Leveraging The Power of Value Discipline Thinking
From the list of, “Books that I truly wish had updated editions” comes one of my top 10 favorites, the 1997 book, “The Discipline of Market Leaders,” by Michael Treacy and Fred Wiersma.
I re-read this book…or at least parts of it every year and I still carry through the concepts in my academic and client strategy work. While the examples are brutally dated and some of the companies have moved from good to great to gone, I find the framework of Value Discipline thinking to be a powerful tool that is easy for students and clients to digest and one that is useful in guiding strategic choices.
If you’re not familiar with the framework or the book, or it it’s been a decade since you’ve picked it up, I encourage you to add it to your reading list. You will come away with some good insights and I suspect some very challenging questions about how your activities, investments and resources are properly aligned around your firm’s true value discipline.
The Basics:
Treacy and Wiersma submit that no firm can be all things to all people and that a firm’s managers must clarify the value proposition (in my terms, why people buy), select a value discipline from one of three major choices and then build the right value-driven operating model to support that discipline. The three value disciplines that Treacy and Wiersma outline are:
- Operational Excellence-where firms focus on price and convenience.
- Product Leadership-where the emphasis is on creating products that consistently push performance boundaries.
- Customer Intimacy-where firms cultivate deep relationships with their clients.
The authors also appropriately highlight that the choice of a discipline is not a goal or a program or a campaign, but rather “a central act that shapes every subsequent plan and decision a company makes…”
The Power of the Value Discipline Framework in Promoting the Right Discussions:
- It’s always fascinating to watch a group of executives flail over what their value discipline is or is not. Rarely does a team immediately agree on their true value discipline. Some of the debates are nearly comical, although out of regard for clients, I will refrain from highlighting the narratives. Let’s just say that they often align very closely to the particular functional role of the executive.
- The discussion around Value Discipline forces a critical discussion about “value proposition.” Once again, many firms don’t truly understand why clients buy and what their core value proposition is for their customers. They are most definitely not Tuned In (another of my favorite strategy and marketing books in my took kit.) This “gap in corporate consciousness must be closed to improve strategy selection and execution effectiveness.
- Once the debate over “What are we?” distills down to a dull roar and reasonable selection (of which it cannot be all 3!), the framework requires management teams to assess whether their operating model, infrastructure and resource and investments all support the discipline. This is an important part of selecting the right activities and importantly, saying “No!” to the wrong activities.
Value Discipline Thinking is Important for Independent Consultants/Solopreneurs and Small Firms:
While the content is geared towards larger firms and business units, challenging yourself to think through and focus your value proposition and operating approach is critical for your marketing, messaging and business development activities. Run, don’t walk to define a value proposition that resonates with your target audience, differentiates your from competitors and integrates with the services or products that you are providing.
Sidebar: B-School Educators Can Use the Framework as a Tool to Promote Conceptual Thinking
This book and framework offer a great way for B-school educators to create a powerful and practical classroom learning experience. A simple exercise is to ask students to categorize some of their favorite companies into one of the three disciplines and to explain the reasons and evidence behind their choices. It is commonplace for firms like WalMart, McDonald’s and Starbucks to end up in multiple categories.
As part of the discussion, you have a great opportunity to introduce that lofty phrase, “value proposition” into the discussion and make it real for the students as they drill down further into why they actually buy or frequent the various firms.
Last and not least, just as in corporate discussions, the framework provides an easy way for you to delve into the operating models of various firms and to study how activities and investments are aligned to support the Value Discipline.
Great stuff for a rich and practical classroom learning experience!
The Bottom Line for Now
There is no expiration date on “Value Discipline” thinking. While no book and no framework will provide you with the silver bullet for success, spending some time assessing your value proposition, value discipline and supporting operating model is an important exercise for everyone and every firm, from solopreneurs and consultants to global firms.
So, what’s your Value Discipline?
Leadership Caffeine-Develop a Big Picture View or Risk Becoming a Carp
Filed under: Leadership, Leadership Caffeine, Leadership Skills, Leading Change, Management Education, Management Innovation, Organizational Transformation, Performance, Social Commentary, Strategy, Your Professional Development "To Do" List
Far too many leaders that I encounter lack awareness of the broader forces swirling around their firms, their customers and those shape-shifting clusters that we describe as industries.
