How Market Orientation Drives Success
There has been much written about the dynamic and disruptive market forces we operate in. But there is less attention paid to how an organization and its system can only achieve its purpose and goals if the individual and group-based human factors are aligned and oriented towards a shared value proposition to the market. We call this market orientation: enterprise-wide market information (intelligence) related to the present and upcoming needs and desires of customers, disseminating information through and in between departments comprising the parts of an organization’s system, resulting in organization-wide responsiveness, according to Falasca. Simply stated, that means a holistic relationship between leadership, the workforce and its market designed to drive response and engagement among stakeholders.
Why Market Orientation?
Market orientation basically represents a set of processes touching on all aspects of an organization with the purpose of maintaining and growing continuous dialog, recognition, and intent across all organizational units. This interrelationship connects all parts of the organizational system, which enables its responsiveness to the market and its customers.
Market orientation and resulting responsiveness have their basis in agility. It seeks to limit ambiguity by staying knowledgeable and informed on the continued evolution and/or maturation of the market and aligning goals, strategies and tactics that are reflective of market needs and wants, creating deeper and additive customer value.
Authentic market orientation reveals the truth about transformation and how human factors and behaviors impact the organizational system. It isn’t about “marketing,” it isn’t about “sales,” and it isn’t about “product management.” It is focused on the human elements of an organization-wide system that must cohesively align for a shared purpose.
Akroush and Mahadin define market orientation as reflective of the organization’s culture by focusing on creating superior competitive value for customers and exploring and identifying trends in target markets to provide greater needs and desires to customers. Market orientation as a business philosophy and practice should influence and form the basis of culture. This orientation forms the structure by which a culture is set, grows, and matures over time. The culture works towards goals with a shared definition and understanding of information and intelligence including factors and variables that exist in or across the macro (world, region, country, locality), meso (the organization and its system) and micro (representing individuals across the customer base and workforce) systems. Therefore, it does not reflect the culture, it sets the foundation on which the cultural forms.
Market Orientation and Risk
A comparison of organizations that establish a clear and explicit market orientation versus organizations that do not, reveals that the organizations which do have a better and clearer understanding of strategies and capabilities, customer needs and desires to confront competitors and exterior forces and respond in proper ways, according to Knight, Liesch, and Acosta.
Kohli and Jaworski’s, two leaders in researching and assessing organizations, propose that top management’s attitude toward risk and organizational structure would affect a firm’s adoption of market orientation. Risk, particularly fear of challenges to safety, comfort, and familiarity runs deep and is more pervasive than we recognize across leadership’s ability to manage the organizational system. Fear of risk also influences attitudes and behaviors resulting in “safe” decisions that create less friction, avoid confrontation and limit scope to a closed-loop part of the organizational system.
Here’s a real-life example of market orientation and risk. General Electric (GE) will separate into three distinct companies. The official mantra at GE has focused on management practices and systems as the solution to respond to, and evolve with the market to remain relevant, sustain and grow. We are seeing in the present that although management, particularly at the top echelons, may have aligned to a shared purpose, the human system (downstream and dispersed levels) across GE functioned with a different set of knowledge, purposes for being, and a disparate marketing orientation existing outside of alignment with the market. The challenge for any organization in the present and the future is to recognize the importance of the human system comprising the workforce — and that it takes an aligned village to a shared purpose to remain relevant, sustain, grow and yes … transform in organization-wide responsiveness to the market. One cannot manage out of or around the human factor. Humans in this century and moving forward aren’t just the cogs in the wheel.
Market Orientation vs Marketing Concept
The business theme song today is the aspiration that “We are going to be more entrepreneurial; we are going to be innovative, and we are going to become a learning organization.” Although each of these intentions offers the opportunity for change and perhaps even seeding transformation, the result represents only one piece of the pie and translates to improving only one element, direction, area or approach of the organization and its system. The remainder of the organization, its purpose, human complement and how work is accomplished, remains untouched and/or removed from the potential of achieving a defined and shared purpose that aligns to market orientation.
Kohli and Jaworski defined market orientation as a marketing concept: “the organization-wide generation of market intelligence, dissemination of the intelligence across departments and organization-wide responsiveness to it.” According to them, marketing orientation is a “marketing” business philosophy, whereas the term market orientation really refers to the actual implementation of marketing. In today’s terms, individuals, and organizations understand “marketing” as having a marketing department which is responsible for acquiring, curating, and maturing the customer base, regardless of business focus. That department is responsible for understanding the customer and identifying new customers for one area or department of an organization. That approach can be subject to intellectual and experiential correlations based on default behaviors and lack of critical thinking and assessment. A siloed marketing department overlooks the involvement of all parts of the system parts in a shared purpose.
Marketing from an organizational perspective, along with sales, represents how customers are acquired and retained and how the market, comprised of potential customers, becomes aware of products and/or services offered by an organization. Marketing joined with sales, is of major importance in maintaining an engine of stability and growth. If potential customers do not know about an organization or what it offers, they will seek out organizations that they do know. As a result, revenues do not grow, and the organization’s relevance is compromised.
