Customer Intimacy and Other Value Disciplines, XanEdu Flashcards
How did Dell, Home Depot, and Nike beat its competitors?
They redefined value for customers in their respective markets, built powerful and cohesive business systems that could deliver more value than their competitors, and by doing so raised customer’s expectations beyond the competitor’s reach.
They changed what customers valued and how it was delivered, then boosted the level of value that customers expected.
How do today’s customers define value?
Their definition of value includes convenience of purchase, after-sale service, dependability, etc.
Companies that have taken leadership positions in their industries in the last decade have done so by….
Narrowing their business focus, not broadening it.
Successful companies focus on delivering superior customer value in line with one of the three value disciplines, which are…
Operational excellence
Customer intimacy
Product leadership
Become a champion in one of these disciplines while meeting industry standards in the other two.
Operational excellence is…
Providing customers with reliable products or services at competitive prices with minimal difficulty or inconvenience. (Example: Dell)
Companies that excel in customer intimacy…
Combine detailed customer knowledge with operational flexibility so they can respond quickly to any need, from customizing a product to fulfilling special requests. (Example: Home Depot)
Product leadership means…
Offering customers leading-edge products and services that consistently enhance the customer’s use or application of the product, thereby making rivals’ good obsolete. (Example: Nike)
How do companies that push the boundaries of one value discipline while meeting industry standards gain such a lead over their competitors?
The leaders have aligned their entire operating model (the company’s culture, business processes, management systems, and computer platforms) to serve one value discipline. They know what they want to provide to customers.
FedEx to Wal-Mart (both operational excellence) vs going from FedEx to Nike (Nike is product leadership)…
FedEx to Wal-Mart would be an easy transition. FedEx to Nike would be a nightmare transition.
Companies pursuing operational excellence are indefatigable in seeking…
Ways to minimize overhead costs
Eliminate intermediate production steps
Reduce transaction and other friction costs
Optimize business processes across functional and organizational boundaries
Companies pursuing customer intimacy…
Continually tailor and shape products and services to fit an increasingly fine definition of the customer.
Willing to spend now to build customer loyalty for the long term.
Look at the customer’s lifetime value, not the value of any single transaction. (Nordstrom, IMB in its heyday, Home Depot)
What are the three ways in which companies pursuing product leadership must challenge themselves?
They must be creative
They must commercialize their ideas quickly
They must relentlessly pursue new solutions to the problems that their own latest product or service has just solved
