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k e t d riv e n . H o w e v e r, o u r s tu d y o f 2 5 p io n e e rin g v a tio n o f s u c c e s s fu l m a r k e t d r iv in g in n o v a tio n s .
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d e n ts o f In d ia w h o w e r e b lin d a s a r e s u lt o f c a ta r a c ts .
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la tio n w ith s ta te -o f-th e -a r t fa c ilitie s o r c h a r ita b le h o s -
te m . M a rk e t d riv in g s tra te g ie s e n ta il h ig h ris k , b u t
p it a ls t h a t s e r v e d t h e p o o r , v a s t m a jo r it y o f t h e p o p u -
a l s o o f f e r a fi r m t h e p o t e n t i a l t o r e v o l u t i o n i z e a n
la tio n w ith in a d e q u a te , o u t-d a te d , o v e r c r o w d e d
in d u s try a n d re a p v a s t re w a rd s . A lth o u g h e s ta b -
fa c ilitie s . In a d d itio n , m o s t o f th e p o o r , w h o r e s id e
lis h e d c o m p a n ie s fa c e fo u r m a jo r o b s ta c le s in
in th e c o u n tr y s id e , w e r e u n a b le to a c c e s s m o s t h o s p i-
d e v e lo p in g a n d la u n c h in g ra d ic a l m a rk e t d riv in g
ta ls , w h ic h w e r e u s u a lly lo c a te d in u r b a n a r e a s .
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to h e lp e s ta b lis h e d c o m p a n ie s o v e rc o m e th e s e
o b s t a c l e s a n d b e c o m e m o r e m a r k e t d r i v i n g . ©2 0 0 0 T o im p le m e n t h is v is io n o f g iv in g e y e s ig h t to th e
E ls e v ie r S c ie n c e L td . A ll rig h ts re s e rv e d b lin d , r e g a r d le s s o f a b ility to p a y , D r V e n k a ta s w a m y
s e t u p h o s p ita ls in S o u th In d ia th a t s e r v e b o th th e
r ic h , w h o p a y fo r th e s ta te -o f-th e -a r t c a ta r a c t s u r g e r y ,
T h e v a lu e o f b e in g m a r k e t d r iv e n is u n q u e s tio n e d in a n d th e p o o r , w h o r e c e iv e a lm o s t id e n tic a l s e r v ic e s
c o m p a n ie s to d a y . C u r r e n t p r a c tic e d ic ta te s th a t s u c - fo r fr e e . T h e s a le s fo r c e , a d v e r tis in g , a n d p r o m o tio n
c e s s s ta r ts w ith c a r e fu l m a r k e t r e s e a r c h , in v e s tig a tin g o f A r a v in d E y e H o s p ita l fo c u s o n a ttr a c tin g fr e e
th e c u s to m e r s ’ n e e d s , a n d d e v e lo p in g d iffe r e n tia te d r a th e r th a n p a y in g p a tie n ts . F o r e x a m p le , th e s a le s
p r o d u c t s o r s e r v i c e s f o r a w e l l - d e fi n e d s e g m e n t . V a r i - fo rc e h a s a n n u a l ta rg e ts fo r th e n u m b e r o f fre e
o u s e x c e l l e n t c o m p a n i e s s u c h a s N e s t l e´ , P r o c t e r & p a tie n ts th e y m u s t g e n e r a te ; w e e k ly ‘s a le s m e e tin g s ’
G a m b le , a n d U n ile v e r e ffe c tiv e ly e m p lo y th is m a r k e t m o n ito r in d iv id u a l p e r fo r m a n c e to w a r d s th e s e ta r -
d r iv e n a p p r o a c h . H o w e v e r , m a n y s u c c e s s fu l p io n - g e ts . A r a v in d ’s s o p h is tic a te d s a le s p e o p le s c o u r th e
e e r in g c o m p a n ie s , w h o h a v e c r e a te d n e w m a r k e ts In d ia n c o u n tr y s id e lo o k in g fo r p o o r p a tie n ts w ith in
a n d r e v o lu tio n iz e d e x is tin g in d u s tr ie s th r o u g h r a d ic a l th e ir a s s ig n e d te r r ito r ie s a n d th e n tr a n s p o r t th e m to
b u s in e s s in n o v a t io n lik e A m a z o n .c o m , B o d y S h o p , th e h o s p ita l a t n o c o s t to th e p a tie n t. T h in k w h a t c u s -
C N N , IK E A , S ta rb u c k s , a n d S w a tc h , a re b e tte r to m e r s a tis fa c tio n m u s t b e lik e a m o n g th e s e p o o r
d e s c r ib e d a s m a r k e t d r iv in g . A lth o u g h m a r k e t d r iv in g p a tie n ts w h o r e g a in th e ir a b ility to s e e — fo r fr e e !
in v o lv e s in h e r e n tly h ig h r is k a n d m a n y w o u ld -b e B y fo c u s in g o n e y e c a r e a n d r o u tin iz in g p r o c e d u r e s ,
m a r k e t d r iv e r s fa il s p e c ta c u la r ly , w h e n m a r k e t d r iv - A r a v in d ’s s u r g e o n s a r e s o p r o d u c tiv e th a t th is n o n -
in g s tr a te g ie s a re s u c c e s s fu lly d e v is e d a n d p r o fi t o r g a n i z a t i o n h a s a g r o s s m a r g i n o f 5 0 p e r c e n t
im p le m e n te d th e y r e w r ite in d u s tr y r u le s a n d o ffe r d e s p ite th e fa c t th a t o v e r 6 5 p e r c e n t o f th e p a tie n ts
th e p o te n tia l to r e a p v a s t r e w a r d s . B y s tu d y in g th e s e r v e d d o n o t p a y ! A n d u n l i k e m o s t n o n p r o fi t
e le m e n ts th a t c o n tr ib u te to th e s u c c e s s o f th e s e m a r - o r g a n iz a tio n s in th e d e v e lo p in g w o r ld , it is n o t

European Management Journal Vol 18 No 2 April 2000 1 2 9

F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

d e p e n d e n t o n d o n a tio n s a n d a tte m p ts to m a x im iz e a p le a s a n t s h o p p in g a tm o s p h e r e , a n d lo w p r ic e s ,
th e n u m b e r o f fr e e p a tie n ts s e r v e d . w h ile a s k in g th e c o n s u m e r in r e tu r n to e n g a g e in s e lf-
s e r v ic e , s e lf-a s s e m b ly , a n d s e lf-tr a n s p o r ta tio n , o fte n
W h a t A r a v in d E y e H o s p ita l s h a r e s w ith o th e r m a r k e t fr o m p e r ip h e r a l lo c a tio n s . T h is w a s a d r a m a tic a lly
d r i v i n g fi r m s s u c h a s A m a z o n . c o m , B e n e t t o n , B o d y d iffe r e n t v a lu e p r o p o s itio n fr o m th e tr a d itio n a l, fu ll
S h o p , C h a r le s S c h w a b , C lu b M e d , C N N , D e ll, F e d E x , s e r v ic e , e x p e n s iv e , h ig h s tr e e t fu r n itu r e s to r e . A s F ig -
H e n n e s a n d M a u r itz , IK E A , S A P , S o n y , S o u th w e s t u r e 2 in d ic a te s , r a th e r th a n p la y in g o n th e e x is tin g
A ir lin e s , S ta r b u c k s , S w a tc h , T e tr a P a k , V ir g in , a n d in d u s tr y is o -v a lu e l i n e , m a r k e t d r i v i n g fi r m s s u c h a s
W a l-M a r t is th e in a b ility o f th e m a r k e t d r iv e n IK E A d e liv e r a d is c o n tin u o u s le a p in c u s to m e r v a lu e .
a p p r o a c h to e x p la in th e ir s u c c e s s . T h e s e m a r k e t d r iv -
i n g fi r m s d i d n o t u s e t r a d i t i o n a l m a r k e t r e s e a r c h t o T h e le a p in c u s to m e r v a lu e p r o v id e d b y m a r k e t d r iv -
d e v is e th e ir p a th -b r e a k in g s tr a te g ie s th a t c h a lle n g e i n g fi r m s m a y i n v o l v e e i t h e r b r e a k t h r o u g h t e c h -
th e s ta tu s q u o . M a r k e t r e s e a r c h , w h ile u s e fu l in g e n e r - n o lo g y o r b r e a k th r o u g h m a r k e tin g . T h e s u c c e s s o f
a tin g in c r e m e n ta l in n o v a tio n , s e ld o m le a d s to b r e a k - B o d y S h o p , F e d E x , S ta rb u c k s , a n d e v e n C N N a n d
th r o u g h in n o v a tio n s .2 T h e in s p ir a tio n f o r th e r a d ic a l W a l-M a r t is le s s a b o u t n e w te c h n o lo g y th a n a b o u t
b u s i n e s s i d e a s o f t h e s e m a r k e t d r i v i n g fi r m s c a m e a g g r e s s iv e ly e x p lo itin g e x is tin g te c h n o lo g y to s e e th e
fr o m a v is io n a r y s u c h a s D r V e n k a ta s w a m y , A n ita m a r k e tp la c e d iffe r e n tly a n d to s e r v e th e c u s to m e r in
R o d d ic k o f B o d y S h o p , o r R ic h a r d B r a n s o n o f V ir g in a n u n c o n v e n tio n a l m a n n e r . T h e k e y to th e s u c c e s s
w h o s a w th e w o r ld d iffe r e n tly a n d w h o s e v is io n o f t h e s e m a r k e t d r i v i n g fi r m s i s t h a t t h e y c r e a t e a n d
a d d r e s s e d s o m e d e e p -s e a te d , la te n t, o r e m e r g in g d e l i v e r a l e a p i n b e n e fi t s , w h i l e r e d u c i n g t h e s a c r i -
n e e d o f th e c u s to m e r . R a th e r th a n fo c u s in g o n fi c e s a n d c o m p r o m i s e s t h a t c u s t o m e r s m a k e t o
o b ta in in g m a r k e t s h a r e in e x is tin g m a r k e ts , th e s e r e c e i v e t h o s e b e n e fi t s ( e . g . h a v i n g t o o r g a n i z e y o u r
m a r k e t d r iv e r s c r e a t e d n e w m a r k e t s ( e .g . C N N , F e d - s c h e d u le a r o u n d w h e n th e n e tw o r k s w is h to b r o a d -
e r a l E x p r e s s , S A P , T e t r a P a k ) o r r e d e fi n e d t h e c a t e - c a s t t h e n e w s ) ( S t a lk e t a l., 1 9 9 6 ) . T h e y c r e a t e a
g o r y in s u c h a fu n d a m e n ta l w a y th a t c o m p e tito r s p r o d u c t/ s e r v ic e e x p e r ie n c e th a t o v e r w h e lm s c u s -
w e r e r e n d e r e d o b s o le t e ( e .g . n o n e o f t h e t o p 1 0 d is - to m e r e x p e c ta tio n s a n d e x is tin g a lte r n a tiv e s . A s a
c o u n te r s o f 1 9 6 2 , th e y e a r W a l-M a r t w a s b o r n , a r e in r e s u lt, th e la n d s c a p e o f th e in d u s tr y is s u b s ta n tia lly
b u s i n e s s t o d a y ) . 3 U l t i m a t e l y , t h e s e fi r m r e v o l- a lte r e d .
u tio n iz e d th e ir in d u s tr ie s b y c h a n g in g th e r u le s o f th e
g a m e a n d ‘d r iv in g ’ th e ir m a r k e ts . B u s in e s s s y s te m r e fe r s to th e c o n fi g u r a tio n o f th e
v a r io u s a c tiv itie s r e q u ir e d to c rea te, p ro d u c e, a n d
O u r r e s e a r c h in d ic a te s th a t th e s u c c e s s o f m a rk e t d e liv e r th e v a lu e p r o p o s itio n to th e c u s to m e r. IK E A
d r iv in g fi r m s i s b a s e d i n r a d i c a l i n n o v a tio n o n tw o c o u ld n o t d e liv e r its d is c o n tin u o u s v a lu e p r o p o s itio n
d im e n s io n s — a d is c o n tin u o u s le a p in th e v a lu e b y ju s t im p r o v in g o n t h e e x is t in g b u s in e s s s y s te m o f
p ro p o s itio n a n d th e im p le m e n ta tio n o f a u n iq u e b u s i- th e tr a d itio n a l fu r n itu r e s to r e (s e e F ig u r e 3 ) .5
n e s s s y s te m ( s e e F ig u r e 1 ) .4 V a lu e p r o p o s itio n r e fe r s
to th e c o m b i n a t i o n o f b e n e fi t s , a c q u i s i t i o n e ffo r ts /c o s ts , T r a d itio n a l fu r n itu r e c h a n n e ls w e r e b e s e t b y e x p e n s -
a n d p r ic e o ffe r e d to c u s to m e r s . F o r e x a m p le , IK E A iv e in d e p e n d e n t d e s ig n e r s , h ig h w o r k -in -p r o g r e s s
o ffe rs t h e b e n e fi t s o f c l e a n S c a n d i n a v i a n d e s ig n a n d in v e n to r y , la b o r in te n s iv e h a n d ic r a ft m a n u fa c tu r in g ,
im a g e , tr e m e n d o u s a s s o r tm e n t, im m e d ia te d e liv e r y ,

