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When
I was younger and about to leave the house, my mother would often
say: "Remember who you are."
That advice was a reminder of my values and a warning against straying
from my goals. Those words provide powerful business advice as well.
To remember who we are, we must first know who we are and what
our business is. For many, the business just evolves into its present
state over time. But a wise business owner will decide what his
business is, and what it will be. Having made that decision, he
is much more likely to be successful.
The fundamental decision each business owner must make is to select
his value proposition. The value proposition is the core offering
of the company, the dimension that distinguishes it from the competition.
It is the concept for which the company is known and upon which
its reputation is built. Having selected a value proposition, the
company can focus its efforts on that concept and concentrate on
delivering greater value to its customers year after year.
In the excellent book "The Discipline of Market Leaders,"
by Michael Treacy and Fred Wiersema, the authors identify three
value propositions: operational excellence, product leadership and
customer intimacy. Let's take a closer look at these three value
propositions.
Operational excellence means low prices and hassle-free service. Operationally, excellent companies offer a combination of quality,
price and ease of purchase that no competitor can match. These companies
are not innovators, nor do they cultivate customer relationships.
Market leaders in this area include Wal-Mart, Dell Computers and
Southwest Airlines.
Product leadership means offering the best product. Product leaders
constantly innovate and offer products that push performance boundaries.
They work to make their own products obsolete and replace them with
a new generation. Market leaders in this area include Intel and
Nokia.
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