The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Marketby Michael Treacy, Fred Wiersema
Pub. Date: 01/28/1997
Publisher: Basic Books
Why is it that Casio can sell a calculator more cheaply than Kellogg's can sell a box of corn flakes? Why can FedEx “absolutely, positively” deliver your package overnight but airlines have trouble keeping track of your bags? What does your company do better than anyone else? What unique value do you provide to your customers? How will you increase
Why is it that Casio can sell a calculator more cheaply than Kellogg's can sell a box of corn flakes? Why can FedEx “absolutely, positively” deliver your package overnight but airlines have trouble keeping track of your bags? What does your company do better than anyone else? What unique value do you provide to your customers? How will you increase that value next year? As customers' demands for the highest quality products, best services, and lowest prices increase daily, the rules for market leadership are changing. Once powerful companies that haven't gotten the message are faltering, while others, new and old, are thriving. In disarmingly simple and provocative terms, Treacy and Wiersema show what it takes to become a leader in your market, and stay there, in an ever more sophisticated and demanding world.
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This book's concepts for strategic marketing management are so widely accepted that the popular Balanced Scorecard concept of Kaplan and Norton in 2001 decided to adopt the ideas for the 'customer perspective'. The authors manage to take Michael Porter's two generic competitive strategies - Differentiation and Cost Leader - and elaborate on these to an extent never presented so elegantly before. In the process, they discover a third generic strategy - Customer Intimacy. Thus, Treacy and Wiersema distinguish between focusing on the following value dimensions: - Operational excellence (cost leadership / focus on supply chain management) - Product leadership (innovation / focus on product lifecycle management) - Customer Intimacy (service leadership /focus on customer relationship management) These are the FOUR RULES that govern market leaders' actions: Rule 1: Provide the best offering in the marketplace by excelling in a specific dimension of value Rule 2: Maintain threshold standards on the other dimensions of value Rule 3: Dominate your market by improving value year after year Rule 4: Build a well-tuned operating model dedicated to delivering unmatched value Expanding on the fourth rule - operating models - may the best long-term contribution of this book. The authors explain in detail and via case stories how the operating models differ for each of the three value propositions. In practice, I've learned that by explaining the operating models, many people can easier find themselves depicted than in the overall generic dimensions of cost, service or product leadership. OPERATIONAL EXCELLENCE or Cost Leadership - Best total cost - operating model: Key success factor: Formula! Golden rule: Variety kills efficiency Culture: Disciplined teamwork; Process focused; Conformance, 'one size fits all' mindset Organization: Centralized functions; high skills at the core of the organization Core processes: Product delivery and basic service cycle; built on standard, no frills fixed assets Management Systems: Command and control; Compensation fixed to cost and quality; transaction profitability tracking Information Technology: Integrated, low-cost transaction systems; Mobile and remote technologies PRODUCT LEADERSHIP - Best product - operating model: Key success factor: Talent! Golden rule: Cannibalize your success with breakthroughs Culture: Concept, future driven; Experimentation, 'out of the box' mindset; Attack, go for it, win Organization: Ad-hoc, organic, and cellular; High skills abound in loose-knit structures Core processes: Invention, Commercialisation; Market exploitation; Disjoint work procedures Management Systems: Decisive, risk oriented; Reward individuals' innovation capacity; Product lifecycle profitability Information Technology: Person-to-person communications systems; Technologies enabling cooperation and knowledge management CUSTOMER INTIMACY - Best total solution - operating model: Key success factor: Solution! Golden rule: Solve the client's broader problem Culture: Client and filed driven; Variation: 'Have it your way' mindset Organization: Entrepreneurial client teams; High skills in the field Core processes: Client acquisition and development; Solution development; Flexible and responsive work procedures Management Systems: Revenue and share-of-wallet driven; Rewards based in part on client feedback; Lifetime value of client Information Technology: Customer databases linking internal and external information; Knowledge bases built around expertise If you're interested in Customer Intimacy, you may want to add Wiersema's additional book on only this strategy to your shopping basket. I highly recommend both paperback books ... great value for money ;-) Peter Leerskov, MSc in International Business (Marketing & Management) and Graduate Diploma in E-business