Figure 1 Types of Strategic Innovation Figure 2 Leap in Customer Value

1 3 0 European Management Journal Vol 18 No 2 April 2000

 F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

Figure 3 Unique Business System

c o n s i d e r a b l e t r a n s p o r t a t i o n a n d i n v e n t o r y o f fi n i s h e d tu r in g s y s te m s a n d u n h a p p y , b y p a s s e d c h a n n e l
g o o d s , fr a g m e n te d m a r k e tin g , c o s tly h ig h s tr e e t r e ta il m e m b e r s . In th e a b s e n c e o f a u n iq u e b u s in e s s s y s te m ,
lo c a tio n s , e la b o r a te d is p la y s , a n d e x p e n s iv e d e liv e r y a n y a d v a n ta g e g a in e d fr o m a d is c o n tin u o u s le a p in
to th e c o n s u m e r . T o d e liv e r th e d is c o n tin u o u s le a p th e v a lu e p r o p o s itio n c a n b e c o p ie d fa ir ly q u ic k ly b y
i n c u s t o m e r v a l u e , I K E A h a d t o r a d i c a l l y r e c o n fi g u r e e x i s t i n g p l a y e r s . T h e r e f o r e , m a r k e t d r i v i n g fi r m s w h o
th e in d u s tr y b u s in e s s s y s te m . IK E A ’s u n iq u e b u s i- c h a n g e th e r u le s o f th e g a m e a r e th o s e th a t in n o v a te
n e s s s y s te m u s e s c o s t-c o n s c io u s in -h o u s e d e s ig n , o n b o th d im e n s io n s o f F ig u r e 1 . T h e u n iq u e b u s in e s s
in te r c h a n g e a b le p a r ts , h ig h v o lu m e c o m p o n e n t s y s te m c r e a te s a m o r e s u s ta in a b le a d v a n ta g e , a s it
m a n u fa c tu r in g , p a r ts in v e n to r y (r a th e r th a n m o r e ta k e s tim e fo r a w o u ld -b e c o m p e tito r to a s s e m b le th e
e x p e n s i v e fi n i s h e d p r o d u c t i n v e n t o r y ) , e x t e n s i v e in tr a o r g a n iz a tio n a l a n d in te r o r g a n iz a tio n a l p la y e r s
c o m p u te r iz a tio n o f lo g is tic s , its n a tu r a l S c a n d in a v ia n n e e d e d to r e p lic a te th a t u n iq u e s y s te m a r c h ite c tu r e .
im a g e , r e la tiv e ly in e x p e n s iv e p e r ip h e r a l lo c a tio n s ,
a n d s i m p l e d i s p l a y f a c i l i t i e s , l e a v i n g fi n a l t r a n s p o r - W e d e s c r i b e t h e s e fi r m s a s m a r k e t d r i v i n g f o r t h r e e
t a t i o n a n d a s s e m b l y t o t h e c o n s u m e r . T o p r o fi t a b l y r e a s o n s . F ir s t, m a r k e t d r iv in g c o m p a n ie s tr ig g e r
c o p y I K E A ’ s v a l u e p r o p o s i t i o n , fi r m s i n t h e t r a - in d u s tr y b r e a k p o in ts o r w h a t A n d y G r o v e o f In te l
d itio n a l fu r n itu r e c h a n n e l w o u ld n e e d to d is m a n tle c a l l s ‘ s t r a t e g i c i n fl e x i o n p o i n t s ’ w h i c h c h a n g e t h e f u n -
th e e x is tin g b u s in e s s s y s te m w h ile m ig r a tin g to a d a m e n ta ls o f th e in d u s tr y th r o u g h r a d ic a l b u s in e s s
n e w IK E A ty p e b u s in e s s s y s te m — a H e r c u le a n in n o v a tio n . S e c o n d , in s te a d o f b e in g in s p ir e d b y tr a -
ta s k in d e e d ! d itio n a l m a r k e t r e s e a r c h a s c o n v e n tio n a l w is d o m r e c -
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B e c a u s e th e v a lu e p r o p o s itio n is v is ib le in th e m a r - c o n c e p t u s u a lly c o m e s fr o m a v is io n a r y . T h ir d , r a th e r
k e tp la c e w h ile th e b u s in e s s s y s te m is h a r d e r to d is - th a n le a r n fr o m e x is tin g c u s to m e r s , th e y o fte n h a v e
c e r n , c o m p e tito r s o fte n m is s th e im p o r ta n c e o f th e to te a c h p o te n tia l c u s to m e r s to c o n s u m e th e ir d is c o n -
la tte r . F o r e x a m p le , D e ll d e liv e r s b u ilt-to -o r d e r c u s - tin u o u s v a lu e p r o p o s itio n .
to m iz e d P C s w h ic h in c o r p o r a te th e la te s t te c h n o lo g i-
c a l a d v a n c e s fa s te r th a n its c o m p e tito r s a n d a t T h e p la n o f th e p a p e r is a s fo llo w s . F ir s t, w e c o n tr a s t
r e a s o n a b le p r ic e s . T o d e liv e r th is v a lu e p r o p o s itio n , m a r k e t d r iv in g w ith th r e e o th e r p o s s ib le o r ie n ta tio n s
D e ll in v e n te d a r a d ic a lly d iffe r e n t b u s in e s s s y s te m t h a t a fi r m c a n h a v e t o w a r d s t h e m a r k e t p l a c e . W e
c o m b in in g m in im a l R & D e x p e n d itu r e s , m a d e -to - d e s c r i b e h o w m a r k e t d r i v i n g fi r m s c o m p e t e a n d s e i z e
o r d e r fl e x i b l e m a n u f a c t u r i n g s y s t e m s ( w h i c h g i v e a d v a n ta g e . T h e n , w e d is c u s s w h y m o s t m a r k e t d r iv -
th e m a s lig h t m a n u fa c tu r in g c o s t d is a d v a n ta g e ), o n e in g c o m p a n ie s a r e n e w e n tr a n ts to a n in d u s tr y a n d
w e e k o f in v e n to r y c o n s is tin g m o s tly o f p a r ts , m in i- e x p lo r e th e b a r r ie r s a n d r is k s th a t la r g e , e s ta b lis h e d
m a l e n d - u s e r a d v e r t i s i n g , a n d e f fi c i e n t d i r e c t d i s t r i - fi r m s f a c e i n s u c c e s s f u l l y d e v e l o p i n g a n d l a u n c h i n g
b u tio n c h a n n e ls . In c o n tr a s t, D e ll’s p r im a r y c o m p e ti- r a d ic a l m a r k e t d r iv in g in n o v a tio n s . F in a lly , w e c o n -
to r s , C o m p a q a n d IB M , h a v e h ig h R & D e x p e n d itu r e s , c lu d e w ith s o m e r e c o m m e n d a tio n s fo r h o w e s ta b -
la r g e r u n lo w v a r ie ty (b u t lo w c o s t) m a n u fa c tu r in g lis h e d c o m p a n ie s c a n b e c o m e m o r e m a r k e t d r iv in g .
s y s t e m s , o n e m o n t h o f m o s t l y fi n i s h e d g o o d s i n v e n -
to r y , e x te n s iv e e n d -u s e r a d v e r tis in g , a n d e x p e n s iv e
th ir d -p a r ty d is tr ib u tio n c h a n n e ls . W h e n C o m p a q a n d
IB M tr ie d to c o p y D e ll’s v a lu e p r o p o s itio n b y s e ttin g
H o w M a rk e t D riv in g F irm s S e iz e
u p th e ir o w n d ir e c t c h a n n e ls , th e ir e x is tin g b u s in e s s A d v a n ta g e
s y s t e m s p r o v e d t o o ‘ s t i c k y ’ t o d o s o p r o fi t a b l y . I t i s
d i f fi c u l t t o d e l i v e r c u s t o m i z e d p r o d u c t s a t c o m p e t i - M a r k e t d r iv in g c a n b e d is tin g u is h e d fr o m th r e e o th e r
tiv e p r ic e s w ith h ig h v o lu m e , lo w v a r ie ty m a n u fa c - o r ie n ta tio n s th a t a c o m p a n y c a n h a v e to w a r d s th e

European Management Journal Vol 18 No 2 April 2000 1 3 1

F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

m a r k e tp la c e : s a le s d r iv e n , m a r k e t d r iv e n , a n d c u s - a r y p r o d u c ts , c o n c e p ts , a n d te c h n o lo g ie s . C o n s id e r
to m e r d r iv e n . T h e s e fo u r c a te g o r ie s r e p r e s e n t id e a l th e e x p e r ie n c e o f S w a tc h . T h e S w a tc h m o d e ls th a t
ty p e s ; n o la r g e o r g a n iz a tio n a d o p ts a s in g le o r ie n - r e c e iv e d th e h ig h e s t in te n tio n to p u r c h a s e in c o n -
ta tio n th r o u g h o u t a ll o f its b u s in e s s u n its . A s a le s s u m e r r e s e a r c h w e r e th o s e th a t lo o k e d th e m o s t lik e
d r i v e n o r i e n t a t i o n c h a r a c t e r i z e s t h o s e fi r m s w h o tr a d itio n a l w a tc h e s . T h o s e w a tc h e s , h o w e v e r , u lti-
v ie w m a r k e tin g a s a to o l to s e ll w h a te v e r th e ir fa c - m a te ly g e n e r a te d v e r y fe w s a le s . In s te a d , th e m o r e
to r y p r o d u c e s . M a r k e tin g a n d s e llin g a r e in te r - r a d ic a lly d iffe r e n t S w a tc h m o d e ls , w h ic h w e r e r a te d
c h a n g e a b le in s u c h c o m p a n ie s .6 P u b lic u t ilit ie s , m o n - in tr a d itio n a l p r e la u n c h c o n s u m e r r e s e a r c h a s th e
o p o l i e s a n d s o m e l a r g e m a n u f a c t u r i n g fi r m s o f t e n le a s t lik e ly to b e b o u g h t, w e r e s u b s e q u e n tly th e b e s t
d is p la y a s a le s o r ie n ta tio n . M a r k e t d r iv e n c o m p a n ie s s e llin g o n e s . H a d S w a tc h b e e n g u id e d b y th a t m a r k e t
in s te a d p la c e th e c u s to m e r s a t th e s ta r t o f th e p r o c e s s r e s e a r c h , it w o u ld n o t h a v e b e e n a r u n a w a y s u c c e s s .
a n d th r o u g h c a r e fu l m a r k e t r e s e a r c h b u ild a p p r o p r i- S im ila r ly , c u s to m e r s w e r e n ’t c la m o r in g fo r S ta r b u c k s
a te p r o d u c ts fo r , a n d d e v e lo p th e d e s ir e d im a g e fo r , c o ffe e , C N N , o r o v e r n ig h t s m a ll p a c k a g e d e liv e r y
th e ir ta r g e t s e g m e n ts . M o s t s u c c e s s fu l c o n s u m e r p r io r to th e ir in tr o d u c tio n .
p a c k a g e d g o o d s c o m p a n ie s s u c h a s L ’O r e a l fa ll in
th is c a te g o r y . C u s to m e r d r iv e n c o m p a n ie s , o n th e M a r k e t d r i v i n g fi r m s i n s t e a d c o a l e s c e a r o u n d v i s i o n -
o th e r h a n d , ta r g e t ‘s e g m e n ts o f o n e ’ a n d d e liv e r c u s - a r ie s w h o s a w o p p o r tu n ity w h e r e o th e r s d id n o t —
t o m i z e d v a l u e c o n fi g u r a t i o n s t o e a c h c u s t o m e r . T h i s a n o p p o r t u n i t y t o fi l l l a t e n t , u n m e t n e e d s o r t o o f f e r
is s o m e tim e s r e fe r r e d to a s r e la tio n s h ip m a r k e tin g . a n u n p r e c e d e n te d le v e l o f c u s to m e r v a lu e . In o u r
T h e S w is s p r iv a te b a n k in g in d u s tr y , w h ic h s e r v e s r e s e a r c h w e d is c o v e r e d th a t g e n e r a tio n a n d d e v e lo p -
h ig h n e t w o r th in d iv id u a ls , is p o p u la te d w ith s e v e r a l m e n t o f ‘th e id e a ’ w a s a c o m b in a tio n o f s e r e n d ip ity ,
s u c h c u s t o m e r d r i v e n fi r m s . T a b l e 1 o u t l i n e s a n d in e x p e r ie n c e , a n d p e r s is te n c e . F o r e x a m p le , S ta r -
s u m m a r iz e s th e k e y d is tin c tio n s b e tw e e n th e s e fo u r b u c k s w a s fo u n d e d in 1 9 8 3 a fte r H o w a r d S c h u ltz ,
m a r k e tp la c e o r ie n ta tio n s o n v a r io u s e le m e n ts o f m a r - c h a r m e d b y th e Ita lia n c o ffe e c u ltu r e o f V e r o n a a n d
k e tin g s tr a te g y . M ila n , p r o m is e d to b r in g it to A m e r ic a . F r e q u e n tly ,
v is io n a r ie s ’ r e la tiv e in e x p e r ie n c e w ith th e in d u s tr y
G iv e n th e fo c u s o f th is p a p e r, w e c o n c e n tr a t e o n h o w m e a n t th e y h a d n o t y e t b e e n in o c u la te d w ith th a t
th e m a rk e t d r iv in g fi r m c o m p e te s . O u r in -d e p th in d u s tr y ’s r e c e iv e d w is d o m . N ik e ’s B o w e r m a n w a s
s tu d y o f 2 5 m a rk e t d r iv in g fi r m s in d ic a te s th a t t h e y a c o lle g e tr a c k c o a c h , C lu b M e d ’s G e r a r d B litz w a s a
s h a re c e r ta in c o m m o n fe a tu re s a s d e s c r ib e d b e lo w . d ia m o n d c u tte r , a n d In g v a r K a m p r a d , th e fo u n d e r o f
I K E A , b e g a n h i s e n t r e p r e n e u r i a l c a r e e r s e l l i n g fi s h .
O fte n , th e s e v is io n a r ie s p e r s is te d in th e fa c e o f m a n y
G u id e d b y V is io n R a th e r T h a n T ra d itio n a l f a ilu r e s a n d r e je c t io n s t o r e a liz e t h e d r e a m s u c h a s
M a rk e t R e s e a rc h F r e d S m ith o f F e d E x w h o d e v e lo p e d th e g u a r a n te e d
o v e r n ig h t d e liv e r y id e a in a b u s in e s s s c h o o l te r m
C o n s u m e rs a n d o r g a n iz a tio n b u y e r s a re e x c e lle n t a t p a p e r a s a ju n io r a t Y a le . H e r e c e iv e d a ‘C ’ f o r t h e
m o tiv a tin g a n d e v a lu a tin g in c r e m e n ta l in n o v a tio n . p a p e r b e c a u s e th e in s tr u c to r w a s n o t c o n v in c e d
H o w e v e r , c u s to m e rs a r e u s u a lly u n a b le to c o n c e p - a b o u t its p r a c tic a lity !7 S o m e s p e n t y e a r s m u d d lin g
tu a liz e o r re a d ily v is u a l i z e t h e b e n e fi ts o f re v o lu tio n - t h r o u g h r e fi n i n g t h e i r v i s i o n u n t i l e v e r y t h i n g c l i c k e d

Table 1 Four Orientations to Marketplace

Sales driven Market driven Customer driven Market driving

Marketing strategy Mass marketing (how to Differentiated marketing Relationship marketing Revolutionary marketing
sell?) (what image to build?) (who to serve?) (how to change the rules
of the game?)
Segmentation strategy Undifferentiated Market segments Segments of one Destroy industry
segmentation
Market research
‘Focus’ Market testing (how to Market sensing (what Customer sensing (what Forward sensing (how
sell it?) does the market want?) does this customer can the marketplace
want?) evolve)
‘Listen to’ R&D Voice of the market Voice of the customer Seeing differently
Price management Cost plus Perceived value Bundling/unbundling New price points
Sales management Sell products Sell image Sell solutions Customer education
Channel management Maximum coverage Product/market fit Multiplex systems Channel reconfiguration
Brand management Product superiority Broadcast for brand Dialogue for corporate Exploit ‘buzz network’
equity equity
Customer service Expense Tactical weapon Strategic weapon Overwhelm expectations
Product development New products Incremental innovation Integrating Radical innovation
product/service platforms

1 3 2 European Management Journal Vol 18 No 2 April 2000

 F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

a n d th e y p e r fe c te d th e ir s tr a te g ie s . W a l-M a r t’s in itia l s e r v ic e o ffe r in g a n d m a r k e tin g s tr a te g y . T h is c r e a te s

