In a ground breaking book, “Discipline of the Market Makers,” Michael Treacy and Fred Wiersema argued that outstanding companies typically pick one of the following 3 disciplines to excel in – Operational Excellence, Product Leadership and Customer Intimacy.
Operational Excellence: Companies who seek to excel though Operational Excellence seek to have the lowest total cost compared to their competitors. Companies like Wal-Mart and Amazon exemplify this discipline.
Product Leadership: Companies that seek to differentiate by product leadership are characterized by a leading-edge “must-have” product or service. Think Apple, Nike.
Customer Intimacy: Customer-intimate companies are those that define themselves as not just providing goods or services, but as helping their clients be successful. Think Ritz Carlton or Zappos.
Their research found that these companies centered themselves around one discipline. Companies that tried to do all of these inevitably didn’t do as well. It is a fascinating insight and has a couple of interesting implications –
1. Know why you choose a product/service. My wife and I stocked up on winter clothes at “The North Face.” The North Face is known for outstanding product quality and we’re very happy with our purchases. However, we had a horrible experience dealing with their customer service number. After a few days of useless back-and-forth, we finally got the issue sorted at the store. So, would we recommend The North Face to friends? Absolutely. We chose it because of a top quality product and they delivered. Just don’t expect it to be cheap or for their customer service to rival Zappos.
2. Prioritize spikes over smooth edges. We are often taught to be smooth, rounded personalities. What we need to do, however, is to consider prioritizing developing areas of serious strength. It is these spikes that enable us to create real impact and make a difference. We can’t all be great at everything. Pick what you’d like to be great at and do enough of the rest so they don’t obstruct progress. Prioritize spikes. Pick.
Uber created a media storm yesterday with their CEO’s response to an executive’s irresponsible behavior. The company’s attitude shouldn’t be all that surprising. Uber, as a company, have clearly distanced themselves from the idea of customer intimacy with their actions. Their Product Leadership edge is questionable. It remains to be seen if they can succeed in their quest to build an outstanding company by continuing to excel in their operations while not letting their inadequate treatment of customers impede their progress. Time will tell.