Value Disciplines Model In A Nutshell

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

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

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

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. 

Apple’s continued devotion to innovation and product updates has seen then remain as leaders in the tech space for decades.

Operational excellence

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.

Key takeaways:

  • 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

Porter’s Five Forces

Porter’s Five Forces is a model that helps organizations to gain a better understanding of their industries and competition. Published for the first time by Professor Michael Porter in his book “Competitive Strategy” in the 1980s. The model breaks down industries and markets by analyzing them through five forces

Ansoff Matrix

You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

Blitzscaling Canvas

The Blitzscaling business model canvas is a model based on the concept of Blitzscaling, which is a particular process of massive growth under uncertainty, and that prioritizes speed over efficiency and focuses on market domination to create a first-scaler advantage in a scenario of uncertainty.

Business Analysis Framework

Business analysis is a research discipline that helps driving change within an organization by identifying the key elements and processes that drive value. Business analysis can also be used in Identifying new business opportunities or how to take advantage of existing business opportunities to grow your business in the marketplace.

Gap Analysis

A gap analysis helps an organization assess its alignment with strategic objectives to determine whether the current execution is in line with the company’s mission and long-term vision. Gap analyses then help reach a target performance by assisting organizations to use their resources better. A good gap analysis is a powerful tool to improve execution.

Business Model Canvas

The business model canvas is a framework proposed by Alexander Osterwalder and Yves Pigneur in Busines Model Generation enabling the design of business models through nine building blocks comprising: key partners, key activities, value propositions, customer relationships, customer segments, critical resources, channels, cost structure, and revenue streams.

Lean Startup Canvas

The lean startup canvas is an adaptation by Ash Maurya of the business model canvas by Alexander Osterwalder, which adds a layer that focuses on problems, solutions, key metrics, unfair advantage based, and a unique value proposition. Thus, starting from mastering the problem rather than the solution.

Digital Marketing Circle

digital channel is a marketing channel, part of a distribution strategy, helping an organization to reach its potential customers via electronic means. There are several digital marketing channels, usually divided into organic and paid channels. Some organic channels are SEO, SMO, email marketing. And some paid channels comprise SEM, SMM, and display advertising.

Blue Ocean Strategy

A blue ocean is a strategy where the boundaries of existing markets are redefined, and new uncontested markets are created. At its core, there is value innovation, for which uncontested markets are created, where competition is made irrelevant. And the cost-value trade-off is broken. Thus, companies following a blue ocean strategy offer much more value at a lower cost for the end customers.

Other strategy frameworks:

Additional resources:

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