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Creating a Market-Driven Organization

October 15, 1999 | George S. Day | Innovation

Even the best-intentioned senior managers may find it difficult to translate aspirations into action, when molding a more market-driven company. Although the underlying principles and prescription of generic change programs offer valuable guidance, a firm must tailor its own change program to the particular challenges it faces in understanding, attracting, and keeping its valuable customers.

In this article, Day discusses six conditions that ensure change-process success. He uses the experiences of four corporate change programs (Fidelity Investments; Sears, Roebuck and Co.; Eurotunnel; and Owens Corning) and post-audits of some failed change initiatives to illustrate this change model and explain the necessary conditions for a firm's durable shift to a market orientation.

Two pressures initiate a firm's change process: (1) its inclination to focus inwardly and become remote from its customers and unresponsive to competitive challenges; and (2) external market, technology, and competitive forces that pull the business out of alignment with its present market. The interplay of these forces leads to one or more of the following triggers for change: market disruptions that threaten a firm's business model, continuing erosion of market alignment that results in a market disadvantage, strategic necessity, or intolerable opportunity costs.

Successful change programs have six overlapping stages:

1. Demonstrating leadership commitment. A leader owns and champions the change, invests time and resources, and creates a sense of urgency.

2. Understanding the need for change. Key implementers understand market responsiveness, know the changes needed, and see the benefits of the initiative.

3. Shaping the vision. All employees know what they are trying to accomplish and understand how to create superior value.

4. Mobilizing commitment at all levels. Those responsible have credibility and know how to form a coalition of supporters to overcome resistance.

5. Aligning structures, systems, and incentives. Key implementers have the resources they need to create a credible plan for alignment.

6. Reinforcing the change. Those responsible know how to start the program and keep attention focused on the change and benchmark measures.

Any program to create a market-driven organization must begin quickly but be sustained over many years. Fidelity's approach, which took five years to reach 60 percent completion, resulted in increased customer-retention rates and a doubling of "share of wallet" -- two results that would justify and sustain any firm's change efforts.

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