DDBA 8161 Week 10 Strategy Measurement Plan Example

Writing Down the Result That Would Prove Us Wrong: A Measurement Plan for a Hotel Laundry's Route-Density Strategy After a National Rival Matches Its Price, Measured Route by Route Rather Than by Profit

Student Name

Walden University

DDBA 8161: Business Strategy and Innovation for Competitive Advantage

Instructor Name

Month Day, Year

Writing Down the Result That Would Prove Us Wrong: A Measurement Plan for a Hotel Laundry's Route-Density Strategy After a National Rival Matches Its Price, Measured Route by Route Rather Than by Profit

Why the Strategy Needs a Way to Lose

Most strategy claims are written so that nothing could prove them wrong. "Our density gives us a cost advantage" survives any quarter: if profits rise, density worked; if they fall, something else interfered. Popper (1959) held that a claim earns scientific standing only when some conceivable observation could refute it. This plan applies that standard to the route-density strategy of Harbor Linen, the composite Charleston laundry mapped in Week 4, now that a national linen company has matched Harbor's prices instead of undercutting them. The strategy claims that Harbor's dense routes let it serve hotels more cheaply than the rival can, so that at equal prices Harbor keeps its hotels and the rival loses money trying to win them. The plan measures that claim where it operates, on the routes, and writes down in advance what would show it to be false.

Why Measure Routes, Not Profit

Profit mixes the effects of density with everything else: linen prices, labor rates, a hotel opening or closing. Wiggins and Ruefli (2002) found that superior performance rarely lasts long in most industries, which makes it all the more important to see early whether the mechanism behind an advantage is holding. If density is the mechanism, density should be visible first in route figures, then in cost per pound, then in retention. Profit is the last and noisiest signal.

The Measures

The measures follow the chain the strategy describes. If Harbor's stops per route hour fall, density is weakening at its source. If delivered cost per pound rises above the rival's estimated cost, the advantage has gone even if density holds. If retention falls, customers are leaving despite equal prices, which would mean something other than cost drives their choice. The rival's own density, estimated from what can be observed, shows whether the rival is closing the gap. Casadesus-Masanell and Ricart (2010) describe business models as chains of choices and consequences; measuring each consequence separately shows where a chain breaks.

Table 1

Measurement Plan for the Route-Density Strategy

Harbor figures from dispatch and cost records; rival density estimated from truck counts at hotel loading docks and announced contracts. Composite case.

The Falsification Statement

If, within four quarters of the rival's price match, Harbor loses more than 10 percent of its hotel accounts while its own stops per route hour and delivered cost per pound stay within target, the route-density strategy is wrong about why hotels choose Harbor. In that case, density would be intact and cost low, yet hotels would still leave, which would show that something else, such as the rival's linen quality, its national contracts with hotel brands or its service guarantees, matters more than cost. Harbor would then need a different strategy, not more density.

Other Results and What They Would Mean

If retention holds and the rival's estimated density stays below about three stops per route hour, the strategy is working as claimed. If retention holds but Harbor's own density falls, the strategy is at risk even though no customers have left yet. If retention falls and Harbor's density falls too, the cause could be either, and the plan would need closer study of which hotels left and why.

Who Measures and When

Harbor's dispatch manager compiles route data monthly. The controller computes cost per pound quarterly. The sales manager counts the rival's trucks at ten large hotels on two mornings each month and records contracts the rival announces. The owners review the full table each quarter.

What the Plan Cannot Do

Estimates of the rival's density are rough. Truck counts at a sample of hotels may miss routes that serve other customers. The plan treats the rival figure as a signal, not a precise measure. It also cannot distinguish hotels that leave because of the rival from hotels that close, renovate or change brands; the sales manager will record the reason for every lost account so those departures can be set aside.

References

Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long Range Planning, 43(2-3), 195-215. https://doi.org/10.1016/j.lrp.2010.01.004

Popper, K. R. (1959). The logic of scientific discovery. Hutchinson.

Wiggins, R. R., & Ruefli, T. W. (2002). Sustained competitive advantage: Temporal dynamics and the incidence and persistence of superior economic performance. Organization Science, 13(1), 81-105. https://doi.org/10.1287/orsc.13.1.81.542