How to use the Delta Model in higher education
**The Edvocate is pleased to publish guest posts as way to fuel important conversations surrounding P-20 education in America. The opinions contained within guest posts are those of the authors and do not necessarily reflect the official opinion of The Edvocate or Dr. Matthew Lynch.**
A guest post by Enrique Suarez
If Educational Institutions are to achieve success in the marketplace, they must begin to think about their business strategy in new ways. Traditional competitive approaches that rely on product differentiation do not produce optimal results, nor do they take advantage of new sources of profitability that the connectivity of a networked economy offers. Too often, they focus the attention in the wrong place.
To survive and prosper today, Educational Institutions must shift their attention from products to customers and create a business plan based on:
- The innovative restructuring of your customer relationships
- Segmenting your customers more creatively
- Delivering a value proposition that places the customer at the center of your strategy
The research at the MIT Sloan School of Management, has given rise to a powerful business model that reflects the many new ways to compete in the current economy. Called the Delta Model, it was designed to offer senior managers a fresh and pragmatic approach to critical strategic business thinking. This new, integrative, strategic framework presented by Enrique Suarez, allows educational managers to identify new sources of profitability, develop new strategic approaches, establish new directions for their educational institutions, and implement an enhanced strategic agenda.
This strategic framework will also allow Educational Institutions to gain pragmatic insights on how to:
- Begin to change from a product-driven orientation to a customer-driven orientation
- Utilize “complementors” to extend your enterprise network
- “Decommoditize” the way you do business by strengthening your customer relationships
The First Task: Positioning The Foundations of Management Strategy
In the conventional, best product positioning approach to business strategy, the way to attract, satisfy, and retain the customer is through the inherent characteristics of the product itself. Managers are guided by product economics and measure their success in terms of product share. In contrast, MIT has developed a different model of business strategy based on customer economics. Called the Delta Model it was designed to identify better ways to compete in a networked economy and advocates an innovative, customer-centric approach to business strategy. I’ll examine the current state of critical business thinking at institutions of higher education and the Delta Model’s triangle of strategic options that make it possible for educational managers to craft more creative and effective business plans. These three options include:
System Lock-In – a broad-scope strategy that relies on a full network of meaningful contributors to create both customer lock-in and competitor lock-out and achieve the highest level of customer bonding. Those who are successful in reaching this position gain a de facto dominance of the market.
Total Customer Solutions – which emphasizes customer bonding through a portfolio of customized products and services that represent a unique and comprehensive value proposition to individualized customers. It is a 180 degree departure from Best Product positioning (see below) and requires a very different mindset.
Best Product – a more narrow option built on classic forms of competition and centered on the intrinsic superiority of a product or service, being first to market, or the differentiation of a so-called dominant design. Most companies are positioned here, with limited opportunities for customer bonding. System Lock-in, Total Customer Solutions, and Best Product are alternative options for achieving customer bonding and can be pursued simultaneously.
You can download the entire presentation in the following link: