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While the 3-Circle analysis presented here provides a post-hoc account of Ultimate Ears’ success after the fact, this book is about how to use the framework to analyze a current market situation and look ahead. The goal is to anticipate market development and evolution, and to build and execute solid growth strategy. We will see, in the chapters that follow, that this simple diagram provides a powerful basis for analysis of a company’s current competitive position and substantial insight into prospective growth strategy for the company. But at its roots is the most basic of all competitive strategy notions—that in simplest terms, competitive advantage is about creating value that really matters for customers, in ways that competitors cannot.
We find that the most effective starting point for such analysis is the customer and developing a deep understanding of customers’ values. Chapter 2 "Introduction to 3-Circle Analysis" provides an overview of the underlying framework that begins with the customer perspective. There, we will introduce the basic concepts and several case examples illustrating the principles that underlie the development of effective growth strategy. We then proceed in Chapter 3 "Defining the Context" through Chapter 8 "Dynamic Aspects of Markets" to provide detail on the core model concepts. The process begins with a clear definition of context (Chapter 3 "Defining the Context"). It is followed by an in-depth study of customers in which we will deeply explore the value customers seek and how existing competitors get credit for the value they create (Chapter 4 "The Meaning of Value"). From these steps, significant insight is obtained into current competitive positions and potential growth. Chapter 5 "Sorting Value" presents the categorization of customer value that is at the heart of the 3-Circle model’s contribution and in clarifying a firm’s positioning. Chapter 6 "Growth Strategy" then explores and defines the growth strategies that naturally evolve from the seven categories of value, leading to the inevitable question addressed in Chapter 7 "Implementation: An Inside View of the Organization": Do we have the skills and resources to pursue these ideas? Answering this requires a much deeper reflection on the firm’s (and competitors’) capabilities in terms of what strengths we have to leverage, what weaknesses we need to fix, and what gaps exist around which capability building will be necessary. Chapter 8 "Dynamic Aspects of Markets" explores the dynamic aspects of markets and Chapter 9 "Summary: Growth Strategy in 10 Steps" provides a summary of the book with a review of the 10-step process behind a 3-Circle growth strategy project.
This is designed to be a team process that engages customer, company, and competitor research in an integrative way. We look forward to the journey. At the end, you will find that the core of this analysis is seeking to deeply study and uncover ways to provide value for customers that competitors have simply not understood, and perhaps ways that have always been there for the taking. Chapter 2 "Introduction to 3-Circle Analysis" next provides an overview of the full 3-Circle framework.