a tte m p ts w e r e u n d e r w h e lm in g . D a v id G la s s , to d a y h a v o c in th e in d u s try b y d e s tr o y in g th e s e g m e n ta tio n
th e C E O o f W a l-M a r t w a s a t th a t tim e e m p lo y e d w ith fo llo w e d b y th e in d u s try p r io r to th e m a rk e t d r iv e r ’s
a c o m p e tin g s to r e ; h e r e p o r te d ly o p in e d a fte r c h e c k - e n try a n d re p la c in g it w ith a n e w s e t o f s e g m e n ts
i n g o u t t h e fi r s t D i s c o u n t C i t y , ‘ T h o s e g u y s w i l l n e v e r r e fl e c t i n g t h e n e w , a lte r e d la n d s c a p e :
m a k e it .’ S a m W a lt o n c o n t in u e d t o t in k e r w it h t h e
fo r m u la u n til h e g o t it r ig h t. F e w o f th e s e v is io n a r ie s ϖ A r a v in d E y e H o s p ita l d id n o t a c c e p t th e n o r m a l
e x p e c te d th a t th e ir b u s in e s s id e a w o u ld a c h ie v e th e s e g m e n ta tio n b e tw e e n r ic h a n d p o o r p a tie n ts .
le v e l o f s u c c e s s th a t w a s u ltim a te ly a tta in e d . A s ϖ S o u th w e s t A ir lin e s d e s tr o y e d th e s e g m e n ta tio n
H a s s o P la ttn e r , th e c o -fo u n d e r o f S A P , o b s e r v e d : b e tw e e n g ro u n d tr a n s p o r ta tio n a n d a ir lin e s ,
‘W h e n p e o p le a s k h o w w e p la n n e d a ll th is , w e a ttr a c tin g m a n y w h o w o u ld n o t o th e r w is e h a v e
a n s w e r “ w e d id n ’t . I t ju s t h a p p e n e d ” ’( P la t t n e r , 1 9 9 6 ) . fl o w n a t a l l .
E v e n w h e n in d u s tr ie s a r e r e v o lu tio n iz e d , th e m a r k e t
d r i v e r m a y n o t b e p r o fi t a b l e o r s u c c e s s f u l i n t h e l o n g ϖ S w a tc h , w ith its c h e a p a n d fa s h io n a b le w a tc h e s ,
t e r m . F o r e x a m p le , A m a z o n .c o m h a s d r a m a t ic a lly b r id g e d th e c h a s m b e tw e e n th e s e g m e n ts fo r
a lte r e d th e la n d s c a p e in th e m a r k e tin g o f b o o k s , fo r c - c h e a p , u tilita r ia n w a tc h e s a n d e x p e n s iv e , fa s h io n -
in g in d u s tr y le a d e r s lik e B a r n e s a n d N o b le to v e n tu r e a b le o n e s .
in to e -ta ilin g , e v e n th o u g h A m a z o n h a s y e t to c o m e ϖ W a l-M a r t d e m o n s tr a te d th a t s m a ll r u r a l to w n s
n e a r a n o p e r a t i n g p r o fi t . c o u ld s u p p o r t h u g e d is c o u n t s to r e s w h ic h p r e -
v io u s ly h a d lo c a te d o n ly in la r g e u r b a n a r e a s .
B e c a u s e th e y a r e tr y in g to c h a n g e th e r u le s o f th e ϖ W h ile e x is tin g s o ftw a r e v e n d o r s c o n c e n tr a te d o n
g a m e a n d fa c e m a n y o b s ta c le s o n th e w a y to s u c c e s s , d e v e lo p in g d iffe r e n t s o ftw a r e p a c k a g e s fo r d iffe r -
m a r k e t d r iv in g c o m p a n ie s r e c r u it a n d s e le c t p e o p le e n t d e p a rtm e n ts ( e .g . m a n u f a c t u r in g , s a le s ,
w h o s u b s c r ib e to th e v a lu e s o f th e o r g a n iz a tio n . h u m a n r e s o u r c e s ), S A P d e s tr o y e d th e s e d is tin c -
T h e r e is o fte n a n a tte m p t to a ttr a c t th o s e w ith little tio n s b y d e v e lo p in g e n te r p r is e s o ftw a r e th a t c o u ld
e x p e r ie n c e in th e in d u s tr y , in d iv id u a ls w h o h a v e n o t in te g r a te a n d r u n th e e n tir e b u s in e s s .
b e e n in fu s e d w ith th e in d u s tr y ’s c o n v e n tio n a l w is -
d o m a b o u t w h y th e m a r k e t d r iv in g id e a is d o o m e d to
fa il. S u c h e m p lo y e e s a r e m o tiv a te d s tr o n g ly b y th e ir
b e lie f th a t th e y a r e o n a m is s io n , n o t s im p ly b y V a lu e C re a tio n T h ro u g h N e w P ric e P o in ts
m o n e y , a llo w in g th e m to ta p in to d e e p e r m o tiv -
T o d e liv e r a le a p in c u s to m e r v a lu e , m a r k e t d r iv in g
a tio n a l e n e r g ie s . A c o m p e llin g v is io n e n th u s ia s tic a lly
fi r m s e s t a b l i s h n e w i n d u s t r y p r i c e p o i n t s f o r t h e q u a l -
a r tic u la te d b y a c h a r is m a tic le a d e r tu r n s th e s e
ity o r s e r v ic e le v e ls th e y d e liv e r . S w a tc h , A r a v in d
e m p lo y e e s in to c r u s a d e r s :
E y e H o s p ita l, S o u th w e s t A ir lin e s , a n d C h a r le s
S c h w a b a ll s e t p r ic e s m u c h lo w e r th a n th o s e p r e -
ϖ S a m W a lto n b e lie v e d th a t W a l-M a r t s to r e s w o u ld v io u s ly a v a ila b le fo r s im ila r p r o d u c ts . T h is p u ts e x is t-
‘lo w e r t h e c o s t o f liv in g f o r e v e r y o n e , n o t ju s t in g c o m p e tito r s u n d e r tr e m e n d o u s p r e s s u r e . T h e
A m e r ic a ... w e ’ll g iv e t h e w o r ld a n o p p o r t u n it y t o c o m p e tito r s m u s t m a k e d r a m a tic c h a n g e s in o p e r -
s e e w h a t it’s lik e to s a v e a n d h a v e a b e tte r life s ty le , a tio n s a n d p r o d u c t lin e s to s u r v iv e , b u t th e y a r e
a b e tte r life fo r a ll’ e n e r g iz e d h is e m p lo y e e s . u n a b le to s w iftly m e e t th e c h a lle n g e b e c a u s e th e y
ϖ N in e ty p e r c e n t o f B o d y S h o p fr a n c h is e e s a r e c a n n o t q u ic k ly a n d s u c c e s s fu lly r e p r o d u c e th e in n o v -
w o m e n w h o h a v e n o fo r m a l b u s in e s s tr a in in g b u t a tiv e b u s in e s s s y s te m th a t e n a b le s th e lo w e r p r ic e
a r e in s te a d c h o s e n o n th e b a s is o f p e r s o n a lity te s ts , p o in t. C o n tin e n ta l le a r n e d th is th e h a r d w a y w h e n
h o m e v is its , a n d a ttitu d e s to w a r d s th e e n v ir o n - it tr ie d to c o m p e te a g a in s t S o u th w e s t A ir lin e s w ith
m e n t a n d p e o p le . T h e y a r e m o tiv a te d b y fo u n d e r ‘C o n tin e n ta l L ite ’:
A n ita R o d d ic k ’s id e a th a t th e y c a n m a k e a d iffe r -
e n c e in p e o p le ’s liv e s a n d in th e w o r ld th r o u g h ϖ W h e n S o u th w e s t A ir lin e s e n te r s a n e w c ity th e y
B o d y S h o p . p r ic e a g a in s t g r o u n d tr a n s p o r ta tio n a s m u c h a s
ϖ In th e e a r ly d a y s a t F e d E x , th e r e w e r e c o u r ie r s a g a in s t e x is tin g a ir s e r v ic e . T h is ty p ic a lly r e s u lts
w h o p a w n e d th e ir w a tc h e s to p a y fo r g a s o lin e . in p r ic e s a t le a s t 6 0 p e r c e n t b e lo w c o m p e titiv e
a ir fa r e s — s o m e tim e s o v e r 7 5 p e r c e n t lo w e r . F o r
S u c h h is to r ic , s o m e tim e s m y th ic , s to r ie s b e c o m e p a r t e x a m p le , S o u t h w e s t A ir lin e s c h a r g e d $ 1 5 .0 0 f o r a
o f th e o r g a n iz a tio n a l c u ltu r e o f m o s t m a r k e t d r iv - tr ip fr o m D a lla s to S a n A n to n io w h e n B r a n iff, th e
i n g fi r m s . n e x t m o s t in e x p e n s iv e c o m p e tito r , w a s c h a r g in g
$ 6 2 .0 0 . A s h a r e h o ld e r a s k e d t h e C E O , ‘C o u ld y o u
n o t r a is e th e p r ic e tw o o r th r e e d o lla r s ? ’ a n d
R e -d ra w In d u s try S e g m e n ta tio n r e c e iv e d th e r e s p o n s e , ‘W e a r e n o t c o m p e tin g
a g a in s t o t h e r a ir lin e s b u t g r o u n d t r a n s p o r t a t io n .’
B y a ttr a c tin g th e ir c u s to m e r s fr o m a v a r ie ty o f p r e - ϖ S w a tc h a d o p te d a s im p le in tr o d u c to r y p r ic in g
v i o u s l y - d e fi n e d m a r k e t s e g m e n t s , a n e w m a rk e t s tr a te g y — $ 4 0 in U n ite d S ta te s , 5 0 C H F in S w itz -
c o a l e s c e s a r o u n d t h e m a r k e t d r i v i n g fi r m ’ s p r o d u c t - e r la n d , 6 0 D M in G e r m a n y , a n d 7 0 0 0 y e n in

European Management Journal Vol 18 No 2 April 2000 1 3 3

F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

Ja p a n — a n d k e p t th o s e p r ic e s u n c h a n g e d fo r th e B o e in g 7 3 7 s , r e d u c in g th e c o s ts o f m a in te n a n c e
fi r s t 1 0 y e a r s d e s p i t e h i g h d e m a n d . a n d p ilo t tr a in in g . F u r th e r m o r e , S o u th w e s t A ir -
lin e s d o e s a ll o f its o w n tic k e tin g a n d d o e s n o t
W h ile th e tr e n d is to w a r d s h ig h e r p e r fo r m a n c e a t m a k e s e a ts a v a ila b le th r o u g h th e s ta n d a r d in d u s -
lo w e r p r i c e p o i n t s , t h e r e a r e m a r k e t d r i v i n g fi r m s tr y c o m p u te r iz e d r e s e r v a tio n s y s te m s lik e S a b r e
w h o h a v e e s ta b lis h e d e le v a te d p r ic e p o in ts th a t a r e a n d A p o llo . A s a r e s u lt, o n ly 5 5 p e r c e n t o f
h ig h e r th a n ty p ic a l in a n in d u s tr y . C N N , S ta r b u c k s , S o u th w e s t’s tic k e ts a r e s o ld th r o u g h tr a v e l a g e n ts
a n d F e d E x s e t p r ic e s c o n s id e r a b ly a b o v e w h a t c u s - c o m p a r e d to 9 0 p e r c e n t fo r th e in d u s tr y , a d d in g
to m e r s h a d b e e n p a y in g . In d u c in g th e b u y e r to p a y u p to s u b s ta n tia l s a v in g s o n tr a v e l a g e n ts ’ c o m -
th e s e h ig h e r p r ic e s r e q u ir e s th a t th e s e m a r k e t d r iv in g m is s io n s .
fi r m s h a v e a v a l u e p r o p o s i t i o n t h a t i s s i g n i fi c a n t l y ϖ B e n n e to n h a s s e t u p a u n iq u e s y s te m w h e r e th e y
m o r e c o m p e llin g th a n th e a v a ila b le a lte r n a tiv e s . s u b c o n tr a c t s im p le , n o n -e s s e n tia l ta s k s . O n ly c r u -
c ia l q u a lity -m a in te n a n c e ta s k s s u c h a s d y e in g a r e
d o n e in -h o u s e . F u r th e r m o r e , b y k n ittin g p r o d u c ts
S a le s G ro w th T h ro u g h C u s to m e r E d u c a tio n p r io r to d y e in g r a th e r th a n v ic e v e r s a th e y c a n
r e s p o n d fa s te r to s a le s d a ta th a n th e r e s t o f th e
G iv e n th e r a d ic a l n e w c o n c e p t, th e s a le s ta s k fo r m a r - in d u s tr y .
k e t d r iv in g fi r m s is n o t to s e ll b u t ra th e r to e d u c a te ϖ W a l-M a r t r e v o lu tio n iz e d m a n u fa c tu r e r – r e ta ile r
th e c u s to m e r o n th e e x is te n c e o f, a n d h o w to c o n - r e la tio n s h ip s b y ‘fo r c in g ’ P r o c te r & G a m b le a s
s u m e , th e ir ra d ic a l v a lu e p ro p o s itio n : w e ll a s its o th e r s u p p lie r s to r a tio n a liz e th e ir p r o -
d u c t lin e s , a d o p t E v e r y d a y L o w P r ic e s , e lim in a te
ϖ A r a v in d E y e H o s p ita l h a s to c o n tin u o u s ly e d u c a te w h o le s a le r s , p r e s e n t o n e in v o ic e p e r c o m p a n y ,
its ‘fr e e ’ p a tie n ts , w h o a r e p r e d o m in a n tly illite r a te , a n d e s ta b lis h e le c tr o n ic lin k s w ith th e ir s to r e s
th a t th e ir v is io n c a n in fa c t b e r e s to r e d a n d th a t (K u m a r , 1 9 9 6 ). T h is h e lp e d e lim in a te c o n s id e r a b le
th e n e c e s s a r y s u r g e r y is a v a ila b le to th e m fr e e o f c o s ts in th e v a lu e c h a in .
c h a rg e .
ϖ I K E A h a d t o t e a c h c o n s u m e r s t h e b e n e fi t s o f t r a n s -
p o r tin g fu r n itu r e c o m p o n e n ts h o m e fo r s e lf- B r a n d A tta c h m e n t b y C a p ita liz in g o n th e ‘B u z z
a s s e m b ly in s te a d o f b u y in g it p r e -a s s e m b le d a n d N e tw o rk ’
d e liv e r e d . W h e n IK E A e n te r e d S w itz e r la n d , th e y
r a n a d v e r t is e m e n t s w h ic h jo k e d a b o u t t h e S w is s M a r k e t d r i v i n g fi r m s o f t e n p l a c e g r e a t e r r e l i a n c e o n
u n w illin g n e s s to tr a n s p o r t a n d a s s e m b le fu r n itu r e , th e ‘b u z z n e tw o r k ’ to g e t th e ir m e s s a g e a c r o s s .
e v e n fo r lo w e r p r ic e s . T h e a d v e r tis e m e n ts p o k e d B e c a u s e t h e s e fi r m s o f f e r a l e a p i n c u s t o m e r v a l u e ,
fu n a t th e s e lf-d e liv e r y a n d s e lf-a s s e m b ly a s p e c ts th e ir c u s to m e r s a r e d e lig h te d a n d e a g e r to n o tify
s a y in g ‘T h a t is a s tu p id th in g ’ a n d ‘Y o u c a n ’t d o o t h e r s a b o u t t h e i r ‘ fi n d . ’ R e p o r t e r s i n t r a d e p u b l i -
t h a t t o t h e S w is s .’ c a tio n s a n d th e p o p u la r p r e s s a ls o o fte n p u b lic iz e th e
r a d ic a l n e w in n o v a tio n . T h e c o m m itm e n t a n d
e n th u s ia s m o f e a r ly a d o p te r s a n d o p in io n le a d e r s
g e n e r a te s e x c ite m e n t a n d a n in ta n g ib le b r a n d c a c h e t
C h a n n e l R e c o n fi g u r a t i o n
t h a t t h e m a r k e t d r i v i n g fi r m s t r i v e s t o m a i n t a i n .
In a lm o s t e v e r y m a r k e t d r i v i n g fi r m , c h a n n e l r e c o n - C o n s e q u e n t l y , m a r k e t d r i v e r s d o n ’ t fi n d i t a s n e c e s -
fi g u r a t i o n a p p e a r s t o p la y a c r itic a l r o le in g e n e r a tin g s a r y to s p e n d a lo t o f m o n e y o n tr a d itio n a l a d v e r tis -
th e a r c h ite c tu r a l in n o v a tio n th a t r e s u lts in a u n iq u e in g ; th e ir a d v e r tis in g -to -s a le s r a tio is o fte n le s s th a n
b u s in e s s s y s te m . M a r k e t d r i v i n g fi r m s h a v e u n l e - th a t o f th e ir e s ta b lis h e d c o m p e tito r s :
a s h e d a w id e r a n g e o f in n o v a tiv e d is tr ib u tio n a n d
c h a n n e l m a n a g e m e n t p r a c tic e s w ith in th e ir in d u s - ϖ B e n e tto n is a c la s s ic e x a m p le o f a m a r k e t d r iv in g
tr ie s : fi r m le v e r a g in g its c o n tr o v e r s ia l a d v e r tis in g to
g e n e r a te lo a d s o f fr e e p u b lic ity a n d d e v e lo p a n
ϖ F e d E x tr a n s p o r te d p a c k a g e s u s in g its o w n p la n e s im a g e w h ic h a r o u s e s s tr o n g fe e lin g s a m o n g b o th
v ia a ‘h u b a n d s p o k e s ’ a ir fr e ig h t s y s te m r a th e r th o s e w h o lo v e a n d th o s e w h o h a te th e m .
t h a n t h e ‘ p o i n t - t o - p o i n t ’ c o m m e r c i a l fl i g h t s u s e d ϖ S o u th w e s t A ir lin e s b o a s ts ‘W e h a v e a lo t o f
b y c o m p e tito r s s u c h a s E m e r y . T h e r e s u lt w a s th a t a m b a s s a d o r s o u t t h e r e , o u r C u s t o m e r s .’ E v e r y
F e d E x w a s tw ic e a s lik e ly a s E m e r y to d e liv e r a y e a r r e p r e s e n ta tiv e s fr o m d o z e n s o f c itie s b e g
p a c k a g e o n tim e . S o u th w e s t to la u n c h s e r v ic e s in th e ir c itie s .
ϖ O n th e o th e r h a n d , S o u th w e s t A ir lin e s d o e s n o t ϖ A 1 9 5 8 1 3 -p a g e L ife m a g a z in e p h o to s p r e a d o n
e m p lo y th e h u b a n d s p o k e s y s te m u s e d b y th e r e s t C lu b M e d le d to m a n y m o r e c u s to m e r s th a n
o f th e p a s s e n g e r a ir lin e in d u s tr y , b u t r a th e r c o n - c a p a c i t y . I n 1 9 6 2 , 1 2 y e a r s a f t e r t h e fi r s t v i l l a g e ,
c e n t r a t e s o n p o i n t - t o - p o i n t s h o r t h a u l fl i g h t s . t h e y t u r n e d a w a y m o r e t h a n a 1 0 0 ,0 0 0 a p p lic a n t s
S o u t h w e s t fl i e s i n t o m a j o r c i t i e s ’ l e s s c o n g e s t e d a s t h e y c o u ld o n ly a c c o m m o d a t e 7 0 ,0 0 0 m e m b e r s .
s m a lle r a ir p o r ts w h ic h im p r o v e s th e ir o n -tim e p e r - ϖ N ik e d id n ’t r u n a s in g le n a tio n a l te le v is io n a d
f o r m a n c e v i s - a` - v i s m a j o r c a r r i e r s . T h e y u s e d o n l y u n til th e y h a d 1 b illio n d o lla r s in s a le s . P h il K n ig h t

