Value discipline, a term coined by Michael Treacy and Fred Wiersema in their book, “The Discipline of Market Leaders” to describe different ways companies can differentiate itself from competitors. A value discipline is more than just a benefit statement—it is a statement of strategic focus and provides a context for a company to set its corporate vision and objectives, to target its most profitable customers, and to focus and align its activities.
Treacy and Wiersema identified three different ways of bringing together a compelling value proposition with an effective operating model. The basic idea is that any company can deliver value to its customers in three value disciplines.
- Operational Excellence: Delivering quality products or services at the lowest total cost with the least inconvenience and always on time. Companies pursuing operational excellence are relentless in seeking ways to minimize overhead costs, to eliminate intermediate production steps, to reduce transaction and other “friction” costs, and to optimize business processes across functional and organizational boundaries. They focus on delivering their products or services to customers at competitive prices and with minimal inconvenience. An operationally excellent company proactively designs its entire business model for its targeted customer segments, paying particular attention to speed, efficiency, and cost.
- Product leadership: Aims to build a culture that continuously brings superior products to market. Companies that pursue product leadership are innovation-driven, and they constantly raise the bar for competitors by offering more value and better solutions. Product leaders continually scan the landscape for new product or service possibilities; where others see glitches in their marketing plans or threats to their product lines, companies that focus on product leadership see opportunity and rush to capitalize on it.