For forty years managers have been exhorted to "stay close to the customer and ahead of the competition." And with good reason Research now shows that market driven organizations outperform their rivals. Given the obvious benefits, why do so many companie

George S. Day holds the Geoffrey T. Boisi Professorship in the Department of Marketing and is Director of the Huntsman Center for Global Competition and Innovation at the Wharton School of the University of Pennsylvania. Professor Day has written more than 125 articles for leading marketing and management journals and fourteen books including Market Driven Strategy, the companion volume to this book. A consultant to leading corporations worldwide, Day is the recipient of the Charles Coolidge Parlin Award for his leadership in the field of marketing and the Paul D. Converse Award for outstanding contributions to the development of the science of marketing. He lives in Bryn Mawr, Pennsylvania.

Introduction: Move to the Market It is in vogue to aspire to become market-driven. CEOs exhort their employees to get closer to customers, stay ahead of competitors and make decisions from the market back. While this rhetoric is now commonplace, successful market-driven organizations still are rare. Too often, even the best-intentioned senior managers have been unable to translate their aspirations into action. Their organizations haven't grasped what it means to be market-driven or they lack the commitment to make the deep-seated changes that are needed.Why should organizations strive to become market-driven? Our answer is that in an era of increasing market turbulence and intensifying competition, a robust market orientation has become a strategic necessity. Onlywith superior skills in understanding, attracting and keeping customerscan firms devise strategies that will deliver superior customer value and keep this strategy aligned with changing market requirements. Even firms with world-class technology and innovative business models have to stay close to their customers and ahead of competition to realize their full potential.The power of a market-driven organization can be seen in the success of companies such as Intuit, Wal-Mart, Virgin Airlines, Disney, Gillette, and many others who have used a superior relationship to customers to gain advantage over rivals. In contrast, the stories of IBM's loss of control of the PC market, Motorola's stumble in shifting from analog to digital cellular systems, and Sears, Roebuck's difficulties in the early 1990s show how a failure to align the organization to the market can quickly and seriously erode competitive performance. In fact, a growing body of research supports the insight that market-driven organizations outperform their peers.Given the benefits of becoming market-driven, why do so many organizations fail to do so? The first reason is confusion about what it means to be market-driven. Some companies have become "customer compelled," jumping to meet every customer whim without a clear strategy. As a backlash, a growing group of firms argues that there are times when it is better to "ignore the customer." As discussed in Chapter 2, both these views are misconceptions with unfortunate consequences.The second reason is that the culture, capabilities and configuration of most organizations are more a hindrance than a help. In working with executives to apply the concepts of my 1990 book,Market Driven Strategy,it became clear that most firms lacked the means to implement such an approach to a strategy. Their internal processes, structures, incentives and controls were in the way. As one 3M manager summed up their problem, "The fact that we are a: multi-dimensional, multi-functional, multi-regional and multi-plant organization is not the customer's fault."What does it mean to be market-driven? How does this orientation to the market improve performance? How can companies build successful market-driven organizations? I have spent the better part of the past decade pursuing these questions. This work began in earnest with a conference on "Organizing to Become Market-Driven" I coordinated as executive director of the Marketing Science Institute in 1990. It continued in executive programs and consulting with more than a thousand senior executives around the world. Through this work and through my research I have developed insights into distinguishing features of the market-driven organization.Part I of this book examines the many organizational elements that work together supportively in a market-driven organization. Those with the greatest leverage on performance are an externally oriented culture, capabilities for market sensing and market relating, and a configuration that aligns vertical functions and horizontal processes. All of these elements work together to foster a market orientation. We will study each element