About the Authors |
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Acknowledgements |
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Preface |
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PART I Complexity: The Silent Killer of Profits and Growth |
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Chapter 1 The Overwhelming Case for Conquering Complexity |
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3 | (22) |
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4 | (2) |
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The Three Rules of Complexity |
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5 | (1) |
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Complexity Rule #1: Eliminate complexity that customers will not pay for |
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6 | (3) |
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Case #1 : The story of Southwest Airlines vs. American Airlines |
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6 | (3) |
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Complexity Rule #2: Exploit the complexity customers will pay for |
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9 | (2) |
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Case #2: Capital One vs. MBNA, Bank of America, et al |
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9 | (2) |
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Complexity Rule #3: Minimize the costs of complexity you offer |
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11 | (7) |
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Case #3: The real secret of Toyota |
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12 | (2) |
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Case #4: Experience bought, not taught |
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14 | (4) |
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Finding the Right Combination of External and Internal Complexity |
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18 | (2) |
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The Complexity Value Proposition |
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20 | (1) |
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Conclusion: The competitive advantage of conquering complexity |
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21 | (4) |
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Chapter 2 Exposing the Silent Killer: How (and how much) complexity drains time and resources in your business |
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25 | (16) |
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How Complexity Silently Kills Profits and Drains Resources |
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26 | (3) |
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Process Cycle Efficiency: The foundation for quantifying complexity |
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29 | (2) |
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Quantifying What Affects PCE: The Complexity Equation |
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31 | (4) |
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How Variation in Mix Destroys PCE and Profit |
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35 | (1) |
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What Lever to Pull?: Advice on improving PCE |
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36 | (2) |
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38 | (2) |
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40 | (1) |
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Chapter 3 How Complexity Slows the Flow of Critical Information |
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41 | (12) |
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Information Flow Complexity = Too Long to Reach Decision Makers |
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43 | (3) |
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Complexity Creates Noise in Information Systems |
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46 | (1) |
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Dell and Compaq: Better to be fast than first |
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47 | (4) |
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How Does Dell Achieve Fast Information Flow? |
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48 | (3) |
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Conclusion: Cumulative effect of complexity on strategic decision making |
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51 | (2) |
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Chapter 4 How Conquering Complexity Drives Shareholder Value |
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53 | (18) |
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The Challenges of Accounting for Complexity |
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55 | (3) |
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Making Decisions That Benefit Shareholders: Earnings Per Share vs. Economic Profit |
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58 | (4) |
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Key Lessons About EP and Growth |
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62 | (1) |
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The Complexity Imperative in Fast Markets |
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62 | (4) |
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The Links between Complexity and Value |
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66 | (2) |
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68 | (3) |
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Chapter 5 Complexity as a Strategic Weapon |
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71 | (15) |
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Six Precepts For Strategic Use of Complexity |
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72 | (8) |
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Precept #1: Customers define value |
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73 | (1) |
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Precept #2: The biggest gains from conquering complexity come from step-change improvements |
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73 | (1) |
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Precept #3: Focus on what matters most-100% of your value creation probably resides in only 20% to 50% of offerings |
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74 | (1) |
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Precept #4: Think value share instead of market share |
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75 | (3) |
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Precept #5: Growth results from value-driven application of finite resources |
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78 | (1) |
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Precept #6: First eliminate offerings that can never generate positive Economic Profit, then attack internal complexity |
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79 | (1) |
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ALDI International: A case study in strategic complexity |
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80 | (3) |
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Eating Away the Competition |
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81 | (1) |
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ALDI's Secret of Success: Eternal watch against complexity |
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82 | (1) |
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Conclusion (and a look ahead) |
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83 | (3) |
PART II Complexity Analysis: Quantifying and Prioritizing Your Complexity Opportunities |
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Executive Overview of Complexity Analysis |
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86 | (3) |
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Chapter 6 Identify Strategic Complexity Targets |
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(Complexity Analysis Phase 1) |
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89 | (26) |
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Overview of Target Selection |
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90 | (2) |
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Step 1: Identify areas of greatest value-at-stake |
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92 | (4) |
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Data You'll Need to Identify Value-at-Stake |
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92 | (2) |
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Interpreting Economic Profit |
