Customer Intimacy, Product Leadership or Operational Excellence: Pick one and don’t be greedy!

Introduction to Product Leadership, Operational Excellence and Customer Intimacy

It is logical to try and do everything better than everyone else when running your own business.

But unfortunately it is extremely difficult to achieve as you will often find yourself spread too thinly across too many areas.

Instead it much more favourable to do one thing better than everyone else.

This is the underlying principle behind the three disciplines theory that was proposed by Michael Treacy and Fred Wiersema in their 1996 book entitled, ‘Disciplines of Market Leaders‘.

The three disciplines theory suggests that a customer will make a purchase in relation to one of three disciplines: operational excellence, product leadership or customer intimacy.

Discipline of Market Leaders
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Customers will obviously consider all three disciplines when making a purchase but each individual customer will have a stronger emphasis towards one particular discipline over the other two.

If you understand who your potential customers are along with the type of customer experience they value the most you will be in a very successful position to offer it to them. 

We will now explore each of the three disciplines and put them into context.

Product Leadership

Some customers are predominantly interested in the actual product or service being offered.

They are concerned with the type, colour, innovation, style, quality and status associated with their purchase.

Price is a consideration but often does not limit their potential to buy if the product is right.

Operational Excellence

Some customers will mostly be concerned with the operational process involved with making their purchase.

They want a hassle-free experience which offers good value for money.

Slick processes, efficient delivery of goods and effective support after purchase are all highly regarded by these customers.

Customer Intimacy

Some customers want their needs to be met in a personalised manner.

They like products and services that can be specifically designed to meet their individual requirements.

Customer service and a positive purchasing experience are important to these customers.

How To Plan Your Business Strategy Using The Three Disciplines Model: Product Leadership, Operational Excellence or Customer Intimacy?

In order to be successful in business you need to gain a competitive advantage over your rivals.

Attempting to be the best in all three disciplines will typically spread you too thin and you will end up being ‘adequate’ at all three rather than ‘world-class’ at one.

You should focus your business strategy around becoming better than your competitors in one discipline as this will give you your unique selling point.

You will still need to provide a level of service that meets customer expectations for the other two disciplines but maximising one is definitely the most beneficial strategy to adopt.

Let’s put this into context by using the example of coffee shops. 

Example of Operational Excellence Business Model

If you set up your business strategy to be the best in operational excellence you will need to employ plenty of staff to ensure your customers do not have to queue.

You will also make sure that your drink containers never leak, get too hot or cool too quickly.

Everything about the purchasing process will be perfect and you will attract custom based on this factor.

You still need to serve good coffee and be polite to your customers but your main focus will be around delivering an efficient service.

This may be a suitable strategy if the majority of your customers are passing through on business and want to get a quick cup of coffee to go.

Example of Product Leadership Business Model

Alternatively, you could focus your business strategy on being the best at product leadership.

You would offer the best coffee, in the most stylish cups and your customers would be happy to queue for hours and pay extra money to get a cup of your amazing coffee.

Queuing for food and drink is seen more frequently in America than in the UK but when someone comes up with a new snack or drink, particularly if endorsed by a celebrity, people can be seen queuing out of sight.

As with the last example you still need to take care of the other two disciplines so the queuing experience and customer interaction must also meet expectations.

This may be a suitable strategy to adopt if the quality of coffee shops in the local area is fairly poor.

You will generate custom by simply offering a superior product.

Example of Customer Intimacy Business Model

Lastly, if you adopted a business strategy focused on offering the best in customer intimacy you would offer personalised coffee options for your customers.

They can select the type of coffee beans that are used, the type of milk and even the colour cup they would like to drink from.

You could even allow your regular customers to leave their own cups behind the counter to add an additional personal touch.

You should try to engage your customers in anyway you can to maximise their experience.

This is often referred to as The Cheers Effect, where you would now your regulars by their first name, remember their orders and ask them about their family.

Let them decide what music is played, what channel is on TV and even allow them to pick out the new colour when redecorating.

Again you need to serve decent coffee and ensure the operational processes are adequate to meet expectations for the other two disciplines.

This may be a suitable strategy to adopt if your shop is located in an area where people are likely to stay for more than one drink, chat, socialise and relax.