The Value Disciplines Model was developed by authors Michael Treacy and Fred Wiersema. In their model, the authors use the term value discipline to represent any method a business may use to differentiate itself. The Value Disciplines Model argues that for a business to be viable, it must be successful in three key areas: customer intimacy, product leadership, and operational excellence.
- Understanding the Value Disciplines Model
- The three key areas of the Value Disciplines Model
- Limitations to the Value Disciplines Model
- Key takeaways:
- Connected Business Frameworks
Understanding the Value Disciplines Model
After researching successful companies such as Dell and Sony, the authors, Michael Treacy and Fred Wiersema proposed that a business must be competent in the three key areas mentioned at the outset. Importantly, businesses who aspire to be market leaders must also excel in one of the key areas.
The three key areas of the Value Disciplines Model
Customer intimacy encompasses customer service and customer attention. To excel, a business must wherever possible personalize customer service. It must also develop a range of customizable products that meet different customer needs in great detail.
The customer service team of shoe company Zappos not only keep their customers happy but also surprise them too. When a best man ordered shoes from Zappos for a wedding that were later lost in postage, the company overnighted a new pair of shoes to him and gave a full refund anyway.
Product leadership means that a business offers products that are market leaders. This often requires a large investment in research and development, but the rewards are obvious. Leadership is easier said than done. It requires creative thinking and a rapid commercialization process to beat the competition. Products must also be continually updated to avoid obsolescence.
In the context of the Value Disciplines Model, operational excellence means a focus on price and convenience. This means that a business should focus on removing common barriers that prevent a consumer from making a buying decision.
Dell was able to become market leaders in desktop computers by offering computers delivered to order rather than to inventory. This removed the middleman and reduced costs without sacrificing the product or service.
Limitations to the Value Disciplines Model
While adequate performance in each of the three areas is relatively easy, businesses will find becoming a market leader by excelling in one area much more difficult.
For smaller businesses, there is the potential that they become disheartened at a rather binary approach to success. Newer businesses might also become disillusioned at the broad and generic definitions of success – particularly if these businesses do not have sufficient data to gauge success.
- The Value Disciplines Model defines success in the context of three generic value disciplines: customer intimacy, product leadership, and operational excellence.
- Success in the Value Disciplines Model can be broadly measured by the degree of cost-effectiveness, product or service quality, and organizational performance.
- The Value Disciplines Model is a long term strategy that requires a certain level of maturation in a business. Without a solid understanding of their industry and a lack of resources, some may find it difficult to define and then achieve market leadership.
Connected Business Frameworks
Other strategy frameworks:
- AIDA Model
- Ansoff Matrix
- Balanced Scorecard
- BCG Matrix
- Design Thinking
- Lean Startup Canvas
- Pestel Analysis
- Technology Adoption Curve
- Total Addressable Market