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94 | (1) |
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Getting More From Your Waterfall Chart |
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95 | (1) |
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Step 2: Analyze the strategic position of selected value-at-stake units |
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96 | (10) |
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Data You'll Need to Evaluate Strategic Position |
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96 | (1) |
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Using and Interpreting Strategic Position Data |
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97 | (2) |
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Mining Market Profitability and Competitive Position Data |
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99 | (5) |
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Outcome of Strategic Analysis |
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104 | (2) |
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Step 3: Develop a Complexity Profile of selected business units |
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106 | (9) |
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Data You'll Need for a Complexity Profile |
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106 | (1) |
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Charting and Interpreting a Complexity Profile |
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107 | (2) |
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What You Can Learn From a Complexity Profile |
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109 | (1) |
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Summarizing Phase 1 Lessons: Sources of exploitable advantage |
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110 | (3) |
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113 | (2) |
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Chapter 7 Map & Quantify the Impact of Complexity |
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(Complexity Analysis Phase 2) |
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115 | (28) |
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Overview of Mapping Complexity & Quantifying Impact |
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116 | (3) |
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Step 4: Identify the strategic value of your core processes |
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119 | (10) |
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EGI Case Study, Part 1: Core Process Analysis |
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125 | (4) |
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Step 5:. Determine family groupings |
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129 | (3) |
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EGI Case Study, Part 2: Identifying product families |
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130 | (2) |
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Step 6: Create a Complexity Value Stream Map |
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132 | (3) |
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EGI Case Study, Part 3: CVSM |
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135 | (1) |
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Step 7: Computing PCE baselines |
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135 | (7) |
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Data You'll Need to Compute PCE Baselines |
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136 | (4) |
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Calculating PCE Baselines: EGI example |
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140 | (2) |
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142 | (1) |
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Chapter 8 Build a Complexity Value Agenda |
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(Complexity Analysis Phase 3) |
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143 | (38) |
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Overview of Developing a Complexity Value Agenda |
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144 | (2) |
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Step 8: Calculate EP% for offerings |
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146 | (4) |
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Data You'll Need to Calculate EP% by Offering |
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147 | (3) |
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Step 9: Perform a substructure analysis |
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150 | (2) |
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Data You'll Need to Perform a Substructure Analysis |
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150 | (1) |
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Interpreting a Substructure Analysis |
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151 | (1) |
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Step 10: Calculate PCE Destruction and complete a Complexity Matrix |
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152 | (7) |
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Data You'll Need for PCE Destruction and the Complexity Matrix |
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155 | (2) |
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Completing and Interpreting a Complexity Matrix |
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157 | (2) |
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Step 11: Evaluate potential impact of process |
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159 | (1) |
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Path A: Value creation from process improvement |
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160 | (2) |
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Path B: Value creation from offering improvement |
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162 | (4) |
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Adding Numbers to the Options: What-If analyses with the Complexity Equation |
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166 | (3) |
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Step 12: Select options and build business cases for selected opportunities |
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169 | (3) |
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Step 13: Create a Complexity Value Agenda (and Execute!) |
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172 | (9) |
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The EGI Case Study: Prioritizing and Building a Value Agenda |
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172 | (5) |
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PART III Implementing Complexity Agendas |
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Chapter 9 Simplifying Product and Service Lines |
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Going for Big Gains in Economic Profit |
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181 | (4) |
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185 | (4) |
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Simplifying Product or Service Configurations: Exploiting naturally occurring configurations |
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189 | (1) |
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Adjusting Your Customer Portfolio |
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190 | (4) |
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Options for Deletion of a Product or Service |
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194 | (4) |
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196 | (2) |
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Roadblocks to Simplification |
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198 | (7) |
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Conclusion: Biting the simplification bullet |
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205 | (2) |
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Chapter 10 Finding the Complexity That Customers Value |
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207 | (20) |
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A Case Study in Choice Explosion |
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208 | (5) |
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What Customers Want vs. What They Value |
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213 | (12) |
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Technique #1: Key Buying Factor analysis |
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213 | (2) |
