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LOYOLAUNIVERSITYGRADUATE SCHOOL OF BUSINESS
ISOM 799High-Tech Strategy & Business Development
Spring Quarter, 2000
Growth Driver Analysis & Management
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Growth Drivers Refer to the Dynamic Interactions Between Members of a Value Web That Result in a Set of Mutually Reinforcing Actions That Benefit Each Participant.
Core Products
ChannelsCustomers
Complementary Products
Business Unit
Growth Drivers Interact to Create Increasing Returns
Active Management of Growth Drivers is Key to Rapid and
Sustained Growth
Active Management of Growth Drivers is Key to Rapid and
Sustained Growth
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Potential Growth Drivers are Found Throughout the Value Web
Business Unit– Buyer Power
Core Product– Scale
Complementary Service Providers– Web Attractiveness
Channels– Attractiveness– Market Power
Customers– Network Effects– Learning Effects
A Few Examples...
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Growth Driver Management Process
Select/Adjust for Specific Application
Construct Model(s)
Simulate & Analyze
Dynamics
Develop Set of Management
Initiatives
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Active Growth Driver Management Helps TravelWorld.com Succeed The following is an amended example from Net Gain, by John Hagel III and Arthur Armstrong
Revenue
ActiveMembers
TransactionVolume
AdvertisingFees
• Content Attractiveness• Member Loyalty
• Member Profiling• Transaction Offerings
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Content Attractiveness Builds Membership Base
Member-to-MemberInteraction
ContentAttractiveness
Member-GeneratedContent
Hours Spent at Site
MarketingEffectiveness Members
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Loyalty Maintains Membership Base
Contributions toSite Content
MemberLoyalty
Relationships withOther Members
Hours Spent at Site
ChurnRate Members
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Member Profiling Increases Revenue
TransactionVolume
ProfileDetail
AdvertisingEffectiveness
TargetedTransactions
AdvertisingRevenue
Click-ThroughRate
TransactionRevenue
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Transaction Offerings Drive Transaction Revenue
Attractivenessto Vendors
TransactionOfferings
Vendors
Members
TransactionRevenue
Transactions
MarketingExpenditures
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Ten-Year Forecasts Demonstrate Power of Efficiency, Scope and Reach
Initial Investment: $15M
Year 10 Revenue: $620M– Estimate $285M Due to Interaction of Growth Drivers
Year 10 Travel Commissions: $170M– At 5% Commission, $3.3B in Implied Transactions
Less Than 4% of Total Leisure Travel Spending, but 8x Travel & Leisure Magazine and 200x Average Travel Office
Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved.
Growth Driver Analysis Highlights Strategic Issues
Business Development Stages– Critical Mass of Members
– “” Usage Profiles
– “” Advertisers/Vendors
– “” Transaction Profiles
– “” Transactions
Member Development Stages– Attract Members
– Promote Participation
– Build Loyalty
– Capture Value