Given the hurricane like market and societal forces buffeting our globe today, a strategy of boarding up the windows and hunkering down is tantamount to committing corporate suicide. Yet, mostly by the sin of omission, this is exactly what I’m observing inside too many organizations.
I cannot rationalize why some firms lack the systems and cultural elements that encourage environmental scanning, assessment and action formulation, but I can empathize just a bit.
The world is a complex place and increasingly, planning and managing businesses for value creation has become a “Wicked Problem” where the volume of contradictory and conflicting information is overwhelming. Ignoring this complexity and focusing on controllable issues and digestible problems is an understandable human response. In many cases, taking an Occam’s Razor approach is much better than falling victim to the malady of complexity induced organizational paralysis. However, in cases where a firm marches along oblivious and/or unresponsive to the swirling forces constantly reshaping the world it is a wholesale failure of leadership.
There are no miracle cures or silver bullets for making sense out of the chaos, other than the hard work of paying attention, assessing and either reacting or pro-acting as the occasion merits.
Building a learning culture is essential to survival, not just success. For real-time examples of firms that don’t and did not get it, pick up any newspaper. And while the smaller firms in our economy don’t grab the headlines, the failures and the failing are epidemic here as well. At least part of this epidemic stems from a failure of top leaders to comprehend the destructive power of the broader market forces until right after these force have flattened their firms.
How the Lowly Carp Fits Into this Story:
The physicist and author, Dr. Michio Kaku uses the following personal anecdote to challenge people to think beyond the confines of their current four dimensions into the possibilities of a much more complex and much larger universe:
“When I was a child, I used to visit the Japanese Tea Garden in San Francisco. I would spend hours fascinated by the carp, who lived in a very shallow pond just inches beneath the lily pads, just beneath my fingers, totally oblivious to the universe above them.
I would ask myself a question only a child could ask: what would it be like to be a carp? What a strange world it would be! I imagined that the pond would be an entire universe, one that is two-dimensional in space. The carp would only be able to swim forwards and backwards, and left and right. But I imagined that the concept of “up”, beyond the lily pads, would be totally alien to them. Any carp scientist daring to talk about “hyperspace”, i.e. the third dimension “above” the pond, would immediately be labeled a crank.
Today, many physicists believe that we are the carp swimming in our tiny pond, blissfully unaware of invisible, unseen universes hovering just above us in hyperspace. We spend our life in three spatial dimensions, confident that what we can see with our telescopes is all there is, ignorant of the possibility of 10 dimensional hyperspace.”
–
While fascinated by the opportunities and possibilities of 10-dimensional hyperspace, the comparison in this post is to those that operate in the confines of their firms and traditional industry boundaries, without sticking their heads out of the pond to observe the broader world and the impact that it is having on their personal pond.
9 Suggestions for Not Becoming A Carp (Or Improving Your Team’s External Awareness and Chances of Survival):
- Establish the audacious goal of creating a cultural evolution to increase your team’s/firm’s external awareness AND ability to act. Many of the following support this goal.
- Let people know that it is their job to monitor…customers, competitors and partners. Reinforce this by creating systems to do something with the lessons learned and insights.
- Create forums to discuss the external world and ensure that these forums don’t succumb to the powerful gravitational pull of internal stuff.
- Challenge business units and leaders to define “learning” strategies. Challenge IT to create systems that enable collection, translation and dissemination.
- Ask and require answers to the question: “What does this mean for us? Our customers? Our future?
- Connect external factors and internal hypotheses to improvement and innovation actions and then measure and report the results of these efforts.
- Run strategy reviews with an emphasis on connecting what’s happening externally to how resources are being used/invested internally. If there is no connection, blow up the project.
- Recognize the need to use the tools of management…especially structure as a means to create value out of changing forces. While your current processes and culture might not support responding to change by building the product that will cannibalize your business, a dedicated project team, a spin-out or an acquired firm might enjoy a higher probability of success.
