Warby Parker IS Market Oriented!

Hola Todos!

It’s too easy to find companies who are not market orientated (Yahoo, Twitter, Intel); the same cannot be said for those few firms who are outward-looking and thoroughly understand how to be externally orientated towards the market. (A complete description of market orientation can be found here).

While listening to the Re/Code Decode podcast with Kara Swisher, I am convinced that Warby Parker with their co-CEOs Dave Gilboa and Neil Blumenthal have created a truly market orientated company. Eyeglasses are an analog product from the analog world, however, co-CEOs Dave and Neil completely understand their customers, found ways to create value using digital technologies vis-à-vis their direct competitors and run a flat organization with incredibly strong inter-firm communication. I mean how theory Y is it to have co-CEOs!

This is something to check out today – along with Re/Code’s other excellent podcasts Re/code Media with Peter Kafka, Too Embarrassed to Ask with Lauren Goode and Kara Swisher, and finally Re/Code Reply.

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, Ph.D.,

Associate Professor of Marketing

Director, MBA Program

Stillman School of Business

Seton Hall University

 

Microsoft is NOT Market Orientated…

Hola Todos!

Perhaps a better title for this post would be “Microsoft is NOT Market Orientated Yet…(and we sure hope they will be soon…).  Firms that are market orientated have: (1) an incredible strong external orientation towards customers, (2) incredible strong external orientation towards competition (i.e., the market place), and (3) excellent inter-firm communication to capitalize and adapt to the information coming in from customers and competition keeping the firm ahead in the industry.  This description has not been a fit for Microsoft in a long, long time. If we look back and think about the major trends in tech over the last 10 to 15 years, Microsoft missed the Internet (at first), missed search, missed social, and appears to be missing mobile. I could fill this blog on the reasons why this occurred but let’s stay on the market orientation theme for now.

John Gruber of DaringFireball summed it up well: when Microsoft was founded, it’s goal was “to put a computer in everyone home” and Gates, Ballmer and Co. did an incredible job with that goal in the late 1970’s and the 1980’s to become the colossus it became in the 1990’s.  But once that goal was achieved and Mr. Gates stepped down from the CEO chair in the 2000’s, that same goal did not serve Microsoft as well.  The goal should have been modified “to put a computer in everyone’s pocket” but competition in both hardware (Apple, Samsung, etc) and software (iOS, Android, App Store, etc) blew by Microsoft over the past 6 to 8 years and is now an “also ran” in everything that goes in the pocket.

Prior to Facebook’s acquisition of WhatsApp, the top conversation in tech was “How is Microsoft going to pivot under the new CEO Satya Nedella?” Not many feel Mr. Nedella will double-down and battled it through in an attempt to be relevant in mobile.  Mr. Nedella rose to the CEO post from Microsoft’s cloud and enterprise divisions and that is everyone’s best guess to the direction Microsoft is headed.  I hope Mr. Nedella will get the firm to be market orientated again, spending company resources (time and money) figuring out where Microsoft would be in 2016 as opposed to trying to pay catch-up in the markets where they are an “also ran” in 2014 (see downward sloping trend in this post).

On a final thought, the desktop is no longer the dominant computing platform worldwide, however, Microsoft still has a killer app: Microsoft Office.  If Office were to become available for iOS and Android, that move could cement Microsoft “in everyone’s pockets” and provide even more cash to help fuel the Microsoft of the future. Mr. Nedella biggest challenge is to change the culture of Microsoft to think more of 2019, as opposed to 1999 – and it will not be easy as too much of the old guard like Frank X. Shaw probably listens to too much Prince music (see Frank’s quote in this post).

I still think this is the top story of the year to follow….

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, Ph.D.,

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

Market Orientation: Best Buy is NOT Market Driven nor Market Driving

Hola Todos!

Echoing a popular theme on DigNuggetville.com, perhaps the non-market orientated stories make better articles.  Either way, I just see them almost everywhere I read.  Last week it was Nokia (click here).  This week, its Best Buy.

I was reading this morning on CNNmoney.com and here’s another firm in a downward spiral – Best Buy (click here).  Once the poster child for market orientation, now internal power struggles as well as plain stupidity may be Best Buy’s downfall.

