Innovators
or Sheep?
Have you ever notice
that so many companies want to be visionary? Able to predict future products
and services you need; but yet they also say they respond to market demand by
being market-driven. Seems to me that’s an oxymoron. Can you be both
market-driving and market-driven?
To disruptively break
free from reactive business strategy and accelerate the agile
and pivot-able strategy, we need to understand the difference between
market-driving and market-driven companies. In his 2004 book, “Marketing as
Strategy,” Nurmalya Kumar characterised these two types of strategies.
Market-driving companies
rule the future – they push the envelope of possibility and consistently
surprise customers by introducing unique value in exceptional brand new
products and services. Market driven
companies are doomed to fall increasingly further behind as they react to
customer needs that will surely change by the time they deliver the ultimately
out of date product.
The Market-driving and
Market-driven Oxymoron
The oxymoron mentioned
above is simply the observation that to be market-driven, you are letting the
past, make your decisions. So then, how can you project a forward looking
vision, envisioning a new and different future, if you are driving while looking
backwards?
A Current Example
Consider Apple vs.
Microsoft. Apple is a market-driving company anticipating trends and taking
risk to consistently amaze and surprise customers with delivered value.
Microsoft is a market-driven company missing trends and failing to take risk
which forces it to react after dramatic market shifts have already occurred.
Invariably, one can predict the fate of Zune vs. iTunes, or understand the
relative adoption of Windows mobile vs. the iPhone. It’s not hard to see which approach
is also more cost-effective.
Approach Makes Them Different
Market-driven companies
perform exhaustive market research to fully understand an existing customer
need. They perform multiple validation cycles with heavy documentation of
requirements and written detailed specifications of features and benefits. A
serially laborious process is then followed through multiple cycles of
develop-and-test until a differentiated product or service is identified. For
some, static well-defined market segments, perhaps this approach can still
work. (Procter and Gamble for many products, is a good example of being driven
by these static segments).
Market-driving
companies focus on a vision for the future, unhampered by traditional thinking
and industry norms for product development. Market-driving companies are poised
to make discontinuous leaps in innovation in terms of customer value (not just
incremental capability and technology). These companies also have a mission to
build unique value networks and engage in a bigger business ecosystem through
technology and business model innovation. Apple’s iPod with iTunes is a good
example of a value network in a business ecosystem.
9 Ways to Differentiate
In pondering what it
takes, or how one can observe and more deeply characterise one type of company
from another, let’s look at these key differentiators.
| Market-driving |
Market-driven
|
Disruptive
|
Reactive
|
Innovative
|
Incremental
|
Creative
|
Insignificant
|
Value
|
Features
|
Agile
|
Rigid
|
Competitive
|
Tentative
|
Decisive
|
Unsure
|
Clear
|
Confused
|
Dynamic
|
Static
|
To get a better
understanding of these criteria, let’s explore them in more detail in the
comparisons that follow.
- Market-driving companies are disruptive to
markets surprising customers with value. Market-driven companies are reactive to
clear shifts that are late and underwhelming.
- Market-driving companies are discontinuously innovative
introducing radical efficiency. Market-driven companies are incremental
in adding features to automate existing methods.
- Market-driving companies bring creative
solutions to difficult customer challenges. Market-driven companies bring insignificant responses
leaving customer questions unanswered.
- Market-driving companies create massive value to
delight customers. Market-driven companies add expected features that
fall short of customer expectation set by competition.
- Market-driving companies are agile in
their ability to pivot both vision and strategy. Market-driven companies
are rigid, and unable to modify past decisions even for
course-correcting good reason.
- Market-driving companies are recognized as competitive
by early activity. Market-driven companies are perceived as tentative,
by their late reactivity.
- Market-driving companies are decisive in
quantifying and taking measured risk. Market-driven companies are unsure in
researching and over-analysing seemingly irrelevant risk.
- Market-driving companies are clear in
articulating new business model value to customers in simple terms.
Market-driven companies are confused in their positioning and value
messages to the market.
- Market-driving companies are dynamic in regularly creating new and growing markets. Market-driven companies are static and can only serve existing often declining markets.
How To Become Market-driving
Like momentum keeps a
freight train in motion, it’s generally easier to sustain a
market-driving organisation than to transform into one. It’s not easy to
become a market-driving company, if not one already. But if yours is a reactive
market-driven company, expect to fall further and further behind, as the rest
of the world is increasingly market-driving. Your company’s competition is
taking the risk required to create the future that your company will be
chasing.
To become a
market-driving organisation, you must first decide and commit to making the
changes necessary. The transformation will require a shift in culture.
Market-driving companies are led by marketing and the CMO’s leadership and
backed up by forward-looking predictive data and prescriptive analytics. Being
market-driving requires the right people, the right leadership,
and the will to make the difficult changes. The vision for being a
market-driving company must come from the top. The CEO must create and
communicate a clear picture of what your company looks like as a market-driving
company. It requires a pervasive strategy and continuous mentoring of
management and staff throughout the organisation.
Which type is your
company? Market-driving or market-driven?
by Grant Stanley 2015
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