Michael Treacy Focuses
on Double Digit Growth
I recently sat down with Michael Treacy,
who has a formidable career as top business strategist and
is co-author of one
of the most popular business books, The
Discipline of Market Leaders.
His new book, Double-Digit
one of the most useful and optimistic books I have read in
some time. Growth
is the whole point of business. Yet many so-called leaders
don’t seem to have plans to fulfill their purpose.
This should be read by all business execs—no matter
what your sector. AG
ChainLink: Michael—can you tell us a little about
yourself—where were you born, early inspirations in
I grew up in Canada, in a little town of 5,000, called Parry
Sound, which is famous in hockey circles, the home of Bobby
Orr. Came down to go to school in Boston in ‘78 and
I never looked back.
ChainLink: Early career moments—what made
you who you are?
Although most people see me as a consultant, I really see
myself as an entrepreneur. That is probably the most important
thing. This is the 7th venture, at Gen3, that I am doing.
And you know, you are a small business. What are you thinking
about? All you’re thinking about is its growth. And
when you are small (nobody wants to be a small business),
that is where you have to start out. So, my whole career,
all I have thought about is how you drive growth.
ChainLink: What was the impetus for writing Double-Digit
I thought in ’95 I had cracked the code on growth with
the Discipline of Market Leaders. I thought...if you are
a value leader, boom, you grow. What I have subsequently
found out is yes, value is important, but it’s
not the whole story. And there is more to growth than simply
being the value leader in the market place. That is what
motivated me to do this book.
ChainLink: So, out of these ideas came the new book. How
did you derive the content for the book Double-Digit
I learn in a few ways—the way I think about things
is, I learn by doing. I have had my own businesses and struggled,
and over the years consulted with lots of companies—some
highly successful. Putting your ideas into action makes the
difference. It shapes your thinking. And the third thing
is, you know I spent ten years at MIT doing research. So,
when it comes to conducting this kind of research, I am very
well equipped. Just as an aside, I read a lot of business
books—and some of the methodologies are just atrocious.
I think applying the right methodology to draw the right
conclusions to guide people is critical. Well, this might
Chainlink: No, I don’t think so. How people
derive their conclusions and then what actions to take
for people to become successful. So, what is the key message
for business leaders, especially in this environment we are
Exactly what I’m learning is, if you ask any manager
to cut cost by 10%—they know exactly how to do it.
Why? It’s because they have a management discipline—a
methodology. They have management information systems. They
know what data to gather. They go out and create a project
team, they meet monthly to review progress, and before long,
the goal is achieved.
If you ask the same team to grow by 10%, they give you a
blank stare. Why? It’s because they think it either
requires luck, trial and error, or a growing economy. There
is no sense that there is a disciplined way to generate growth.
They don’t have a methodology. They think their growth
is luck, a good economy, or trial and error. And there are
lots of illustrations of that.
There is no sense that there is a disciplined way to thrive
and grow with confidence, and that is demonstrated by the
kind of information systems they have—for example,
budget and financial system. You know how budget statements
work. You get 10 lines on cost and one line on growth.
So, when I go around and talk to companies, there is disbelief
that you can turn growth into a discipline where you have
a certainty of result. Do you know… people don’t
believe that? And I find that remarkable.
ChainLink: So, why are these people leaders, why are they
entrusted with the job of growing their companies?
That we have not built a sophisticated understanding and
discipline about growth, I find remarkable. We do not have
a sophisticated understanding that growth can be a method—a
discipline. Yet, you go into a Wal-Mart, a Mohawk or an Oshkosh,
they have certainty about the results they can achieve. As
certain as their cost cutting, they know why they are going
to grow, and they know what initiative will drive that growth.
To me, that is the biggest insight of this book—that
there is a disciplined approach for growth, just like a disciplined
approach to cost cutting.
ChainLink: We just went through this spent and panic
phase in the business community, which to me was really
Spending money, all that money, with no plan—and now
there is no spending. Why do these exec’s have these
jobs if they have no real plan?
The missing component is execution—in all these businesses.
ChainLink: So, let’s talk about Johnson Controls...
Johnson Controls has a really sophisticated approach to growth—they
are very smart the way they pursue adjacent markets.
ChainLink: Adjacent markets, in fact all the cases
you talk about… What is key though, is the leadership—would
Oshkosh Truck Corporation be Oshkosh without Bohn running
My opinion is that growth is about the management of
not only the strategy. That’s number one. And the strategist
won’t solve the growth problem. It needs to be solved
by a whole bunch of people who have a holistic approach to
management. I think half of the equation is the people management
I am currently doing research on the differences between
the people management state of low growth vs. high growth
firms. What is interesting about people management is it
is very comparable to supply chain—it’s just
the supply of people. Think of the current challenges you
have—getting a supply of the most knowledgeable people.