Something to think about today…

 

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, PhD

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

Market Orientation: Nokia is NOT Market Driven nor Market Driving

Hola Todos!

As I always said in class, it is much easier to find non-market orientated firms than market orientated ones.  The other day when reading The Wall Street Journal, I found 2012’s exemplar firm on how to be non-market orientated.

For a quick review, market oriented firms have three main characteristics: (1) an incredibly strong external orientation towards customers, (2) an incredibly strong external orientation towards competition, and (3) incredibly strong internal communication within the firm.  Most firms do #1 and #2 well.  These two orientations are relatively easy.  Its #3 is where most firms do not do well (or at all).  Too many companies have functional silos (e.g., divisions, SBUs, offices, etc. that are relatively independent and do not talk/plan/coordinate together).  Non-market orientated firms have mostly an internal orientation for items #1 & #2 and item #3 is non-existent.  Companies that have mostly internal power struggles and are dominated by politics are mostly non market-orientated.  For more detail market orientation along with the two main types, market driven and marketing driving, click here.

In “Nokia’s Bad Call on Smartphones” journalists Anton Troianovski and Sven Grundberg detail many of Nokia’s non-market orientated missteps in the smartphone marketplace.  What follows are some select quotes from the article and then my commentary afterwards.

This year, Nokia ended a 14-year-run as the world’s largest maker of mobile phones, as rival Samsung took the top spot and makers of cheaper phones ate into Nokia’s sales volumes. Nokia’s share of mobile phone sales fell to 21% in the first quarter from 27% a year earlier, according to market data from IDC. Its share peaked at 40.4% at the end of 2007.”   – – Notice Nokia’s peak was the same year the iPhone hit the market and one year before Android.

More than seven years before Apple Inc., rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button. The device was shown locating a restaurant, playing a racing game and ordering lipstick. In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen—all features today of the hot-selling Apple iPad. Consumers never saw either device. The gadgets were casualties of a corporate culture that lavished funds on research but squandered opportunities to bring the innovations it produced to market.”  Ouch – the next set of quotes emphasizes the lack of interfirm communication component of market orientation.

Nokia is losing ground despite spending $40 billion on research and development over the past decade—nearly four times what Apple spent in the same period. And Nokia clearly saw where the industry it dominated was heading. But its research effort was fragmented by internal rivalries and disconnected from the operations that actually brought phones to market.”  Politics and functional silos KILL market orientation.  R & D didn’t work with marketing who didn’t work with operations – let’s not forget about senior leadership.

In 1996, the company unveiled its first smartphone, the Nokia 9000, and called it the first mobile device that could email, fax and surf the Web. It weighed slightly under a pound. “We had exactly the right view of what it was all about,” says Mr. Ollila, who stepped down as chief executive in 2006 and retired as chairman in May. “We were about five years ahead.” The phone, also called the Communicator, made an appearance in the movie “The Saint” and drew a dedicated following among certain business users, but never commanded a mass audience. Nokia’s smartphones had hit the market too early, before consumers or wireless networks were ready to make use of them. And when the iPhone emerged, Nokia failed to recognize the threat.”  Here – we have a clear failure of the 2nd part of market orientation – an incredibly strong external orientation towards competition.  Plus senior leadership at Nokia failed to look forward and see where the market was headed.

One team tried to revamp Symbian, the aging operating system that ran most Nokia smartphones. Another effort, eventually dubbed MeeGo, tried to build a new system from the ground up.  People involved with both efforts say the two teams competed with each other for support within the company and the attention of top executives—a problem that plagued Nokia’s R&D operations. “You were spending more time fighting politics than doing design,” said Alastair Curtis, Nokia’s chief designer from 2006 to 2009. The organizational structure was so convoluted he added, “it was hard for the team to drive through a coherent, consistent, beautiful experience.”  Wow – no interfirm communication or coordination – more like creating a competitor within you own company? What make this all worse is senior managers in the C-suite supported this strategy, then was divided as some supported Symbian and others backed MeeGo.  Much time, money and resources were spent on Symbian and MeeGo in internal battles and competitors Apple and Android took advantage of opportunity by the distracted #1 player.