- Seek out varied perspectives. Constantly. Remember, asking another carp in the pond about the world outside the pond will only get you another perspective from the pond.
The Bottom-Line for Now:
This topic invariably invites debate and a fair amount of criticism, especially from top leaders that feel that my observations are an indictment of their efforts. And while I am most definitely offering criticism, my primary purpose is to encourage you as a leader to live up to your billing as a sentient being. While a carp may perceive the outcome of an environmental change, you alone plus your team members are capable of assessing and taking action to survive and ideally prosper.
Vow not to become a carp this year or any year.
Increase Your Team’s Global Awareness or Risk Being Run Over
Filed under: Crisis Leadership, Life and Business, Management Education, Social Commentary, Strategy, Your Professional Development "To Do" List
Note from Art: this post is written from the perspective of U.S. industry and business. For my many overseas readers, I suspect that you face similar issues with slightly different context. Also, I’ve endeavored to not stray too far into the political arena on this topic, although in my opinion, the politicians and their policies are at the root of many of the current problems. Of course, we as citizens hold the key to solving that issue. However, that’s another post for another day.
Consider this post as one of robust encouragement versus a scolding.
Too many of our businesses, business leaders, citizens and politicians fail to understand, pay attention to or even appreciate the impact of the ever-changing global business environment. Or, if they do appreciate the impact, many are caught like the proverbial “deer in the headlights,” staring as the global competitors approach at an accelerating rate.
We’ve all known for a long time that the world is flattening and the advance of global trade in large part through the elimination of historical trade barriers has created a rising tide effect. We also know that for some countries, the tide has risen and continues to rise faster than for others. Consider the emergence of South Korea, India and China as economic powers over the past two decades as three prime examples.
In my own career experience, embracing the creeping globalism and leveraging the powerful forces behind it to compete and profit have been and continue to be much like breathing. However, step outside of the walls of your global giant or innovative tech start-up and spend some time in one of thousands of little industrial parks around the country, and you are liable to find very different circumstances.
Much of my work now occurs inside smaller firms that sprouted from entrepreneurial seeds and specialized know-how. These firms lived and thrived for a time and many have grown considerably during the past twenty years. A good number of these firms are specialized manufacturers or packagers and instead of expanding and adding to the job rolls in their communities, many are on the brink of extinction as a result of failing to adapt to and embrace a global world.
Disturbingly, instead of searching for solutions, adapting their strategies or even taking on the tough task of reinventing their businesses, many of these firms and individuals are standing in the road staring at impending collision and death. Often, their first response is to reach out to the politicians for “protection,” but the reality is that artificial barriers do more damage than good.
In part, I believe a root cause of this seeming inability to move and adapt stems from a still very-much-alive global ignorance on the part of U.S. business owners and operators, as well as everyday citizens. Whether it is ignorance or arrogance or, as I suspect, a bit of both, many of us lack context for anything outside of our own culture and language. Some of my clients are puzzled at how quickly their businesses have declined and didn’t see it coming. Much of this stems from a “head in the sand” view of the world.
Wake up people! It’s a big, competitive, inter-connected world filled with firms that want to eat you for lunch and spit out the bones.
While there are no easy or quick cures for coping with global competitors or having to serve customers that demand the lowest prices, you can certainly improve your chances of survival by challenging yourself and your team to become citizens and competitors of the world, not just American business-people and firms. You need to consider the future of your business armed with the context of a much bigger picture than the one from your office window in the suburbs of Chicago or Detroit.
A Few Starting Suggestions for Improving Your Global Awareness:
- Instead of glossing over the World News sections of the Wall Street Journal, study it closely. Subscribe to publications like The Economist and The Financial Times, where much of the perspective comes from outside the U.S.
- Watch carefully and monitor as the new global economic battleground is increasingly shaped by countries other than the U.S.
- Support the global education of your team and hire talent with a global experience.
- Identify partners to help extend your reach or improve your ability to source and compete on the global stage.
- Seek out the many resources available from the U.S. Government, local Business Development Centers and of course, qualified consultants.
- Constantly rethink your business strategy from a global perspective.
