The Two Dimensions of Market Orientation

This is a post by Ralph Christian Ohr ()

Recently, I was reading an interesting HBR article, named: “Meeting the Apple Game of Customer Perception” by Ndubuisi Ekekwe.

The key paragraphs for me were:

“But meeting customer needs is not enough. You must exceed needs if you want to remain relevant. Technology disrupts the habits of the customers so quickly that if you focus on needs, you will never be an industry leader. You can’t keep early adopters loyal by just meeting their needs. They want more from you.

They want you to understand their expectations. Even if you have met their needs, they want more. Your heating customers want green solar energy, but all they can afford is dirty coal so that is what you give them. You have met their immediate needs, but they expect you to do more, quickly. Agile firms serve that expectation and retain their customers.

While expectation can help you stay in the game, top firms meet the perception of customers. Perception is the king of business. Unfortunately, few firms get to that level. Perception is providing to customers what they never expected or imagined they needed.”

This reminded me again of the following: market orientation is two-dimensional. For companies it’s required to:

  • meet existing needs and expectations that customers are aware of,
  • anticipate needs that customers are not (yet) aware of (perception).

Both requirements correspond to distinct capabilities, timelines and approaches. Meeting existing needs tends to happen on a short term range and often leads to innovation derived from current markets. Anticipation often addresses future needs and is the basis to create new markets. Some companies have the propensity towards developing and exploiting existing markets. Others, such as Apple, are primarily targeted at tapping new markets by offering novel ‘proposals’. Successful companies of the future will most likely be able to combine both capabilities – in order to serve innovators, early adopters as well as the majority in the innovation diffusion cycle.

At the end, economic success is fueled by deeply understanding customers and empathy-driven innovation.

What do you think?

Enhanced by Zemanta

Next Article

Innovation posts of the week: The Innovation Matrix

The Innovation Matrix is a sketch by Tim Kastelle that helps explain how organizations get better at innovation
  • Pingback: Tweets that mention The Two Dimensions of Market Orientation | Game-Changer -- Topsy.com()

  • David Locke

    Get yourself a Sci Fi author in residence. Create a new world, not just a new feature.

  • Hi @ralph_ohr,

    I’ve been thinking about this also. The word ‘better’ fits the incrementalists and the words ‘better and different’ fit the disruptors.

    Innovation theory says that incremental improvements should be the focus of every business because it’s easier. Yet when everybody is improving, just a few are re-imagining. It also seems to me that the ones who are re-imagining are ‘waiting’ for the opportune moment to create a new game without actually knowing a whole lot of that market (think Apple).

    The race also looks a lot differently now, where you think you’re running 1000m but then after the first lap you’re told this now a 5000m race and then suddenly in the middle of it other runners join who were not at the beginning at the race.

    I haven’t heard this anywhere else but I think shape-shifting is a good description of what companies need to be thinking about.

    Thoughts?

    • Ralph Ohr

      Thanks much for your comment, Jorge.

      I think, the focus of innovation (portfolio) depends on several criteria, such as size, strategy, culture etc. Most of the bigger companies are concentrated on incremental improvements in their portfolio – based on existing markets. I described this phenomenon in my post on Tim’s blog:
      http://timkastelle.org/blog/2010/11/innovation-and-ambidexterity/
      Improvement is mainly about fullfilling existing expectations of the market majority.
      Creating new markets is really about putting forward a vision or re-imagination, as you put it. It’s about testing a novel set of assumptions, addressing ‘pioneers’ that are ahead of the masses. This is accomplished by gaining empathic insight and foresight of technological or cultural changes. That’s what I mean by “anticipation”.
      The point is: there is no market yet – it’s yet to build. This kind of innovation is not based on existing customer needs. It’s built around assumptions about customer needs – this poses a much higher unpredictability and risk.

      I agree with you: companies that decide to act as creators/disruptors need to be capable of having a long breath, as well as acting flexibe and adaptable to be responsive to the reaction. Market development cannot be foreseen and common planning isn’t applicable in this case.

      As progress and shift accelerate, one key for the future will be to balance these two dimensions.

      Cheers, Ralph

      • Hi Ralph (@ralph_ohr),

        Agreed. I’m writing my next post which hopefully adds to your posts about what I’m thinking. Will be out tomorrow 😉

        Thanks,

        Jorge

        • Ralph Ohr

          Great, Jorge!

          Looking forward to reading your thoughs on that.

          Thanks, Ralph

  • Pingback: Tweets that mention The Two Dimensions of Market Orientation | Game-Changer -- Topsy.com()

  • Ned Kumar

    Ralph,
    Your two dimensions are very valid. In fact, Hamel and Prahalad pretty much stressed along similar lines way back in 1994. The key as you said is not only meeting current needs or addressing existing market factors but the most successful firms will be building competencies for the future and working with strategic foresight.

    Cheers,
    Ned

    • Ralph Ohr

      Thanks for your comment, Ned. Just noticed it by now – sorry for the late reply 😉

      You nail it. I think it’s also important to understand that distinct capabilities are required to cover the two dimensions.

      Some companies are successful in nurturing existing markets and customers, but bad in foresight and anticipation. Others are the other way round. “Champions” are capable of combining both approaches in order to balance their portfolio.

      Cheers, Ralph

  • Pingback: Great readings this week! « Intuinovare()

  • Pingback: For innovation firepower turn weakness into strength | Game-Changer()