Time To Revisit Value Migration
by Phil Phillips, PhD
Contributing Writer
phillips@chemarkconsulting.net
•Value flows between business designs
within a company. Example: from IBM
mainframe computers to IBM PC’s with
system integration.
Three Stages of Value
• Value inflow stage. Value is absorbed from
other companies or industries.
• Value stability stage. Competitive equilibrium with stable market shares and stable
profit margins.
• Value outflow stage. Companies lose value
to other parts of the industry - reduced
profit margins - loss of market share - outflow of talent and other resources.
Analyzing value
stages and types
of value.
Adrian Slywotzky created a business model that has lasted longer than its in- troduction in 1996 in the book, “Value
Migration - How to Think Several Moves Ahead
of the Competition.”
Slywotzky defines Value Migration, Market-
ing and Marketing Strategy, prior to discussing
the elements of Value Migration.
In marketing, he says, value migration is the
shifting of value-creating forces. Value migrates
from outmoded business models to business designs
that are better able to satisfy customers’ priorities.
Slywotzky defines Marketing Strategy as
the art of creating value for the customer. The
caveat here he says of creating value for the
customer, can only be done by offering a prod-
uct or service that corresponds to customer
needs. Slywotzky made a statement that was
true in 1996 and has been proven even more
so in 2012. “In a fast changing business envi-
ronment, the factors that determine value are
constantly changing.”
In the Slywotzky model there are three types
and three stages of Value:
Three Types of Value
• Value flows between industries. Example:
from airlines to entertainment.
• Value flows between companies. Example:
from Corel WordPerfect to Microsoft.
In dealing with Value Migration in this article we will address only one type when considering the Three Stages of Value and that is
the way value flows between companies. Further, there are two key differentiators in a business: business technologies and business
design. An example of business design differentiator would be United Airlines and Southwest. In Table 1. we have the same industry
and same technology but two radically different business designs.
Another example of business design differentiation is the auto industry model comparing
the traditional U.S. industry to the Toyota success model seen in Table 2.
In the two business design examples above
the “old” models were forced to change their
model to something else to compete. Being
slow to change both United and Traditional
Auto suffered share loss to Southwest and Toy-
Table 1. United vs. Southwest
36 | Coatings World
www.coatingsworld.com
July 2012