- If you don’t have a strategy, it’s time to get one.
- Pay attention to the manipulations and machinations of our elected officials on global trade issues. That special interest they are protecting today might sew the seeds of your industry’s doom tomorrow.
The Bottom-Line for Now:
There are no easy answers or simple solutions to playing and competing successfully in this fast changing and very, very tough global world. However, you might start by jumping out of the way of that oncoming global competitor. It’s time to raise your game by raising your team’s global IQ and then doing something with this knowledge.
Leadership Caffeine: Five Simple Suggestions for Minimizing Management Myopia
Filed under: Leadership, Leadership Caffeine, Management Education, Management Innovation, Middle Management, Organizational Transformation, Performance, Professional Growth, Strategy, Your Professional Development "To Do" List
Participate in or monitor enough management team conversations and you will invariably conclude that it’s darned hard for these teams to spend quality time discussing external issues.
The gravitational pull of internal “stuff” is overwhelming and resists all attempts to move the conversation to topics outside of the firm’s four walls, preferring instead to keep managers focused on the nuances of their own operations. The result is a self-fulfilling management myopia where the view on the world is grossly limited to the immediate surroundings…and ranges as far as the eyes can see outside conference room windows.
Myopic firms miss market moves and focus incorrectly on improving yesterday’s systems and products and services while customers are looking and moving forward in search of new solutions to emerging vexing problems.
Overcoming this myopia requires extraordinary effort on the part of key leaders to train and enable their teams to move outside of the four walls and to build a more comprehensive market view that is constantly in the process of being refreshed.
5 Simple Suggestions for Minimizing Management Myopia:
1. Start by scheduling regular forums where the only items discussed are external in nature. Create a series of core questions that challenge team members to show up prepared to talk about what’s going on with customers, competitors and other industry ecosystem players. Resist the urge in these forums to move towards actions and internal items with one exception.
2. The one exception to the “no internal discussion rule,” is to teach your team members to end their discussions of external forces/factors/changes with “What this means for our firm is… .” Capture these notes.
3. Charge team members with the task of monitoring specific competitors and industry participants and providing regular updates to the group as well as instantaneous updates as conditions change. Remember, that the insights must always be accompanied by, “What this means for our firm is…” statements. Rotate assignments periodically to keep people fresh.
4. Interview customers. Regularly. It’s interesting to sit around and speculate on what customers are doing or thinking, but it’s much more compelling and actionable to truly understand what’s on their minds. Again, create a simple customer survey script and charge your key managers and contributors with keeping tabs on specific customers. I’ve done this with development resources, product managers and of course executive managers, and it gets people on your team connected to someone in the market. Bring the findings into your “external forums” and share.
5. If your team is internally focused such as IT or an internal support group, make certain to forge relationships with external facing colleagues and departments. Invite members of these groups to join your meetings and to share updates on current market issues. Pay attention for opportunities to better tune your function’s activities and priorities to issues and opportunities that your external facing colleagues see in the market.
The Bottom-Line for Now:
Inevitably the best outcome of good external awareness is the reflection of insights in program, product and service improvements that create value for customers and profitable growth for your firm. You will need to develop a good mechanism for translating external awareness into internal execution, however, that’s a post for another day.
For now, set a goal to increase your team’s external IQ and try the suggestions here on for size. And be certain to double-back and share with us your own suggestions. After all, your input is part of my program to stay externally aware!
Leadership 2009 Style-What We Learned
Filed under: Crisis Leadership, Current Affairs, Leadership, Leadership Skills, Leading Change, Life and Business, Organizational Transformation, Performance, Professional Growth, Strategy, Talent Management
Mix one part global economic crisis with ample quantities of uncertainty and ambiguity. Stir in two-parts ever-changing global competition and a dash of geopolitical instability and you’ll end up with something that looks and feels a lot like the world of today, complete with the mild aftertaste of fear.
You’ll also end up with a remarkable living leadership laboratory, where the best leaders are rediscovering the importance of leadership blocking and tackling while simultaneously developing the new skills and approaches required in this complex environment.