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 F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

o b s e r v e s th e y in s te a d ‘u s e d w o r d -o f-fo o t a d v e r tis - th e ir h e a d , m a r k e t d r iv in g c o m p a n ie s a r e u s u a lly

in g ’ b y g e ttin g t h e b e s t a th le te s to w e a r th e ir p r o - n e w e n tr a n ts to th e in d u s tr y .9 O f te n , th e m a r k e t d r iv -
d u c ts . in g id e a s w e r e a v a ila b le t o , b u t r e je c t e d b y , in c u m -
ϖ V ir g in ’s R ic h a r d B ra n s o n g e n e ra te s c o n s ta n t fre e b e n ts :
p re s s th ro u g h h is h o t a ir b a llo o n e x p e d itio n s ,
h ig h ly p u b lic m e d ia w a rs a g a in s t th e e s ta b lis h e d ϖ S a m W a lto n , o r ig in a lly a B e n F r a n k lin fra n c h is e e ,
p la y e r s (s u c h a s h a v in g a ll p la n e s p a in te d w ith a h a d h is id e a fo r s ta r tin g b ig s to r e s in s m a ll to w n s
b a n n e r a g a in s t t h e p ro p o s e d B A – A A m e rg e r) a n d tu rn e d d o w n b y th e B e n F r a n k lin fr a n c h is e .
e v e n m a k in g p u b lic a p p e a ra n c e s in ‘d r a g .’ ϖ M a n y m a jo r s h o e m a n u fa c t u r e r s r e je c t e d th e ru n -
n in g s h o e c o n c e p t, w h ic h la te r w a s im p le m e n te d
b y N ik e .
O v e rw h e lm C u s to m e r E x p e c ta tio n s ϖ S A P w a s fo rm e d b y e x -IB M e m p lo y e e s a fte r IB M
G e rm a n y re fu s e d th e ir r e q u e s t to d e v e lo p
M a rk e t d r i v i n g fi rm s e x c e e d e x is tin g c u s to m e r e x p e c - e n te r p r is e s o ftw a re fo r IC I.
ta tio n s w h ic h a re ty p ic a lly fo rm e d th ro u g h p a s t
in te r a c tio n s w ith c o m p e tito r s o r e x is tin g a lte rn a tiv e s . W h y d o s u c c e s s fu l in c u m b e n t s fi n d it s o d i f fi c u l t t o
P a rt o f th e le a p in c u s to m e r v a lu e c o m e s fro m a c h ie v e th e c o m b in a tio n o f r a d ic a l in n o v a tio n in b o th
d e liv e r in g s e r v ic e a t le v e ls fa r a b o v e w h a t c o n s u m e rs v a lu e p r o p o s itio n a n d b u s in e s s s y s te m ? P r im a r ily
e x p e c t fo r th e m a rk e t d r iv e r ’s p r ic e : b e c a u s e fo u r fe a tu re s o f m a rk e t d r iv in g id e a s m a k e
th e ir m a n a g e m e n t p ro b le m a tic f o r fi r m s w ith w e ll-
ϖ T h e p o o r p a tie n ts o f A r a v in d E y e H o s p ita l n e v e r e s ta b lis h e d n e w b u s in e s s d e v e lo p m e n t p r o c e s s e s in
e x p e c te d to r e g a in th e ir s ig h t, a s u n d e r n o r m a l c ir - p la c e .
c u m s ta n c e s a n o p e r a tio n w o u ld b e o u t o f th e ir
g e o g r a p h ic a l, e c o n o m ic , a n d p s y c h o lo g ic a l r e a c h . F ir s t, m a r k e t d r iv in g id e a s a r e m a v e r ic k in n a tu r e .
ϖ B e c a u s e o th e r d is c o u n te r s lo w e r c u s to m e r s ’ e x p e c - T h e r e is a d e g r e e o f s e r e n d ip ity in th e p r o c e s s . It is
ta tio n s b y p r o v id in g s u c h p o o r s e r v ic e , W a l-M a r t o fte n n o t p o s s ib le to p r e d ic t w h e r e in th e o r g a n iz a -
is p e r c e iv e d a s p r o v id in g g r e a t v a lu e d e s p ite its tio n s u c h a n id e a w ill a r is e o r w h o w ill g e n e r a te s u c h
r a th e r lim ite d s e r v ic e . In H o u s to n , a n u m b r e lla - a n id e a . H o w e v e r , s in c e m o s t c o m p a n ie s a r e
w ie ld in g s e r v ic e r e p w a lk s c u s to m e r s to th e ir c a r s o r g a n i z e d f o r e f fi c i e n c y , s u r p r i s e s a r e s e e n a s n e g a -
w h e n it is r a in in g a t b o th W a l-M a r t’s d is c o u n t tiv e e v e n ts .1 0 F u r th e r m o r e , in d iv id u a ls o fte n fe e l
s to r e a n d S a m ’s C lu b . T h is le v e l o f s e r v ic e is b y a p r e s s u r e to h id e m a r k e t d r iv in g id e a s a s th e y r e b e l
w a r e h o u s e c lu b th a t o p e r a te s o n s lim 1 0 p e r c e n t a g a in s t th e p r e v a ilin g in d u s tr y a n d in c u m b e n t w is -
g r o s s m a r g in s ! N o w o n d e r a ty p ic a l W a l-M a r t c u s - d o m . T h e v a s t in d u s tr y e x p e r ie n c e o f e s ta b lis h e d
to m e r v is its W a l-M a r t 3 2 tim e s a y e a r c o m p a r e d fi r m s t h e r e f o r e b e c o m e s a b a r r i e r t o b e i n g m a r k e t
to a lo y a l K m a r t c u s to m e r w h o s h o p s o n ly 1 5 d r i v i n g . I t i s d i f fi c u l t t o u n l e a r n r e c e i v e d w i s d o m
tim e s p e r y e a r a t K m a r t. th a t h a s b e c o m e ir r e le v a n t a s th e fu n d a m e n ta ls o f th e
ϖ F e d E x c o n s ta n tly le d its c u s to m e r s to e v e r h ig h e r in d u s tr y s h ift (H a m e l a n d P r a h a la d , 1 9 9 4 ). A n
e x p e c ta tio n s fo r q u ic k d e liv e r y tim e s , le a v in g o b s e s s io n w ith h is to r y — o r e v e n th e p r e s e n t — c a n
c o m p e tito r s s tr u g g lin g to m e e t th e s p ir a lin g p r e v e n t a fi r m f r o m g r a s p i n g a n d s h a p i n g t h e f u t u r e .
d e m a n d s . C u r r e n t m a r k e t le a d e r s o fte n te n d to d is c a r d m a v e r -
ic k id e a s fr o m in s id e o r fr o m o u ts id e th e c o m p a n y
ϖ T w e lv e tim e s b e tw e e n 1 9 8 7 a n d 1 9 9 3 , lo w -p r ic e d
t h a t d o n ’ t fi t t h e p r e v a i l i n g i n d u s t r y w i s d o m . B o r -
S o u t h w e s t w o n t h e u n o f fi c i a l ‘ t r i p l e c r o w n ’ o f t h e
d e r s , fo r e x a m p le , h a s b e e n s lo w to r e s p o n d to th e
a ir lin e in d u s tr y — fe w e s t c u s to m e r c o m p la in ts ,
t h r e a t o f ‘E - t a ilin g ’ b o o k s e lle r s lik e A m a z o n .c o m :
fe w e s t d e la y s , a n d fe w e s t m is h a n d le d b a g s — a
fe a t n o o th e r c a r r ie r h a d e v e r a c h ie v e d . C E O H e r b ϖ L in o ty p e -H e ll, a G e r m a n c o m p a n y , in v e n te d L in o -
K e lle h e r o b s e r v e d th a t ‘it’s e a s y to o ffe r g r e a t s e r - ty p e p r in tin g p r e s s e s in 1 8 8 6 . T h e ‘h o t-ty p e ’ L in o -
v ic e a t a h ig h c o s t. It’s e a s y to o ffe r lo u s y s e r v ic e ty p e s y s te m w a s w id e ly u s e d fo r p r in tin g b o o k s ,
a t lo w c o s t. W h a t’s to u g h is o ffe r in g g r e a t s e r v ic e m a g a z in e s , a n d n e w s p a p e r s u n til th e 1 9 7 0 s .
a t lo w c o s t, a n d th a t is w h a t o u r g o a l is ’8 A lth o u g h th e c o m p a n y h a d d o m in a te d e v e r y
a d v a n c e in p u b lis h in g te c h n o lo g y u n til th a t tim e ,
th e y w e r e b lin d -s id e d b y th e d ig ita l a g e o f
O b s ta c le s to M a rk e t D riv in g in s o ftw a r e - a n d s c a n n e r -b a s e d p r in tin g . L in o ty p e
m a n a g e r s c lu n g to th e ‘h o t-ty p e ’ m in d s e t th a t
E s ta b lis h e d F irm s c a m e o f a g e w h e n ty p e s e ttin g in v o lv e d lo u d c la t-
te r in g m e c h a n ic a l m a c h in e s r a th e r th a n la s e r s . T h e
M o s t in n o v a tio n s in a n y in d u s try a r e la u n c h e d b y th e c o m p a n y ’s s to c k h a d d e c lin e d to a lo w o f 5 6 D M
la r g e , e s ta b lis h e d in c u m b e n t fi r m s w ith in th a t in d u s - in Ju ly 1 9 9 6 fr o m a r e c o r d h ig h o f 9 7 0 D M in M a y
try , b u t th e s e a re p re d o m in a n tly in c r e m e n ta l in n o - 1 9 9 0 a n d w a s u ltim a te ly a c q u ir e d in 1 9 9 7 b y H e id -
v a tio n s r a th e r th a n r a d ic a l in n o v a t io n s . S in c e t h e s u c - e lb e r g e r D r u c k m a s c h in e n , A G .
c e s s o f m a rk e t d r i v i n g fi r m s is b a s e d o n r a d ic a l
in n o v a tio n a n d tu r n in g e x is tin g in d u s tr y r u le s o n S e c o n d , m a r k e t d r iv in g id e a s in v o lv e h ig h r is k . F o r

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F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

e v e r y s u c c e s s fu l r a d ic a l in n o v a tio n in v a lu e p r o p - ϖ IB M r e m a in e d fo c u s e d to o lo n g o n m a in fr a m e s a t
o s itio n a n d b u s in e s s s y s te m , th e r e a r e p r o b a b ly h u n - th e e x p e n s e o f p e rs o n a l c o m p u te rs b e c a u s e P C s
d r e d s o f fa ilu r e s th a t o n e n e v e r h e a r s a b o u t. A n r e q u ir e d a d iffe r e n t d is tr ib u tio n s y s te m , h a d lo w e r
e n tr e p r e n e u r c h a s in g a m a r k e t d r iv in g d r e a m h a s m a r g in s , a n d w a s n o t a s a fte r -s a le s s e r v ic e in te n -
b o u n d e d d o w n s i d e fi n a n c i a l r i s k a s h e o r s h e g e n e r - s iv e a s th e m a in fr a m e b u s in e s s .
a lly in v e s ts e n o r m o u s e ffo r t b u t o n ly lim ite d c a p ita l. ϖ G e n e r a l M o to r s a n d F o r d w e r e s lo w in r e s p o n d in g
H o w e v e r , if th e id e a is s u c c e s s fu l, th e r e is u n lim ite d to th e p o p u la r ity o f m in iv a n s b e c a u s e it p u t th e ir
u p s id e p o te n tia l s in c e a v a s t p e r s o n a l fo r tu n e c a n b e c o n v e n tio n a l s ta tio n w a g o n s a t r is k .
m a d e . In c o n tr a s t, in m o s t o r g a n iz a tio n s , th e o r ig in - ϖ F o r fe a r o f c a n n ib a liz in g th e ir p e r m a n e n t s o ft le n s
a to r o f a s u c c e s s fu l m a r k e t d r iv in g id e a m a y , a t b e s t, a n d s o lu tio n b u s in e s s e s , B a u s c h a n d L o m b
r e c e iv e a n ic e b o n u s o r p r o m o tio n (lim ite d u p s id e ig n o r e d d is p o s a b le s o ft le n s e s , w h ic h a r e m o r e
p o te n tia l), b u t a p u b lic fa ilu r e m a y b e th e e n d o f c o m fo r ta b le a n d p r o v id e b e tte r v is io n fo r th e c o n -
o n e ’s c a r e e r w ith in th e o r g a n iz a tio n o r e v e n b e y o n d s u m e r.
(s u b s ta n tia l d o w n s id e p o te n tia l). W h e n o n e c o m -
b in e s th e h ig h fa ilu r e r a te o f r a d ic a l in n o v a tio n w ith
th e r is k / r e w a r d r a tio in m o s t la r g e o r g a n iz a tio n s ,
p u r s u in g m a r k e t d r iv in g id e a s is n o t a r a tio n a l s tr a t-
e g y fo r in d iv id u a ls in s u c h o r g a n iz a tio n s . F ro m M a rk e t D riv e n to M a rk e t D riv in g

