The market driven organization

Headnote

Understanding, attracting and keeping valuable customers, by transforming your organization into a market-driven one.

(Part one of a two-part installment.)

Even with a clear design for a more market-focused structure and a more interactive strategy, transforming an organization is a risky proposition. By one estimate, only 30 percent of all change programs implemented by a sample of Fortune 100 companies since 1980 produced an improvement in bottomline results that exceeded the company's cost of capital.1

The path to becoming more market-driven is at least as perilous. Because of the complex and interlinked elements that contribute to a market orientation, achieving successful change in all these dimensions can be very challenging. Creating a deeper market focus often runs counter to entrenched beliefs of the culture and long-standing structures, strategies, capabilities and processes.

Change threatens people, provoking resistance. Organizations that have been successful in the past have a particularly hard time. "An unhealthy arrogance begins to evolve... [and] arrogant managers can over-- evaluate their current performance and competitive position, listen poorly, and learn slowly.... The combination of cultures that resist change and managers who have not been taught to Dead] change is lethal." 2

Yet as challenging as change initiatives are to complete successfully, standing still is perhaps even more risky. The pace of change is accelerating, competition is intensifying, customers are more demanding, and emerging technologies are undermining traditional business models. The status quo has become unsustainable.

How can organizations avoid the pitfalls of the change process? I will outline six conditions that increase the odds of success in translating the concepts of the market-driven organization into reality. We examine how three firms-Owens Corning, Sears, Roebuck and Eurotunnel-successfully used this process to transform their organizations.

Conditions for Successful Change

This section draws upon cumulative knowledge of successful change initiatives to provide a road map to guide a market-driven change process. In contrast with most other discussions of change, our focus is not on the leaders of the organization but on the conditions that will enable their people to produce good results. While there is tremendous diversity among successful leaders in personality, style, abilities, and interests,3 Most SUC_ cessful market-driven change initiatives were designed to meet six conditions:4

1. Demonstrate leadership commitment. There is a...