Is there a Best Value Discipline Strategy?

    

In most of Advantexe's business acumen skill development and business leadership engagements, wevalue-disciplines.png discuss several strategic frameworks for building a strategy and assessing markets. One of the frameworks we share is the Discipline of Market Leaders proposed by Treacy and Wiersema in their book by the same name. The core of this framework suggests that there are really only three different strategic approaches to business – Product Leadership, Customer Intimacy, and Operational Excellence. According to Treacy and Wiersema, choosing one of these value propositions and creating organizational alignment and focus through flawless execution is the key to success.

Our premiere business simulation – the Advantexe Global Enterprise Simulation (AGES) – helps participants learn about business acumen and business leadership by choosing a value discipline, setting a strategy, and executing it in a competitive marketplace. Participants apply the framework and learn about the system of business through the simulation experience, then take their new skills and competencies back to the real world.

Inevitably, participants ask great questions as they try to fully understand the value discipline framework; one question we hear often is, "Is there a best value discipline? Is one better or more successful than the others?"

To answer this question accurately, let's look at some real-world data.

Recently, Interbrand published its annual Best Global Brands report. I decided to analyze the top 25 on the list to see if there are any trends that might suggest an answer to this common question.

Brand

Value

Value Proposition

Coca-Cola

$77,839

Product

Apple

$76,568

Product

IBM

$75,532

Customer

Google

$69,726

Product

Microsoft

$57,853

Product

GE

$43,682

Product

McDonalds

$40,062

Operations

Intel

$39,385

Product

Samsung

$32,893

Product

Toyota

$30,280

Operations

Mercedes

$30,097

Product

BMW

$29,052

Product

Disney

$27,438

Operations

Cisco

$27,197

Operations

HP

$26,097

Operations

Gillette

$24,898

Customer

L-V

$23,577

Customer

Oracle

$22,126

Customer

Nokia

$21,009

Product

Amazon

$18,625

Operations

Honda

$17,280

Operations

Pepsi

$16,594

Customer

H&M

$16,571

Operations

American Express

$15,702

Customer

SAP

$15,641

Customer

The data is interesting. Of the top 25 brands, the primary value disciplines break down as follows:

  • Product Leadership – 10
  • Operational Excellence – 8
  • Customer Intimacy – 7

From a statistical analysis perspective, the distribution is basically even, so there's no clear winner based on frequency alone.

However, going one step further, I added up the quantifiable "brand equity," as defined by Interbrand, and the results of that data are more pronounced:

  • Product Leadership - $408 Billion
  • Operational Excellence - $204 Billion
  • Customer Intimacy - $194 Billion

In this analysis, the data suggests that product leaders – innovators who have best-in-class products (actual and perceived) – have a higher brand equity value. If you think about it, that makes a lot of sense.

The question remains, though: "Is there a best value discipline?" While the data may suggest that product leadership is most profitable, the true answer – as it so often is in business – is, "It depends." It depends on factors like capital intensity, risk, competition, customer growth and potential, changes in technology, global economics, and so many more.

Despite the insights from data, I still believe that an organization can be tremendously successful by choosing any of the three value propositions and executing it flawlessly. 

why business acumen matters

 

Robert Brodo

About The Author

Robert Brodo is co-founder of Advantexe. He has more than 20 years of training and business simulation experience.