Last week, Amazon followed Apple in reaching the trillion dollar milestone. Both are modern-day super brands built on fundamentally different business models.
In their classic book, The Discipline of Market Leaders, Michael Treacy and Fred Wiersema describe three business models: Operational Excellence, Product Leadership and Customer Intimacy. The authors detail exactly what makes each model unique. Whether it’s the organization structure, core operating processes, management systems, information technology requirements or culture, market-leading companies master at least one of these models.
Apple leads the way with its Product Leadership. This company’s laser focused on product innovation has created a culture that encourages individual imagination and the desire to create the future. Imagine a business structure that wholeheartedly supports entrepreneurial initiatives and rewards results without punishing individuals for failures along the way. Few brands romance new product innovation like Apple.
Amazon has mastered Operational Excellence. The company disrupted the bookselling industry by optimizing and streamlining the value chain. Instead of financing brick-and-mortar inventory, its online ordering system minimized operating costs and made purchasing easier. The information technology and online user-experience is the standard by which other e-commerce businesses are now measured.
I would argue that both companies also have achieved a high level of customer intimacy—Apple with its retail stores and Amazon with its recommendations based on past purchase behavior. Customer intimacy, however, is a secondary outcome achieved by each company’s singular focus on implementing its primary business model with excellence.
For managers wanting to improve brand performance, I recommend you start by dissecting your underlying business model. If you are not sure which model drives your brand’s success, you likely have identified your first and most significant challenge to overcome. Visit the Services section of our website for details on how we can help.
Credit to Jim Cobb (The Bloodhound Group)
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