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Exhibit 4. Drivers Consistently Outperform Passengers

Stock Price (Indexed)

Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00

1,200

Compaq

S&P Computer

1,000

Hardware Index

1,400

800

Dell

Dell versus Compaq

(Jan. 1997 Jun. 2000)

600

400

200

0

100 = Index January 31, 1997

Month

Stock Price (Indexed)

Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00

300

Northwest

S&P Airline

250

Index

Southwest Airlines versus Northwest Airlines

200

350

(Jan. 1997 Jun. 2000)

Southwest

150

100

50

0

100 = Index January 31, 1997

Month

Sources: Standard & Poor’s Compustat; Booz Allen & Hamilton

manner. Their approach is integrated, holistic, and proac- tive. They work together with suppliers from the beginning of the development process to craft customer solutions rather than dictating a set of specifications. Our experience indicates that greater efficiencies, cost savings, and higher quality result.

Meanwhile, passengers continue to concentrate their re-engineering efforts on the latter stages of manufacturing, forfeiting the potential for value creation at the earlier stages.

By leaving intact the existing components and interfaces of a complex system, these compa- nies lay the foundation for the next generation of bottlenecks, misunderstandings, and creeping overhead costs.

These differences in approach between drivers and passengers explain why compa- nies in the same industry can consistently generate different levels of performance (see Exhibit 4). It is a matter of creat- ing what you want versus taking what you are given.

The Five Principles for Success

rivers become the center of gravity in their respective value chains by determining specifically where and how value is created and positioning themselves to control it. In our experience, they adopt five key principles (see Exhibit 5). D

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