One of the best business books is The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wiersema. It appeared in 1997, and is still viable. Essentially, the authors argue that for a company to be successful, it can’t be all things to all people. There are three basic value propositions: price, technology, and customer service. The authors maintain that any company that plans to be successful should concentrate on being superb in one of those three areas. (A second can be added—but forget about the third.) Still, it seems that there are too many companies that are taking a half-assed approach because they are trying to cover everything. More’s the pity for them.
Michael Treacy’s new book, Double-Digit Growth: How Great Companies Achieve It—No Matter What (Portfolio; $27.95), may prove to have the same sort of enduring value as The Discipline of Market Leaders. Treacy maintains that there are too many companies who aren’t thinking sufficiently—and methodically—about what it takes to grow profitably. He suggests that companies that decline in their markets are victims of their own actions or lack thereof: “the degeneration of a major company is more often a case of self-destruction than of being lapped by a newer business model. Most decaying enterprises are brought down by their own managers, yoked to wishful thinking and dumb tactics that fail to deliver growth.” They’re doing what they’d like to think is right. Reality is otherwise.
Treacy has six principles for double-digit growth: Spread the risk (have multiple initiatives going at all times); Take small bites (lots of small growth areas leads to an overall big growth); Balance your strategy (think and, not or); Commit to superior value (“Nothing stops growth faster than an inferior value proposition”); Expand growth capabilities (make sure there is the organizational wherewithal to grow); Manage for growth (everyone should be focused on it). Simple to say. Difficult to do. Which is probably why the great are few and the mediocre are many. Treacy’s observations tend to be common sense spoken aloud. (Yikes!) While he maintains that it is useful for a company to hang on to its customer base, he also admits, “If there ever were any customers who would never abandon you for a competitor’s product—as we all were told at our father’s knee—they are nowhere to be found today. Sentimental loyalty doesn’t exist.” Even loyal customers are looking for a better value proposition. And if you are going to keep those customers, then you’d better provide it. The same holds true for acquiring new customers: “If you want to build market share, your company must make sure potential customers are aware of your superior proposition.” Which, of course, assumes that you have a superior proposition.
Too often, there are too many people who are decrying this condition or that for why they aren’t successful. But what these people fail to do is to take a close look at what they are offering to the market—be they products or services—and asking themselves whether it is truly best-in-class from the standpoint of customer’s perceptions. If it’s not, then they have a problem. And while this problem may be temporarily ameliorated by, say, throwing cash at the customer, in the long run—which nowadays is comparatively short—the customer will migrate to the best value.
As Treacy observes of corporate managers, “Don’t they realize that growing is a choice to succeed and not growing is a choice to fail?” The choice is yours.