Causal diagrams, the placebo effect, and the expectation effect
The Senseo effect
15
www.allianceexperts.com Alliance experts The Senseo effect ALFRED GRIFFIOEN Bangkok, June 3 rd 2010
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Lecture given in Bangkok on June 3rd at the Netherlands Thai Chamber of Commerce NTCC.org
Transcript of The Senseo effect
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The Senseo effect
ALFRED GRIFFIOEN
Bangkok, June 3rd
2010
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Introduction
Alfred Griffioen• Specialist in business partnerships and alliances• Track record in marketing, business
development and strategy consulting• Author of 2 books about alliances and
competitive advantage
Alliance experts• Collaboration of 5 alliance specialists with
different backgrounds: legal, public-private, operational management, business alignment
• Our vision is that collaboration between companies will become increasingly important
• We focus on converting experience, research and knowledge-sharing into practical models and methods
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How to make a profit?
• Differentiation is the basis for making a profit• With an offer different from the rest you have a kind of
monopoly: you can pick your optimum price on the demand curve
• Without differentiation one can only follow the price of the competitors
numbers
sold
numbers
sold
in competitionmonopolyprice
costs
profit
demand curve
price
costs
profit
demand curve
price
costs
profit
demand curve
price of the
competitor
price
costs
profit
demand curve
price of the
competitor
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Competitive advantage
Which of the suppliers has the biggest competitive advantage?
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Competing on price doesn’t work any more
0
500
1000
1500 Video recordersDVD-players
Price (€)
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Partnerships are an important means of achieving competitive advantage
Purchase
Investments Risks
Time Exclusivity
Invest yourselfInvestments Risks
Time Exclusivity
Partner
Investments Risks
Time Exclusivity
Do a take-overInvestments Risks
Time Exclusivity
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Examples of alliances can be found both in business and consumer markets
Business-to-business markets Business-to-consumer markets
Printing products and services
Mobile phones
Business applications
Consumer electronics
Mobile platformSeamless air transportation
LNG terminal Search engine
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Philips and Sara Lee/DE introduced the Senseocoffee maker in 2001 with huge success
• Coffee maker for one or two cups of coffee at a time
• Philips produced the coffee maker, Douwe Egberts, part of Sara Lee, developed the coffee pads
• Perfect response to trends:• Smaller households• Growing popularity of espresso
and cappuccino• Demand for luxury
• Patented technology of the coffee maker and the coffee pads
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The truth is that it wasn’t that easy
• Douwe Egberts was facing declining margins and a shrinking market
• Various companies were invited to partner but refused, including Philips
• Douwe Egberts proceeded with the development on its own, but ran into technical problems
• Cor Boonstra made the link with Philips and guided the collaboration
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The business model and how it can change
• In 2001 the business model seemed obvious:• Philips would receive the one-off revenue
of the coffee maker• Douwe Egberts would profit infinitely
from the sales of the coffee pads
• The purchase price of € 59 was an obstacle to rapid market penetration
• Douwe Egberts compensated with a first box of free coffee pads
• Later on the patent on the pad could not be sustained, and multiple suppliers of the pads emerged on the market
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Contractual arrangements
• An alliance can be formalised through various types of contractual arrangements
• Philips and Douwe Egberts chose for a bilateral agreement• LG Philips was formalised as a joint venture
Minorityshare
Traditionalcontract
JointVenture
Dissolvea company
• Transactional customer / supplier relations
• Joint R&D, marketing, distribution
• One-sided• Exchange of shares
• 50% - 50%• Other proportions
• Merger• Takeover
Partnerships
• Licensing, franchising• Long term outsourcing
Unilateralagreement
Bilateralagreement
Contractualagreements
Sharetransactions
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Chances of generating a profit through your collaboration also depends on ‘soft’ factors
• Teamwork primarily depends on trust, not on procedures
• Trust requires some self-examination
• Smart trust combines a positive attitude with a good level of proof and analysis
4 cores of credibility Types of trust
Integrity Are you reputable?
Intent What's your agenda?
Capabilities Are you relevant?
Results What's your track record?
Blind trust Smart trust
DistrustNo trust
Low
High
High
Low
Level of proof and analysis
Ba
sic
att
itu
de
to
ward
s t
rus
t
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Setting up a partnership also requires informing your organisation
• An alliance only works if the majority of those involved see it as a benefit for both the company and themselves.
Do
es th
e in
fo
rm
atio
n
help
a co
mp
etito
r?
Is information publicly available?
Yes
NoYes
No
Freely share
information
Share the
information
if it helps the
collaboration
First consult
other managers
before sharing
information
Do not share
the information
• This requires explaining that the collaboration aims to enlarge the workload and not to transfer work to another company.
• Information sharing is another topic to be addressed: only share the information that does not help the competitor
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Evaluation, advice and training are the best means of enhancing your chances of success
Research by the University of Rotterdam into 49 companies shows that success as measured in profits, achieving targets and the quality of the relationship increases with experience
The learning effect tends to level off from the 6th alliance
More success can be achieved through:- Structured evaluation + 38 %- Hiring a specialist + 45 %- Training in the subject + 76 %
6Number of alliances
Successratio
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Knowledge sharing
• We have various presentations available on our website www.allianceexperts.comand on Slideshare
• The booklet The Alliance effect is available for every participant
• Please join us in the Linked-in group Alliance professionals in Southeast Asia if you are interested
