It was the beginning of a new year, and the executive vice president of sales was in my office. We had recently been through the annual budgeting rain dance and now – not even a full month later – he was telling me that the sales forecast was unachievable. I guess he had just realized the conflict between what he wanted to achieve when the vision of big bonuses was dancing in his head and reality of what seemed possible. Boy, I could hardly wait to report this to the board of directors.

I have a hunch that the sweaty palms, nervous ticks, and stomachaches due to unrealistic sales forecasts will be particularly interesting to watch this year. During the recent economic malaise, we all focused on maximizing operational productivity and have pretty much squeezed out all the productivity gains we are going to get. Now, everyone seems gung-ho again on improving profits by increasing revenues. The thinking is that the euphoria of a new year combined with a recovering economy can bring “sales salvation.” It’ll be a piece of cake. Well, only if you believe in the Tooth Fairy!

Even if optimistic business leaders don’t want to say it out loud, those little voices in their heads tell them that it’s easier said than done. The reality is that even if the economy is recovering, markets are fragmented. Product and service life cycles are shortening. There is a less time to make money as competition and pricing pressures quickly intensify. And consumers are less loyal to brand and more sophisticated and demanding than ever before. In addition, many industries are in a price war (the classic knee-jerk reaction to consumer behavior in a poor economy).

Not exactly the rosy picture that you presented to the Board of Directors last month when they approved your annual budget, is it?

Well, I’ve formed some opinions on this subject that you may find to be of value. The path to increasing sales doesn’t lie in slick new brochures or advertising campaigns, new products with newfangled feature, or even new salespeople. The answer, my friends, isn’t in becoming more marketing oriented. Rather, it is in becoming more market oriented.

What is Market Oriented?

Let me start with what market oriented is not. Being market oriented does not mean getting the marketing department involved in every function of the company on the logic that they have the best understanding of what the customer wants. It does not mean hiring more salespeople to increase call points, or giving each division its own sales force or engineering group to respond better to customer needs. It does not mean increased manufacturing automation to improve quality. It does not mean spending more on new product development to leapfrog the competition’s technology.

These are all standard responses, especially if the CEO follows Peters and Waterman’s advice in In Search of Excellence – to raise the rallying cry for “getting close to the customer.” They might be part of an overall integrated strategy, but by themselves, these responses just result in department heads defending their own turf and talking past each other. Besides, most businesses sell to a wide variety of customers with different – and maybe even conflicting – wants and needs.

Being market oriented is instilling a philosophy and a culture that runs deep in the organization. It requires taking an integrated, global view of the business and creating a coordinated set of processes that involve all aspects of the company. Market-oriented organizations typically have three key characteristics:

1. Knowledge of what influences a customer’s buying decision resides in every department, at all levels. This means knowledge of the customer goes beyond the sales and marketing functions to include the R&D folks, manufacturing engineers, and field service employees.

But market orientation won’t start from the bottom up; it needs commitment from the top. Executives need to routinely visit key customers to see them using or retailing their products and consuming their services.

One organization I know of made a list of their top 20 customers and divided them among the executives, who visited them and then prepared detailed reports that analyzed their company’s relationship with the customer. Each one shared the information with everyone else on the executive team, who shared it with their departments, trickling down the information until everyone in the organization understood their customers and how to satisfy their wants and needs.

2. People in different parts of the organization talk to each other; big and little decisions are made interfunctionally. 

Is communication between your departments clear and open, or is it more like tossing a rock with a message taped to it over the cubicle wall?

Say marketing requests that R&D develop a product with a list of specifications by a certain date. If R&D isn’t market oriented and doesn’t understand or feel committed to the customer, it might not honor the request. Perhaps R&D thinks the request is unreasonable and drags its feet, or perhaps it has become more difficult to meet the specifications than anyone realized. Either way, if R&D doesn’t tell marketing, the result is a missed deadline or changed specifications, and a surprised marketing department, and a missed sales forecast, and a missed profit plan – and soon, new management!

However, in market-oriented companies, everyone is focused on the customer. So interdepartmental communication is as smooth as a baby’s butt. And marketing and R&D can make intelligent trade-offs together, all the way from big strategic decisions to the little tactical ones.

3. Strategies are executed with inter-departmental cooperation.

Wildly successful new products don’t emerge out of a linear process that has marketing sending specs to R&D, which sends designs and prototypes to manufacturing, and so on. Rather, all functions analyze opportunity at the beginning and all throughout the process, so everyone has the chance to share ideas along the way. The strengths and knowledge of all parties is leveraged throughout.

Are We There Yet?

One of my favorite “Far Side” cartoons shows two shepherd-like fellows riding camels in the middle of the desert. The first one turns around to say to the other, “Stop asking me if we’re almost there yet! We’re nomads, for crying out loud!”

Businesses can’t ever really be “there” either, because “there” keeps changing. And no organization can ever reach the point where it can’t improve on being market oriented any more.

It’s not easy to change into a market-oriented organization, because it requires a culture change. Business leaders must push their people to think about customers and to think about the organization as a whole, not just what’s best for their individual departments. It starts with collecting detailed customer data and giving it to all employees at all levels. It requires interdepartmental decision making, forced by the CEO. And it requires commitment to executing the strategy as a whole company.

The road can be long, but you’ll know you’re on the right track when you see that your organization is making customer-focused, joint decisions.

Then your customers will believe that you are easier to do business with, that you make reasonable promises that you stick to, that you meet the standards they expect, and that you are responsive to their needs. And then that warm fuzzy feeling that your organization is finally more market oriented can replace those nervous gut aches that seem to come around this time of year.