The Discipline of Market Leaders
written by Michael Treacy & Fred Wiersema

Have you ever had a book that you have not read before but you have heard so much about it that you feel that you have read it? This was the case for me with this month’s book, "The Discipline of Market Leaders". For many years I heard many people refer to this book and read many articles that referenced the book. I felt like I had already read it myself. I finally decided to read the book this month and am very glad that I did. I believe that this book is one of the business management classics of our time.

"The Discipline of Market Leaders "was written in 1995. The authors of the book, Michael Treacy and Fred Wiersema are both highly regarded business consultants. The book was based on the research and experience of both authors working with both Fortune 500 companies and small businesses as well.

The simple but powerfully important message of this book is that no company can succeed today by trying to be all things to all people. The book suggests that instead companies must find the unique value that it alone can deliver in a target market. The authors identify in the book three distinct value disciplines that each delivers a different kind of customer value. The three disciplines are Operational Excellence, Product Leadership, and Customer Intimacy. Ideally, a company chooses one of these unique disciplines and stakes it’s market reputation squarely on top of it.

Operational Excellence means providing average products at the lowest overall cost to the consumer. Examples of companies that exemplify this value discipline are Wal-Mart, McDonalds, and Southwest Air. For each of these companies it is all about lowering their own cost of doing business through being operationally superior to the competition which than results in offering the consumer the lowest prices and hassle-free service.

Practitioners of Product Leadership concentrate on offering the best products in the market. In addition, these companies are committed to innovating their products on a continual basis. Competition is not about price here but about product performance. Examples of these companies include 3M, Apple Computers, and Nike.

Customer Intimacy focuses on delivering whatever the customer desires. It’s about cultivating lifetime partnerships with clients. It means understanding the unique needs of the customer and doing whatever it takes to exceed the expectations of that customer. I think of companies such as Nordstrom’s department stores, Ritz Carlton hotels, and Lands End mail order in this area.

Which value discipline have you chosen for your company? My experience is that most small businesses try to be all three. They promote themselves as being customer-centric, they position themselves as being innovative, and they compete on price. According to the authors of the book, this is a formula for business failure. One can’t be everything to everybody. Instead, they prescribe that the business leader choose one value discipline and invest resources there to carve out a unique market position. This does not mean that we ignore the other two disciplines. Instead we look to maintain a competitive position in these areas as well.

My own experience as small business owner and consultant is that Customer Intimacy may be the easiest and most powerful value discipline for the small business. It is very hard for a small business to compete with larger businesses on price. Being the Innovator typically requires significant financial resources for research and development, which most small businesses don’t have.

I strongly recommend this book.