Aligning the Organization with the Market

We will scrutinize two central premises of market-driven organizations: First, that organization structures should evolve to align more closely with the structure of the market. Second, that improving this alignment will improve performance.

While the evidence - including my own study of the organizational dimensions of 347 business units - is directionally consistent with these two premises, it is not enough to support robust prescriptions about the appropriate structure.

To help interpret these findings we undertook in-depth studies of 15 firms that had adopted some variant of a customer-focused organization. Our preliminary conclusion is that any theory of customer-focused organizations needs to account for:

* the continual evolution and fluidity of all organization structures

* the constraints of path dependencies

* a wide range of contingency variables including the intended strategy and the structure of the market

* the over-riding importance of the quality of implementation (including leadership, systems support, resources, and confidence in metrics and incentives.)