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Technique #2: Kano analysis |
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215 | (2) |
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Technique #3: Functional analysis |
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217 | (4) |
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Technique #4: Conjoint analysis |
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221 | (4) |
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Conclusion: Considering complexity when developing customer-focused strategies |
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225 | (2) |
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Chapter 11 Avoiding the Big Costs |
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Using Complexity Principles to Simplify Product Designs |
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227 | (2) |
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Simplicity Principle #1: Emphasize commonality |
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229 | (9) |
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A. Commonality Through Modularization |
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230 | (2) |
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B. Commonality Through Platforms |
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232 | (2) |
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Case Study: IPM's applications of platform thinking |
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234 | (2) |
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236 | (2) |
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Simplicity Principle #2: Exploit design reuse/recycling |
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238 | (1) |
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Simplicity Principle #3: Design with the life cycle in mind |
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239 | (1) |
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Benefits of Life Cycle Planning and Execution |
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240 | (1) |
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Example: Simplifying brake design in bikes |
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240 | (4) |
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Improving Design-to-Market Cycle Time |
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244 | (2) |
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Conclusion: Start with the end in mind |
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246 | (1) |
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Chapter 12 Achieving Service and Process Simplicity Optimizing work flow with Lean, Six Sigma, and complexity tools |
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247 | (14) |
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249 | (1) |
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Approach #1: Exploit commonality to reduce duplicative effort |
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250 | (3) |
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Approach #2: Ensure standardization of tasks |
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253 | (2) |
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Approach #3: Eliminate the delays and impact of task startup and task switching |
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255 | (4) |
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The Four Step Rapid Setup Method |
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257 | (2) |
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259 | (2) |
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Chapter 13 Using Information Technology to Deliver Complexity at Lower Cost |
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261 | (16) |
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Using IT to Deliver Variety (Good Complexity) at Low Cost |
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263 | (1) |
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The Cost of IT Complexity |
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264 | (2) |
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Fighting Back Against IT Complexity |
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266 | (1) |
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Principle #1: Don't rely on IT to fix a broken process (it won't!) |
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267 | (1) |
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Principle #2: Reduce the complexity in your systems architecture (because your customers won't pay for it!) |
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267 | (1) |
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Principle #3: Outsource complexity where strategically desirable |
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268 | (2) |
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Principle #4: Use modularity in your hardware and software |
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270 | (2) |
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272 | (5) |
PART IV High-Return Investments When Conquering Complexity |
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Chapter 14 Creating a Culture that Can Conquer Complexity |
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277 | (14) |
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Cultural Ingredient #1: Believe conquering complexity is an imperative |
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278 | (2) |
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Cultural Ingredient #2: Ongoing executive engagement |
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280 | (4) |
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Cultural Ingredient #3: Target high value-at-stake opportunities |
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284 | (1) |
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Cultural Ingredient #4: Dedicate organizational resources |
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285 | (1) |
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Cultural Ingredient #5: Provide an analytical methodology and toolset |
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285 | (1) |
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Cultural Ingredient #6: Align metrics, incentives, policies with complexity goals |
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286 | (2) |
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Cultural Ingredient #7: Nurture close customer connections |
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288 | (1) |
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289 | (2) |
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Chapter 15 Conquering Complexity in Your Product and Service Value Chain |
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291 | (18) |
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Value Chain Configuration: Extracting the full value from conquering complexity |
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292 | (5) |
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Strategic Sourcing: How complexity drives the make-or-buy decision |
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294 | (3) |
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Managing Upstream Complexity: Strategic supplier segmentation |
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297 | (4) |
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Planning for Value Chain Changes |
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301 | (3) |
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Downstream Complexity: Smashing the retail paradigms |
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304 | (1) |
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305 | (4) |
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Chapter 16 Applying Complexity Principles to Mergers and Acquisitions |
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309 | (10) |
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310 | (5) |
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Win the Deal, Lose the Synergies |
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311 | (4) |
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Addressing Complexity Can Accelerate Integration |
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315 | (3) |
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Making Complexity Due Diligence (and M&A) a Repeatable Process |
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318 | (1) |
Conclusion |
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319 | (2) |
Appendix |
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321 | (10) |
Index |
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