Remaining competitive: The Discipline of Market Leaders

Fred Wiersema, former executive of CSC Index, author and lecturer, and I recently connected. This brought back memories of his book The discipline of Market Leaders co-authored by Michael Treacy with after all those years still valid points.

Fred Wiersema and I recently connected via the social media evolution. These applications of web technology are changing the way we do business and how we interact! My connection with Fred brought back memories of the sales powerhouse that Gartner was in the nineties with leadership of Richard Eldh. Thirty percent sales growth, year after year after year. A business model well executed.

The nineties brought us a lot of change. The internet and world wide web emerged. And so did ‘corporate re-engineering’ and ‘enterprise resource planning’ software. SAP was a small company and Baan a challenger. All this creativity, new technologies and business ideas sparked economic prosperity. But every bubble has to burst one day.

In that same decade an important book was published by Fred Wiersema and Michael Treacy: The Discipline of Market Leaders. Rather than talking about how to run an operation, through organization, process and systems, The Discipline of Market Leadership is about choosing which race to run.

Today’s competitive environment forces businesses to change and fast. This means that the rules of competition need to be reinvented all the time. Successful companies redefine business competition in one market after the other. By delivering distinctive value to specific customer groups market leaders change the rules of the competitive game.

The message of The Discipline of Market Leaders is that no company can succeed today by trying to be all things to all people. It must instead find the unique value that it alone can deliver to a chosen market. Treacy and Wiersema introduce us to the concept of Value Disciplines. They refer to three desirable ways in which companies can combine operating models and value propositions to be the best in their markets.

 

Operational Excellence companies have a simple proposition to their customers: low price and convenient transaction of middle-of-the-market products. Think of Wal-Mart.
 
Product Leadership companies push the boundaries of innovation and product performance. Their proposition to customers is to offer the best products. Think of Apple.
 
Customer Intimacy companies cultivate relationships. These companies specialize in satisfying unique needs using intimate customer knowledge and the relationship to offer a solution. Think of Amazon. 

 

Selecting one discipline to excel in means that a company has identified a dimension of value on which to build its market reputation. Choosing a value discipline is the core decision, it is the result of extensive research and analysis, that shapes every subsequent plan and decision. The choice of value discipline shapes the entire organization from its competencies to its culture. What the company does and what it is. 
 
After 15 years The Discipline of Market Leaders is a useful book providing executives a structure to make explicit choices for the direction of their organization. In 2010 many organizations struggle with their mission, vision and markets. Without continuous change and understanding of your value proposition there will not be a future. For sales people the three disciplines, product leadership, customer intimacy and operational excellence, provide a framework to position the value proposition of their solutions to customers.