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Many other researchers focused on the market orientation-performance relationship in different contexts.4 Appiah-Adu researched differences between large and small businesses as well as conducting empirical tests in a transition economy (1997, 1998)5 . Avlonitis and Gounaris (1997)6 compared the market orientation-performance relationship between industrial and consumer goods companies. Similar empirical studies were made
in service industries (see Chang and Chen, 1998)7, innonpro t service providers (Kara, Spillan, and DeShields, 2004)8 and in university business schools (Hammond, Webster and Harmon, 2006)9 .
These systematic studies and others provide convincing evidence that there is a strong positive relationship between market orientation and organizational performance.
The importance of market orientation as a corporate culture was highlighted in an empirical study by Homberg and P esser (2000)10 and the relevance of a culture that focused on customers and considered competitors (Homberg, Grozdanovic and Klarmann, 2007)11 . The relationship between corporate culture, market orientation and innovativeness in Japanese rms was explored by Deshpande, Farley and Webster (1993)12 This work addressed the culture measurement issues and performance outcomes
and provided a framework for measurement. A large amount of research has also been conducted to de ne and measure the relationships between organizational culture and performance - see for example Kotter and Heskett, 199213, Ogbonna and Harris, 200014 and Berson, Oreg and Dvir, 200515.
These studies, as well as observation by practitioners, led us to conclude that corporate culture is a decisive driver of business performance.
The Changing Global and Local Business Environment
We all have a sense of what is happening today. It is
a time of unprecedented change. Large multi-national businesses as well as nationally based organizations have become more complex as they service many markets and customer segments with an increasing variety of products and services. The pace of
change and technological disruption is requiring
most organizations to review their product lines and services and develop new ones and in many instances change their operating models – that is, the way in which they organize themselves to create and deliver new forms of value to their customers. Those that
have not been able to respond, such as Kodak and Borders book stores, no longer exist. Others, such as Nokia, have been acquired.
Social media has sparked revolutions and enabled communities and consumers to mobilize themselves and demand change. These new forms of virtually instant communications to literally millions of people make governments as well as corporations much more transparent. A company’s culture and its willingness to respond to customer demands and poor customer experiences is now transparent for everyone to see.
Yet, many organizations have not responded effectively and have not transformed their organizations to a customer focus. Reports by the Forrester research group consistently reveal the disconnect between companies that believe they are customer focused and the perception of their customers.16 Our experience with many organizations across the world supports this view. While most senior corporate leaders intuitively agree that a customer focus is important to future business performance, they do not fully understand the critical requirement of a customer-focused culture. To effectively survive and prosper in today’s environment, most organizations must have a customer culture. We maintain that this is imperative to creating sustainable growth and pro tability.
What is a Customer Culture?
“I came to see, in my time at IBM, that culture isn’t just one aspect of the game – it is the game. In the end an organization is nothing more than the collective capacity of its people to create value.”Lou Gerstner, former CEO of IBM17
We conducted our own research during 2007-2009 to nd out why so many organizations are not customer focused. We found that when we asked leaders in companies if they were customer focused, most said “yes, of course, it is in our vision”. When we asked what they meant by customer focus and how did it apply in their organizations we received many different answers – good customer service, well targeted offers to market segments, quick handling of customer complaints. It was clear that different people in the same organizations and across businesses had a different view as to what customer focus means. There was a clear need to be able to de ne it and make it tangible.18
First we must distinguish between customer focus and customer culture. The term customer focus
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