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Part One
Overview and Background
Chapter 2
Value Disciplines and Related Frameworks
Value Disciplines

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Treacy and Wiersema counseled that companies could advantageously differentiate themselves through better processes, better products, or better relationships. Their ideas about competitive strategy were structured according to three related components: the value discipline and its supporting value proposition and operating model.

According to Treacy and Wiersema, the value proposition is the implicit promise, that is, the offer that the company makes to its customers regarding the value – benefits less costs – that the customer can expect if he or she does business with the firm. Perhaps the simplest such proposition is Geico's famous “15 minutes could save you 15 percent.” In other words, an investment (i.e., cost) of 15 minutes of your time could save you 15 percent on your car insurance premiums (i.e., benefit).

Value is not only measured in cost reduction, of course. It might include access convenience, purchase convenience, elegance, design, ego gratification, entertainment, emotion, user experience, or personal or business transformation, to name a few.

Treacy and Wiersema then defined the value-driven operating model as the integrated mechanism by which that value is delivered: processes, resources, data, plant, equipment, IT assets, location, organization, culture, leadership, management, governance, and employee skills and motivation. Different companies may have different approaches to delivering value: Toyota uses a very different model for manufacturing Camrys than Rolls-Royce does with its handmade Phantom Coupé. Each creates value for its target segments, but they are different kinds of value with different kinds of operating models.

Each value discipline is a combination of a generic value proposition with its corresponding operating model.40 A company pursuing operational excellence through cost reduction, for example, will think about controlling costs everywhere, and is more likely to invest in automated self-service and interactive voice response (IVR) systems than in front-line account teams to build customer intimacy.

Treacy and Wiersema argued that value disciplines are very different from strategic goals. Whereas the same company can have different strategic goals one year versus the next, having a different value discipline requires rethinking all dimensions of corporate identity. So, to continue the example, an annual goal for an operationally excellent company might be to grow the proportion of customer service calls handled by the IVR system; whereas a customer intimate company might have a goal of increasing average customer satisfaction scores by 5 points, and incentivizing its dedicated account teams accordingly.

They also distinguished value disciplines from quick fixes. A company noticing a decline in market share might offer special promotions to win some deals that otherwise might be lost, but this is very different than reengineering core processes for lower cost. A CEO might desperately visit some top customers, but this is very different than customer intimacy that is deeply practiced throughout the organization. A company might paper over deep process issues by introducing expediters to speed some customer orders, but this is not a comprehensive process improvement approach leading to operational excellence.

40

Treacy and Wiersema, The Discipline of Market Leaders, xiv.

Digital Disciplines

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