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least one major difference. According to the value disciplines model, no discipline
may be neglected: threshold levels on the two disciplines that are not selected must
be maintained. According to Porter, companies that act like this run a risk of getting
“stuck in the middle.”

In their book, The Discipline of Market Leaders, they offered four rules that
[4]
competing companies must obey with regard to strategy formulation:
1. Provide the best offer in the marketplace, by excelling in one specific

dimension of value. Market leaders first develop a value proposition, one that is
compelling and unmatched.
2. Maintain threshold standards on other dimensions of value. You can’t
allow performance in other dimensions to slip so much that it impairs the
attractiveness of your company’s unmatched value.
3. Dominate your market by improving the value year after year. When a
company focuses all its assets, energies, and attention on delivering and improving
one type of customer value, it can nearly always deliver better performance in that
dimension than another company that divides its attention among more than one.
4. Build a well-tuned operating model dedicated to delivering unmatched
value. In a competitive marketplace, the customer value must be improved. This is
the imperative of the market leader. The operating model is the key to raising and
resetting customer expectation.
What Are Value Disciplines?
Treacy and Wiersema describe three generic value disciplines: operational
excellence, product leadership, and customer intimacy. As with Porter’s perspective
about the importance of making trade-offs, any company must choose one of these
value disciplines and consistently and vigorously act on it, as indicated by the four
rules mentioned earlier.
Operational Excellence
The case study that their book uses to illustrate the “operational excellence”
value discipline is AT&T’s experience in introducing the Universal Card, a combined
long-distance calling card and general purpose credit card, featuring low annual fees
and customer-friendly service.
Key characteristics of the strategy are superb operations and execution, often
by providing a reasonable quality at a very low price, and task-oriented vision toward
personnel. The focus is on efficiency, streamlined operations, supply chain
management, no frills, and volume. Most large international corporations are
operating according to this discipline. Measuring systems are important, as is
extremely limited variation in product assortment.
Product Leadership
Firms that do this strategy well are very strong in innovation and brand
marketing. Organization leaders demonstrate a recognition that the company’s
current success and future prospects lie in its talented product design people and
those who support them. The company operates in dynamic markets. The focus is on
development, innovation, design, time to market, and high margins in a short time
frame. Company cultures are flexible to encourage innovation. Structure also
encourages innovation through small ad hoc working groups, an “experimentation is

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