How to Think Several Moves Ahead of the Competition with Value Migration
Value migration is a concept that describes how economic and shareholder value shifts from obsolete business models to new, more effective ones that better satisfy customers' needs. The term was coined by Adrian J. Slywotzky, a strategy consultant and author of the book Value Migration: How to Think Several Moves Ahead of the Competition.
In his book, Slywotzky identifies seven patterns of value migration that every manager should know, such as multidirectional migration, blockbuster migration, multicategory migration, and specialization migration. He also provides a step-by-step process for evaluating one's own company's situation and designing a business that can capitalize on the inevitable migration of value.
Value migration is not driven by new products or technologies, but by superior business designs. A business design is how a company selects customers, differentiates its offerings, configures its resources, goes to market, and captures value. Slywotzky argues that companies that understand their customers' highest priorities and create a business design that aligns with them can gain a competitive advantage and achieve growth in revenue, profits, and market value.
Some examples of companies that have successfully applied value migration are Microsoft, Nucor, Starbucks, Southwest Airlines, and Merck. They have each created a business design that enabled them to capture value from previously dominant competitors like IBM, U.S. Steel, General Foods, United Airlines, and Pfizer. They have also anticipated customer changes and adapted their business designs accordingly.
To learn more about value migration and how to apply it to your own business, you can download a PDF version of Slywotzky's book Value Migration: How to Think Several Moves Ahead of the Competition from this link[^1^]. You can also read some reviews of the book from other readers[^2^] or check out some related research papers on value migration in the digital economy[^3^].
One of the key insights of value migration is that customers are not loyal to products or companies, but to the value they receive. Therefore, companies that want to retain or attract customers need to constantly monitor and improve their value proposition. Slywotzky suggests that managers should ask themselves three questions: What is the current value equation for our customers How is it changing How can we change our business design to deliver more value
Another important aspect of value migration is that it can occur in any industry, at any time, and in any direction. Slywotzky provides several examples of how value has migrated from one industry to another, from one category to another, from one segment to another, and from one function to another. He also shows how value can migrate within an industry, from incumbents to challengers, from challengers to incumbents, or from both to a third party.
A final point that Slywotzky emphasizes is that value migration is not a one-time event, but a continuous process. He warns that companies that have achieved a successful business design should not rest on their laurels, but should always be on the lookout for new opportunities and threats. He also advises that companies that have lost value should not give up hope, but should seek to reinvent themselves and find new sources of value. 061ffe29dd