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.
- 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.
- 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.
- 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.
- 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:
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
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:
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
Book: Michael Treacy
& Fred Wiersema - The Discipline of Market Leaders -
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Compare with Value Disciplines:
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Return to Management Hub: Change & Organization | Decision-making & Valuation | Finance & Investing | Leadership
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Supply Chain & Quality
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