Competitive Strategy: Value Discipline

Imagine you were building a football team from the ground up. Would you just go about willy-nilly picking the best available players?  Do you think after you filled your roster and realized you had 10 quarterbacks, and no running backs or receivers you’d ever win a game? What is your value discipline?

No, when you build a team, you build a team around the best talent available to execute a particular style of play.  You choose a style of play, build a team around that style. You build a strategy around the optimal path to exploit your resources and compete against the other teams. If there are no great throwing quarterbacks available and there are a ton of mobile quarterbacks and running backs, you build a running team. To build on that you would look for linemen that can help you support that running strategy.

You declare to the team, “we are a ball control team.” You better make sure everyone on the offense now understands we are a run oriented-offense. The coach declares to win we keep the ball on the ground, control the clock, and dominate the ground game. Everyone knows we are built to run.

If the coach misses a game, the quarterback doesn’t just switch the offensive game plan to west coast offense. No, the QB understands we aren’t a wide-open offensive team and he will stick to smash mouth running football.

Think about your company? How do you play offense? When your team members are in a situation, and they don’t have access to you, how do they know which play to call?

Like football teams, companies have a competitive style.

My wife, Mrs. Don’t-Ever-Call-Her-Cranky-if-You-Value-Your-Life, tells me I need to cater to people who don’t give a crap about football. She asks, how would this apply to restaurants?

Okay, honey, let’s say we opened a Kentucky Fried Chicken restaurant. We do this because everything that no one eats tastes like chicken and therefore we can procure the cheapest road kill we can find, bread it, throw it in a boiling vat of animal fat and call it fried chicken.

So here I am, the owner and leader of Chez Animal m Fué Sur la Route (French for Road Kill Restaurant) and I go on vacation for a week. The people in my restaurant decide when I’m away they’re going to serve high-end French Food. By the time I get back, the place is out of business… I failed because I didn’t direct my team that we specialize in frying rodents and birds and stuff. We didn’t stay true to our core, or value discipline.

In their book, the Discipline of Market Leaders, Michael Treacy and Fred Wiersema posit that companies compete on three value disciplines:

  1. Customer Intimacy – Focusing on building long-term customer relationships through customization, and satisfying each customer’s unique desires. Example: Nordstrom
  2. Product Leadership – Providing innovative products that customers may never have known they needed. Example: Apple iPhone
  3. Operational Excellence– Conveniently providing serviceable products at a reasonable price. Example: Dollar Shave Club

Leaders need to declare their value discipline. The principles on which they compete. Are we a running team? Do we quickly serve low quality, low-cost food? Are we the kind of company where the customer is always right?

I can buy sunglasses from Amazon, Walmart or Nordstroms. These three companies sell many of the same things and yet they are very different companies.

I might choose to buy it from Amazon because they offer a wide choice of products. I can easily check the customer reviews and ratings. Amazon will ship it to me and I’ll receive them tomorrow without ever leaving my home. Amazon is a product leadership company.

I might choose to buy my sunglasses at Walmart. Walmart offers several low-cost options, they’ll be in stock, the prices will be very competitive and the lines at checkout will be short. Walmart is Operationally excellent.

Finally, I might choose Nordstrom, they’ll have unique glasses I can’t find anywhere else. I could buy the same product elsewhere for less money but at Nordstrom, the salesclerk will be extremely knowledgeable and helpful.  Three years from now, when I break these sunglasses, Nordstrom will allow me to replace them.. no questions asked. Nordstrom is customer intimate

Leaders who define the principles of value discipline provide their team with a method to make decisions independent of management. When I return my 3-year-old broken sunglasses to Nordstrom, the sales clerk does not have to call back to the CEO to find out if they should accept the return.

Companies must be competitive on all three value disciplines. Walmart can’t suck in customer service and innovation and compete only on operational excellence. No, if they sucked at customer service they’d be K-mart and out of business. Companies must be good in all three aspects unless you’re lucky enough to be in a low-competitive market like Airlines. American or United Airlines are lucky enough to compete against each other by providing overpriced, crappy service poorly run companies. You’re probably not that lucky. You must focus on all three value disciplines and excelling in one. What value discipline defines your operation? You as a leader are responsible for devining, defining and declaring that focus.

A well-defined value discipline is a key to building a scalable organization. It eliminates the need for complex procedural manuals that attempt to document every possible situation every employee might encounter in the course of their job.

Want to discuss your value discipline or competitive strategy? Want to build a high-performance culture? Want to figure out how you can unleash the discretionary energy of your team? Try a complimentary, one-hour, online, coaching session. Schedule it now by pressing that little red button down there.