By conducting research at more than 80 companies in more than 3 years in more than 40 markets, Treacy and Wiersema have built a model that provides insight into why some companies score so much better than others. A model that is placed at Porter’s level.
They have created a value triangle with three disciplines at the extremes. As a company, it is important to make choices and shift your strategy to one of the corners, otherwise you will become stuck in the middle and will not be able to acquire or defend market leadership.
Which disciplines are we talking about and what do you have to do for them? 1. Cost Leader (Operational Excellence)
- The flow of a product is optimized and streamlined end-to-end to minimize costs and problems.
- Activities are standardized, simplified, tightly controlled and centrally planned, with few decisions left to lower management.
- Management systems use fixed standards and are aimed at fast transactions that are fixed and coordinated.
- A corporate culture in which efficiency is rewarded and waste is abhorred.
- Product Leader (Product Leadership)
- Focusing on Research & Development and market exploitation.
- A loose ad hoc organizational structure that is constantly adapted to new business plans and changes in direction, which are characteristic of working in unexplored territory.
- Result-oriented management systems that evaluate and reward the success of a product, and that have room for experimentation.
- A corporate culture that stimulates performance and imagination of the individual, and that encourages unexpected ideas and a future mentality.
- Customer Partner (Customer Intimacy)
- A major emphasis on the core processes: solution development (helping the customer understand what is needed), results management (ensuring that what is needed is implemented correctly) and relationship management.
- An organizational structure that delegates decision-making authority to the people closest to the customer.
- A relationship management system that focuses on a well-selected, carefully cared for customer base.
- A corporate culture that is based on specific rather than general measures and on long-term good relationships with the customer.
- Rule 1: Try to be the best in the market by excelling in one value discipline.
- Rule 2: ensure that the other value disciplines remain at threshold level.
- Rule 3: Control the market by increasing the value you offer every year.
- Rule 4: design a good working model that is fully dedicated to creating the chosen value.
Scoring with value creation
To determine where your company stands, an excellent tool can be found under ‘scoring with value creation’ by Paul van der Marck on scoring.
A fun fact: this book reached the top of many sales rankings because the gentlemen themselves bought their own books en masse. This attracted so much attention that the ‘virus’ spread quickly and sales then took off automatically.