The Discipline of Market Leaders Updated with Some Caveats

In the mid 1990’s I read a book that connected with me. It was The Discipline of Market Leaders authored by Michael Treacy and Fred Wiersema. In a nutshell it said that companies need to pick their marketing strategy from one of three choices, those choices are Operational Efficiency, Product Leadership, or Customer Intimacy. A company that believes they should do all three will fail.

 It goes like this:

  • Companies are most successful when they focus on only one marketing discipline
  • Companies are mediocre when they focus on two marketing disciplines
  • Companies will be run over when they think they can do all three

 

The table below summarizes the concepts of the book:

 

OPERATIONAL EFFICIENCY

PRODUCT LEADERSHIP

CUSTOMER INTIMACY

Core Business Process

Sharpen distribution systems and provide no-hassle service

 

Nurture ideas, translate them into products and market them skillfully

Provide solutions and help customers run their business

 

Structure

Strong central authority and a finite level of empowerment

Acts in an ad hoc. Organic loosely knit, and ever changing way

Pushes empowerment close to customer contact

 

Management Systems

Maintain standard operating procedures

 

Reward individuals’ innovative capacity and new product success

Measure the cost of providing service and of maintaining customer loyalty

Culture

Acts predictably and believes that “one size fits all”

Experiments and thinks “out of the box”

Flexible and thinks ” have it your way”

 

Company Examples

Wal-Mart – McDonalds

Intel – Nike – 3M

Nordstrom

Over the last few years I have heard nothing from these authors. I wondered are the concepts no longer valid, what has changed?

My feelings are they are as relevant today as they were 10 years ago, with two caveats.

First: it doesn’t matter what strategy you are pursuing, you need to continually look at ways to lower your costs and add more value (from the customers view not the companies) for lower costs. This is a fact in the world we live in today with no exceptions that I am aware of.

Second: adding more features and functions after a certain point where the customers aren’t demanding them will open up the possibilities of a disruptive product coming in and interrupting your strategy. This disruptive concept was originated in the book The Innovators Dilemma by Clayton M. Christensen, it is worth reading.

The Discipline of Market Leaders is still a relevant book today to help companies chart their path, but remember the two caveats.

One Response

    Great issue, I didn’t think reading this would be so cool when I klicked on the url!!

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