Value Disciplines
(Treacy and Wiersema)

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Trying to be leading on operational excellence, product leadership or customer intimacy. Explanation of Value Disciplines of Treacy and Wiersema. ('94)

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Value Disciplines model - Treacy & WiersemaFour New RUles

According to CSC Index consultants Michael Treacy and Fred Wiersema in "The Discipline of Market Leaders", there are four new rules that competing companies must obey.

  1. Provide the best offer in the marketplace, by excelling in one specific dimension of value. Market leaders first develop a value proposition, one that is compelling and unmatched.
  2. Maintain threshold standards on other dimensions of value. You can't allow performance in other dimensions to slip so much that it impairs the attractiveness of your company's unmatched value.
  3. Dominate your market by improving the value year after year. When a company focuses all its assets, energies and attention on delivering and improving one type of customer value, it can nearly always deliver better performance in that dimension than another company that divides its attention among more than one.
  4. Build a well-tuned operating model dedicated to delivering unmatched value. In a competitive marketplace, the customer value must be improved. This is the imperative of the market leader. The operating model is the key to raising and resetting customer expectation.

What are Value Disciplines? Description

Treacy and Wiersema describe three generic value disciplines in their book. Any company must choose one of these value disciplines and consistently and vigorously act upon it. As indicated by the four rules mentioned above.

  • Operational Excellence. Superb operations and execution. Often by providing a reasonable quality at a very low price. Task-oriented vision towards personnel. The focus is on efficiency, streamlined operations, Supply Chain Management, no-frills, volume is important. Most large international corporations are operating out of this discipline. Measuring systems are very important. Extremely limited variation in product assortment. But see: Reverse Positioning.

  • Product Leadership. Very strong in innovation and brand marketing. Company operates in dynamic markets. The focus is on development, innovation, design, time to market, high margins in a short time frame. Flexible company cultures.

  • Customer Intimacy. Company excels in customer attention and customer service. Tailors its products and services to individual or almost individual customers. Large variation in product assortment. Focus is on: CRM, deliver products and services on time and above customer expectations, lifetime value concepts, reliability, being close to the customer. Give decision authority to employees that are close to the customer. Compare: Customer Relationship Management.

The Value Disciplines model is quite similar to the 3 generic strategies from Porter (Cost Leadership, Differentiation, Focus). However there is at least one major difference: according to the Value Disciplines model no discipline may be neglected: threshold levels on the 2 disciplines that are not selected must be maintained. According to Porter, companies that act like this run a risk to get "stuck in the middle".


Book: Michael Treacy & Fred Wiersema - The Discipline of Market Leaders -


Value Disciplines Forum
  The Differences Between Customer-led and Market-oriented Companies
The concepts "customer focus" and "market orientated" are often discussed and presented in different companiesí mission statements. It is important to know that there are significant differences between these two customer orientations. Slater and Nar...
     
 
  Value Discipline for Coca-Cola Company?
Would you agree that the Coca-Cola Company's primary value principle is Operational Excellence? Although they are innovative in product leadership and aggressive in their branding and customer intimacy, it seems that their main focus is operational e...
     
 
  Balanced Value Disciplines...
In my opinion any company needs to apply a bit of all three customer disciplines that Treacy & Wiersema created, in order to optimize and guarantee the continuity of the organisation. It's practically impossible to create a sustainable advanta...
     
 
  Competitive Priorities
Competitive priorities are critical, more operational, dimensions a process, company or an entire supply chain must posses to satisfy customers now and in the future and build market share.
Any business should choose a maximum of maybe 1 ...
     
 
  How to Adapt Value Disciplines Model to Services / Schools?
Is this model applicable to services - how? I can visualize what a manufacturing company wanting to be "operationally excellent" or a "product leader" will do. But if it is a service company (let us say a school), what should it do to be "operationa...
     
 
  Customer Intimacy Discipline
If I establish a company that sells equipment with an aim to not only sell but provide customers with a know-how to use the equipment to their advantage, which one of the three disciplines would be more suitable for adopting a compensation strategy a...
     
 
  Value discipline vs. value proposition
What is the difference between a value discipline and a value proposition?...
     
 
  Value Discipline Process?
Hi, I'm looking for a generic process to implement value disciplines thinking in a company. Who has some experience? Thanks --...
     
 
  What customers are willing to give up
Note that operational excellence (low cost, no-frills) competitors may know perfectly well what their clients want, but even more what they are prepared to give up in exchange for a lower price. Classic examples are Ryanair and ING Direct. Sou...
     
 
  Focusing on ONE Value Discipline
Be careful for the trap to get "stuck in the middle" in an effort to install concomitant high levels for all 3 value disciplines.
Don't run after many rabbits at the same time; you might catch none....
     
 
  Are Most Firms Opting for Operational Excellence?
Isn't it so that most (almost all) large corporations are opting for the operational excellence strategy? I find it difficult to mention more than a few examples for the other two. Perhaps the Product Leadership and Customer Leadership strategy are e...
     
 

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Best Practices - Value Disciplines Premium
  Why not Use all 3 Value Disciplines?
Why is it not possible to use the three disciplines in the same organization?...
     
 

Expert Tips - Value Disciplines Premium
 

Customer Centricity: Success Factors for Customer Intimacy

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Usage (application): Value Disciplines, Customer Strategy, Customer Intimacy, Customer-oriented, CRM
 
 
 

Understanding your Customer's Needs

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The Importance of Customer Differences in Markets with Network Effects: the Limits of Scale

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Resources - Value Disciplines Premium

Dynamic Competitive Paradigm of Managing Moving Targets

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Fundamental Customer Centricity

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Value Disciplines Diagram

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