sourcing to reduce the labor cost of design, engineering, problem solving.

10kcontestspermonth,$142mpaidouttodesigners

185kdatascientistscompetingtosolve

yourproblem

@PraxentSoftware

Leveraged assets & time• Eliminated cost of

real estate and labor from the hospitality industry by leveraging the unused real-estate of others

• 2M listings (90X more per employee)

• 640k hosts• 500k stays per night• $25B valuation• Owned properties? Zero.

@PraxentSoftware

3D Printing

• Local Motors reduced cost of manufacturing by 1000x by leveraging 3D printing

• 5-22x faster process for a car to produce (depending on vehicle)

@PraxentSoftware

Leveraged assets

• Eliminated cost of assets from the taxi transportation industry by leveraging the cars and desire for independence of everyday drivers

@PraxentSoftware

Remember…Strategy is about differenceand being different requires tough choices

FactorA FactorB FactorC

High

LowFactorD X-Factor

COST

BUYERVALUEDaretobebad…

Sothatwecanbegreat.

@PraxentSoftware

Tough choices?Kodak has a digital moment• Steve Sasson invents the first

digital camera in 1973 at Kodak

@PraxentSoftware

Innovator’s DilemmaIt’s much harder to create a disruptive innovation as an industry giant

@PraxentSoftware

How do we apply these ideas to Praxent?

@PraxentSoftware

Remember…Strategy is about differenceand being different requires tough choices

FactorA FactorB FactorC

High

LowFactorD X-Factor

COST

BUYERVALUEDaretobebad…

Sothatwecanbegreat.

@PraxentSoftware

@PraxentSoftware

Strategy CanvasCurves International

Price Amenities EquipmentVariety

WorkoutTime

AvailabilityOf

Instructors

MotivatingEnvironment

Non-threateningSameSex

Environment

Convenience

Traditionalhealthclub

High

Low

Curves

@PraxentSoftware

A case study

BUYERBENEFIT

• Comfortable, non-threatening environment

• Friendly group classes create accountability, builds community

• Convenient: Located nearby with plenty of parking

@PraxentSoftware

A case study

COST• Small 2,500 sq ft

facilities in strip centers (vs. 15,000 sq ft gyms) lowers real estate costs

• One class at a time lowers labor costs

@PraxentSoftware

Increase Buyer Value. How?

Eliminate points of friction between your customer and the benefit.

BUYERVALUE

@PraxentSoftware

Rule #1Strategy is not about you or your capabilities. It’s about your chosen customer and their journey.