T h ir d , th e n e w b u s in e s s d e v e lo p m e n t p r o c e s s in m o s t A lth o u g h n e w e n t r e p r e n e u r i a l fi r m s c a n s i n g l e -
fi r m s t e n d s t o b e b i a s e d a g a i n s t , a n d t h e r e f o r e m in d e d ly p u r s u e a m a k e o r b r e a k m a r k e t d r iv in g
s q u e lc h e s , th e m o r e in n o v a tiv e b r e a k th r o u g h id e a s p e r s p e c t i v e , m o s t e s t a b l i s h e d fi r m s h a v e t o o m a n y
th a t c o u ld p o te n tia lly c r e a te n e w m a r k e ts . In m o s t o b lig a t io n s a n d t o o m u c h t o lo s e t o ju s t if y t h e o b v i-
m a r k e t - l e a d i n g fi r m s , t h e n e w p r o d u c t d e v e l o p m e n t o u s r is k s o f c h a s in g o n ly r a d ic a l m a r k e t d r iv in g ‘b ig
a n d n e w b u s in e s s d e v e lo p m e n t p r o c e s s e s fa v o r p r o - h i t s . ’ 1 1 I n s u c h fi r m s , t h e s e a r c h f o r r a d i c a l b u s i n e s s
je c t s t h a t a r e t r ia b le , r e v e r s ib le , d iv is ib le , t a n g ib le , in n o v a tio n s h o u ld n o t b e p u r s u e d to th e d e tr im e n t
fa m ilia r , s e r v e c u r r e n t c u s - o f im p r o v in g th e e x is tin g b u s i-
t o m e r s , fi t w i t h t h e o r g a n i z a - n e s s . I n c u m b e n t fi r m s s h o u l d
tio n ’s d ir e c tio n , a n d a r e c o n s is t- N o n e o f th e to p 1 0 d e v o te th e o v e r w h e lm in g
e n t w ith s u n k c o s ts in v e s te d in m a jo r it y o f t h e ir in n o v a t io n
R & D , c o r p o r a te im a g e m a n a g e - d is c o u n te r s o f 1 9 6 2 , t h e y e a r e ffo r ts to m a r k e t d r iv e n a c tiv i-
m e n t, s a le s tr a in in g , a n d c h a n - tie s , s u c h a s in c r e m e n ta l in n o -
n e ls — a ll o f w h ic h a r e r a r e ly W a lm a r t w a s b o r n , a r e in v a tio n a n d tr a d itio n a l m a r k e t
c h a r a c te r is tic o f r a d ic a lly r e s e a r c h . N e v e r th e le s s , s o m e
in n o v a tiv e m a r k e t o ffe r in g s . b u s in e s s t o d a y r o o m m u s t b e fo u n d fo r r a d ic a l
E s t a b l i s h e d fi r m s s e l e c t n e w b u s in e s s in n o v a tio n o r th e m a r -
b u s in e s s d e v e lo p m e n t o p p o r tu n itie s o n th e b a s is o f k e t le a d e r r is k s b e in g le a p -fr o g g e d a n d d e p o s e d b y
te c h n o lo g ic a l fe a s ib ility a n d p o te n tia l m a r k e t s iz e . u p s t a r t m a r k e t d r iv e r s . P r o je c t s n e e d t o b e c h o s e n in
H o w e v e r , in th e e a r ly s ta g e s o f r a d ic a l n e w b u s in e s s t h e c o n t e x t o f o t h e r p r o je c t s in t h e c o m p a n y ’s p o r t -
d e v e l o p m e n t , i t i s d i f fi c u l t t o k n o w w h i c h t e c h n o l o g y fo lio s o th a t th e r e is a n a d e q u a te b a la n c e b e tw e e n
w ill s u c c e e d , w ith w h a t c a p a b ilitie s , fo r w h ic h m a r - in c r e m e n ta l a n d r a d ic a l in n o v a tio n . T h u s , a s T u s h -
k e ts . T h e te c h n o lo g ic a l a n d o p e r a tio n a l p r o b le m s m a n a n d O ’ R e i l l y o b s e r v e , fi r m s n e e d t o b e a m b i d e x -
s e e m in s u r m o u n ta b le , o fte n w ith n o o b v io u s m a r k e t tr o u s , c a p a b le o f s im u lta n e o u s ly m a n a g in g in c r e m e n -
in s ig h t. E x p e c te d a p p lic a tio n s d is s o lv e a n d u n fo r - ta l a s w e ll a s r a d ic a l in n o v a tio n (T u s h m a n a n d
s e e n o p p o r t u n i t i e s e m e r g e w h i l e t h e fi r m is s till O ’R e illy , 1 9 9 6 ).
e x p e r im e n tin g :
U n f o r t u n a t e l y , e s t a b l i s h e d fi r m s fi n d i t d i f fi c u l t t o
ϖ T w o in itia l a p p lic a tio n s fo r N u tr a s w e e t — a r ti- g e n e r a te a n d la u n c h r a d ic a l m a r k e t d r iv in g in n o -
fi c i a l l y s w e e t e n i n g b r e a k f a s t c e r e a l s a n d r e p l a c i n g v a t i o n s . A n e s t a b l i s h e d fi r m t h a t w i s h e s t o e n g a g e i n
s a c c h a r i n — fi z z l e d w h i l e a n u n a n t i c i p a t e d m a r k e t m a r k e t d r iv in g m u s t m e e t tw o c h a lle n g e s — it m u s t
s iz z le d . N u tr a s w e e te n e d b r e a k fa s t c e r e a l r a n in to h a v e th e v is io n a n d e n v ir o n m e n t to g e n e r a te b r e a k -
te c h n ic a l a n d r e g u la to r y o b s ta c le s a n d s a c c h a r in th r o u g h id e a s a n d it m u s t h a v e th e c a p ita l, fo r titu d e ,
u s e r s r e je c t e d N u t r a s w e e t b e c a u s e it d id n o t h a v e a n d r is k to le r a n c e to p e r s e v e r e a n d a llo w th e r a d ic a l
th e a fte r ta s te o f s a c c h a r in ! In s te a d N u tr a s w e e t i d e a t o h a v e a f a i r c h a n c e t o s u c c e e d . T h e fi r s t i s t h e
f o u n d a m a r k e t w i t h d i s s a t i s fi e d s u g a r u s e r s u p s tr e a m c r e a tiv e c h a lle n g e o f d e v e lo p in g th e a b ility to
( L y n n e t a l., 1 9 9 6 ) . ‘s e e d if f e r e n t ly .’ S in c e r a d ic a l c o n c e p t s o f t e n s p r in g
f r o m t h e i m a g i n a t i o n o f a s i n g l e i n d i v i d u a l , t h e fi r m
F in a lly , e s ta b lis h e d fi r m s o fte n p e r c e iv e d th a t th e y m u s t c r e a te a n e n v ir o n m e n t w h e r e c r e a tiv ity in in d i-
h a v e to o m u c h in v e s te d in th e s ta tu s q u o to r is k v i d u a l s m a y fl o u r i s h . T h e s e c o n d i s t h e d o w n s t r e a m
d e s tr o y in g th e e x is tin g in d u s tr y a n d m a rk e t. T h e im p le m e n ta tio n c h a lle n g e o f s u c c e s s fu lly m a r k e tin g th e
g re a te r th e th re a t o f c a n n a b a liz a tio n , th e m o re u n iq u e c o n c e p t, w h ic h r e q u ir e s a te a m e ffo r t. W ith -
in te n s e is th e r e s is ta n c e to m a r k e t d r iv in g id e a s : o u t t h e a b i l i t y t o s e e d i f f e r e n t l y , t h e fi r m i s u n a b l e t o

1 3 6 European Management Journal Vol 18 No 2 April 2000

 F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

c h a n g e th e r u le s o f th e g a m e a n d m u s t b a ttle to n o t e a s y to g e t a w a y fr o m tr a d itio n . T h a t is w h y a ll
b r a n d -s w itc h b u y e rs o f c o m p e tito r s ’ p r o d u c ts in o u r n e w o p e r a tio n s a r e a lw a y s d ir e c te d b y m e n w h o
e x is tin g m a rk e ts . A n d , w ith o u t th e a b ility to h a v e n o p r e v io u s k n o w le d g e o f t h e s u b je c t a n d th e re -
im p le m e n t a m a rk e t d r i v i n g c o n c e p t , t h e fi r m w i l l fo r e h a v e n o t h a d th e c h a n c e to g e t o n r e a lly fa m ilia r
jo in t h e r a n k s o f c o m p a n ie s th a t fa ile d to c a p ita liz e te r m s w ith th e im p o s s ib le ’ (F o r d , 1 9 8 8 ). In m a n y
o n th e ir in v e n tio n s s u c h a s X e r o x w ith p e r s o n a l c o m - m a r k e t le a d e r s , h o w e v e r , r o u n d s o f te s tin g a n d in te r -
p u te rs a n d E M I w ith s c a n n e r te c h n o lo g y . v ie w s d o m o r e to r e in fo r c e c o n fo r m ity th a n to
a s s e m b le a c o lle c tio n o f in d iv id u a ls w ith d iv e r s e
U n lik e in c r e m e n ta l in n o v a tio n , w h e r e a w e ll- c a p a b ilitie s a n d p e r s p e c tiv e s .
d e v e lo p e d in n o v a tio n p r o c e s s c le a r ly is a n a s s e t, th e
d e v e lo p m e n t o f m a r k e t d r iv in g id e a s is m o r e p r o je c t
b a s e d . I t i s a l s o d i f fi c u l t t o p r e d i c t w h o i n t h e o r g a n i -
z a tio n w ill d e v e lo p a m a r k e t d r iv in g id e a a n d w h e n E m p o w e r L a te n t E n tre p re n e u rs a n d O ffe r
th e y w ill d o s o . P e r h a p s w h a t S o m e r s e t M a u g h a m M u ltip le C h a n n e ls fo r N e w Id e a A p p ro v a l
o b s e r v e d a b o u t w r itin g n o v e ls a p p lie s h e r e : ‘T h e r e E v e n fi r m s w i t h a h i s t o r y o f p r i o r m a r k e t d r i v i n g
a r e th r e e r u le s fo r w r itin g a n o v e l. U n fo r tu n a te ly n o a c t i v i t y fi n d i t d i f fi c u l t t o k e e p t h e fi r e s o f i c o n o c l a s t i c
o n e k n o w s w h a t t h e y a r e .’ W h ile w e r e c o m m e n d c r e a tiv ity s to k e d . T o d a y ’s s u c c e s s fu l m a r k e t d r iv e r
s o m e p r a c t i c e s t h a t w i l l h e l p e s t a b l i s h e d fi r m s m u s t b e w a r e o s s ify in g in to th e c a u tio u s , m a r k e t
in c r e a s e th e ir p r o b a b ility o f d e v e lo p in g m a r k e t d r iv - d r i v e n b e h e m o t h o f t o m o r r o w . I n a n y l a r g e fi r m c a n
in g in n o v a tio n s , e v e n if a ll o f th e s e p r a c tic e s a r e b e fo u n d m a n y fr u s tr a te d p o te n tia l e n tr e p r e n e u r s
e m p lo y e d , th e y w ill n o t g u a r a n te e th a t a m a r k e t w h o h a v e id e a s a s y e t u n v e ile d . In m o s t o r g a n iz a -
d r iv in g in n o v a tio n w ill b e d is c o v e r e d . S o m e m a r k e t tio n s , a p p r o v a l o f a n e w b u s in e s s id e a r e q u ir e s s e v -
d r i v i n g fi r m s d o n o t e n g a g e i n a l l o f t h e s e p r a c t i c e s . e r a l ‘y e s ’ v o te s a s it m o v e s u p th e h ie r a r c h y w h ile a
N e v e r t h e l e s s , i f t h e s e p r a c t i c e s a r e i n s t i t u t e d , t h e fi r m s in g le ‘n o ’ c a n k ill it; th e n a tu r e o f r a d ic a l m a r k e t
w ill b e b e tte r p o s itio n e d to d is c o v e r a n d im p le m e n t d r iv in g in n o v a tio n is s u c h th a t it is a lm o s t c e r ta in
m a r k e t d r iv in g in n o v a tio n s in d e p e n d e n t o f th e to g a th e r a ‘n o ’ s o m e w h e r e in th e p r o c e s s . T o h e lp
p e o p l e r u n n i n g t h e c o m p a n y . W h a t w e fi n d o f p a r t i - p r o m is in g n e w id e a s s u r fa c e , a n id e a g e n e r a to r a t 3 M
c u la r c o n c e r n , h o w e v e r , is th a t m a n y o f to d a y ’s m a n - h a s n u m e r o u s c h a n n e ls th a t c a n b e u s e d fo r s e c u r in g
a g e m e n t tr e n d s a r e u n fo r tu n a te ly m o v in g in d ir e c - a p p r o v a l a n d s u p p o r t f o r a p r o je c t if o n e ’s im m e d ia t e
tio n s th a t m a k e it le s s lik e ly m a r k e t d r iv in g id e a s w ill s u p e r io r r e je c t s it . P r o v id in g a lt e r n a t iv e r o u t e s f o r
a r is e a n d th r iv e . a p p r o v a l c h a n g e s th is d y n a m ic to o n e w h e r e a p r o -
je c t g a r n e r in g a s in g le ‘y e s ’ v o t e in t h e f a c e o f s e v e r a l
‘n o ’ v o te s s till p r o c e e d s .
A llo w S p a c e fo r S e re n d ip ity
S e r e n d ip ity h a s p la y e d a r o le in th e d e v e lo p m e n t o f J a p a n e s e fi r m s l i k e N E C h a v e l a u n c h e d c o m p e t i t i o n s
t o fi n d m a v e r i c k i d e a s , h a r n e s s i n d i v i d u a l i n i t i a t i v e ,
m a n y r a d ic a l n e w id e a s . T o a llo w fo r s e r e n d ip ity , 3 M
re s e a rc h e rs a re e n c o u ra g e d to s p e n d u p to 1 5 p e r c e n t a n d d e v e lo p e n tr e p r e n e u r s a m o n g its e m p lo y e e s (s e e
E x a m p le 1 ). S im ila r ly , T o y o ta ’s D r e a m 1 9 9 5 c a m -
o f t h e ir t im e o n a r e s e a r c h p r o je c t o f t h e ir c h o ic e . T h is
e n s u r e s th a t p r o b le m d r iv e n r e s e a r c h d o e s n o t p r e - p a ig n e n c o u r a g e d ‘e n tr e p r e n e u r s w ith n e w b u s in e s s
id e a s to s e r v e a s p r e s id e n ts o f n e w b u s in e s s e s ’ to
c lu d e a ll c u r io s ity d r iv e n r e s e a r c h . 3 M ’s fa m o u s P o s t-
It n o te s w e r e in v e n te d w h e n a n a s s o c ia te w a s s u b m it p r o p o s a ls to th e ir B u s in e s s D e v e lo p m e n t
D e p a r tm e n t. T o y o ta r e a liz e d th a t th e tr a d itio n a l
a tte m p tin g to d e v e lo p a b e tte r b o o k m a r k fo r h is
h y m n b o o k . S im ila r ly , o n e o f S e a r le ’s r e s e a r c h s c ie n - s tr e n g th o f g u a r a n te e d life tim e e m p lo y m e n t r e c ip r o -
c a te d b y d e e p c o m m itm e n t o n th e p a r t o f e m p lo y e e s
t i s t s d i s c o v e r e d t h e a r t i fi c i a l s w e e t e n e r N u t r a s w e e t
w h ile lo o k in g fo r a p o s s ib le tr e a tm e n t fo r u lc e r s . A s h a d u n in te n tio n a lly c r e a te d a p a s s iv e c u ltu r e ‘w h ic h
r e a c ts to e v e n ts r a th e r th a n d r iv e s c h a n g e ’ (e m p h a s is
S c h u m p e te r o b s e r v e d : ‘H is to r y is a r e c o r d o f
“ e f f e c t s ,” t h e v a s t m a jo r it y o f w h ic h n o b o d y in t e n d e d in o r ig in a l) .1 2 T h e p o s te r o f th e p r o g r a m s c r e a m e d ,
‘T h e p r e s id e n t ’s c h a ir is w a it in g f o r y o u .’
t o c r e a t e .’ U n f o r t u n a t e ly , r e - e n g in e e r in g e f f o r t s in
m o s t fi r m s h a v e e l i m i n a t e d m u c h o f t h e s l a c k w i t h i n
w h ic h s e r e n d ip ity th r iv e s .
E s ta b lis h C o m p e titiv e T e a m s a n d ‘S k u n k W o r k s ’

S e le c t a n d M a tc h E m p lo y e e s fo r C re a tiv ity In th e e a r ly s ta g e s o f th e d e v e lo p m e n t o f a r a d ic a l
n e w c o n c e p t, it is n o t r e a d ily a p p a r e n t w h ic h te c h -
T o g e n e ra te n e w id e a s , N is s a n D e s ig n In te r n a t io n a l n o lo g y o r fo r m a t w ill s u c c e e d a n d w h ic h m a r k e t w ill
d e lib e r a te ly p ro m o te s ‘c r e a tiv e a b r a s io n ’ b y h ir in g m a te r ia liz e . T h e r e fo r e , M o to r o la e n c o u r a g e s its w ir e -
p e o p le in c o n tra s t in g p a ir s ( e .g . b a la n c in g n e r d s w ith le s s d iv is io n s to c o m p e te a g a in s t e a c h o th e r o n th e
h ip p ie s ). E m p lo y e e s a r e e n c o u r a g e d to d is p la y c o lo r a s s u m p tio n th a t th e m a r k e tp la c e w ill s e le c t th e w in -
c h a rts o f th e ir ‘p e r s o n a ly s is ’ to h e lp m a n a g e r s d o th e n e r. IB M h a d a b o u t h a lf a d o z e n p a r a lle l d e v e lo p -
m ix in g . F o r im p le m e n ta tio n o f c r e a tiv e id e a s , H e n ry m e n t te a m s fo r th e P C . O fte n w h e n s e le c tin g a p a r ti-
F o r d lo o k e d to w a r d s in e x p e r ie n c e d e m p lo y e e s : ‘It is c u la r n e w te c h n o lo g y a s its m a in fo c u s , S h a r p