Marketing and sales are important but only represent two organizational parts that comprise the entire system. If sales and marketing choose the customers to interact with, they have undue power. That power creates a situation of control where strategic decisions are made without context or understanding the supporting organizational parts and their capacities to match the direction.
Consider a case when marketing and sales focus on a potential growth market segment. Say this market segment has desires for expanded features or functionality of the organization’s products that have not yet been developed. Although marketing and sales understand the opportunity as well as the documented customer need, the organization as a whole has not aligned to that market orientation. The other parts of the system may not even have the capability or capacity to match the demand. This approach will cause chaos caused by the expectation to expand product features and functionality combined with the expense for the acquisition of this market segment. Most certainly, any net revenue gain over time will fail if it is based on a faulty premise.
In this case, since the intent and decision by marketing and sales has been made without the context of the organizational system, it reflects only one part of the system and the potential results that part of the system may gain. The necessary changes and/or transformation to further develop the product and the impact of those changes and/or transformation on the other parts of the systems is not recognized.
Disconnected, Siloed Systems
This example is a perfect illustration of siloed departmental goals and/or responsibilities that permeate many organizations when individuals and teams are given responsibility and are incentivized to focus on, and execute their given goals to success, without regard to the larger system.
Beyond the financial and operational impacts of this siloed approach, how can the rest of the organization understand and define their roles in a direction set by others? Do they stop how they are currently working; eliminating what is currently or planned to be provided to customers? Do they change the approved plans or roadmaps for developing the products? And what are the consequences of those new plans and who decides whether to move forward? How do they come to understand what has changed? What is being lost? Is the definition of “customer needs” still valid or are the interpretation and understanding now different?
In reality, the inter-dependencies across an organization are often ignored. Leaders may unintentionally seek to motivate and inspire individuals and teams with added responsibility and recognition (incentives). However, this has cascading and fracturing impacts across the organization. The market orientation seemingly set in isolation and without interaction is not widely communicated nor aligned with a shared purpose, which then leads to confusion among the individuals who must achieve the goal.
A New Market Orientation
A siloed perspective may lead to effective performance in one part of an organization but change and transformation will always be limited to that specific part. At 2040, we consider the definition of market orientation in a broader and more complex sense. The various perceptions and interpretations of market orientation must come together holistically with decision making, market intelligence, strategic, and customer orientation perspectives aligned with innovation, agility practices and marketing (tactical) execution (inclusive of sales). If you remember one thing: One part of the system, changed and transformed in isolation does not lead to successful organizational change and transformation.
Consider the data points on the diversity of the world’s population. An effective market orientation must consider both the market as it currently exists and how it is expected to evolve over time. An organization operating under assumptions and perceptions of the market and its relationship to that market must set a strategy and tactics to anticipate where it is headed. If its assumptions and perceptions are not aligned closely to the market, then an organization is not truly aligned in market orientation. It sits on shaky ground that represents a different reality than what exists.
A better approach is to recognize the impact of behavioral defaults on our perceptions of the world. Clarity can be achieved with contextual analysis that evolves and transforms into a fluid market orientation. This orientation is based more firmly on fact than assumption and perception. The shared purpose of, and reason for, a true market orientation creates the basis for all individuals and groups within the organization to understand the roles and responsibilities that their respective parts of the organization have in the overall system. The aligned orientation also provides the opportunity for individuals and groups to see and grasp what identity and responsibility they may be losing and will be subsequently redefined as part of the orientation.
Foundation of Shared Knowledge
Market orientation is achieved through the generation of intelligence gained by a contextual analysis of factors and variables. This intelligence is based on interpreted and applied objective data, across the macro (world, country, region or locality), meso (organization), and micro (representative of individuals and groups of customers, employees and stakeholders). The dissemination of intelligence then becomes shared knowledge that forms the basis for a shared purpose and organizational responsiveness.
Shared knowledge further mitigates and minimizes individual and group ambiguity in how the organization’s parts relate to the organizational responsiveness represented via the market orientation.
The value of market orientation addresses the following challenges based on human behavior, contextualization, and decision making with objective basis points:
- Minimizing the individual influences resulting from bias and overgeneralization.
- Limiting individual motivations driven by the personal gain that impacts and influences decision making and comprises the organizational system.
- Offering an opportunity to create and measure quantifiable goals towards the shared purpose with organizational goal attainment above individual goal attainment.
- Reliance on data to remove assumptions and perceptions.
In summary, a market orientation becomes the basis and foundation of a culture and creates a structure to ensure the organizational parts and people that comprise those parts align towards a shared purpose within a meso system environment that ingrains organizational responsiveness.
Market Orientation Playbook
At 2040 we help clients excel in a hostile environment with a high level of market disruption, competitive intensity, and technological turbulence. Market orientation is a strategic necessity for survivability. We agree with Kumar, Jones, Venkatesan, and Leone that consumers constantly change their preferences, competitors relentlessly compete, and new technology keeps emerging, organizations must have a systematic approach in keeping up with consumers’ demands and ward off competitive threats. Get in touch with us to help you design the right market orientation model that is human factor-based and aligned with your goals.
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Onward and upward from the 2040 Team