How Do You Compete?

First, thanks to those who responded to the last blog about your stickiest situations. Give me a day or two to sort out your responses and choose a winner for the free manual.

My vacation was fantastic — a cruise on the Celebrity Century. We were skeptical about going on a huge cruise ship, and were blown away by the amazing service we received. This got me thinking about strategy. To be blunt….

How do you compete?

One of the most elegant strategic frameworks out there is by Michael Treacy and his book, “The Discipline of Market Leaders.” Unfortunately, the book took some heat when his consulting firm allegedly bought tens of thousands of copies to push it onto the best-seller lists. But the content itself is still worthwhile. Read on….

Basically, his framework states that companies who dominate their industries do so by spiking in one of three domains: product leadership, customer intimacy, or operational excellence. Companies that try to excel in all three fall into the “zone of mediocrity” while ALL companies still have to meet minimum standards in the remaining two areas. So you have to choose one discipline where you will excel, and then keep up with the market in the other two disciplines.

Product leadership means you come up with cutting edge products for customers who value first movers and the leading edge. Intel is a great example, as is Nike.

Customer intimacy means you develop lasting relationships with your clients, and expand your offerings to meet a wide range of their needs. They become trusted advisors. IBM is an example of this type of company. They might not have the BEST products across the board, but are fantastic at understanding client’s needs and providing a broad range of solutions to their problems.

Operational excellence means that you provide no-frills, fast, low-cost value to your customers. Southwest Air and WalMart are classic examples here.

I’ve intentionally not applied this framework to Web Designers/Developers. Take some time and think about how the following four questions apply to you:

1. Which of the above three disciplines best defines your strategy?

2. In which of the above three disciplines do you not meet minimum market standards?

3. Are you at risk of falling into what the book calls “the zone of mediocrity”?

4. If you had to apply this framework, which discipline would you choose, and what would you do differently starting tomorrow?

Best,

Andrew

P.S. The Celebrity cruise line, I think, is an example of customer intimacy. Their fleet is older than the “product leaders,” but they have found numerous ways to keep customers coming back again and again with extraordinary service. But they have to upgrade their fleet over time or they risk falling below market expectations in the product leadership discipline.

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  • http://www.lengelzigich.com maxor

    1. I try to fall into the ‘customer intimacy’ category. As a web developer I cannot really be very cutting edge, and this industry isn’t one that especially enjoys no-frills fast service, so it seems that this disciplines suits not only myself but the industry well.

    2. If I am coming close to not meeting minimum market standards it would be in the first category, product leadership. It’s not so much that I’m behind on the latest technology, but I feel like I could personally know more about certain things, XML is a big one for me right now.

    3. No, I’m not close to that point yet.

    4. I would apply the customer intimacy discipline and starting tomorrow I would spend more time engaging my clients in conversation related to projects or not, in an attempt to build a stronger personal relationship that would hopefully lead to more business.

  • http://www.mjswebsolutions.com type0

    1. Right now the business is focused and excels in customer intimacy.

    2. Product leadership – We offer the basics, but need to increase our product line.

    3. Yeah, I could see where mediocrity could happen. I just finished E-Myth (loved it) and I’m starting to develop strict systems for the business.

    4. (1) Customer Intimacy – because I’m good at it and I’ve been very successful building my businesses by creating strong relationships with people. (2) I will make a phone call, send an email, send an article or make a date for lunch or breakfast. I need to improve my communication after the website is launched.

    P.S. Andrew, why do you say, “I’ve intentionally not applied this framework to Web Designers/Developers”?

  • aneitlich

    type0:

    Thanks for your question. Here’s a stab at an answer:

    I wanted readers to think about the questions before I gave specific examples of how different firms might use different disciplines to compete.

    The professional services model lends itself naturally to the customer intimacy model. I’d expect most readers are trying to spike here, although spiking here is not so obvious or easy as it may seem. There is lots of competition, and few who have separated themselves from the pack in a meaningful, measurable way (a la the Ritz or IBM, even on smaller scale).

    There is also plenty of room for the other two disciplines. Designers/developers who use templates, self-service, and repeatable processes are probably trying to excel in operational excellence.

    Those who create new applications that other developers or customers can license/use and that give those developers or customers an edge are trying to be product leaders (e.g. Sun with java, creator of a cutting-edge portal for a specific industry with unmatchable features). Perhaps the same for designers who create cutting-edge sites on a custom basis, the kinds of sites that produce breakthroughs in usability, response, etc. This is a hard space to lead, but can be done with an investment in R+D and people motivated by being the first to solve big problems.

    The questions are: Where do you want to play, and how can you be the best at the game you choose?

    Pls keep the responses coming…

    Andrew