European Management Journal Vol 18 No 2 April 2000 1 3 7

F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

m a in ta in s s m a ll R & D p r o je c t s o n t h e a lt e r n a t iv e t e c h - lo c a tio n s , th e r e b y le a v in g fe w v a c a n t s p a c e s fo r c o m -
n o lo g ie s . p e tito r s to e x p lo it. T h e y b e lie v e in k e e p in g th e c a n n i-
b a ls in th e fa m ily .
I n a n e s t a b l i s h e d fi r m , a r a d i c a l n e w c o n c e p t w i l l
ty p ic a lly e ith e r fa ll o u ts id e th e c u r r e n t b u s in e s s
d e fi n i t i o n o r t a r g e t m a r k e t s o f t h e fi r m ( e . g . N u t r a - E n c o u ra g e E x p e rim e n ta tio n a n d T o le ra te M is ta k e s
s w e e t fo r S e a r le ) o r p o s e a s e r io u s th r e a t to d e s tr o y
m u c h o f t h e fi r m ’ s e x i s t i n g b u s i n e s s ( e . g . I B M ’ s p e r - D e v e lo p in g a n e x p e r im e n tin g o r g a n iz a tio n th a t s e e k s
s o n a l c o m p u te r la u n c h ). In a d d itio n , m a r k e t d r iv in g c re a tiv e s o lu tio n s r e q u ir e s a to le r a n c e fo r m is ta k e s .
p r o j e c t s , b y d e fi n i t i o n , r e q u i r e a u n i q u e b u s i n e s s s y s - F ir m s m u s t p r o b e a n d le a r n in th e m a r k e tp la c e ,
t e m , w h i c h m e a n s l i m i t e d s y n e r g y w i t h t h e fi r m ’ s im p r o v i n g w i t h e a c h s u c c e s s i v e g e n e r a t i o n . T h e fi r s t
e x is tin g b u s in e s s s y s te m . W h e n m a r k e t d r iv in g id e a s W a l-M a r t s to r e w a s h o r r ib le b u t S a m W a lto n
a r e p u r s u e d w ith in th e e x is tin g b u s in e s s s tr u c tu r e , im p r o v e d th e fo r m a t o v e r tim e b y tr y in g d iffe r e n t
o th e r p r io r itie s o fte n h in d e r th e ir s u c c e s s fu l, s p e e d y id e a s a n d w a tc h in g c u s to m e r r e a c tio n . S im ila r ly , th e
fr u itio n . o r ig in a l N ik e s h o e w a s n ’t v e r y g o o d b u t th e y k e p t
le a r n in g a n d im p r o v in g th e te c h n o lo g y . L u c ia n o
T o h e lp o v e r c o m e o r g a n iz a tio n a l r e s is ta n c e a n d in e r - B e n e tto n , th e fo u n d e r o f B e n e tto n , o b s e rv e d th a t th e
t i a , fi r m s c a n s e t u p ‘ s k u n k w o r k s , ’ p h y s i c a l l y a n d b e s t m a r k e t r e s e a r c h is to o p e n a n e w s to r e a n d le a r n .
o r g a n iz a tio n a lly in d e p e n d e n t, s e lf c o n ta in e d e n titie s A s In g v a r K a m p r a d o f IK E A o b s e r v e d , ‘O n ly w h ile
w it h d e d ic a t e d m e m b e r s .1 3 S k u n k w o r k s b r in g a s le e p in g o n e m a k e s n o m is ta k e s . T h e fe a r o f m a k in g
s e n s e o f u r g e n c y t o t h e p r o je c t , h a r n e s s t h e e n t r e p r - m is ta k e s is th e r o o t o f b u r e a u c r a c y a n d th e e n e m y o f
e n e u r ia l z e a l o f m e m b e r s , a n d c o n c e n tr a te th e e ffo r t a ll e v o lu t io n .’1 4
o f th o s e in v o lv e d ; im p o r ta n tly , th e y a ls o p r o te c t th e
fl e d g l i n g b u s i n e s s f r o m e n t r e n c h e d i n t e r e s t s w h o In th e U n ite d S ta te s , th e fo c u s o n d a ily s to c k p r ic e ,
h a v e m o t iv e s t o k ill t h e p r o je c t . 3 M , I B M , A p p le , R a y - q u a r te r ly r e s u lts , a n d W a ll S tr e e t a n a ly s ts te n d s to
c h e m , D u P o n t, E r ic s s o n , G e n e r a l E le c tr ic , X e r o x , a n d s e v e r e ly p u n is h m is s te p s . T h is is a n o th e r h u r d le th a t
A T & T , a ll u s e s k u n k w o r k s to c a p tu r e th e s o u l o f a la r g e , p u b lic ly tr a d e d m a r k e t le a d e r s m u s t m a n a g e
s m a l l , e n t r e p r e n e u r i a l o u t fi t w i t h i n t h e b o d y o f t h e i r in o r d e r to e ffe c tiv e ly c u ltiv a te m a r k e t d r iv in g
l a r g e fi r m s . A l t h o u g h s o m e c o m p a n i e s h a v e r e c e n t l y a c tiv ity . T h e c o m p a n y n e e d s to c a r v e o u t a s h e lte r e d
b e c o m e d is illu s io n e d w ith s k u n k w o r k s , w e b e lie v e a r e a w h e r e th e r is k -ta k in g a s s o c ia te d w ith e x p e r i-
in m a n y c a s e s th is r e s u lts fr o m u s in g s k u n k w o r k s m e n tin g c a n b e to le r a te d a n d w h e r e th e r e is r o o m
i n a p p r o p r i a t e l y , s p e c i fi c a l l y , f o r i n c r e m e n t a l i n n o - fo r th e in e v ita b le fa ilu r e s th a t w ill s o m e tim e s e n s u e .
v a tio n a n d r e la te d b u s in e s s e s . S k u n k w o r k s a r e m o s t T h e s e p o t e n t i a l f a i l u r e s a r e t h e p r i c e t h e fi r m m u s t
e ffe c tiv e w h e n u s e d to d e v e lo p a n d u n le a s h m a r k e t p a y to c u ltiv a te m a r k e t d r iv in g , b u t th e y n e e d to b e
d r iv in g id e a s . p la n n e d fo r s o a s n o t to c a u s e u n e x p e c te d s h o c k s .
H o w e v e r , th e r e m u s t b e s o m e r u le s w ith r e s p e c t to
fa ilu r e s . D a v id P o ttr u c k , C E O a n d P r e s id e n t o f
C a n n ib a liz e Y o u r O w n C h a r le s S c h w a b , a r tic u la te d th e fo llo w in g th r e e r u le s :
(1 ) D o n ’t p u t th e c o m p a n y a t r is k . B y lim itin g th e
T h e n a tu r a l te n d e n c y o f e s ta b lis h e d m a r k e t le a d e r s e n o r m ity o f p o s s ib le fa ilu r e , o n e e n s u r e s th a t
t o p r o t e c t t h e i r c o r e b u s i n e s s m a k e s i t d i f fi c u l t f o r e m p lo y e e s b e t th e h o r s e , n o t th e fa r m . (2 ) T a k e
th e m to v o lu n ta r ily p u r s u e a v e n u e s th a t th r e a te n to r e a s o n a b le p r e c a u tio n s a g a in s t fa ilu r e . (3 ) L e a r n
u n d e r m in e th a t c o r e . F o r e x a m p le , K o d a k ’s d e s ir e to s o m e th in g fr o m it (P o ttr u c k , 1 9 9 7 ).
e n s u r e th a t its n e w d ig ita l b u s in e s s d o e s n o t e n c r o a c h
o n i t s t r a d i t i o n a l fi l m b u s i n e s s h a s s l o w e d t h e i r p r o -
g r e s s in d ig itia l im a g in g . P a b lo P ic a s s o o n c e
o b s e r v e d , ‘ E v e r y a c t o f c r e a t i o n i s fi r s t o f a l l a n a c t C o n c lu s io n
o f d e s t r u c t io n .’ M a r k e t d r iv in g e x p lic it ly e n c o u r a g e s
c a n n i b a l i z a t i o n , b a s e d i n t h e b e l i e f t h a t s o m e fi r m O v e r t i m e , e v e n s u c c e s s f u l m a r k e t d r i v i n g fi r m s
w ill c a n n ib a liz e th a t c o r e b u s in e s s , s o w e h a d b e tte r c h a n g e , a s t h e y s h o u l d , i n t o m a r k e t d r i v e n fi r m s . T h e
d o it o u r s e lv e s . W h e n S o n y in t r o d u c e s a m a jo r n e w h is to r y o f in n o v a tio n is a p a tte r n in w h ic h b u r s ts o f
p r o d u c t , t h r e e t e a m s a r e c r e a t e d — t h e fi r s t t e a m t i n - b r e a k th r o u g h in n o v a tio n w h ic h r e s h a p e a n in d u s tr y
k e r s w ith m in o r im p r o v e m e n ts , th e s e c o n d s e e k s a r e i n t e r s p e r s e d b y fl o w s o f l e s s d r a m a t i c i n c r e m e n -
m a jo r im p r o v e m e n t s , w h ile t h e t h ir d e x p lo r e s w a y s t a l i m p r o v e m e n t s a n d r e fi n e m e n t s . O n c e t h e r a d i c a l
to m a k e th a t n e w p r o d u c t o b s o le te . A t H e w le tt-P a c k - in n o v a tio n p h a s e is o v e r , in c r e m e n ta l in n o v a tio n to
a r d , w h ic h fo s te r s c o m p e titio n a m o n g its d iv is io n s , im p r o v e th e e x is tin g o ffe r in g a n d b u s in e s s s y s te m
p r o d u c ts le s s th a n tw o y e a r s o ld a c c o u n t fo r 6 0 p e r b e c o m e s th e p r im a r y , im m e d ia te c h a lle n g e . F u r th e r -
c e n t o f o r d e r s . M a r k e t d r iv in g r e ta ile r s s u c h S ta r - m o r e , c o m p e tito r s u ltim a te ly e m e r g e w ith c o m p e ti-
b u c k s a n d S a m ’s C lu b s o f th e U n ite d S ta te s , S w e d - tiv e , o r e v e n s u p e r io r , v a lu e p r o p o s itio n s a n d b u s i-
e n ’s H e n n e s a n d M a u r itz , a n d Ita ly ’s B e n n e to n s tr a - n e s s s y s te m s m o d e le d a fte r th e ‘n e w ’ m a r k e t le a d e r .
te g ic a lly c a n n ib a liz e th e ir o w n s to r e s to s o m e e x te n t I t i s a t t h i s s t a g e t h a t m a r k e t d r i v i n g fi r m s , l i k e T e t r a
b y b u ild in g n e w o u tle ts c lo s e to e x is tin g , s u c c e s s fu l P a k to d a y , m u s t s e a r c h fo r th e ir n e x t m a r k e t d r iv in g

1 3 8 European Management Journal Vol 18 No 2 April 2000

 F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

in n o v a tio n . H o w e v e r , a s th e s u c c e s s fu l m a r k e t d r iv e r T h e in -h o u s e e n tr e p r e n e u r p r o g r a m h a s b e c o m e a n
tr a n s fo r m s in to a n e s ta b lis h e d m a r k e t le a d e r , it fa c e s a n n u a l e v e n t a t N E C . M o r e th a n 6 0 0 n e w b u s in e s s
a ll th e s a m e o b s ta c le s to m o tiv a tin g m a r k e t d r iv in g id e a s h a v e b e e n g e n e r a te d . T o m a x im iz e th e n u m b e r
s tr a te g ie s th a t th e fo r m e r m a r k e t le a d e r s fa c e d . W ith o f p r o p o s a ls , th e a n n u a l in v ita tio n is w id e ly p u b -
a g e a n d s i z e , fi r m s t e n d t o b e c o m e i n c r e a s i n g l y lic iz e d to a ll e m p lo y e e s o f N E C a n d its s u b s id ia r ie s .
b u r e a u c r a tiz e d , r o u tin iz e d , a n d r is k a v e r s e . T o d a te , F u r th e r m o r e , in itia l p r o p o s a ls a re lim ite d to
v e r y f e w fi r m s h a v e b e e n a b l e t o c o n s i s t e n t l y l a u n c h p r e s e n tin g o n ly a n o v e r v ie w o f th e n e w b u s in e s s c o n -
a s e r ie s o f s u c c e s s fu l m a r k e t d r iv in g id e a s . S o n y h a s c e p t. L a te r , a s p r o p o s a ls m o v e th r o u g h v a r io u s s e le c -
b e e n o n e s u c h e x c e p tio n . W e th e r e fo r e e n d w ith a n t i o n s t e p s , p r o j e c t e d s a l e s , p r o fi t s , a n d i n v e s t m e n t
e x a m p le (E x a m p le 2 ) fr o m S o n y a n d th e ir d e v e lo p - in fo r m a tio n a r e g a th e r e d th r o u g h d e ta ile d b u s in e s s
m e n t o f c o m p u te r d is k e tte s w h ic h d e m o n s tr a te s h o w p la n s . A s M r S h ir o ta , n o w P r e s id e n t o f K a in o a te c ,
th e y u tiliz e a lm o s t e v e r y p r a c tic e r e c o m m e n d e d o b s e rv e s , th e p ro g ra m h e lp s d is c o v e r h id d e n
a b o v e to c r e a te a m a r k e t d r iv in g c u ltu r e . e n tr e p r e n e u r s a m o n g th e Ja p a n e s e s a la r y m e n w h o
a r e w a itin g fo r s o m e o n e to ta p th e m o n th e s h o u ld e r
a n d g iv e th e m a c h a n c e .

