MyValueSpace
(An e-magazine produced by Ban Mittal) Compliments of Valuespace
Scene from an Executive Meeting, reviewing a lack-luster performance for several quarters in a row:
A flustered CEO: We can't go on losing customers like this. We have to become market-oriented.
Marketing VP (gleefully, to his counterparts): That is what I have been telling you all these years-- become marketing-oriented and pay attention to what we in marketing tell you.
CEO: I said, market-oriented, not marketing-oriented.
- Adapted (with paraphrase) from Ben Shapiro, "What the Hell is Market Oriented," Harvard Business Review, 1988, 66, 119-125.
What is Market Orientation?
Let us begin with a definition well accepted in scholarly marketing literature:
Market
orientation is the organizationwide generation of market intelligence
pertaining to current and future customer needs, dissemination of the
intelligence across departments, and organizationwide responsiveness to it.
-- This definition was proposed by two marketing professors Ajay Kohli
(formerly at University of Texas, Austin and now at Emory University), and Bernard Jaworski (formerly of University of Southern California, now a principal in MarketSpace, a Cambridge, MA, based Research and Consulting company).
Noteworthy in this definition is a view of the organization where strategy and planning is based on knowledge rather than hunches, and that knowledge includes knowledge about the customer (in addition to knowledge about technology, production, and process management). Plus it includes knowledge about competitors. With respect to such intelligence, it speaks of organizational activities of three types: generation, dissemination, and utilization (i.e., responsiveness). That is, there is research to gain customer knowledge. That knowledge is then shared across all departments (rather then being confined to the marketing department). And then, rather than collect dust on executive office shelves, it becomes the basis of all strategic actions.
How to Measure Market Orientation?
Various researchers have developed and tested measurement scales for market-orientation. A workable synthesized scale is presented in the Exhibit below. Organizations can use it for self-assessment and for benchmarking.
Source: Customer Behavior: Consumer Behavior and Beyond, Jagdish Sheth, Banwari Mittal, and Bruce I. Newman, Dryden Press, 1999, p.17. |
Home
Market-Orientation and Firm Profitability.
Is market orientation a mere “feel good” posturing, a PR speak, a customer-enticing sloganism? Several academics have systematically researched this question, and their unequivocal answer is “NO.” University of Washington marketing professors John C. Narver and Stanley F. Slater measured both market orientation and firm profitability (defined as ROI in your SBU relative to others in the industry) in 113 SBU’s of a forest products corporation and found the linkage to be a positive one. Rohit Deshpande’ of Harvard Business School and John Farley and Fred Webster of Amos Tuck School researched this issue in 50 Japanese firms and also found market orientation to be positively related to firms’ financial performance.
Toward True Market Orientation.
Defining and measuring market orientation as described above is well and good, but it is a start. A number of companies could falsely assume they are market oriented, at least in three ways:
a.
Confusing customer satisfaction surveys with customer
knowledge.
Customer satisfaction surveys are only one part of customer knowledge; even more important is finding out customer needs, both current and emergent, visible and latent. Nor is such customer knowledge gathering to be limited to specific market research projects entailing quantifiable surveys; rather, it extends to everyday conversations with a variety of clients and from these conversations, induction of latent and emerging needs. It extends also to co-planning sessions with lead clients where common future is jointly envisioned.
b.
Scoring well on the market orientation scale.
Scoring well on the market orientation scale is good, but it is only a barometer (as all measures are), not the organizational mind set and values system of which it is a measure. The definition, and the scale, implicates investment of resources in customer research and in organization wide response to gaps in satisfying customers' preferences. These investments must stem from deep commitment to customer orientation and must therefore be enduring. Accordingly, the true test of customer orientation would be not in basing actions on customer knowledge only when such actions are judged congruent with all other organizational goals and all other stakeholders, but even when actions that would be of value to customers might sacrifice short-term profitability (that in the long run they would invariably advance shareholder value is axiomatic).
c. Mechanistic implementation sans organistic adoption.
Finally, organizations could go through the motion, collecting customer/market intelligence, disseminating it cross-functionally, and acting on it, even ostensibly taking actions that should please customers. But when done without a deep understanding of customer value, it can become mere activity rather than serve purpose. Like the scripted greeting you get as you board an airplane—if you badly need water (because you ran up three flights of stairs and 200 yards so as to not miss the flight, and you are short of breath), you must wait for your glass of water till the crew is done greeting all arriving customers!
In contrast to mere mechanistic implementation, Organistic Adoption occurs when customer orientation is assimilated in corporate culture. As Amos Tuck School Professor Frederick Webster puts it:
In a customer-oriented organizational culture, the customer’s interests
come first, always. The firm stays focused on the customer in everything it
does, and management constantly asks how it can do things better on behalf of
the customer. The customer-oriented
firm puts the customer’s interests ahead of those of the owners, management,
and employees. Everyone’s job is
defined in terms of how it helps to create and deliver value for the customer,
and internal processes are designed and managed to ensure responsiveness to
customer needs and maximum efficiency in value delivery.
