Operational Excellence, Product Leadership and Customer Intimacy

One of my goals for my blog is to maintain honesty and neutrality. Still, I can't restrain myself from quoting Roger Bonine's blog:

We have been Network Appliance users for about five years now. The NetApp filers are relatively expensive, but almost bulletproof. We have never had a service outage since the filers were installed. The filer technology is impressive as well, but those aren't the things that impress me the most. Network Appliance has the best service and support of any company that I have ever dealt with, in any industry - bar none.

Consider this. The filers "phone home" to NetApp support whenever there is a component failure. NetApp immediately sends us a replacement part by overnight mail. It's not uncommon for us to arrive at work for the morning and have a drive or fan waiting for us when we didn't even realize that there was a problem. Also, if we need to talk to a NetApp engineer, we can go to the support website and initiate a live chat session in a matter of seconds.

Honesty compels me to admit that I omitted the part in Roger's blog about a NetApp component failure where the next-day delivery didn't work out. (Once an engineer, always an engineer.)

In his book The Discipline of Market Leaders, Michael Treacy describes his model of how companies win. Treacy argues that to be successful, every company must choose one of three "value disciplines". The three disciplines are:

Operational Excellence - "best price with least inconvenience"

Examples include Wal-Mart, McDonald's and Dell. These companies don't focus on delivering the best possible product, or having the closest relationship with their customers. They win by being very efficient at delivering standard products at the best price.

Product Leadership - "innovation that delivers the best products"

Examples include Sony and Microsoft. These companies win by delivering new products with new features. (Think Sony Walkman here, not Sony's rootkit DRM fiasco.)

Customer Intimacy - "deep customer relationships for customized results"


Examples include Nordstrom's and IBM. These companies win by understanding their customers deeply and delivering exactly what they need, often in a customized way.

Treacy has some rules for winning. Rule #1 is that every company must choose one discipline to excel in. Rule #2 is that companies must also be "good enough" at the other two disciplines, where good enough depends on how well their competitors do.

NetApp is a product leadership company. Our primary focus is to deliver products that solve problems nobody else can. We focus on innovation with technology like iSCSI, RAID-DP and SnapVault, and with acquisitions like Spinnaker, Alacritus and Decru.

Still, Rule #2 says that we also have to be good at the other value disciplines. Over the past five years or so, as we've focused increasingly on supporting high-end enterprise customers, and started competing more against EMC, we've made large investments in "customer intimacy", so it's good to hear that NetApp Global Services understands Roger and his business well enough to keep him happy.

Interestingly, in his comments about service, one of the things that Roger mentions is NetApp's "phone home" capability, which is actually a product feature. Even when it comes to improving customer intimacy, we use product innovation as a tool for success.