HOW NOT TO WRITE A BUSINESS `HOW TO'
THE DISCIPLINE OF MARKET LEADERS
Choose Your Customers, Narrow Your Focus, Dominate Your Market
By Michael Treacy and Fred Wiersema
Addison-Wesley 208pp $25
Business book writers often seem to crib from the same style sheet as authors of pop psychology books. Both usually take complex topics and oversimplify them, claiming that changes in one or two areas can turn a corporation into a world-beater or salvage an otherwise purposeless, neurotic life. Only rarely do such books acknowledge how complicated the world is and how hard change can be.
Reengineering the Corporation, the 1993 business blockbuster by Michael Hammer and James Champy, was popular at least in part because the authors appreciated the difficulty of the problems companies were trying to face and suggested equally taxing solutions. In contrast, the authors of The Discipline of Market Leaders have taken the easy way out. Michael Treacy and Fred Wiersema, consultants with CSC Index, the firm that helped spawn the reengineering craze, have penned a breezy book packed with generalizations and platitudes about what successful companies do well.
Essentially, the authors conclude, they do one thing: serve the customer. Surprising? Probably not. More interestingly, Treacy and Wiersema suggest that market leaders do this by excelling in one of three ways: They deliver either the best product, the best total cost, or the best "total solution"--but never all three. "Market leaders choose to excel in delivering extraordinary levels of one particular value," Treacy and Wiersema write. "So you choose your customers and narrow your value focus."
Provocative, as far as it goes. Despite years of declaring that the customer is king, too many U.S. companies seem to have only the barest notion of whom they're serving. And with downsizing and reengineering continuing unabated, overworked employees often have little time to serve customers, let alone grow "intimate" with them, as Treacy and Wiersema prescribe.
Problem is, the authors don't go far enough. Just how does a company identify its customers? How does it balance the competing demands of investors, employees, and other interest groups? What specific steps do successful companies take to win customers' hearts?
Treacy and Wiersema only sideswipe such questions. They map their thesis out cogently in Chapter Two--which readers might not get to after 13 pages of fluff--then proceed to make the same point over and over across the next seven chapters. Case studies add frustratingly little detail. We learn, for instance, that chipmaker Intel Corp. established very close links with end-users. But we don't find out how it did it, or what, specifically, those links achieved. The only statement we get from an Intel manager is that "the end-users give us a lot of input about the more global things that they want to have in the product." Like what?
The heart of the book explores the three disciplines the authors have determined market leaders practice. Some, such as Southwest Airlines, make "the promise of the lowest total cost"--which includes not just price but also "product reliability and durability." Another set, which includes Intel, delivers superior products. (Surely the way Intel reacted when it produced a flawed product, the Pentium chip, undermines the assertion that it has learned to listen carefully to end-users.) A final group focuses on "but one master: the customer." Such companies--soda upstart Cott Corp. is mentioned often--"offer a unique range of superior services, from education to hands-on help, so that customers can get the most out of their products."
Not only is there a lack of useful detail but it soon becomes clear that the one-value schematic, though intriguing, is overly simplistic. Operationally excellent companies, the authors write, "reject variety, because it burdens the business with cost." But this certainly doesn't apply to a key example, Wal-Mart Stores Inc., with its endless array of items. Nor does the one-value-only model do justice to Southwest Airlines, which, despite its low-cost motto, treats its customers as intimately and personally as any company. Other companies, such as Motorola Inc., seem to both make the best product and deliver the lowest total cost.
Discipline also suffers from a lack of diversity. The same companies are discussed again and again--presumably they are or were clients--while obvious candidates for discussion are barely mentioned. Certainly, a chapter on companies that design and produce superior products should contain more than passing references to 3M and Motorola, two titans of product development. Overseas companies are not discussed in any great detail--a glaring omission, especially when talking about the auto industry. For all the success of the Ford Taurus, clearly the Japanese still produce better cars more quickly than their U.S. counterparts.
The Discipline of Market Leaders isn't an awful book. It's a pleasant read. The second chapter offers extremely useful ways to look at a business. And the concluding three chapters, which outline how to decide which discipline to follow, are also helpful. But reading the entire book leaves one with the feeling that the authors are trolling for clients, saving their best insights for those who will pay for more--much more--than a hardcover book.BY KEVIN KELLY