Customer Reviews

The New Market Leaders: Who's Winning and How in the Battle for Customers

5 star:		(7)
4 star:		(3)
3 star:		(2)
2 star:		(0)
1 star:		(3)

 

 

Dr. Fred Wiersema (of The Discipline of Market Leaders) returns with a look at how the disciplines of becoming a market leader have evolved since the earlier book was written. This book is much better done in terms of analysis than the prior one, and comes closer to capturing the state of the art. Basically, Dr. Wiersema argues that the most effective companies are now gaining customers by employing more than one of the original disciplines (customer relationships, having cutting-edge innovative offerings, and being operationally superb). The book's main weakness is that by selecting companies based on a high market capitalization/sales ratio the book strays from a focus on finding companies that are the best at adding customers and making money serving them. As a result, some pretty marginal companies made it into the study group (Priceline is one example).

The companies in the study are compared to the Fortune Most Admired List. The companies outlined here are much more consistently interesting than the aging behemoths losing market share that the Most Admired list carries. Looking at 5009 companies, 640 were identified as being high in gaining market share (growing much faster than competitors) and in stock price (having a higher market capitalization/sales ratio than competitors). The top names you will recognize: Cisco, GE, Microsoft, Intel, Yahoo!, Home Depot, Wal-Mart, Oracle, Nokia, and AOL Time Warner. If you follow technology stocks, most of the rest will also be known to you. These include companies whose stocks have fallen mightily like JDS Uniphase, Dell, QUALCOMM, Hewlett Packard, Lucent, PMC-Sierra, and At Home.

The book makes many observations about the new economy. The basic point is that technology has permitted such substantial productivity gains that there is a lot of excess capacity with low costs. As a result, what companies have to manage is getting customers. Those are the scarce resource. Well, I always thought that you had to start with customers. Peter Drucker once said that the purpose of a business is to create a customer. What does seem different now is that people go to greater lengths to add customers.

Dr. Wiersema says that new aspects include: (1) creating a larger-than-life market presence; (2) seeking out customers who stretch capabilities; (3) ensuring that the customer obtains full benefit from your offerings; and (4) acting more boldly (this often means having outsized ambitions). Obviously, the drawback of this approach is that if the business environment turns out differently than you forecast (the norm, not the exception) you are likely to crash and burn. How do you feel about that?

Customers are then segmented by the degree of their preference for being self-reliant versus ready for help, and their eagerness to change versus their preference for stability. These scales turn into the searchers (self-reliant, eager to change), collaborators (ready for help, eager to change), streamliners (self-reliant, seeking stability), and the delegators (seeking stability and ready for help).

You are encouraged to keep enticing the searchers (Yahoo! is the case study); reassure the streamliners (EMC is the case study); free up the delegators (Solectron is the case study); and team up with collaborators (UPS is the case study). I found the case studies to be pretty superficial compared to what I know about these companies.

The book also has a good discussion of what kind of internal environment is needed to act boldly and with enough unity of purpose to succeed. You need a process for facilitating change, an agreement on shared ambitions, clear goals, and knowledge of where you stand.

Your mantra should be "customers, customers, customers."

The book's main weaknesses relate to not considering enough about how to gain market share profitably (any idiot can gain market share if they don't care what it costs, and have enough resources), what the emerging state of the art is (the examples here are slightly out-of-date and incomplete), and an overfocus on the customer-facing dimension of gaining customers. That last point probably sounds strange. More innovation in getting customers comes today in creating new business models for serving customers than in marketing, sales activities, or new technologies. This book missed that point.

Compared to the recent raft of quantitative studies published by Harvard Business School Press, this is by far the best of the lot despite its weaknesses. Read this book, and you will benefit by focusing on more relevant role models and understanding more about how you have to reshape yourself to compete for market share gains.

May your profit and personal growth always exceed your boldest dreams!

The value of customer service is known to almost every one of us. So, what is new about this book? More detail on how to win customers in these days of fragmented markets (mass media can't help us anymore) and customer scarcity (it's really product/service glut). The author studied the best 5,000 companies in the world and came up with some valuable information that we can copy from these market leaders.

