Building Advantaged
Capabilities:
Missing Link Between Strategy
and Impact
June 2013
Deloitte Consulting LLP
Operational Effectiveness Versus Strategic Positioning
Nonprice buyer
value delivered
High
Strategic
Positioning
Operational
Effectiveness
Productivity Frontier
Low
(state of best practice)
High
Low
Source: Adapted from What Is Strategy?, Michael Porter, Harvard Business Review. November-December 1996
2
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Relative cost position
Advantaged Capabilities Underpin Strategic Position
Nonprice buyer
value delivered
High
Strategic
Positioning
Operational
Effectiveness
Productivity Frontier
Low
(state of best practice)
High
Low
Source: Adapted from What Is Strategy?, Michael Porter, Harvard Business Review. November-December 1996
3
CAS-COD-Prez-Date-CTL
Relative cost position
Advantaged Capabilities:
The Bridge Between Strategy and Action
MANAGING
4
CAS-COD-Prez-Date-CTL
COMPETING
A Capability Blueprint
Desired
Performance

Price consistently within and between segments
Delivered by
Hypothesize
Bound
Analyze
Develop
Test / Execute
Flow
of Activity
Process,
Decision
Rights
Appropriate
Tests
Gross to
Net Pricing
Process
Documentation
Waterfall
Analyses
Order
Approved
400
YES
Dealer
seeks job
quote
Territory Manager
(TM) contacted by
dealer
SLDP,
metro tier, or
key dealer
quote?
Above
18%
margin
?
Quote reviewed by
pricing analysts
NO
391
24
Deploy,
Track
(Update)
Statistical
Application
Commercial
Processes
Price
Variance
Dashboard
Variation
Analyses
Sales Process /
CRM
Policy
Design
Illustrative
4
363
RFQ reviewed by
Inside Sales
Leader (ISL)
TM creates RFQ
Data
Management
Test and
Refine
Price
Band
30
7
326
300
Order
Approved
YES
Quote sent to
pricing team
NO
Above
ref erence
sell price?
200
NO
Quote reviewed by
quoting manager
= Start / End
Above
15%
margin
?
YES
= Process Step
= Decision
= Process Gaps
Order
Approved
NO
Quote reviewed by
pricing team leader
Minimum
acceptable
order?
YES
NO
Order sent back to
DSO f or new RFQ
100
Invoice Promotion Terms Net Price
Price
/ Rebates Discount
External Warehouse Net Price
Freight
after Cost
to Serve
5
CAS-COD-Prez-Date-CTL
Enabling
Ideas, Tools
Scatter
Analytics
Price
Leakage
Database
Systems,
Structures
Individual
Competencies
& Assets
Scoping
Meeting Your People Where They Are
major
“New Job”
“Revolution”
“Refinement”
“New Group”
minor
minor
major
Change in People’s Work Relationships
6
CAS-COD-Prez-Date-CTL
Change in People’s Activities
A new capability presents different challenges for different groups
Building Advantaged Capabilities
Identify and focus on critical capabilities
Hold to a higher standard of definition
Ensure integrated and adaptive deployment
Meet your people where they are
7
CAS-COD-Prez-Date-CTL
Leadership imperatives?
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