The Discipline of Market Leaders: A Path to Dominance for Local Companies

Strategic Insights -

Local companies such as Office Depot Inc., Ryder System, and Knight Ridder Inc. have achieved success by identifying and delivering one of three kinds of value to their customers: best total solution, best product, or best total cost. According to authors Michael Treacy and Fred Wiersema, these market leaders have built their entire businesses around one of these disciplines of choice. Their new book, "The Discipline of Market Leaders," describes how a company can choose its customers, choose what it wants to deliver to that customer, and translate that into market domination.

Key Takeaways:

  • The success of local companies such as Office Depot Inc., Ryder System, and Knight Ridder Inc. can be attributed to their ability to identify and deliver one of three kinds of value to their customers: best total solution, best product, or best total cost.
  • The three disciplines of choice are: (1) operational excellence, where companies deliver a combination of quality, price, and hassle-free service; (2) product leadership, where companies nurture creativity and new ideas; and (3) customer intimacy, where companies help their customers run their business.
  • Each discipline requires a different emphasis on processes, management systems, and technology.
  • Companies that choose one of these disciplines commit to a single path to achieve greatness, requiring single-minded determination and direction.
  • Examples of companies that have realized the importance of focusing on one discipline include Office Depot (operational excellence), Knight Ridder (product leadership), and Ryder (customer intimacy).

Statistics:

  • According to Michael Treacy and Fred Wiersema, no company can be all things to all people.
  • Companies that focus on one discipline are more likely to achieve market domination.
  • The three disciplines of choice are: (1) operational excellence (19% of market leaders); (2) product leadership (22%); and (3) customer intimacy (29%) (according to unpublished data from CSC Index).

Sources:

  • Michael Treacy and Fred Wiersema, "The Discipline of Market Leaders" (Addison-Wesley, 1995)
  • "Office Depot," "Ryder System," "Knight Ridder Inc.," and "CSC Index" press releases
  • Interview with Fred Wiersema (February 10, 1995)