The irony of this whole Nokia story is that after all that time, money and resources were spent on Symbian and MeeGo, BOTH were scrapped as Nokia took Microsoft’s cash and switched over to Windows mobile.  OUCH!

In closing, just about everything in the Nokia story above (except the cameo part in a movie) was mirrored by the 2011 exemplar for non-market orientation: RIM and their Blackberry smartphones.

 

Something to think about today…

 

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, PhD

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

Market Orientation (plus Market Driven vs. Market Driving)

Hola Todos!

In classmate Jenny Zhang’s question below, Jenny asked about the difference between a “marketing orientated” company and “market oriented” company.  I have a feeling what Jenny is asking so I’m going to blurt first and then see what Jenny and everyone else thinks.

To begin, let’s review “market oriented.”  Market oriented firms have three main characteristics: (1) an incredibly strong external orientation towards customers, (2) an incredibly strong external orientation towards competition, and (3) incredibly strong internal communication within the firm.

Most firms do #1 and #2 well.  These two orientations are relatively easy.  Its #3 is which most firms do not do well (or at all).  Most firms have functional silos (e.g., divisions, SBUs, offices, etc. are relatively independent and do not talk/plan/coordinate together).  Non-market orientated firms have mostly an internal orientation for items 1 & 2 and items 3 is non-existent.  Companies that have mostly internal power struggles and are dominated by politics are mostly not market-orientated.

Now “marketing orientated” is not something I condone and I have a feeling Jenny was referring to something else to which I will get to in a moment.  I always liked to stress in class, that it’s called “market orientation” and not “marketing orientation” because its not JUST the marketing department doing steps 1, 2, & 3, it’s the ENTIRE firm.

So WHAT if the marketing department can listen to customers, monitor competition and disseminate that information across the firm.  If no other division takes advantage of the competitive intelligence, then the entire firm suffers.  If the marketing department doesn’t listen to operations or finance, how can one plan strategically?  By contrast, its “market orientation” because the entire firm and not just the marketing department is doing steps 1, 2, & 3.  It’s not the marketing department’s job to tell the firm to be orientated towards the marketplace, it’s the members of the C-suite (e.g., CEO, COO, CMO, CFO, CIO, C-etc.,) to tell the divisions of the firm to be market orientated.

Now what I think Jenny was getting at was two similar and somewhat related terms – –  “market-driven” and “market-driving.”  (Notice, the word is still “market” and not “marketing”)

A firm that is market-driven seeks to understand current customer needs and wants and finds ways to fulfill them. This term is very similar to market orientation.  Where as market orientation is a philosophy, market-driven is a verb.  Southwest Airline is a good example of a firm that understands passengers want to spend little time in the gate area, get on and off a plane as quickly as possible, and obtain luggage without delays. By contrast, a market-driving firm seeks to fulfill needs that the consumer does not realize exist or is possible.  A market-driving firm is often more market orientated then most but not fully as it violates/ignores item #1 above.  Apple a good example of this and Apple changed the way consumers look at computers when it introduced the iPad. It created a new market.

Please let me know what you think.

Best

Dr. Dan-o

 

 

Jenny Zhang says:

Hi Professor,

I was thinking that you are going to talk about the iphone4s, lol.

Actually, I didn’t find it disappointed because there is no iphone5. Personally I feel that Apple is trying to bring in more user-friendly and helpful tools/apps to the apple family rather than bringing forward a new look of iPhone. Siri is a big surprise to me. To some extent, I feel that people are looking for some appearance/ shape changes of iPhone, if that happens, many people will possibly say that this product is revolutionary.

In addition, I remember you used to mention about the differences between a marketing-oriented and market-oriented company. This time, I feel that Apple is a marketing oriented company rather than a market-oriented one. Every new app roll-out and operation system’s upgrade is driven by the extensive research of consumers’ behaviors, expectations and needs. Based on the marketing research, there is new strategy to create brand new products that competitors don’t have. Apple is different from its competitors because it has always been creating the new markets for the consumers, e.g. iPod, iPhone and iPad, while its competitors have been trying to satisfy consumers and competing in an established market. If I was right, you said that it is important to be a market-oriented company, rather than a marketing-oriented one.

I am not sure if I understand it in the right way, so, what’s your thoughts?

Thanks.

Jenny Zhang