Professor Ken Homa Georgetown University. Value Disciplines. Proprietary Material. K.E. Homa

Transcription

1 Professor Ken Homa Georgetown University Value Disciplines Proprietary Material K.E. Homa

2 Planning Finance Customer Intimacy Operations Excellence Product Leadership Technology Info Systems

3 Credited to Treacy & Wiersema, CSC Index Customer Intimacy and Other Value Disciplines, HBR, January February 1993 The Discipline of Market Leaders - Choose Your Customers, Narrow Your Focus, Dominate Your Market, Addison-Wesley, 1993

4 What successful companies do Redefine value for customers. Build powerful, cohesive business systems that deliver more of that value than competitors do. Raise customers expectations beyond the competition s reach.

5 Basic Premise Companies that have taken leadership positions in their industries typically have done so by narrowing their business focus, by delivering superior customer value in line with one of three value disciplines: Operational excellence Customer intimacy Product leadership Each discipline requires different processes, organization structures, and management systems & rewards..

6 Operational Excellence providing customers with reliable products or services at competitive prices, delivered with minimal difficulty or inconvenience Product Leadership providing products that continually redefine the state of the art and render competitors offerings obsolete Customer Intimacy segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of those niches..

7 Operational Effectiveness Objective: Lead industry in price & convenience (i.e. minimal inconvenience) Relentlessly seek to ways to Minimize overhead costs Eliminate intermediate production steps Reduce transaction and other friction costs Optimize business processes across functional and organizational boundaries Reengineer processes with an emphasis on efficiency and reliability Build their operations around information systems that emphasize integration and low-cost transaction processing.

8 Operational Effectiveness Operations: standardized, simplified, tightly controlled, often centrally Processes: Streamlined and optimized processes for end-to-end supply and basic services Information Technology: Build operations around information systems that emphasize integration and low-cost, high speed, reliable transaction processing. Culture: Abhors waste, rewards efficiency

9 Customer Intimacy Goals: Customer satisfaction & loyalty; company profitability Continually tailor and shape products and services to fit an increasingly granular definition of the customer. Typically look at the customer s lifetime value to the company (CLTV), not the value of any single transaction. Develop a tight bond with customers by designing operating models that allow them to address each customer or small subsegment of their market individually Infrastructures facilitate multiple modes of producing and delivering products or services. Empower the people actually dealing with the customer

10 Customer Intimacy Focus: Customer relationships, tailored, specific solutions Business processes stress flexibility and responsiveness. Information systems collect, integrate, and analyze data from many sources. Organizational structure emphasizes empowerment of people working close to customers Hiring and training programs stress the creative decisionmaking skills required to respond to individual customer needs.

11 Product Leadership Goal: Produce a continuous stream of state-of-the-art products and services and new ways to go to market Invented anywhere recognize and embrace ideas that originate outside the company continually scan the landscape for new product or service possibilities Engineered for speed commercialize their ideas quickly avoid bureaucracy make decisions quickly look for new ways such as concurrent engineering to shorten their cycle times Self-obsolescence relentlessly leapfrog pursue new solutions to the problems that their own latest product or service has just solved Risk tolerant have the infrastructure and management systems needed to manage risk well react quickly to contain risks.

12 Product Leadership - Creativity Recognize and embrace ideas that originate outside the company Listen to and consider ideas, however unconventional and regardless of the source Continually scan the landscape for new product or service possibilities Relentlessly pursue new solutions to the problems that their own latest product or service has just solved

13 Product Leadership Focus: Invention, product development, market exploitation Structure: Loosely knit, ad hoc, dynamic Systems: Results-driven, reward success, tolerate failure Culture: Forward-drive, imagination, accomplishment

14 Final Words Many companies falter simply because they lose sight of their value discipline. Reacting to marketplace and competitive pressures, they pursue initiatives that have merit on their own but are inconsistent with the company s value discipline. Inconsistent companies often appear to be aggressively responding to change. In reality, however, they are diverting energy and resources away from advancing their operating model.

15 Planning Finance Customer Intimacy Operations Excellence Product Leadership Technology Info Systems

16 Examples Customer Intimacy: USAA Insurance Nordstrom Operations Excellence: Walmart Toyota Product Leadership: Apple Nike J&J

17 Appendix Value Discipline Variants

18 Planning Finance Customer Intimacy Operations Excellence Product Leadership Technology Info Systems

19 Planning Finance Customer Intimacy Operations Effectiveness Product Leadership Technology Info Systems

20 Planning Finance Customer Satisfaction Operations Effectiveness Product & Process Innovation Technology Info Systems

21 Planning Finance Customer Satisfaction Operations Effectiveness Product & Process Innovation Technology Info Systems

22 Planning Finance Customer Intimacy Operations Excellence Product & Process Innovation Technology Info Systems

23 Planning Finance Nordstrom Customer Intimacy Amazon Operations Excellence Toyota USAA UPS Product & Process Innovation Technology Apple Info Systems

24 Planning Finance Nordstrom Customer Intimacy Amazon Operations Excellence Toyota USAA UPS Product & Process Innovation Technology Apple Info Systems

25 Planning Finance Customer Intimacy Operations Excellence Product Leadership Technology Info Systems