Value Disciplines

The Value Disciplines was created by Michael Treacy and Fred Wiersema. They helped and advised organizations in determining or improving their strategy. The value strategy model has been drawn up to determine the correct strategy each organization.

Do I need the Value Disciplines?

You need the Treacy and Wiersema value discipline model when formulating strategy. The value strategy model establishes that one of the three value strategies is chosen, where they stand out from the competition. The other value strategies must be implemented at a threshold level.

Which variables do I need?

Each value strategy of the Treacy and Wiersema model contains an explanation and an example. There is a description of which strategy suits what type of organization.

Product leadership

The product leadership value strategy model is applied to organizations with a highly distinctive product or service. A company with superior performance, creative solutions and a visionary policy according to Treacy and Wiersema. The target group of innovative organizations is often relatively young. This makes it important that they are aware of the latest developments and trends.

Features of product leadership:

• Talents are stimulated;
• Flexible corporate culture;
• Company culture is based on innovation and results;
• Focus on development;
• Focus on high margins in a short period of time;
• Focus on time-to-market.

Customer intimacy (customer partnership)

The customer intimacy value strategy model is applied to organizations that tailor their product portfolio as closely as possible to customer needs. These organizations have a sustainable relationship with the customer. This sustainable relationship ensures that the changing needs and wishes of the customer can be anticipated.

This value discipline of the Treacy and Wiersema model is about providing a total solution and maintaining the relationship with the customer. The added value is created by customizing the product or service for the customer.

Features of customer intimacy:

• Decision-making authority for employees close to the customer;
• Excel in customer attention and customer service;
• No one-off transactions with the customer;
• Product or service at (almost) individual level;
• Wide variation in product range;
• Maintains relations with the customer.

Operational excellence (cost leadership)

The operational excellence value strategy model is applied to organizations that want to achieve the lowest possible cost price. This allows an organization to have a low sales price on the market. The goal is to use processes, people and resources efficiently and effectively to greatly reduce costs.

This value discipline ensures a problem-free delivery of product or service. This process is carried out at the lowest costs, least time and greatest convenience for the customer. The management system focuses on efficient transactions and the organization on cost and time savings and minimization of waste. The distinguishing feature is the excellence of a low sales price with a reasonable quality “best performance”.

Features of operational excellence:

• Task-oriented vision with regard to personnel;
• Measurement systems are very important;
• Limited variation in product range;
• Within this organization, the focus is on standardization and routine work;
• The focus is on efficiency, streamlined operations.

How can I apply the model?

Practice shows that it is unwise to excel in just one value discipline of the Treacy and Wiersema Value Disciplines. It is unlikely that an organization within its industry presents well on value discipline and poorly on other value disciplines. A wise decision is to make a choice in which value discipline you want to excel. The others must also function properly at the same time. The Treacy Wiersema model therefore offers the opportunity to formulate a strategy.

Product leadership example:

Organizations with this value strategy model do a lot of research into the needs of consumers. This allows a wide audience reach. They respond to the consumer behavior of the population. This has been analyzed by means of market research and sector research that is geared to the Treacy and Wiersema Value Disciplines.

Customer Intimacy example:

Organizations with this value strategy model use different marketing channels to get in touch with the customer. Customers know exactly what they have in these organizations. The prices and agreements are therefore transparent.

Operational excellence example:

Organizations with this value discipline use business processes to inform customers quickly. This mainly concerns the level of the order status of their order.

What can I get out of it?

With the Treacy and Wiersema Value Disciplines strategy model, a distinction is made between organizations with regard to competition. Each organization uses a different positioning. The model therefore lays a foundation in the type of strategy that you want to pursue as an organization.