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MANAGEMENT LIBRARY
The Discipline of Market Leaders
by Michael Treacy and Fred Wiersema

The authors suggest that no company can become a market leader until it learns certain key disciplines. They provide a broad variety of examples of winning companies that used these disciplines to reinvent the rules of competition in their chosen markets. The book, they claim, will make it impossible for companies to compete on the old terms.

Getting Started
The authors have identified three value disciplines that they believe are essential to successoperational excellence, product leadership, and customer intimacy. By focusing on the most suitable discipline for their marketplace, a company can achieve leadership in its chosen field. That discipline, say the authors, should shape all the companys other plans and activities.

Contribution
Improving Value.

According to the authors, market leaders dont excel at everything. They have achieved a level of excellence in one value discipline that puts them ahead of competitors. Treacy and Wiersema believe that there are now new rules of competition. Successful companies must change customer expectations. They explain how customers buy different types of value, such as product quality, expert advice, or personalized service. The authors advise companies to continue improving value year after year to meet rising customer expectations. However, producing ever-increasing value requires a superior operating model that can deliver results. Winners, they suggest, concentrate on the competencies that are core to their value proposition. This determines their operating model.

Product leaders, say the authors, focus on investment, product development, and market exploitation. They tend to have a loose-knit organizational structure that encourages enterprise.
Product Leadership.

They believe that companies who compete on premium product performance need to have a good basis of design and quality management. They also educate and prepare the market for new products, reducing risk and uncertainty for customers. They demonstrate how product leadership companies are driven by vision and concept. Such companies cultivate talent who can turn ideas into marketable products. Talent is their most important asset, so they spend a great deal of time recruiting and retaining the
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right people. They create a culture for innovation by giving their people personal challenges. Despite product leadership, they argue, companies have to adjust prices to market conditions. Brand leadership no longer provides price protection. If price is a chosen weapon, it requires an integrated system to sustain the advantage.
Service-driven Organizations.

Tracy and Wiersema show how service-driven organizations recognize and reward employees, get the supply position right, and deliver first-class service. Time, they believe, is critical to a market leader. Customers are no longer prepared to wait for slow service. Customers expect support as well as an excellent product, and that, the authors argue, makes service an integral part of any market-leading offer.

Leadership through Customer Intimacy. The authors explain that companies who lead through customer intimacy build strong relationships and aim to achieve high levels of customer lifetime value. Their employees are empowered to deliver great levels of personal service to customers throughout the relationship.

This type of company, they argue, focuses on a hierarchy of customer needs. They go beyond the product and basic service to discover underlying problems and contribute to customer success. They leverage their understanding of customer problems and offer a variety of support services. Frequently, they will manage customers problems for them and mold their own organizations to those of their customers. The authors believe that customer intimacy requires the focus of all employees so that deep relationships can be formed throughout an organization. Companies who build on their operational strengths demonstrate a number of important characteristics, according to Treacy and Wiersema. They offer standard products, services, and operating procedures. They have developed tried and tested formulas for success and they simplify transactions. They also make extensive use of information technology to improve their efficiency.
Building on Operational Strengths.

Context
The book is one of many that look at successful companies and try to identify a formula for success. Many of the companies given as examples are similar to those found in other success books. Tom Peters and Robert Waterman first brought the technique to prominence with the publication of In Search of Excellence. Unfortunately, many of their excellent companies failed in subsequent years, but that did not prevent other authors from following similar investigations. Treacy and Wiersema focus on three strandsoperational excellence, product leadership, and customer intimacy. The themes of product leadership and customer intimacy are well covered by other authors.

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Operational excellence is less of a recurring theme. However, the authors acknowledge a debt to Hammer and Champys Reengineering the Corporation for examples of operational excellence at work.

For More Information

Treacy, Michael, and Fred Wiersema. The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market. Cambridge, MA: Perseus, 1997.

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