Lecture 1 Summary: Strategy, Diamond-E Framework, Key Success Factors, and KPIs

Flashcards covering vocabulary, frameworks, and metrics from Lecture 1 including the Diamond-E Framework, Strategy, Key Success Factors (KSF), and Key Performance Indicators (KPI).

Diamond-E Framework

A strategic framework where internal configurations (Management Preferences, Organization, Resources) link to internal strengths and weaknesses, while external factors (Environment) link to opportunities and threats in a SWOT analysis.

Strategy

The plan a business uses to pursue opportunities and avoid threats by evaluating internal capabilities (“can”) and external demand (“should”).

Internal Consistency

Good strategic execution achieved when a business's strategy is aligned with its internal configurations: management preferences, organization, and resources.

External Alignment

The condition in which a firm selects the right strategy to fit its external environment.

Management Preferences

The vision, mission, preferences, and biases of leadership that determine what a business wants to do.

Organization

The culture, identity (“who we are”), capabilities, and structural setups of a business entity.

Specialist Organizational Structure

An organizational structure focused on specific functional departments (e.g., accounting, marketing) to maximize operational efficiency.

Generalist Organizational Structure

An integrative organizational structure that emphasizes broad, cross-functional capabilities over isolated specialization.

Resources

The tangible and intangible assets available to a firm, including human skillsets, capital, financial assets (raised via debt or equity), and reputation.

Cycle Time

The total amount of time required to move a concept from initial idea generation to reality.

Share of Wallet

A metric measuring how frequently customers buy from a specific brand compared to competing brands in the market.

Turnover KPI

A Key Performance Indicator measuring the percentage of employees a company must replace each year.

Churn

The percentage of customers who leave a company to buy from a competing brand.

Net Promoter Score (NPS)

A metric measuring customer advocacy by evaluating how likely customers are to recommend a company to others.

Pareto Customer Loyalty Rule

The business principle stating that the top $20\text{1}$ most loyal customers generate $80\text{1}$ of total business revenue.

Key Success Factors (KSF)

The core structural components required for financial performance: financial resources, employee commitment, customer satisfaction, quality products & services, innovation & creativity, and distinctive competitive advantage.

Key Performance Indicators (KPI)

Quantitative measurements that allow a business to track progress, evaluate performance, and diagnose the root cause of operational problems.

Firm Value KPI

A strategic indicator reflecting how the market evaluates a company's current performance and its future growth prospects.

Warranty Claims KPI

A quality control metric measuring returned products, used to diagnose root causes such as incompetent/unmotivated employees, flawed processes, or poor input materials.

Distinctive Competitive Advantage

Valuable and sustainable differentiation from competitors rooted in unique resources, capabilities, or market insights that competitors cannot easily imitate.