The basics of effective leadership never go out of style. Articulating a compelling vision, backing words with actions and support, offering coaching and feedback and driving strategy are all table-stakes for good leaders and effective leadership in any era.
However, this is no ordinary era, and what worked during the last boom or even the last recession almost a decade ago, no longer fits and certainly doesn’t match or meet the needs of organizations and workers today.
The variables are different, the risks higher and the way forward for many firms in many industries masked by the fog of complexity and ambiguity.
Welcome to leadership circa 2009!
This high-anxiety environment that we’re all living in and working through has catalyzed an accelerated evolution in leadership practices, and while the period is painful for many, I truly like where this is taking us on the leadership front.
We’re learning to build the new airplane while flying the old one, and this balancing act requires remarkable leadership agility and creativity.
Consider:
- Practices that reflect transparency, honesty, accountability and straight-talk on the tough issues are increasingly de rigueur.
- Effective leaders are spending less time in boardrooms and behind closed doors and more time out where the work gets done, particularly in the factories and stores of their customers.
- Employee involvement is popular again with the smartest leaders recognizing the need to enlist front-line employees in identifying and sharing customer insights and to challenge everyone else to turn those insights into improvements and value creating services, products and systems.
- There is no “rising tide” effect lifting industries and companies. Leadership is on display and under a magnifying glass, and the collective good results of prior years have unmasked the ineffective and in some cases, corrupt leadership practices that were glossed over when the numbers rose in defiance of poor leadership approaches and lousy leaders.
What a great time to be a leader!
Critical Leadership Lessons of 2009:
The best leaders are heeding Deming’s advice to work on eliminating fear in the workplace. Fear is an organization killer, and the cure for this cancer is for leaders to attack it with transparency and visibility. Those comfortable with leading from the rear have learned the necessity of moving to the front and leading the charge with a constant flow of unvarnished information on the real issues.
Leading has always been about coping with ambiguity, but in today’s fog enshrouded world leaders are learning to reshape their cultures and their operating approaches to facilitate fast recognition and response to emerging opportunities and threats. Easy words to write…hard culture to realize, but the best leaders are working tirelessly to breed the right people, systems and behaviors to produce this sense and respond culture.
Good crisis leaders are capable of admitting, “I don’t know,” in answer to some of the most complex issues, as long as the admission is backed and packed with action. Few crisis leaders understand the details of the path to prosperity, but the good ones recognize the power in Drucker’s comment, “Actions in the present are the one and only way to create the future.” Good leaders mobilize teams, choose a direction and go based on their best intelligence and gut hunches. If the course turns out to be wrong, they correct without looking back and keep moving.
Organizations and leaders that recognize the complexity of this new world have jettisoned traditional planning models and approaches in favor of dynamic, fast-moving methods that facilitate market monitoring and organizational learning and place a premium on acting. These approaches require experimentation and embracing frequent small failures on the path to success.
The foundation of any successful business is talent and while much lip service is paid to this topic, and the smartest leaders are carefully navigating the most remarkable talent pool in many generations for those anxious and motivated to contribute and prove their former employers wrong. While it is too soon to see if talent management and leadership development will become part of the DNA of tomorrow’s organizations, the need has never been more apparent.
The Bottom-Line for Now:
The leadership observations and trends above might seem like the domain of jumbo-sized global firms with deep pockets and robust talent systems. And while some firms of this ilk do have natural advantages and are pushing the envelope on breaking down walls and experimenting with new approaches to leadership and management (think Cisco), I’m seeing these practices in small start-ups, old-line manufacturers and innovative retail and service establishments on Main Street.
I have every reason to believe that the way forward is filled with obstacles that rival the labors of Hercules. There are no silver bullets, no easy answers and no magical leadership or management fads that offer miracles cures.
I do however believe that necessity is pushing us to innovate in management and operating approaches, and that a new style of leader must emerge to help firms cope with the modern day Herculean labors of ambiguity, fear, complexity, speed, ever-changing adversaries and a capable but shell-shocked talent pool. For right now however, the leader circa 2009 is busy mucking today’s equivalent of the Augean stables. Grab a shovel and we’ll finish this together.
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