Three Ways to Think About Business Focus
April 27, 2010 9 Comments
At the EO Atlanta Strategy Summit today, where we planned high-level goals for next year, one of the board members talked about a book (I don’t remember the name) where the author argued that there are three main areas of business focus:
- Operational excellence
- Product innovation
- Customer intimacy
The main thesis is that a business needs competency in all three, but should only focus on one. For example, Walmart leads at operational excellence, Apple leads at product innovation, and Starbucks leads at customer intimacy.
What are some other examples for the the three categories? What one does your business focus on?
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This may be considered product innovation, but Marc Andreessen has a great argument for product-market fit being the primary focus of an early-stage company – http://pmarca-archive.posterous.com/the-pmarca-guide-to-startups-part-4-the-only.
Thanks Adam. I’m a big fan of the product-market fit idea.
David,
The book is: “The Discipline of Market Leaders”
An excellent read for anyone in corporate strategy.
Thanks Garrett. I appreciate it.
Nordstrom is an example of customer intimacy. Their passionate focus on customer service allows them to charge a premium for merchandise. Google is an example of product innovation. They continue to launch new products and services at an incredible rate. Southwest Airlines is an example of operational excellence. Using one model of airplane, they keep their costs low, passing those savings along to customers. I also think there’s an interaction effect among these factors. For example, Apple’s profits from its innovative products allow them to offer better customer service than its peers, which in turn builds upon its cult-like following. Similarly, Google’s success in search allows them to build operational excellence in terms of network efficiency, which keeps response time fast and builds loyalty and brand strength.
Thanks Ben, those are great examples.
In the auto business you could ascribe Toyota for operational excellence (recent news not withstanding). Ferrari for product innovation. And Harley Davidson for customer intimacy. Others may pick different automakers of course as examples that best serve operational excellence and product innovation, but for customer intimacy no car maker comes close in customer intimacy and the cultivation of a culture than Harley does.
Great examples Raghu! I agree.
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