As companies aspire to become market-driven, they exhort employees to get closer to customers, stay ahead of competitors, and make decisions based on their markets. Yet, even the best-intentioned senior managers find it difficult to translate those aspirations into action. Failed or flawed change programs have many symptoms, most of which are traceable to a lack of commitment to the deep-seated changes needed. The organization hasn’t fully grasped what it means to be market-driven — or why it matters — and lacks a clear path to that end.1 Further problems occur if the change program is unsuited to the task of orienting the business to its present and prospective markets.
While the underlying principles and prescription of generic change programs offer valuable guidance, the organization must sensitively tailor the design of a change program to become market-driven to the particular challenges of understanding, attracting, and keeping valuable customers. My purpose in this article is to establish the six conditions that ensure change process success. I use the experiences of four different change programs — Fidelity Investments, Sears Roebuck, Eurotunnel, and Owens Corning — and post-audits of some failed change initiatives to validate the change model and explain the necessary conditions for a durable shift to a market orientation.
What Triggers the Change Process?
A firm’s orientation to its present and prospective markets is subject to two pressures. On one side are the centripetal influences that induce the company to look inward for guidance on decisions and become remote from customers and unresponsive to competitive challenges. This influence is accentuated by a “liability of success” where good financial performance leads to arrogance, overconfidence, and a technology orientation that condones the belief that “we know better than the market.” Compounding the problems are the centrifugal effects of market, technology, and competitive change that continually pull the business out of alignment with its markets and erode its advantages. The interplay of these forces leads to one or more of the following triggers for change:
- Market disruptions that threaten the business model.
- Continuing erosion of alignment with the market that puts the firm at a disadvantage with market-driven competitors.
- Strategic necessity.
- Intolerable opportunity costs.
Each of these triggers started at least one of the four change programs described in this article.