Discipline of Market Leaders? Listening, but only if you can act!

In 1995 Michael Treacy wrote the book ‘The Discipline of Market Leaders’ – The crux of the book is based on five years of research into Intel, Home Depot, Dell, Sony and others. These companies are no longer market leaders like they once were. Why? In the 1990’s successful companies took a leadership position within their industry by focusing on one of three primary ‘value disciplines’ – operational excellence, product leadership or customer intimacy. According to Treacy’s research, successful companies became champions in one of these disciplines while performing at an acceptable industry standard in the other two, but today the corporate ‘tectonic plates’ have shifted and not many organizations have stabilized.

In the 21st century the ‘one discipline’ approach is no longer a sustainable strategy. Simply stated, the new operating model mandates that your company excel in all three value disciplines. For example, a firm can now easily rent operational excellence from a provider like Amazon, and in many cases gain more efficiency than an org can provide internally. Product leadership is simply a must and customer intimacy, well as Forrester claims:

‘The future belongs to customer-obsessed enterprises. Customers are disrupting every industry, ushering in a 20-year business cycle Forrester calls ‘The Age of the Customer.’ In the age of the customer, the only sustainable competitive advantage is knowledge of and engagement with customers. The most successful enterprises will reinvent themselves to systematically understand and serve increasingly powerful customers. This is not about “customer-centric” thinking or “the customer is always right.” Instead, the new power of customers means that a focus on the customer now matters more than any other strategic imperative.”

This is one of the ‘biggest’ organizational challenges in the modern era. If a firm is going to listen to the customer then they must listen to their front-line staff…two sides of the same coin. If they are committed to listening then they must be responsive. Responsiveness means establishing a hierarchy, resources and leadership that prioritizes change. And let’s be honest, organizations are traditionally poor at encouraging change, many are stuck in old patterns.

Not Samsung, in the late 90’s management decided to bet big on the expected transition from analog to digital technology that would gave them a once-in-a-lifetime chance to catch its better-known rivals. The leadership team listened to their staff and the desire of their customers, betting the company on digital technology. In about 5 years, this resulted in a constant flow of new digital products from the 80,000 scientists, engineers, and designers.

Most organizations don’t have the resources of Samsung, but it’s not hard to set up the right approach to listen, collaborate and capture insights. The challenge is acting on those insights, the starting point of the innovation journey. Introducing the multi-disciplined operating model will enable a firm to master the discipline of the 21st century market leader.

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