To capture such organistic adoption, I suggest top management ask these three questions:
1. Do we communicate commitment to customer value, and its primacy over all other organizational goals, to all levels of the organization and do so in words as well as deeds?
2. Do we as an organization practice total immersion into understanding what would be of value to our today’s customers “tomorrow”?
3. Is all organizational action validated by a singular test: its instrumentality in furthering customer value?
- Banwari Mittal, ValueSpace.
Feedback@MyValueSpace.com Home
* * * * * * * * * *
Imagine
your company acquired a German company, and the Executives from the two companies
are having a joint planning session.
Guess what? You wouldn’t get the Germans to talk much! And it is not because they are meek or
uninvolved. Rather it is because they
just don’t believe in talking without a thorough “private” analysis, in sharp
contrast to what some call the Americans’ spontaneous, think-as-you-go,
approach. This is no superficial, mere
stylistic difference, mind you; it is instead, a deeply rooted, cultural chasm.
How do the two groups view each other? Americans think the Germans suffer from “analysis paralysis”; the Germans think the Americans are not deliberative enough.
Consider another situation. You are a British Executive visiting a Japanese client. You were riding in a car with your host, and he was driving at 50 miles an hour in a 25-mile zone and he hit a pedestrian. The police arrive, and ask you what happened.
As the only witness, what would you tell the policeman? Tell the truth? Most Brits would. In Japan, in contrast, to protect a friend, they would almost always lie!
What does this do to your business negotiations? The Japanese feel that they can’t trust you because you won’t even protect a friend; The British Executives feel they can’t trust the Japanese to tell the truth!
Situations like these occur in international business dealings (and of course social interactions as well) all the time. These cultural clashes are called ‘dilemmas’.
The Seven
Dilemmas.
There are seven of them—described in a book by business culture consultants Fons Trompenaars and Charles Hampden-Turner. These are:
1. Individualism versus Collectivism. In the latter, individual merit awards will not work; in the former, organizing team work would require careful thought.)
2. Displaying Emotions versus Restraining them. Northern Europeans don’t show emotions in public; Italians show them uninhibitedly, and would view the former as lacking in passion and commitment.
3. Specificity versus Diffusion. Focusing on the specific role of a person or situation or thing versus looking at them holistically; e.g., in negotiating a deal with your supplier, should you consider what kind of a ‘parent’ your counterpart is to his/her children? Diffusionists would!
4. Universalism versus Particularism. Westerners go by universalism, applying universal principles and playing by the rules; Easterners, on the other hand, display particularism, going by their feelings on each case. (Yes, the motorist incident is addressed by a resolution of this dilemma).
Although these dilemmas confront us most poignantly in dealings across borders, they occur just as surely (albeit in milder forms) in within-borders mergers as well, and indeed in all partnering endeavors. Corporate culture is a powerful but silent and ever-present force that frames all our postures and actions. When the cultures of the two partnering organizations are out of sync, mergers and partnerships fail to produce synergy. Rather than view cultural differences as a hurdle, the partners can instead profit by building on the strengths of the two cultures; by resolving the cultural dilemma. Just like the offspring of an interracial marriage, an organization with hybrid cultural heritage can be more adaptive and thrive in an increasingly mingled-cultures world.
How are such cultural dilemmas resolved? Cross-Culture consultants Trompennars and Hampden-Turner [and no ordinary consultants they are—during the Chrysler-Daimler merger, both companies had independently sought their advice to finesse their negotiation-skills] employ a technique named after the Japanese word kyakkanteki, which contrasts with shukanteki. The latter means ‘the host’s point of view’ which we all assume all the time; the former means the ‘guest’s point of view’. With cross-cultural awareness, the technique calls for taking on “the fresh naivete of a stranger.” The trouble is, “put yourself in the other person’s shoe” is now a well-worn cliche, so it wouldn’t work if adopted casually. The potency of kyakkanteki lies, I think, in goading us to take the time to first learn the cultural values of “the guest,” and then effortfully deduce how those values will produce and explain the strange behavior of our cross-cultural business partners.
You would notice I listed only four dilemmas. The other three are important too. But to read these, you must go to the source I borrowed this from: a very fascinating article by columnist Art Kleiner in the magazine Strategy+Business published by Booze Allen & Hamilton (issue 23, Second quarter 2001, p. 75-85). After all, it is only fair that I direct the readers to the source to which I owe these excerpts. Kleiner’s well-penned prose contains many details not covered here that are both entertaining and educational. And if you want to dive even deeper, you would want to read the Trompennar & Hampden-Turner book, Building Cross-cultural Competence: How to Create Wealth from Conflicting Values. The thoughtful and scholarly consultants resolve all the seven dilemmas. And then some!
I highly recommend the original Strategy+Business article; and the book.
