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Exploding Creativity

May 27th, 2010 at 10:51 am

Discipline of Market Leaders Book Review

Continuing copying my book reviews from my LinkedIn Amazon widget to my blog. I’ve referenced this book in Episode 6: Leadership and Creativity and in Education Reform and (Lack of) Creativity.

The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, by Michael Treacy

Very interesting book bringing together many business concepts (value discipline, organizational structure, corporate culture, marketing, recruiting, and others) and how they apply to different types of businesses. Here’s an excerpted essay about this book I wrote for a UCSD Course on Sales:

For this book, the authors did a “comprehensive, three-year study of more than 80 corporations in more than three dozen markets”, collecting data on market leaders as well as not so successful companies in order to determine why one group of companies was so much more successful than the other group. This book was used as the philosophical guide (the “bible”) of a company I worked at a few years ago, which is when I first read it. It is an interesting book and worthwhile reading. It brings together many business concepts (value discipline, organizational structure, corporate culture, marketing, recruiting, and others) and how they apply to different types of businesses.

The major idea in The Discipline of Market Leaders is that no company can be all things to all people; that a company’s resources are finite and limited, and that a company will be more successful if it chooses a specific value discipline and focuses its resources on achieving leadership in that discipline, while maintaining “threshold standards” in the other disciplines. Three value disciplines are explored: 1. Operational Excellence, in which best overall cost is focused on, defined as the delivery of reliable products or services at competitive prices, delivered with minimal difficulty or inconvenience, 2. Product Leadership, defined as “providing products that continually redefine the state of the art”, and 3. Customer Intimacy, defined as “selling the customer a total solution”. The authors found that companies that excel in the same value discipline are remarkably like each other, in terms of operating processes, business structures, management systems, and culture, even if the companies are in completely different industries. In contrast, mediocre companies within the same industry are remarkably like each other.

This book does seem to make good business sense, and it would be good to recognize different types of companies, how to create a successful company, and to properly match one’s personality type and needs to the appropriate business type. For example, in terms of personal relationships, the authors state that operationally excellent companies do not cultivate one-to-one relationships with their customers, that product leadership companies are very focused on innovative marketing strategies in order to capitalize on their product innovations, and that customer intimate companies, by their very nature, must be highly competent and focused on cultivating relationships with their customers. Therefore, if one is highly motivated by relationship building and personal selling, a company focused on the customer intimate model would seem to be more appropriate than a company focusing on a different model.

Though the customer intimate model is highly focused on relationships with customers, personal selling and relationships are obviously important for all business models. Operationally excellent companies must sell to (get buy-in from) their suppliers, distributors, and partners in the operationally excellent model in order to get product to flow freely with maximum efficiency and low prices to the end customer. Product leader companies must develop relationships with their customers and the end-customer in order to prepare markets and to educate people to accept their innovative products (or services) and to learn from them what kind of products (or services) to develop. And of course, no matter what kind of company, relationships are important with employees, advisors, directors, consultants, and other types of people a company depends upon.

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