In this article we describe the Treacy & Wiersema Value Discipline Model in which there are three different value disciplines that organisations can implement in order to create added value.
What are Treacy and Wiersema’s Value discipline strategies?
According to Treacy and Wiersema, there are three different value discipline strategies that organisations can implement in order to create added value and distinctive character relative to its competitors. They distinguish the following strategies:
- Operational Excellence
- Product Leadership
- Customer Intimacy
Treacy and Wiersema’s theory is a convenient aid in formulating strategy for a business (per SBU). The choice of a valuating strategy to be followed plays an important role in strategic marketing plan.
Why Treacy and Wiersema’s Value discipline strategies?
It is impossible to be good in everything and no single company can stand for everything for their clients. It is important to offer unique value by having foresight into demand, and that can only be done by focussing on a certain area. It must therefore be chosen per SBU/product group for a valuating strategy. Treacy and Wiersema’s Valuation Strategies are convenient aid for this that can also be used in strategic marketing plan.
How does the model look like?
1. Operational Excellence
Outstanding performance in operational processes. Examples: Low production costs Effective production process Logistics – ‘just in time’ principle.
2. Product Leadership
The quality of the product is in a central position. Developing innovative products is the starting point of the organisation. The R&D division is very important and often there is a matter of a relatively young market.
3. Customer Intimacy
Relations with the customer occupies a central position. The organisation excels in relations marketing. A customer relationship management (CRM) programme plays an important role in here. Organisations that strive for client relationship do not believe in one-off transactions but in long enduring relations instead.
In practice, it seems that the unwise thing to do is to excel only in one area. It is unlikely that the market leader within a certain branch perform very good in one dimension and very badly in the others. Actually, all competing organisations perform in all three strategies. It is therefore wise to make a choice and be exceptional in it while also functioning in the other dimensions. If the model is conducted this way, it can be a convenient tool in forming a strategy.