E x a m p le 1 : D is c o v e rin g , C u ltiv a tin g ,

a n d E m p o w e rin g L a te n t E n tre p re n e u rs
E x a m p le 2 : T h e M a rk e t D riv in g C u ltu re
a t N E C
a t S o n y
In 1 9 9 2 , to g iv e n e w b u s in e s s id e a s s p a c e to d e v e lo p
o u ts id e th e c o r p o r a te b u r e a u c r a c y , N E C in v ite d its S o n y h a s b e e n a p o w e r h o u s e in d e v e lo p in g a n d
e m p lo y e e s to s u b m it p r o p o s a ls fo r th e ir o w n s ta r t- la u n c h in g in n o v a tiv e p r o d u c ts w h ic h h a v e c re a te d
u p c o m p a n ie s . E n title d ‘V e n tu r e P r o m o tio n a n d n e w m a r k e ts a n d b u s in e s s e s , s u c h a s th e tr a n s is to r
E n tr e p r e n e u r S e a r c h P r o g r a m ’ it g e n e r a te d 1 4 6 id e a s . r a d io , W a lk m a n , 3 .5 in c h d is k e t t e , a n d a u d io c o m -
O n e s e le c te d p r o p o s a l w a s s u b m itte d b y M r S h ir o ta , p a c t a tte s t. ‘N e w p r o d u c ts c r e a te n e w m a r k e ts ’ is a
a 5 6 y e a r o ld c a r e e r N E C e m p lo y e e . H is b u s in e s s id e a g u id in g c r e d o a t S o n y . S o n y c la im s th a t th e ir s tr o n g -
w a s to d e v e lo p a n d m a r k e t a s o ftw a r e p r o g r a m e s t a s s e ts a r e e m p lo y e e s w h o c o m b in e d re a m s o f c re -
w h ic h w o u ld p r o v id e a h ig h -te c h d e s ig n to o l fo r a tin g n e w p r o d u c ts o r m a r k e ts , w ith th e p a s s io n a n d
Ja p a n ’s k im o n o m a k e r s . B y s c a n n in g th e c u s to m e r ’s e n th u s ia s m to e x e c u te th e m .
p h o to g r a p h in to a c o m p u te r a n d th e n g r a p h ic a lly
s u p e r im p o s in g k im o n o s , th e c u s to m e r s c a n ‘tr y o n ’ S o n y p r a c tic e s s e v e r a l p r in c ip le s th a t la r g e , e s ta b -
d i f f e r e n t k i m o n o s w i t h o u t a c t u a l l y c h a n g i n g o u t fi t s . lis h e d c o m p a n ie s s h o u ld a d o p t to b e c o m e m o re m a r-
T h e c o m p a n y , K a in o a te c , w a s la u n c h e d in 1 9 9 5 w ith k e t d r iv in g . S o n y le a v e s r o o m fo r e x p e r im e n ta tio n ,
N E C p r o v id in g 5 4 p e r c e n t o f th e 1 3 m illio n y e n s ta r t- to le r a te s m is ta k e s , c a n n ib a liz e s its o w n , e n c o u ra g e s
u p c a p ita l a n d w ith M r S h ir o ta a n d a c o lle a g u e , M r c o m p e titiv e te a m s , a n d o ffe r s m u ltip le c h a n n e ls fo r
K o te r a z a w a , e a c h c h ip p in g in 3 m illio n y e n . S in c e its a p p r o v a l o f n e w id e a s . T h e y a ls o n u r tu r e a n d re w a rd
la u n c h , K a in o a te c h a s d e v e lo p e d s im ila r s o ftw a r e fo r in d iv id u a l c r e a tiv ity a s illu s tr a te d b y th e fo llo w in g
th e e y e g la s s in d u s tr y s o th a t c u s to m e r s c a n tr y o n s to ry .
s p e c ta c le s w ith o u t h a v in g to r e m o v e th e ir o w n e y e -
g l a s s e s . T h e v e n t u r e g e n e r a t e d p r o fi t s o f n e a r l y 5 In 1 9 8 0 , th r e e te a m s in tw o d e p a r tm e n ts w e r e w o r k -
m i l l i o n y e n i n i t s fi r s t y e a r a n d h a s i n c r e a s e d s a l e s in g in p a r a lle l to d e v e lo p a 1 0 3 im p r o v e m e n t to th e
a n d p r o fi t s e v e r y y e a r s i n c e t h e n . c o n v e n t i o n a l 5 . 2 5 i n c h ‘ fl o p p y ’ d i s k e t t e . I n i t i a l l y ,
e a c h te a m w a s e s s e n tia lly a s in g le in d iv id u a l w ith a
A u th e n tic L im ite d is a n o th e r c o m p a n y la u n c h e d a s d i s t i n c t v i s i o n o f t h e p r o d u c t c o n c e p t . T h e fi r s t i n d i -
a r e s u lt o f th e p r o p o s a ls g e n e r a te d in 1 9 9 2 . It m a k e s v i d u a l e n v i s i o n e d i t a s a m o r e c o m p a c t fl o p p y , t h e
to p -o f-th e lin e s te r e o s p e a k e r s fr o m g r a n ite . T h is s e c o n d in d iv id u a l v is u a liz e d it a s a 3 .5 in c h p la s t ic
c o m p a n y h a s s in c e d e v e lo p e d th e tin ie s t s p e a k e r in e n c a s e d d is k , a n d th e th ir d in d iv id u a l, w h o w a s in a
t h e w o r l d f o r p e r s o n a l c o m p u t e r s a s w e l l a s a fl a t d iffe r e n t d e p a r tm e n t, w a s w o r k in g o n a 2 in c h d is -
s p e a k e r in c o lla b o r a tio n w ith N e w T r a n s d u c e r s L td , k e tte w ith h ig h r o ta tio n s p e e d . A t th is s ta g e , it w a s
a U K b a s e d c o m p a n y . T h e fl a t s p e a k e r s h a v e b e e n u n c le a r w h e th e r a n y o f th e s e w o u ld d e liv e r a p r o -
in c o r p o r a te d in a n e w N E C n o te b o o k c o m p u te r d u c t th a t c o u ld b e m a r k e te d s u c c e s s fu lly .
la u n c h e d in A u g u s t 1 9 9 7 . T h e u ltr a th in p a n e l s p e a k -
e r s s lid e o u t fr o m b e h in d th e L C D d is p la y a n d p r o - A f t e r t h r e e m o n t h s , t h e fi r s t t e a m h a d e n c o u n te re d
v id e s u p e r io r s o u n d fo r m u ltim e d ia a p p lic a tio n s o n s e v e r a l te c h n ic a l p r o b le m s w h ile th e s e c o n d te a m , le d
th e g o . T h is v e n tu r e w a s th e id e a o f 4 6 y e a r o ld M r b y 2 8 y e a r o ld M r K a m o to , h a d d e v e lo p e d a p r o m is -
K o n d o , w h o h a d w o r k e d fo r a n N E C s u b s id ia r y fo r in g p r o t o t y p e ( a n e a r ly v e r s io n o f t h e 3 .5 in c h p la s tic -
1 5 y e a r s . H e c o n tr ib u te d 3 0 p e r c e n t o f th e c a p ita l e n c a s e d d is k e tte th a t is th e w o r ld s ta n d a rd to d a y ).
w h ile N E C c o n tr ib u te d th e r e s t. A u th e n tic c u r r e n tly S in c e th e y b e lo n g e d to th e s a m e d e p a r tm e n t , t h e fi r s t
e m p lo y s 3 6 p e o p le a n d 1 9 9 7 s a le s a r e a n tic ip a te d to te a m w a s d is b a n d e d w ith th e fo r m e r m e m b e rs
b e in e x c e s s o f 5 b illio n y e n . r e d ir e c t e d t o o t h e r p r o je c t s , in c lu d in g a fe w w h o

European Management Journal Vol 18 No 2 April 2000 1 3 9

F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

w e r e a s s ig n e d to th e s e c o n d te a m . T h e fo r m e r le a d e r c a m e r a c a lle d ‘M a v ic a ’ w h ic h , d e s p ite h ig h e x p e c -
o f t h e fi r s t t e a m w a s a s k e d b y t h e h e a d o f th e d e p a rt- ta tio n s , fa ile d . M r K u ta r a g i, d o g g e d ly p e r s is tin g in
m e n t to a u th o r a n d p re s e n t a p a p e r o n t h e 3 .5 in c h th e fa c e o f c o n tin u in g fa ilu r e , th e n a p p r o a c h e d N in -
d is k e tte a t a n u p c o m in g Ja p a n e s e te c h n ic a l c o n fe r - te n d o in th e h o p e o f p e r s u a d in g th e m to u s e th e
e n c e . It w a s e x p la in e d to M r K a m o to th a t w h ile a ll 2 in c h d is k e tte w ith th e ir v id e o g a m e s o ftw a r e . W h e n
th e in te r n a l r e c o g n itio n a t S o n y fo r th e in v e n tio n o f N in te n d o s ig n e d a c o n tr a c t w ith S o n y fo r th e 2 in c h
t h e 3 .5 in c h d is k e t t e w o u ld g o t o M r K a m o to , it w a s d i s k e t t e , M r K u t a r a g i t h o u g h t h e h a d fi n a l l y f o u n d
im p o r ta n t to k e e p th e fo r m e r le a d e r o f t h e fi r s t th e k ille r a p p lic a tio n fo r h is in v e n tio n . T h r e e y e a rs
te a m m o tiv a te d . la te r , N in te n d o c a n c e le d th e c o n tr a c t w ith o u t e v e r
u s in g th e p r o d u c t.
T h e 3 .5 in c h d is k e t t e , u n v e ile d a t t h e C h ic a g o in d u s -
tr y s h o w in 1 9 8 1 , p iq u e d A p p le ’s in te r e s t. In 1 9 8 3 , A d is a p p o in te d M r K u ta r a g i a p p r o a c h e d S o n y ’s le a d -
S te v e Jo b s , th e fo u n d e r o f A p p le C o m p u te r , a d o p te d e r s h ip w ith a p r o p o s a l to d e v e lo p th e ir o w n lin e o f
th e n e w d is k e tte fo r th e M a c in to s h , d e m a n d in g v id e o g a m e s u s in g C D -R O M s . M r K u ta r a g i c o n -
a s s u r a n c e s th a t th e p r o d u c t w o u ld b e s u b s ta n tia lly v in c e d S o n y th a t h is th r e e y e a r s o f d is c u s s io n w ith
im p r o v e d w ith in o n e y e a r . T h e e n h a n c e d s y s te m N in te n d o h a d g iv e n h im a d e e p u n d e r s ta n d in g o f th e
w o u ld b e d o u b le -s id e d r a th e r th a n s in g le -s id e d , v id e o g a m e b u s in e s s a n d in s ig h ts in to N in te n d o ’s
in c o r p o r a t e a n a u t o m a t ic in je c t a n d e je c t s y s t e m , a n d s tr e n g th s a n d w e a k n e s s e s . W ith a s s is ta n c e fr o m
s till r e d u c e b y 5 0 p e r c e n t p o w e r c o n s u m p tio n , S o n y ’s b u s in e s s s tr a te g y g r o u p , P la y S ta tio n v id e o
h e ig h t o f th e d is k d r iv e , a n d p r ic e . D e s p ite th e s e g a m e s w e r e d e v e lo p e d a n d la u n c h e d in 1 9 9 4 a s a
im p r o v e m e n ts , th e p r o d u c t w a s s till ig n o r e d b y m o s t c o m p e tito r to N in te n d o . S in c e its la u n c h , m o r e th a n
o f th e la r g e r IB M c o m p a tib le w o r ld , a d o p te d b y o n ly 5 0 m illio n P la y S ta tio n s h a v e b e e n s o ld a n d S o n y
t w o m a jo r c u s t o m e r s , A p p le a n d H e w le t t - P a c k a r d . I n p r e s e n tly c o n tr o ls 6 0 p e r c e n t o f th e 1 5 b illio n d o lla r
1 9 8 7 , M r K a m o to w a s tr a n s fe r r e d to s a le s a n d m a r - v id e o -g a m e m a r k e t.
k e tin g d e s p ite h a v in g n o e x p e r ie n c e in th e s e fu n c -
tio n s . It w a s th o u g h t th a t o n ly h e , h a v in g in v e n te d
t h e 3 .5 in c h d is k e t t e , h a d t h e p a s s io n t o m a k e it a
w o r ld w id e s ta n d a r d . T o d a y , it h a s r e p la c e d th e A c k n o w le d g e m e n ts
5 . 2 5 i n c h fl o p p y d i s k e t t e a s t h e s t a n d a r d f o r m a t f o r T h e a u t h o rs w is h to th a n k a n a n o n y m o u s r e v ie w e r fo r s e v e ra l
s to r in g d a ta b y p e r s o n a l c o m p u te r u s e r s . h e lp fu l c o m m e n t s . T h e fi r s t a u th o r g r a te fu lly a c k n o w le d g e s
fi n a n c i a l s u p p o rt fro m IM D F a c u lty R e s e a rc h F u n d s a s w e ll a s
In 1 9 9 1 , S o n y p u t M r K a m o to in c h a r g e o f im p r o v in g in tr o d u c tio n s b y P ro fe s s o r s R o b e rt S . C o llin s a n d D o m in iq u e
its la n g u is h in g p e r s o n a l c o m p u te r in te r n a l h a r d T u r p in a t N E C , S o n y a n d T o y o ta .
d r iv e b u s in e s s , h o p in g th a t h e w o u ld d o fo r h a r d
d r iv e s w h a t h e h a d d o n e f o r t h e 3 .5 in c h d is k e t t e .
U n fo r tu n a te ly , d e s p ite h is b e s t e ffo r ts th e v e n tu r e N o te s
w a s a n e x p e n s iv e fa ilu r e a n d M r K a m o to w a s a s k e d
to c lo s e d o w n th e o p e r a tio n s . G iv e n th is h ig h ly v is - 1 . A n e x c e lle n t s o u r c e fo r m o r e d e ta ils o n th is e x a m p le is V .
K a s tu r i R a n g a n , T h e A r a v in d E y e H o s p ita l, M a d u r a i,
ib le fa ilu r e , M r K a m o to th o u g h t h is c a r e e r a t S o n y In d ia : in s e r v ic e fo r s ig h t [H a r v a r d B u s in e s s S c h o o l c a s e
w a s e ffe c tiv e ly o v e r . S o n y , h o w e v e r , r e c o g n iz e d th a t 9 -5 9 3 -0 9 8 ].
h e w a s m o tiv a te d b y h is e n th u s ia s m to c o n tr ib u te to 2 . S e v e r a l a u th o r s m a k e th e p o in t th a t m a r k e t r e s e a r c h is
th e c o m p a n y a n d a c c e p te d th e fa ilu r e a s a le a r n in g le s s u s e f u l in g e n e r a t in g r a d ic a l in n o v a t io n ( e .g . L y n n e t
e x p e r i e n c e . F o l l o w i n g t h e h a r d d r i v e fi a s c o , S o n y a l., 1 9 9 6 ) . I n t h e ir s t u d y o f ‘b r e a k t h r o u g h s ’ N a y a k a n d
K e tte r in g h a m n o te d th a t in e v e r y c a s e it w a s th e c u r io s ity
g a v e M r K a m o to th e r e s p o n s ib ility fo r m a n a g in g o f t h e i n v e n t o r r a t h e r t h a n m a r k e t p u l l o r fi n a n c i a l n e e d
a n o th e r d a ta s to r a g e d e v ic e , th e m a g n e tic ta p e d r iv e . th a t w a s th e m o tiv a tin g fo r c e b e h in d th e b r e a k th r o u g h .
U n d e r h is c h a r g e , S o n y ’s w o r ld w id e m a r k e t s h a r e fo r H o w e v e r , it m u s t b e n o te d th a t w h ile o u r fo c u s is o n r a d -
m a g n e tic ta p e d r iv e s in c r e a s e d fr o m 3 to 2 5 p e r c e n t i c a l i n n o v a t i o n , e v e r y fi r m m u s t a ls o e n g a g e s im u l-
ta n e o u s ly in in c r e m e n ta l in n o v a tio n . In fa c t, in c r e m e n ta l
o v e r th re e y e a rs .
in n o v a tio n fo r m o s t c o m p a n ie s s h o u ld e n c o m p a s s th e
v a s t m a jo r it y o f t h e ir in n o v a t io n e f f o r t s . D e s p it e it s lim i-
W h ile M r K a m o t o a n d t h e 3 .5 in c h d is k e t t e w e r e ta tio n s w ith r e s p e c t to r a d ic a l in n o v a tio n , m a r k e t r e s e a r c h
m o v in g fr o m s tr e n g th to s tr e n g th , th e le a d e r o f th e i s i n v a l u a b l e f o r h e l p i n g fi r m s w i t h i n c r e m e n t a l i n n o -
th ir d te a m , M r K u ta r a g i, w a s s tr u g g lin g . H is d e s ig n v a t io n ( s e e L y n n e t a l., 1 9 9 6 ; N a y a k a n d K e t t e r in g h a m ,
fo r th e 2 in c h d is k e tte w a s c o m p le te d in 1 9 8 2 , th e 1 9 9 3 ).
y e a r a f t e r t h e 3 .5 in c h d is k e t t e . M r K u t a r a g i’s d is k e t t e 3 . W a l-M a r t S to r e s , In c . [H a r v a r d B u s in e s s S c h o o l c a s e 9 -
7 9 4 -0 2 4 ].
d e liv e r e d e x c e lle n t p e r fo r m a n c e , b u t its a r c h ite c tu r e 4 . O u r v ie w o f in n o v a tio n h a s a c o n s id e r a b le lin e a g e in th e
r e q u i r e d s i g n i fi c a n t c h a n g e s i n t h e a s s o c i a t e d h a r d - s tr a te g y lite r a tu r e . W e a d o p t T u s h m a n a n d A n d e r s o n ’s
w a r e . A s a r e s u lt, n o c o m p a n y o th e r th a n S o n y d is tin c tio n b e tw e e n in c r e m e n ta l a n d r a d ic a l in n o v a tio n ,
a d o p te d it. U n fo r tu n a te ly , S o n y ’s la p to p , ‘P r o d u c e ’ a ls o r e fe r r e d to a s c o n tin u o u s v e r s u s d is c o n tin u o u s o r
e v o lu tio n a r y v e r s u s r e v o lu tio n a r y in n o v a tio n . S u b -
la u n c h e d in 1 9 8 3 – 8 4 , d id n o t s u c c e e d a n d M r K u ta r -
s e q u e n tly th is d is tin c tio n h a s b e e n a p p lie d to n e w p r o -
a g i h a d to s e a r c h fo r o th e r a p p lic a tio n s fo r th e d u c t d e v e lo p m e n t (C h r is te n s e n a n d B o w e r , 1 9 9 6 ; L e o n -
2 in c h d is k e tte . a r d -B a r to n , 1 9 9 2 ). B e c a u s e m a r k e t d r iv in g is m o r e th a n
ju s t d e v e lo p in g a n e w p r o d u c t , w e a p p ly t h e in c r e m e n t a l
T h e d is k e tte fo u n d its n e x t h o m e in S o n y ’s n e w s till v e r s u s r a d ic a l d is tin c tio n to b u s in e s s in n o v a tio n . B u s in e s s