The author starts out by establishing the evaluation criteria that got a company into the study and he coins two new terms to describe these criteria - sales growth index and market value index (details of these terms on pages 7-13 of the book).

The author then summarizes the industries in which all these companies fall under - Consumer Products, Media and Entertainment, Heavy Industry, Technology Products, Technology Services, Financial Services, and Other Industries (healthcare, consumer services, and other).

A whole chapter is then dedicated to why we are feeling a scarcity of customers. The author names the reasons for this sitaution (new realities) - competitors proliferate, all secrets are open secrets, innovation is universal, information overwhelmes and depreciates, easy growth makes hard times, customers have less time than ever. He does a good job of justifying these obvious reasons with some supporting data.

So, if the new realities are that harsh, how are the market leaders managing? The author describes FOUR STRATEGIES that seem to work for these market leaders in overcoming the obvious difficulties in these days of customer scarcity. The four strategies being -

1. being the best and showing it
2. the customers who can make or break you
3. making sure customers 'get it'
4. outsized ambition.

To support why the market leaders have adopted these strategies, the author then labels all customers as falling into four categories and spends 4 chapters explaining how to work each of these groups

1. Searchers (eager to change and self-reliant)
2. Collaborators (eager to change and ready for help)
3. Streamliners (seeking stability and self-reliant)
4. Delegators (seeking stability and ready for help)

The rest of the book consists of some case studies to reinforce the above mentioned concepts and ideas. Overall, a simple book to read and valuable information considering the source data (the top 5,000 companies in the world). The criteria that the author used to come up with this list does seem reasonable. The best part of the book is that this book was originally written before the dot com bubble burst. If the author's claims are true, the companies short-listed by using his criteria survived the burst (except a small percentage attributable to other factors)! We don't know if the author's claims are true that his list didn't change much (as the book was published after the burst even though he wrote it before the burst). But if they are true, it is valuable information for any business that plans on emerging from this gloomy economy as one of the market leaders. The ideas presented meet the common sense test, so we are following these ideas quite a bit in our new company to achieve success.

The book is definitely worthwhile to look at. There are so many books in this niche (business help) that it can be overwhelming for anyone to make any sense out of this glut. But this book is really such a quick read and the concepts are so simple and small in number that I think the 2-3 hours time spent is time well spent. Good luck and I hope you get something good out of this book!

I loved Discipline of Market Leaders. As a business owner I read and listen to a lot of books and Discipline of Market leaders was great. Unfortunately this follow up book by only one of the authors didn't have much to offer. Lots and lots of words but not much being said. There are a few nuggets of knowledge, as there are with most books, but unlike the Discipline of Market leaders that I went through 3 times and even took notes while going through it, this new book was just short of a waste of time. Wish I could say it was better...

I listened to the audio CD's of this book. There are some insights that are valuable. Ultimately, what got me is that the magic formula (which seemed well grounded in data and analysis) brought to the forefront some companies that discredit this poor author - Namely ENRON.

They are praised in the book for doing all these right things. But ultimately when deceit and greed abound and institutions meant to safeguard and protect the free market from itself fail(or are corrupted by their own greed and deceit), grave harm is done to individuals, companies and can be potentially disastrous to national economies that lose the confidence of domestic and foreign investors.

THE RULES OF THE GAME NEED TO BE FOLLOWED AND TRUSTED or everything including this exhaustive analysis is a waste of talent, time, and treasure.

This book did have a few interesting observations about customers, however it was tedious wading through the pages and pages of descriptions, examples and flowerly language. It could have and should have been about 3/4 shorter. Good cure for insomnia.

In a turbulent economic time when everyone is seeking answers to questions about the future and which companies are going to survive and thrive, Wiersema's book provides an excellent foundation for formulating predictions.

It may not be a huge surprise to find out who the New Market Leaders are. But it is interesting to learn about their personal stories, how some of the underdogs made their way to the top, while once sure bets slid toward the bottom. Senior executives and alike will find this material useful in striving to differentiate themselves from their competitors.

