Becoming MarketDriven

1
Becoming Market-Driven
George S. Day The Wharton School

• What does it mean to be market-driven?
• superior skills in understanding, attracting,
  and keeping valuable customers
• How do aspirations become actions?
• designing the change initiative

2
What Does It Mean to be Market-Driven?

• Keep close to customers and ahead of competition
• Love the customer more than the product
• Customer satisfaction is the basis of our
  legitimacy (Tektronix)
• Do business the way the customer wants to do
  business
• Our mission is to find needs and fill them, not
  to make products and sell them
• If were not customer-driven, our cars wont be
  either (Ford)

3
What Does It Meanto be Market-Driven? (cont.)
Front-line behavior
4
What Does It Meanto be Market-Driven? (cont.)
Be 1 in the eyes of the customer
Vision/ Mission
Become consumer intimate
Amazon Were a consumer company not a book
company
5
What Does It Meanto be Market-Driven? (cont.)
Understanding comes from living with customers
Sam Walton Be an agent for your customers
Culture
Scott Cook We owe the customer success
Paranoia about competitors is healthy
6
What Does It Meanto be Market-Driven? (cont.)
Market Learning Capability
GE Quick Market Intelligence
Bloomberg in data terminals
Wal-Mart diffusion of lessons
7
What Does It Meanto be Market-Driven? (cont.)
Structure Systems Incentives
The fact that we are multi-divisional, multi-marke
t, and multi-product is not the customers fault
3M
Hybrid designs
Externally-oriented incentives
8
What Does It Meanto be Market-Driven? (cont.)
Market Relating Capability
Fidelity
USAA
Amex
9
What Does It Meanto be Market-Driven? (cont.)
Strategy Development Process
Marketing as investment
Drivers of retention
10
What Does It Meanto be Market-Driven? (cont.)
What Does It Meanto be Market-Driven? (cont.)
Front-line behavior
11
Quick Market Intelligence

• Quick Market Intelligence is GEs term for the
  magnificent boundary-busting technique pioneered
  by Wal-Mart that allows the entire company to
  understand, to touch the changing desires of the
  customer, and to act on them in almost real-time.
  The rhythm of the Wal-Mart intelligence-action
  cycle encourages experimentation because whatever
  doesnt work is never in place for more than a
  week.
• The secret of Wal-Mart is that it keeps its small
  company speed and behavior as it grows bigger.
  QMI is a chance for us to get bigger by acting
  smaller.
• The QMI rhythm that weekly pulsing of customer
  needs will become the rhythm of GE in the years
  to come and one of the key drivers of our
  top-line growth.
• Letter from Jack Welch to GE
  Shareowners
• Feb. 1993

12
Target Customers for On-line Financial Services
Price
Coverage of quotes and news
Standardization of systems
Terminal ease of use
Buyer (IT Managers)
Users (Traders and Analysts)
On-line analytics
Historical price data
Coverage of quotes
Lifestyle information
Influentials (Senior management, Consultants,
etc.)
13
Target Customers for On-line Financial Services
(cont.)
Coverage of quotes and news
Terminal ease of use
Price
Users (Traders and Analysts)
On-line analytics
Standardization of systems
Buyer (IT Managers)
Historical price data
Coverage of quotes
Lifestyle information
Influentials (Senior management, Consultants,
etc.)
14
Elements of a Market Orientation
Customers
Competitors
Culture is externally oriented

Configuration

• Focus on superior customer value
• Coherence of structure and systems

Shared Knowledge Base
Superior Ability to Understand, Attract, and Keep
Valuable Customers
Capabilities

• Market sensing
• Market relating
• Strategic thinking

Channels
Collaborators
15
Misconceptions about Market Orientation
Self-Centered

• Advantage comes from controlling assets or
  achieving functional excellence

• Technology determines benefits offered

• Strong sales group cuts off market signals to
  rest of organization

Customer-Compelled

• Try to be all things to all people no
  priorities in segments served or benefits offered

• Each function gets different inputs from
  customers and reacts separately lack of
  functional integration

Market Driving

• Leading customers or following customers
• Technology push or market pull

16
Successful Change Initiatives

• Organization was engaged from top to bottom
• Marketing and HR are supportive
• Emphasis was on conditions that enabled their
  people to produce good results
• Clarity of strategy
• Adequacy of systems
• Cultural change followed from behavioral change
• Implementation was more about commitment than
  correctness
• Leaders created a sense of urgency
• Triggers of change

17
What Triggers the Change Initiative?

• Market disruptions threaten the business model
• Fidelity Investments
• Advantages eroded by better aligned competitors
• Sears
• Opportunity costs are intolerable
• Owens Corning
• Strategic necessity either change or fail
• Eurotunnel
• Disruptive consequence of technological change
• Changes economics of organizational information
• Obsoletes established strategies