Choose One At Your Peril: The Disciplines of Market Leaders
The Discipline of Market Leaders became a much revered business book in the mid-90s. At LEVERAGEDWISDOM the book generated vigorous discussion and ultimately disagreement with the authors.
Michael Treacy and Fred Wiersema claimed that market leadership derived from choosing one of three disciplines; operational excellence, product leadership or customer intimacy. To attempt to master all three would lead to weakness and mediocre standing in the market place. They offered extensive research and specific examples of companies who chose one discipline among the three and noted their prosperity.
LEVERAGEDWISDOM members believed differently. After much discussion, Members decided they had to excel at all three disciplines. Customers would eventually require all three partly because “good enough never is.” When Members began holding each other accountable for continual improvement in all three, it led to increased equity value in their businesses.
If you would like to learn more about why LEVERAGEDWISDOM Members embrace the 3 disciplines and why we think Dell, Airbourne and Sony erred in focusing on one, call us and we’ll invite you to lunch at one of our meetings.
In the meantime, here’s a summary. Treacy and Wiersema defined the three disciplines, thusly:
OPERATIONAL EXCELLENCE
“Operationally excellent companies deliver a combination of quality price and ease of purchase and no one else in their market can match. They are not product or service innovators, nor did they cultivate one-to-one relationships with their customers. They executed extraordinarily well, and their proposition to customers is guaranteed low price and/or hassle free service.”
The authors went on to suggest that operational excellence includes standardize simplified and tightly controlled central centrally planned decision-making, management systems that focus on integrated reliable high-speed transactions and a culture that abhors waste and rewards efficiency. Dell computer was referenced by the authors as a master of operational excellence.
It is a given, today, that companies that want to lead must be operationally excellent. They must be able to excel on all elements of internal and external operation. The customer’s operational expectations must be exceeded. On time delivery, complete orders, accurate billings, well trained staff are but a few of those standards. Internally we have to be able to provide the technology, process and personnel to support the customer’s expectations. LEVERAGEDWISDOM Members are continually challenged to invest in advanced enterprise software, personnel training, inventory and warehouse technologies to meet a standard of operational excellence.
CUSTOMER INTIMACY
“A company that delivers value via customer intimacy builds bonds with customers like those between good neighbors. Customer intimate companies don’t deliver what the market wants, but what a specific customer wants. The customer intimate company makes a business of knowing the people it sells to and the products and services they need. It continually tailors its products and services, and does so at reasonable prices. Its proposition is:” We take care of you and all your needs,” or” We get you the best total solution.” The customer intimate companies’ greatest asset is, not surprisingly, its customer’s loyalty.”
“Customer intimate companies don’t pursue transactions; they cultivate relationships. They are adept at giving the customer more than he or she expects. I constantly upgrading their offerings, customer intimate companies stay ahead of their customers rising expectations – expectations that, by the way, they themselves create.” Airborne Express was the authors leading example.
LEVERAGEDWISDOM Members continually gather market intelligence in order too thoroughly understand our customer’s. We want to help our customers get to where they want be in the next 3 years, so that we are the provider of choice and their trusted advisor.
PRODUCT LEADER
“A company pursuing product leadership continually push its products into the realm of the unknown, the untried, where the highly desirable. Its practitioners concentrate on offering customers products or services existing performance boundaries. A product leader’s proposition to customers is best product, period.”
“A product leader consistently strives to provide its market with leading edge products were useful new applications of existing products or services. Reaching that goal requires that they challenge themselves in three ways. First they must be creative. Second they must commercialize their ideas quickly. Third and most important they must relentlessly pursue ways to leapfrog their own latest product or service. Sony was the example referenced as product leader.”
LEVERAGEDWISDOM Members seek to be the creative force in their industries in order to maintain leadership position. They continually innovate, whether by introducing new or exclusive product, new services, new marketing, or creating unique relationships with both vendors and customers.