Review: Market Leaders Redux
The New Market Leaders is based upon solid, extensive research—a six-year study of more than 5,000 companies worldwide.
The New Market Leaders: Who's Winning and How in the Battle for Customers
by Fred Wiersema
Free Press, June 2001
272 pages, $28
In Internet time, the six years since the publication of Fred Wiersema's best seller, The Discipline of Market Leaders (co-authored with Michael Treacy), is an eternity. So it makes sense that Wiersema, a well-known business strategist, decided to revisit the topic of what makes a successful market leader and offer "fresh New Economy role models," in the words of his publisher's press materials.
The New Market Leaders is based upon solid, extensive research—a six-year study of more than 5,000 companies worldwide—and provides useful insight though not especially novel examples, particularly in its frequent case studies. For instance, a discussion of how PDA maker Palm, Inc. produced $1.06 billion in revenue with just 951 people by focusing only on product design and engineering is illuminating, though not particularly new. Wiersema, founder of the Center for Market Leadership at DiamondCluster International, Inc., a global business strategy and technology solutions firm, knows his stuff and isn't afraid to be specific. He also casts a much broader net than most books of this ilk, bringing in global examples such as Japan's NTT DoCoMo, Inc. and India's Infosys Technologies Ltd.
Unfortunately for technology experts, Wiersema does not delve deeply into these companies' IT strategies. Rather, he focuses from an external perspective, looking at how, for example, the customer's search for turnkey solutions has created a boom for companies such as EDS, CSC and IBM. One section, beginning on page 192, briefly discusses the problem of integrating old and new software. "The most daunting tasks include redesigning the organization's business processes…implementing the transition and ensuring that everyone affected by the change is as prepared as possible for a dramatically altered workplace." Again, however, the author's approach is largely external, describing how leading ERP vendors Oracle and SAP have responded to customers' integration needs.
Ultimately, The New Market Leaders' most serious flaw is that Wiersema's benchmarks for measuring market leadership—sales growth and market value—lead to an all-too-predictable list of top-ranked companies, led by Cisco Systems Inc., General Electric Co., Microsoft Corp., Intel Corp. and Yahoo! Inc. His sales-growth index gives us 100 companies that, on average, increased their sales three times faster than their peers in the six years ending in May 2000. Wiersema's second criterion—a market-value index gauging how highly investors valued each dollar of sales—is not exactly news either. Market values, especially for leading technology companies, hit all-time highs (vastly inflated highs, according to most commentators) during the very period Wiersema is considering. Consequently, Wiersema's benchmarks do a good job of selecting existing market leaders, but don't really tell us how long these leaders will hold on nor who will be the leaders of tomorrow. Indeed, one of the top five, Yahoo plummeted from 5 to 86 in a revised list dated spring 2001 that the author provides in an appendix.
Read The New Market Leaders for the research, the case studies and Wiersema's insights into why these companies succeed, but don't expect fresh New Economy role models. They're the same old group you've been reading about in virtually every business magazine on the planet.
Karen Southwick is the executive editor of Forbes ASAP and the author of three business technology books: Silicon Gold Rush, High Noon and the forthcoming Kingmakers, all from John Wiley & Sons, Inc.