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Market Driven or Market Driving?Organizations are constantly told to become more market driven. Whether this comes from consultants, academics, or the press, it is a truism to say that being market driven is well established as a key ingredient for firm success. We certainly do not disagree with this premise, and in fact, fully support the notion of firms becoming more customer oriented, and sensitive to the vagaries of the market. Wharton professor, George Day, has been an active proponent of the market driven organization. However, this is only part of the story. The difference between market driven and market driving is well articulated by Jaworski et al. (2000). They state that market driven is about understanding and reacting to the preferences and behaviours of customers, whereas market driving is about influencing the structure of the market and/or behaviours of the players in a way that enhances the competitive position of the business. Is That All?Yes and no. Empirical research in the areas of market orientation (a construct usually measured by self report questionnaires) provides some interesting insights. Market driven and market driving are in fact two complementary approaches to market orientation. Firms which exhibit higher degrees of market orientation consistently outperform their peers, although the results are not unequivocal. This research has been conducted both in the western world and Asia . One should not confuse the term market orientation with terms such as marketing orientation, customer oriented, or market led. Market orientation is a much broader concept and the reader is directed to the seminal works of Narver and Slater or Kohli and Jaworski for further information.
'Market orientation is not to be confused with marketing orientation, customer oriented, or market led' Getting back to market driven or driving markets, a key ingredient in these ideas is innovation. Innovation is closely linked to market orientation and few would argue that it is not an important component of successful organizations. However, in his book The Innovators Dilemma, Clayton Christensen argues that well managed companies often fail to innovate precisely because they are rightfully preoccupied with the market (a scary thought). Many of today's most successful organizations can be considered as market driving. Firms such as Ikea, Body Shop, and Swatch radically altered the competitive landscape by offering totally new value propositions that no market research study would be likely to uncover. Customers expressed needs do not lead to such market changes. Their latent demands are often taken by such companies and with insight they are shaped into the ideas we now take for granted (consider the Sony Walkman). Empirical findings by Gatignon and Xuereb (1997) demonstrate that a technological orientation to be very important under certain conditions. What Does This Mean in the Final Analysis? Being a market driven firm is crucially important but relying on customer or competitive orientation alone can lead to myopic behaviour that can spell disaster in times of discontinuous change and market uncertainty.
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