Do I have my most talented people working on the growth
projects? They are usually scattered throughout the organization. Firms
like GE and Citigroup have really seeded their industries
with leaders. We will see these people come out of Dell...
ChainLink: We just did a story about a Dell executive who
is making big changes at StorageTek, so these firms do produce
leadership that is transferable in other firms.
You have to go get leadership in whatever discipline, through
the right management programs. If you think about HR being
the most neglected organization in the enterprise… So,
my new research will address this.
ChainLink: We have been trying to bring the people
side of this into our supply chain writing; our case studies
written from the point of view of ‘what did the project
leader or sponsoring manager really think, really do.’
So, the big growth disciplines are:
- First, retain your customer base. It is more than
a loyalty program, but an ever-expanding value to your
- Second, gain market share...
ChainLink: But that’s like saying, you grow
because you grow...
Yes, but most companies do that by eye-to-eye slugfest,
or dropping prices, which only loses money. The operating
is to devote yourself to value and make smart acquisitions
and take those competitors out of the market.
The third discipline is to exploit your market position,
or show up where growth is happening. This is like Johnson
Controls constantly moving into an ever-expanding role in
the automotive market—very smart.
ChainLink: In the software industry, I give advice
to clients like that.... knowing your position in the ‘data chain’ or
market, and leveraging that—using channels, being an
imbedded module, etc.
Right, finding your position and gaining share—and
growth through that. I think a key idea here is in understanding
the shift in customer buying criteria, then move—place
your bets—on the value destination in which customers
are moving. There are technology and process breakthroughs
that can be identified and taken advantage of.
ChainLink: I like this concept of the adjacent
the fourth discipline). It seems that if you are really knowledgeable
about your products, supply chains, and the market players
around you, that this would be the killer strategy—providing
the customer a total solution.
Right. Can you build, or should you acquire the new competitive
Which leads to the fifth discipline of investing in
new lines of business.
ChainLink: But haven’t we gotten our fill
of false synergies?
These are not synergies. These are new sectors all together,
which may be unrelated to the current business. But you
have to proceed here with great caution. Outstanding
made buying at a premium during the last few years.
So, 5 Disciplines for growth—retain your customer
base, gain market share, exploit your market position, penetrate
adjacent markets, invest in new lines of business. Sony beat
out Microsoft, Sega, and Nintendo for domination of the once-flat
video game market by teaming up with video game developers,
excelling at distribution, and creating an untapped adult
market for video games. General Electric controls "customer
churn" by creating "sticky" relationships
with clients that make it hard for them to defect from GE.
ChainLink: This is the real stuff.
So, how does this relate to your supply chain readers?
ChainLink: That was my question! One of the reasons we started
this magazine was to address ways the SC team could identify
and initiate and support the growth side and the growth language
of the CEO.
Here are some ways:
of Supply Chain
Deliver the Value Prop
Excellence in on-time
Keep costs down
Participate in customer initiatives
|Keep us off the complaint list of customers
Gain Market Share
Market entry-be there on day one
Deal with uncertainty in demand
|Be there on day one. Understand and respond to the
Exploit Market Positioning
Differentiation in service
Differentiation in content, components, etc.
|Understand SC requirements for different markets and
Tune the lifecycle of the product
Leverage SC expertise in supply markets, logistics,
|Expand the boundary of the service or process. Examples,
more complete product, assuming services, creating or
managing the IT systems, etc.
|Invest in New Lines of Business
||Identify acquisitions that can leverage existing operating
ChainLink: I am most interested in this discussion
about leadership and talent development. When I think of
it doesn’t strike me actually as a place where we are
grooming talent these days...the mid tier jobs are moving
In my lifetime, we will see the US change. Even the higher-level
knowledge workers—radiologists, for example—will
ChainLink: It makes me think about where will be the strong
places for growth, to invest in.
Think about it. By today’s standards, Ozzie and Harriet
would be considered poor—one TV, one phone, one car.
Now, there is a TV in every room in the house! The entertainment
business is not only something that sells here, but can be
ChainLink: And services.
But those are low-level jobs. Think about it, firms like
Jet Blue and South West are successful, because they operate
on a lower labor cost—all this talk about hubs, etc.
It’s really the labor costs.
ChainLink: I was thinking about repair. You know, as manufacturing
goes east, the need to serve the western market still exists.
But even there, the service firm is doing everything it
can to avoid actually sending someone on the road.
ChainLink: Right. Automation—optimizing the
service network, remote diagnostics, etc. should all be
Well, I guess a really good paying job—will be a global
We think so too!
The Discipline of Market Leaders—Choose Your Customers,
Narrow Your Focus, Dominate Your Market, by Michael Treacy
and Fred Wiesema
Parallax View readers will see more of this in the new
ChainLink Research, Inc.