Business Orientations: Inspiration
My initial reflections on Business Orientations were inspired by the book The Discipline of Market Leaders by Michael Treacy and Fred Wiersema. The authors identify three business disciplines: 1) Customer Intimacy, 2) Product Leadership, and 3) Operational Excellence. They characterize the value propositions for each discipline as follows:
Customer Intimacy: Best total (individual) solution for a single client.
Product Leadership: Best product.
Operational Excellence: Best total cost.
When attempting to apply these concepts, I encountered significant difficulty with Operational Excellence. Treacy and Wiersema cite early Ford Motor Company and Wal-Mart as examples of companies dedicated to achieving the “best total cost.” However, I found these examples perplexing. Henry Ford’s affordable cars were products created by Ford, whereas Wal-Mart’s inexpensive goods are not products it manufactures. While it’s undeniable that Wal-Mart strives to offer items as cheaply as possible, is that really the primary service they provide?
After much consideration, I found the answer through similar examples. What do supermarkets or online shops provide beyond the goods they sell? They enable us to serve ourselves in their physical or virtual spaces. These businesses do not primarily offer products; instead, they offer Self-Service. They create and organize spaces—either physical or virtual—where customers can satisfy their needs themselves through organized self-service.
This realization led me to conclude that Self-Service constitutes a distinct Business Orientation. Consequently, there appears to be no true discipline called Operational Excellence as described by the authors. Most companies cited as examples of Operational Excellence are actually typical Self-Service businesses.
Furthermore, I recognized the existence of commodity-oriented businesses that do not fit into any of these three Business Orientations. These businesses, typically suppliers of basic commodities, represent a fourth orientation. After failing to identify a fifth orientation, I wondered that there could be only four fundamental Business Orientations without this fact being known and used in practice.
Later, I refined the terminology for the first two orientations. I changed “Customer Intimacy” to Skills because such businesses offer their customers an implicit message: “Try my skills!” rather than “Try my intimacy!” I further revised the term to Expert, as this orientation is the most personal: between two experts with comparable skills, customers often choose the one they find more reliable or likable as a person(s). So what an Expert is actually proposing to his customer is: “Try Me!”
Similarly, I adjusted “Product Excellence” to simply Product. The word “Excellence”—implying perfection, originality, uniqueness, or quality—is not necessary to define this orientation. Many businesses, not just product-oriented ones, strive for excellence.
These changes resulted in the following final quartet of Business Orientations:
| 1 | 2 | 3 | 4 |
| Expert | Product | Self-Service | Commodity |
This framework raised additional questions about the core characteristics of these orientations and their manifestations in real business life.
I later realized these four orientations could also be derived from a fundamental question: “What is business?” While answers like “making money,” “building companies,” “creating value” or “serving customers” are valid, they all rely on the underlying principle of satisfying or creating needs. Regardless of a businessperson’s original motive, they cannot achieve their goals without meeting or creating needs for others.
This realization leads to a second basic question: “What means or forms are available to satisfy or create needs?” Despite the many practical possibilities, they all ultimately unfold within the framework of four basic forms or orientations. Human needs—both physical and psychological well-being—are universal, and new needs are simply old ones satisfied through novel practical possibilities. (e.g. telephone instead of mechanical telegraph for needs of communication)
I acknowledge that some characteristics and comparisons within the Business Orientations framework may seem simplistic or questionable. In the end it does not matter so much, since these characteristics serve only to illustrate that there are a maximum of four possible forms or orientations for every business endeavor.
I have certainly not covered all themes of this theory and there are undoubtedly many more topics to explore. I have also included only a few business examples to support my insights. My intention is to provide basic ideas that others can expand upon or contest.
The discovery of the four Business Orientations also led me to identify four underlying Perception Spheres:
| 1 | The concrete sphere of relationships |
| 2 | The general sphere of values |
| 3 | The autonomous sphere of principles |
| 4 | The essential source of all spheres |
These Spheres of Perception and their manifestations in human life are described in more detail in part 9 of the book.
Conclusion
I think that the theory of 4 basic Business Orientations can be challenged only by identifying a relevant fifth Business Orientation and by providing its corresponding market diagrams (see chapters 2.1–2.6).
It never occurred to me till recently that one could argue in the opposite sense – that there are less than 4 Business Orientations. For example, one businessman argued that Self-Service is merely a sales method rather than an orientation. However, Self-Service businesses, such as supermarkets or stock exchanges, do not sell products; they sell the Self-Service since the Self-Service is the only thing they created. The most exemplary Self-Service is a Stock-Exchange. The Stock-Exchange is a Self-Service for both buyers and sellers. The Stock-Exchange normally does not buy or sell anything. At the Stock-Exchange buyers buy from sellers and sellers sell to buyers using the Self-Service of the Stock-Exchange. The Stock Exchange represents the transactional type of Self-Service. Besides that, there are other types of Self-Services, e.g., ‘Customization’ Self-Services (sneakers’ configuration online), ‘information’ Self-Services (search engines, online maps), ‘education or knowledge’ Self-Services (online academies and encyclopedias), and ‘social’ Self-Services (communication networks)…
I would be grateful for any thoughts or comments on Business Orientations, which can be sent to: info@business-orientations.com.
Jaroslav Tyč
Note:
See also the blog post that delves into the difficulty of identifying the third Business Orientation:
“Czech ‘Samoobsluha’: The Key to Business Orientations Theory.”
