The delta model is a customer-centric approach created by Dean Wilde and Arnoldo Hax which deals with the implementation and management of corporate strategies. The delta model argues that business strategy and management should focus on the needs of the end-user. Indeed, unlike many strategic frameworks based on the competitor or the product, the delta model is based on consumer theory.
Understanding the delta model
The creators of the delta model, Dean Wilde and Arnoldo Hax, argue that business management strategies must now cater to modern, consumer-focused markets.
This can be achieved through customer bonding, defined as the process of an organization making connections with its customers.
The delta model triangle
The delta model is named after the triangular representation of three distinct strategic options.
Each option, which guides customer bonding, is described below:
Product development, known as new product development process comprises a set of steps that go from idea generation to post launch review, which help companies analyze the various aspects of launching new products and bringing them to market. It comprises idea generation, screening, testing; business case analysis, product development, test marketing, commercialization and post launch review.
This competitive advantage can be achieved through cost minimization or product differentiation.
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.
Efficient supply chains, distribution channels, and innovation help the business sell standardized products that maximizing consumer satisfaction and better their rivals.
Apple’s suite of consumer products is a good example of this strategic option.
Total customer solutions
The next strategy focuses on providing solutions to consumers per their unique needs.
Here, customer bonding is facilitated by the business taking a cooperative approach to selling.
There is less emphasis on simply beating the competition.
Amazon is a perfect example of a total customer solution-based organization through customer obsession.
Customer obsession goes beyond quantitative and qualitative data about customers, and it moves around customers’ feedback to gather valuable insights. Those insights start by the entrepreneur’s wandering process, driven by hunch, gut, intuition, curiosity, and a builder mindset. The product discovery moves around a building, reworking, experimenting, and iterating loop.
Disney is another, offering its customers a complete and diversified experience across video games, merchandise, music, theme parks, and television shows.
Here the focus is on systemic economics as opposed to product economics.
There is also a focus on attaining market domination through complementors, or those who have significant influence over the customers of a business through complementary value-adding.
Microsoft was able to attract customers to its platform through partnerships with third-party organizations (complementors) such as Intel.
Over time, the company was able to achieve market domination through the extensive partnering seen in their products and services.
Delta model haxioms
Regardless of the strategy chosen, delta model co-creator Arnoldo Hax created a suite of guiding practices which he called “haxioms”.
Winning is defined as achieving customer bonding and not when the competition is beaten.
Try to understand each customer deeply. Strategy is performed one customer at a time by understanding their unique needs and wants.
Product-centric mentalities are constraining. Customers, suppliers, and complementors should be the key constituents of strategy.
Reject the truism which states that “the customer is always right” – in many cases, the customer does not know what is good for them unless a strong business-customer relationship has been established.
Robust strategic planning involves consensual dialogue among the key executives of the organization.
Key takeaways
The delta model is a customer-focused approach to implementing and then managing strategy.
The delta model defines three core strategies from whence its name is derived: best product positioning, total customer solutions, and system lock-in.
The delta model is underpinned by a set of best practices called haxioms. They remind businesses to focus on the customer and create products and services that will best suit their needs.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
