Value Disciplines

Making it big by selling value is not a recent phenomena. Its an age-old practice which has been tailored across decades to suit the market. What is new is how the the customers define the value. Earlier it was perceived as a combination on quality and price while today's consumer has a more expanded concept including convenience of purchase, after-sale service and dependability among others. Micheal Treacy and Fred Weirsema have captured this new found superior customer value under three parameters- Operational excellence, customer intimacy and product leadership.

Operational Excellence

This implies providing reliable products or services at competitive prices and deliver the same with minimal difficulty or inconvenience. The companies adopting this discipline focus on making their operations lean and efficient. The name which champions this field is Dell. 

Customer Intimacy

The second value discipline focuses on customisation and delivering to the niches. Companies adopting this principle segment their target markets precisely and then tailor their offering to match the demands. A marriage of customer knowledge and operational flexibility leads to excellent customer intimacy and subsequently customer loyalty. Home Depot's are an apt example of the same.

Product Leadership

This discipline comes handy to outrun a competitors product or service by offering customers leading-edge products and services which enhance the use or application of the product. In the sports shoe category, Nike excels in product leadership. Johnson&Johnson also lives up to the challenges of being a product leader as it attracts new ideas, develops them quickly and then looks for ways to improve upon it.

Based on a 3-year study of 40 companies, Treacy & Weirsema have drawn a few conclusions. This indicate that generally market leaders excel at one value discipline while a few mavericks have gone ahead by mastering two. Companies which pursue the same value discipline have remarkable similarities irrespective of the industry segment. Eg. Federal Express, American Airlines, Wal-Mart have operational excellence and thus their systems, structures and cultures are more or less similar. However, this homogeneity is visible only among market leaders in the discipline and not among mediocre. To become an industry leader a company must carefully align its strategy in line with one of the disciplines taking into account its capabilities and culture as well as its competitors strength.

The above is inspired from the works of Micheal Treacy & Fred Weirsema, "The Three Paths to Market Leadership"