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 F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

in n o v a tio n is s im ila r to M a r k id e s ’ n o tio n o f s tr a te g ic in n o - 1 4 . In g v a r K a m p ra d a n d IK E A [H a r v a r d B u s in e s s S c h o o l c a s e

v a t i o n w h i c h h e d e fi n e s a s c h a n g i n g t h e r u l e s o f t h e g a m e 9 -3 9 0 -1 3 2 ].
w ith o u t th e h e lp o f te c h n o lo g ic a l in n o v a tio n . M a r k e t d r iv -
in g is b o th s im ila r a n d d iffe r e n t fr o m s tr a te g ic in n o v a tio n .
It is s im ila r in th a t w e a r e a ls o e x a m in in g c h a n g in g th e R e fe re n c e s
r u le s o f th e g a m e w ith o u t te c h n o lo g ic a l in n o v a tio n b u t, C h r is t e n s e n , C .M . a n d B o w e r , J .L . ( 1 9 9 6 ) C u s t o m e r p o w e r ,
a s w e u n d e r s ta n d it, fo r M a r k id e s th is c h a n g e in th e r u le s s t r a t e g i c i n v e s t m e n t , a n d t h e f a i l u r e o f l e a d i n g fi r m s .
o f th e g a m e c o u ld b e th e r e s u lt o f e ith e r r a d ic a l o r S tr a te g ic M a n a g e m e n t Jo u r n a l 1 7 , 1 9 7 – 2 1 8 .
in c r e m e n ta l in n o v a tio n w ith r e s p e c t to v a lu e p r o p o s itio n F o r d , H . (1 9 8 8 ) T o d a y a n d T o m o r r o w , r e p r in t. P r o d u c tiv ity
a n d / o r b u s in e s s s y s te m . In c o n tr a s t, w e p r e fe r to d is - P r e s s , P o r tla n d , O R .
tin g u is h in n o v a tio n o n tw o d im e n s io n s — v a lu e p r o p - G w y n n e , P . (1 9 9 7 ) S k u n k w o r k s , 1 9 9 0 s -s ty le . R e s e a r c h -T e c h -
o s itio n (w h a t is o ffe r e d to th e c u s to m e r ) a n d b u s in e s s s y s - n o lo g y M a n a g e m e n t J u l– A u g , 1 8 – 2 3 .
te m (h o w th e c o m p a n y c r e a te s a n d d e liv e r s its v a lu e H a m e l, G . a n d P r a h a la d , C .K . ( 1 9 9 4 ) C o m p e t in g fo r t h e F u t u r e .
p r o p o s i t i o n ) — a n d r e s t r i c t m a r k e t d r i v i n g t o fi r m s t h a t H a r v a r d B u s in e s s S c h o o l P r e s s , B o s to n .
e n g a g e in r a d ic a l in n o v a tio n o n b o th d im e n s io n s . In n o - H e n d e r s o n , R . a n d C la r k , K . (1 9 9 0 ) A r c h ite c tu r a l in n o v a tio n :
v a tio n in th e v a lu e p r o p o s itio n h a s p r e v io u s ly b e e n m e n - t h e r e c o n fi g u r a t i o n o f e x i s t i n g p r o d u c t t e c h n o l o g i e s a n d
tio n e d b y K im a n d M a u g b o r n e , w ith o u t h o w e v e r th e t h e f a i l u r e o f e s t a b l i s h e d fi r m s . A d m i n i s t r a t i v e S c i e n c e
e m p h a s is o n in c r e m e n ta l v e r s u s r a d ic a l, a n d w e b o r r o w Q u a r te r ly 3 5 , 9 – 3 0 .
th e ir te r m v a lu e in n o v a tio n . O u r c o n c e p tu a liz a tio n o f th e K im , W .C . a n d M a u b o r g n e , R . ( 1 9 9 7 ) V a lu e in n o v a t io n : t h e
b u s in e s s s y s te m is s im ila r to P o r te r ’s v a lu e c h a in c o n c e p t s tr a te g ic lo g ic o f h ig h g r o w th . H a r v a r d B u s in e s s R e v ie w
a n d w e b o r r o w th e te r m a r c h ite c tu r a l in n o v a tio n fr o m 7 5 , 1 0 3 – 1 1 2 .
H e n d e r s o n a n d C la r k (s e e T u s h m a n a n d A n d e r s o n , 1 9 8 6 ; K o tle r , P . (1 9 9 7 ) M a r k e tin g M a n a g e m e n t. P r e n tic e H a ll, N e w
C h r is te n s e n a n d B o w e r , 1 9 9 6 ; L e o n a r d -B a r to n , 1 9 9 2 ; M a r - Je rs e y .
k id e s , 1 9 9 7 ; K im a n d M a u b o rg n e , 1 9 9 7 ; P o rte r, 1 9 8 5 ; K u m a r , N . (1 9 9 6 ) T h e p o w e r o f tr u s t in m a n u fa c tu r e r –
H e n d e r s o n a n d C la r k , 1 9 9 0 ). r e ta ile r r e la tio n s h ip s . H a r v a r d B u s in e s s R e v ie w 7 4 , 9 2 – 1 0 6 .
5 . T h e a u th o r s a r e d e e p ly in d e b te d to P r o fe s s o r X a v ie r G il- L e o n a r d -B a r to n , D . (1 9 9 2 ) C o r e c a p a b ilitie s a n d c o r e r id ig itie s :
b e r t fo r s h a r in g h is p r e s e n ta tio n ‘A c h ie v in g E x c e p tio n a l a p a r a d o x in m a n a g in g n e w p r o d u c t d e v e lo p m e n t. S tr a -
C o m p e titiv e n e s s ’ [1 9 9 7 ]. W e a d a p t h is c o n c e p tu a liz a tio n te g ic M a n a g e m e n t Jo u r n a l 1 3 , 1 1 1 – 1 2 5 .
o f th e IK E A b u s in e s s s y s te m . L y n n , G .S ., M o r o n e , J .G . a n d P a u ls o n , A .S . ( 1 9 9 6 ) M a r k e t in g
6 . S e e K o tle r (1 9 9 7 ) fo r a d is c u s s io n o n th e d iffe r e n c e s a n d d is c o n tin u o u s in n o v a tio n : th e p r o b e a n d le a r n p r o -
b e tw e e n s a le s d r iv e n a n d m a r k e t d r iv e n c o m p a n ie s . C u s - c e s s . C a lifo r n ia M a n a g e m e n t R e v ie w 3 8 , 8 – 3 7 .
to m e r d r iv e n a n d m a r k e t d r iv in g a r e o u r o w n c o n c e p - M a r k id e s , C . (1 9 9 7 ) S tr a te g ic in n o v a tio n . S lo a n M a n a g e m e n t
tu a liz a tio n s . R e v ie w 3 8 , 9 – 2 3 .
7 . S e e N a y a k a n d K e tte r in g h a m (1 9 9 3 ) fo r th e F e d e ra l N a y a k , P .R . a n d K e t t e r in g h a m , J .M . ( 1 9 9 3 ) B r e a k t h r o u g h s . M e r -
E x p re s s s to ry . c u ry , O x fo rd .
8 . S o u th w e s t A ir lin e s : 1 9 9 3 (A ) [H a r v a r d B u s in e s s S c h o o l P la ttn e r , H . (1 9 9 6 ) A c c id e n ta l e m p ir e . C o m p u te r B u s in e s s
c a s e 9 -6 9 4 -0 2 3 ]. R e v ie w A u g u s t, 9 – 1 2 .
9 . T r ip s a s ’ s tu d y o f r a d ic a l te c h n o lo g ic a l in n o v a tio n in d i- P o r t e r , M .E . ( 1 9 8 5 ) C o m p e t it iv e A d v a n t a g e . F r e e P r e s s , N e w
Y o rk .
c a te d th a t n e w e n tr a n ts s u c c e e d o v e r in c u m b e n ts in th o s e
P o t t r u c k , D .S . ( 1 9 9 7 ) C h a r le s S c h w a b : t h e m a v e r ic k r e t a ile r .
s itu a tio n s w h e r e th e in n o v a tio n d e v a lu e s th e e x is tin g
R e ta ilin g Is s u e s L e tte r , C e n te r fo r R e ta ilin g S tu d ie s , T e x a s
c o m p le m e n ta r y s p e c ia liz e d in v e s tm e n ts o f in c u m b e n ts .
A & M U n iv e r s ity , V o l. 9 .
S i n c e i n o u r c o n c e p t u a l i z a t i o n , m a r k e t d r i v i n g fi r m s a r e S in g le , A .W . a n d S p u r g e o n , W .M . ( 1 9 9 6 ) C r e a t in g a n d c o m -
th o s e th a t d e v e lo p a u n iq u e b u s in e s s s y s te m , it fo llo w s m e r c ia liz in g in n o v a tio n in s id e a s k u n k w o r k s . R e s e a r c h -
th a t th e e x is tin g b u s in e s s s y s te m o f in c u m b e n ts is d e v a - T e c h n o lo g y M a n a g e m e n t J a n – F e b , 3 8 – 4 1 .
l u e d a n d t h e r e f o r e m a r k e t d r i v i n g fi r m s t e n d t o b e n e w S t a lk , G ., P e c a u t , D .K . a n d B u r n e t t , B . ( 1 9 9 6 ) B r e a k in g
e n tr a n ts (s e e T r ip s a s , 1 9 9 7 ). c o m p r o m is e s , b r e a k a w a y g r o w th . H a r v a r d B u s in e s s
1 0 . P r o fe s s o r Ja y G a lb r a ith o b s e r v e d th is d u r in g a le c tu r e R e v ie w 7 4 , 1 3 1 – 1 3 9 .
a t t e n d e d b y t h e fi r s t a u t h o r . T r ip s a s , M . (1 9 9 7 ) U n r a v e lin g th e p r o c e s s o f c r e a tiv e d e s tr u c -
1 1 . T h e r e m a y b e h o w e v e r s o m e c r it ic a l ju n c t u r e s w h e n a tio n : c o m p le m e n ta r y a s s e ts a n d in c u m b e n t s u r v iv a l in
la r g e s u c c e s s fu l c o m p a n y h a s to b e t o n a fu tu r e a n d r e in - th e ty p e s e tte r in d u s tr y . S tr a te g ic M a n a g e m e n t Jo u r n a l 1 8 ,
v e n t its e lf. H e w le tt-P a c k a r d , In te l, a n d N o k ia a r e fr e - 1 1 9 – 1 4 2 .
q u e n tly c ite d a s e x a m p le s o f th is . T u s h m a n , M . a n d A n d e r s o n , P . (1 9 8 6 ) T e c h n o lo g ic a l d is c o n ti-
1 2 . In te rn a l T o y o ta d o c u m e n ts . n u itie s a n d o r g a n iz a tio n a l e n v ir o n m e n ts . A d m in is tr a tiv e
1 3 . T h e r e is c o n s id e r a b le lite r a tu r e o n s k u n k w o r k s . S o m e S c ie n c e Q u a r te r ly 3 1 , 4 3 9 – 4 6 5 .
u s e fu l a r tic le s fo r p r a c titio n e r s a r e G w y n n e (1 9 9 7 ); S in g le T u s h m a n , M .L . a n d O ’R e illy , C .A . ( 1 9 9 6 ) A m b id e x t r o u s
a n d S p u rg e o n (1 9 9 6 ). o r g a n iz a tio n s . C a lifo r n ia M a n a g e m e n t R e v ie w 3 8 , 8 – 3 0 .

European Management Journal Vol 18 No 2 April 2000 1 4 1

F R O M M A R K E T D R IV E N T O M A R K E T D R IV IN G

N IR M A L Y A K U M A R , L IS A S C H E E R , U n iv e r -
IM D , In s titu te o f M a n a g e - s ity o f M is s o u r i-C o lu m b ia ,
m en t D e v e lo p m en t, P .O . C o lle g e o f B u s in e s s a n d
B o x 9 1 5 , L a u sa n n e C H - P u b lic A d m in is tr a tio n ,
1 0 0 1 , S w itz e r la n d . S c h o o l o f B u s in e s s , D e p a r t-
m en t o f M a r k e tin g , 2 1 4
N ir m a ly a K u m a r is P r o - M id d le b u sh , C o lu m b ia ,
fe s s o r o f M a r k e tin g a n d M is s o u ri 6 5 2 1 1 , U S A .
R e ta ilin g a t IM D , L a u s -
a n n e . A s a c o a c h , c o n s u lt- L is a S c h e e r is A s s o c ia te P r o -
a n t, s e m in a r le a d e r a n d fe s s o r o f M a r k e tin g a t th e
s p e a k e r o n m a r k e tin g s tr a t- U n iv e r s ity o f M is s o u r i,
eg y , b ra n d in g , d is tr ib u tio n a n d r e ta ilin g , h e h a s w o r k e d C o lu m b ia , a n d C h a ir o f th e M a r k e tin g D ep a rtm en t.
w ith o v er 3 0 F o rtu n e 5 0 0 c o m p a n ie s in m o r e th a n 2 5 H e r r e s e a r c h o n o r g a n iz a tio n a l m a r k e tin g r e la tio n s h ip s
d iffe r e n t c o u n tr ie s . H e h a s a u th o r e d m a n y a r tic le s in h a s b e e n w id e ly p u b lis h e d in jo u r n a ls .
le a d in g jo u r n a ls a n d is a m e m b e r o f th e A d v is o r y B o a r d
o f th e E u ro p e a n M a n a g e m e n t Jo u r n a l.

P H IL IP K O T L E R , J .L .
K e llo g g G ra d u a te S c h o o l o f
M a n a g e m en t, N o rth w estern
U n iv e r s ity , 2 0 0 1 , S h e r id a n
R o a d , E v a n s to n , Illin o is
6 0 2 0 8 -2 0 0 1 , U S A .

P h ilip K o t le r is t h e S .C .
Jo h n s o n D is tin g u is h e d P r o -
fe s s o r o f In te r n a tio n a l M a r -
k e t in g a t t h e J .L . K e llo g g
G ra d u a te S c h o o l o f M a n a g e-
m en t, N o rt h w estern U n iv e r s ity . H e is th e a u th o r o f
M a r k e tin g M a n a g e m e n t, th e m o s t w id e ly -u s e d m a r -
k e tin g b o o k in g r a d u a te b u s in e s s s c h o o ls w o r ld -w id e
a n d sev era l o th er b o o k s a s w e ll a s o v e r 1 0 0 jo u r n a l a r t-
ic le s .

1 4 2 European Management Journal Vol 18 No 2 April 2000