- Ban Mittal
Feedback@myValueSpace.com Home
* * * * * * * * *
Executive Happy Hour
[A potpourri of amusing
mini-stories and tidbits]
Executive Happy Hour [A potpourri of amusing
mini-stories and tidbits] |
Heartstrings
Marketing
(Or Customer Care -- Fairy Tale Style)
Imagine you are on a smoking break. (Nonsmokers: Read on-- it is a marketing story, not a smoking tale.) Outside the office building, puffing away, bracing the January cold in Buffalo, New York, or Minneapolis, Minnesota. Suddenly a friendly youngster walks up to you, with a tray of cups filled with hot coffee. Free. Compliments of Lucky Strike (Nonsmokers: it is a brand of cigarette)! No, you don't have to be smoking the brand-- just smoking.
What? The building you stand outside of is in Miami, Florida, and it is high noon in July? Not to worry, the friendly youngster approaching you will be offering iced coffee!
The marketing campaign, dubbed, Lucky Strike Force has been underway in 11 cities since the beginning of the year. It may soon come to your city too. Not that you would personally benefit from it (for one thing, the program stays on the street, outdoors; for another, it is not extended to nonsmokers standing nearby).
But it is an interesting experiment for marketers to watch. Will it delight individual smokers who receive the freebee? Certainly. Will it make them switch to the brand? Highly unlikely. Will it attract new smokers? Not really. Will it strengthen the brand equity among its current customers? The answer is a definite 'yes'. Will it appease nonsmokers? Yes, a little, but only if they are not antismoking activists. That little appeasement of the at best mildly conflicted public opinion leaders and a sizable upgrade in perceived 'brand value' among the brand's current loyalists is what the campaign can realistically expect to accomplish, in my opinion. That is what heartstring-marketing campaigns do. No more. And no less.
- Ban Mittal
Whither online
buying?
Which product category
has become the leader, replacing which one, in online buying in 2001?
The
answer: Airline ticket replacing the 2000 leader, books. In 2000, Books lead all product categories
at 36 percent of survey respondents; in 2001, online book buying
moved up to some 41 per cent; however, airline tickets online buying (a mere 10 percent in 2000) moved up to 48 percent.
Note 1. The survey was Web-based and hence the data pertains to a sample of Web-surfing consumers only.
Data source: American Express
Survey, as reported in Business Week, May 7, 2001, p. 16.
* * * * * * * * * Home
Managing Offspring Gender
Suppose you take all the mothers and separate them in two groups, ‘A’ and ‘B’, by a criterion we will soon reveal. One British scientist did just that. And then he counted the number of boys and number of girls born of each group. For the mothers in Group ‘A’, there were 106 boys born for every 100 girls born; in contrast, for mothers in Group ‘B’, 81.5 boys were born for every 100 girls born.
Now for the grouping criterion: Group ‘B’ mothers were all vegetarians!
- Reported in Men’s Health Magazine, December 2000, p. 66.
[Note: Study validity parameters not reported.]
* * * * * * * * * *
Clean up your room
and make more money
A
child growing up in a clean home (rather than a dirty home) earns $3100 a year
more, according to a recent study. They also “cleaned up” in educational
attainment. (12 years for dirty homes as compared to 13.6 years in clean or
very clean homes.)
-- From a recent study by The University of Michigan’s Institute for Social Research
This study is based on 3395 young adults whose homes the research team had visited 30 years ago. Researchers took care to adjust the results for such things as parents’ socioeconomic background.
Researchers (Rachel Dunifon and Jeanne Brooks-Gunn) explanation:
“Keeping a clean and organized home reflects an overall ability and desire to maintain a sense of order in a wide range of life activities; these are qualities that also seem to be important in predicting intergenerational success.”
-- Source: News item on the Institute’s Web site
Comments.
o To what extent is the income effect explained by the child’s (not the parents’) education is not known. Or, more to the point, are residual income effects still considerable, after adjusting for the child’s education?
o Does the cleanliness of the parental home also influence the child’s occupation; for example, choosing a creative (e.g., becoming an art director in an ad agency) versus a managerial (e.g., becoming an account executive in an ad agency) occupation?
o Perhaps an extension of the finding would be the effect of keeping a clean and well-organized office on career success. Or at least success in a “managerial” occupation.
o While the questions call for more research, I find the researchers’ explanation sound, sensible, and noteworthy.
Ban Mittal
(Send feedback to Feedback@MyValueSpace.com)
* * * * * * * * Home
Play golf, lose the game, and grin all the way home.
You don't always have to win the game to be a winner. And we are not talking about losing on purpose to please the client or the boss, although that too can lead to a precious gain. No, we speak of what losing does to your health. If your client or boss shoots a 72 on an 18-hole course, he (or she) burns only 1,473 calories; if you shoot a 110, you burn 2,227 calories-- based on a 180-pound body weight). Now, that is something to grin about!
(Reported in Men's Health, July/August 2000, p.34.) Home
* * * * * * *
There is nothing noble in being superior to someone else; the true nobility is being superior to your previous self.
-- A Hindu Proverb
* * * * * * * * * *
Readers are
invited to send Comments and Feedback.
Selected comments will be posted (unless you ask not to be posted) by
name or, if you so request, anonymously.
Posted every Monday evening.
Thank you.
Send comments to comments@Myvaluespace.com
Thank You.
* * * * * * * * * *
T H E E N D
* * * * * * * * * *