Fred's theories of achieving market leadership in turbulent times of "customer scarcity" may be one of the most significant challenges facing business leaders today. I'm not sure many would argue that an intense focus on customers and the right technology strategy drive market leadership - but unlike most industry visionaries, Fred backs this up with hard data on the 5,000 companies he tracked.

I was a bit too quick to jump into a conclusion before reading the whole book. So please ignore my previous rating but take into account the points I made. The second part of the book was much better. It contains this important categorization: purchasing behaviour of customers. Wiersema divides the customers into four broad groups and tries to fit in each grouping the strategies employed by the market leaders defined in the list.

However, even though novel, I was not very comfortable with that classification. I personally consider that there are more than four broad categories regarding purchasing behaviour. This is actually what microsegmentation is about. So, instead of trying to force your strategies into those four categories, one should try to identify many many more behavioral patterns with respect to her own customers. So, instead of emulating the strategies of the market leaders and forcing your customers to fit in any one of those categories, maybe you should better to microsegment them and try to figure out as many distinct purchasing behaviours as possible, and only then maybe use the insights given in the book. In other words, the insights that Mr Wiersema provides us with are good, but regarding strategising, the model he offers is not useful and actually very restrictive.

Also, if you read other books which describe the strategies of the same companies there, e.g. Charles Schwab, ... etc., you will end up finding other explantions regarding their strategies. I believe, truly understanding your customer and distinguishing among them similar purchasing behavior and strageizing on top of this are they keys to success.

This second review, however, does not refute my earlier point that the book is not based on an in-depth study of 5000 companies at all. Hence, the claim is still not true. Of these 5000, there are only a number of companies on which superficial evidence is given. Additionally, on four of them, there are detailed case studies, but that's all. Hence, I would still not reccommend it to a serious strategy reader but I would also not be so rude to downgrade the good effort the author has put into the study. Again, sorry about the first rating.

Who's winning (and why and how) in the battle for customers has never been more timely or important. Nor has it ever been tougher to document. Fred Wiersema expertly describes how today's customers are smarter and more demanding than ever, besieged by an unlimited choice of goods and services, and more than likely to take their business elsewhere unless their needs are met. He then fulfills this book's promise by naming today's new leaders and how they earned the title.

Wiersema's research tracing 5,000 companies, and his new measurement yardsticks of sales growth and market value, further enhance his premise. His examples, including Cisco, EMC, Home Depot, NTTDoCoMo, UPS, Yahoo! and others, and how these firms go about winning and keeping customers, illustrate many of the issues confronting corporate managers today worldwide. Moreover, his definition of "stretch customers" and their importance to profitable growth is a fundamental truth representing a "heads-up" to all senior executives.

Wiersema takes you down a path that leads to new perspectives on the drivers of market leadership in today's challenging global environment. He'll have you thinking differently about the essence of what makes market leaders -- and how they stay that way.

I just finished Wiersema's latest and found it both entertaining and useful. The very personal and revealing stories about the companies are the entertaining part. The author is clearly not an academic type - his information comes from his experiences working with some of the top companies in the world. The most useful part is the new ranking system. I was surprised - and pleased - to see how well his rankings held up post bubble, and found the comparison chart (Apepndix II) fascinating. To me this indicates that Wiersema's method is a good measure of intrinsic value, as opposed to market mania. I think he's on solid ground with this, and we could all use a little solid ground right now.

Wiersema's book is based on a research theory that if you identify leading companies you should be able to extract lessons that should be applicable to other companies. This approach is behind works such as "Pursuit of Excellence" and "Built to Last". Unfortunately for Wiersema he conducted his research at the peak of the economic boom of the 1990's. This makes many of Wiesema's conclusions ring hollow in the face of weak customer demand, increasing competition and an uncertain future.

Wiersema's earlier book on Value Disciplines contributed early on to a move to core competency. This book represents an interesting academic exercise as to what was market leading in the 90's and less so on how to address current market realities and challenges.