How a firm can really become market-driven

ONE of the buzz-words being used by many organisations throughout Hong Kong is ''market-driven'', and many believe that all you have to do is to hire a marketing expert, give him or her some responsibility, and you'll have a market-driven organisation.

What we are dealing with here is, in fact, a very complex issue. One would have to change the attitudes of all the staff in the organisation, not just those employed in marketing.

One major problem in getting organisations to become more market-driven is that various units of the organisation have different priorities. For example, marketing people are intent on achieving marketing objectives.

On the other hand, sales personnel are intent on increasing sales but not necessarily at a price which achieves a higher level of profitability.

Financial people are intent on increasing profitability; administrative staff are intent on improving efficiency but place emphasis on controlling costs; the operations unit is intent on improving production and/or operations efficiency but at the expense of customer service.

What you have in many organisations are various units all working very hard and believing they are working toward a common goal. In fact, they are working against each other and preventing the overall objective from being achieved.

Each unit is instead working toward achieving its own individual objective at the expense of the corporate objectives. Conflict becomes inevitable as each unit truly believes that it is doing those things which are in the best interest of the organisation.

Part of the problem is due to the fact that most organisations have structured themselves on the basis of operational or organisational efficiency and not on the basis of providing outstanding products or services to the customer.

A case in point. A few weeks ago I went to a bank in Central to make a cash withdrawal. There were 12 people in line and only two tellers. There were also three employees sitting at desks doing paper work. Given the pace at which the line was moving, I estimated that it would take me 15 to 20 minutes to get to the teller's station.

Recognising one of the bank managers, I offered the suggestion that if one or two of the employees doing paper work would take over the other teller stations it would cut the waiting time in half and therefore the bank would have a satisfied customer.

The bank manager responded by saying that they had much administrative work to do and could not man the teller stations. He also said that, as it was the lunch hour, the other tellers were not available.

This is the typical conflict between operations and marketing. The customer should come first.

I've also noticed this problem on the numerous sales calls that I have been on when training sales personnel. The marketing department, having determined what the year's market share should be, assumes that the sales department will assist in achieving these objectives.

Unfortunately, the shared objectives have only been translated into number of units to be sold or total revenue, not translated into price levels or profitability. Thus, when an organisation such as a hotel tells its sales department that its objectives are to achieve a certain occupancy rate, it is likely that the sales department will try to achieve that objective but by selling the less expensive rooms, for example - the easiest ones to sell. Again, conflict develops, this time between marketing and sales.

Lack of leadership at senior levels of management, lack of communications between the various units, and lack of well-defined operating unit objectives which are intended to support the overall business objective are all reasons why these problems exist in the first place.

Marketing success in any organisation is a team effort. It includes the entire organisation, from CEO to receptionist. It is not limited to the marketing department. It requires a clear understanding of what each person has to accomplish and how each person will accomplish his or her jobs.

But it all begins with the customer and with the organisation answering the following questions: First, what does it take for our organisation to maintain our existing customer base; and, secondly, what does it require to move a customer from our major competitor to our company? Once you've answered these questions, then you can structure your organisation to achieve those objectives. You have now, in fact, become a market-driven organisation.

Charles Steilen is executive director of the Asia-Pacific Institute of Business, Chinese University of Hong Kong.