The document discusses three value disciplines that companies can adopt: operational excellence, customer intimacy, and product leadership. Operational excellence focuses on efficient production and low costs. Customer intimacy prioritizes building strong customer relationships and tailoring products to individual needs. Product leadership emphasizes continuous innovation and being first to market with new products. The document argues that companies must choose a clear value discipline to target specific customer categories, but also notes it is a challenge to sustain focus on that discipline over time. Shifting attention away from the core value can reduce earnings.

1. CUSTOMER INTIMACY AND
OTHER VALUE DISCIPLINES
A Review of the HBR Article by Michael Tracy and
Fred Wiersema
(Shared purely for academic knowledge – No
copyright infringement intended)

2. “Try not to become a man of success, but a
man of value "
- Albert Einstein
- what is value ??
- how the big companies deliver value ?

3. Operational Excellence
Customer Intimacy
Product Leadership

4. “A specific strategic approach to the production and delivery of
products and services”
• Eliminate intermediate production steps
• Competitive prices
• Reduce transaction and other “friction” costs
• Minimal inconvenience
• Minimize overhead costs

5. Eliminate intermediate production steps
Customers
Dealers Customers
“DELL has risen
to $1.7 billion
in revenue in
less than 10
years”

6. “Direct Connect” –
Virtual Inventory
Linking to GE Credit
Eliminate hassles of
maintaining inventory
Forecasting demand and
planning production and
distribution
“Loaded dealer is no longer a Loyal dealer”

7. "Shaping products and services to fit customer needs"
• Expensive but builds customer loyalty
• Customer's life-time value than single transaction
• Little regard for initial cost
Eg: HOME DEPOT(Home-improvement products)
• Clerks figure out most suited product
• Store personnel ensure customer gets right product
• Forte - Individual service
• Business strategy - not only selling inexpensive
products but also concentrating on customer
satisfaction
• Brands - BEHR paints, Chem-dry(carpet cleaning)

8. OTHER COMPANIES:
Staples(Office-supply retailing), Ciba-Geigy(Pharma)
• Designed Operating models to address every customer
• Sake - Profitability and Customer satisfaction
• Singletime - Lifetime relationship
• Not all customers require same service or generate
same revenues
• Classify customers by visit or revenue - regular,
occasional
• Occasional - dealt by trainees, juniors
• Group customers/clients based on interest and one
account rep per group

9. • Advertising, Merchandising and Operations within a
supermarket to cater customer needs
• Has IS, Educated sales force to develop its product sales
• Decentralized marketing operation, developing sales force-
customer relationship
• Sales force deals with store managers and regional
managers to conduct promotional programs
• Provide work data to sales force, need recommendations
• Has centralized IS - collects and integrates data from three
sources

10. • Trade marketing team - analyse info and sent to sales team
• Business strategy - Flexibility, Responsiveness
• Organizational structure - develops sales force and customer
relationship
• Training programs - stresses decision-making skills
"Have it your way"
Individual stores - consumer purchases by
store, category and product
Demographic and buying habit info from
30000 stores
Outside vendor –
geo-demographic data

11. "Striving to produce a continuous stream of state-of-art
products and services"
 ‘Three ways in which they 'challenge themselves'

12. The 'Acuvue' example
Recognizing the idea
High-speed production
facility
Marketing not only to
the consumers
Continuous research
Product
Leadership

14. “Tata Steel supplied steel tubes to a boiler
manufacturer. The tubes were oiled to avoid
rusting en route to the customer’s plant. Bizarre
as it may seem, the customer first cleaned the
oiled surfaces and then let it pick up rust
before using it!”
A Case Study by James Anderson at ‘The Kellogg’s
program’ in 2009
Source: http://telcostrategies.wordpress.com/tag/product-leadership/

15. OPERATIONAL
EXCELLENCE
+
PRODUCT
LEADERSHIP
CUSTOMER
INTIMACY
+
OPERATIONAL
EXCELLENCE
OPERATIONAL
EXCELLENCE
+
CUSTOMER
INTIMACY

16. (A)
• Choosing a value discipline is the same as targeting a
category of customers to serve.
(B)
• Customers who shop for retail goods at discount and
membership stores and want high quality at low prices.
(C)
• Second category of customers , who are concerned with
getting precisely what they need , willing to compromise
on price and delivery time.
• Third category of customers for whom new, different and
unusual products count the most.

17. Choosing the value discipline, is necessary to be
an industry leader.
But a greater challenge is to sustain the focus,
continuously breathing it into the organisation,
develop internal consistency and to confront
radical changes.
Company’s may experience a slippage in their
earnings if hey shift focus from their value
discipline. E.g. Sears
Sustaining the lead = Sustaining the focus +
incessantly upgrading the operating model.

18. Thank You