The Key to a Winning Market Strategy: Discipline

The Discipline of Market Leaders by Brian Treacy and Fred Wiersema (Basic Books, 1995) had a major impact on me when I first read it way back in 2002, even though it was already about seven years old then. 

Guess what? It still packs a punch more than a quarter-century later.

According to the authors, to build a market-leading company, you must choose one of three dimensions of value to build that business upon. While your performance cannot be substandard in any of the three areas, you must commit fundamentally to one, building your entire culture and operations around that core area in order to separate from the pack. 

Here are the three dimensions of value and the components of the operating model needed to excel in each:

1. OPERATIONAL EXCELLENCE (Delivering the best-cost solution)

Operating imperative: Rigorously developed and deployed systems that minimize cost and maximize predictability/reliability.

• Emphasis on processes that are standardized, simplified and tightly controlled, leaving few decisions to rank-and-file employees
• Management systems that monitor and reward speed, reliability and adherence to process
• A culture that extols efficiency and demonizes waste 

Examples of operational excellence companies: McDonald’s, Wal-Mart and Southwest Airlines.

2. PRODUCT LEADERSHIP (Delivering the best-quality solution)

Operating imperative: Promotion of processes of invention, product development, and continuous market exploitation.

• A business structure that is less formal and more fluid and entrepreneurial to adjust quickly to market developments and destabilizations
• Management systems that measure and reward results more than adherence to process and that don’t punish occasional maverick behavior
• A culture that encourages individual imagination, accomplishment, out-of-the- box thinking and a mind-set driven by the desire to create

Examples of product leadership companies: Apple, Nike and Harley-Davidson

C. CUSTOMER INTIMACY (Tailoring product/service to a specific set of customers)

Operating imperative: Building and maintaining an enterprise-wide orientation towards solution development, i.e., working with and helping the customer understand exactly what is needed and developing the processes and programs to get it to them.

• A business structure that pushes the decision-making power to those closest to the customer
• Management systems measure and reward achieving sustainable results for strategically chosen clients
• A culture that emphasizes those values and principles that maximize deep, long-lasting client relationships

Examples of customer intimacy companies: Nordstrom, USAA and Amazon.

The book has generated some criticism over the years and sparked major controversy over the authors allegedly purchasing tens of thousands of their own books to win a spot on the New York Times bestseller list.

That dustup aside, the core message of The Discipline of Market Leaders is one that business leaders of all stripe would do well to heed: the true value of a strategy is that it provides the core organizing principal and philosophy that guides everything that the organization does.

As I have helped many of my consulting and coaching clients understand and achieve, any enterprise — from the smallest mom and pop to the FORTUNE 100 — that can show this kind of discipline and focus will have a huge advantage in the marketplace.

So what say ye? Do you agree with Treacy and Wiersema? If so, which value discipline will you choose for your company? I look forward to your feedback.