Papers Strategic Marketing
Paper: Market Orientation and the learning organization – S.F. Slater & J.C. Narver
https://edubb.uvt.nl/bbcswebdav/pid-1556942-dt-content-rid-
5306924_1/courses/328251-2017-2018/Slater%26Narver1995%20JM.pdf
A market orientation is valuable because it focuses the organization on:
1. Continuously collecting information about target-consumers’ needs and competitors’
capabilities.
2. Using this information to create continuously superior customer value.
We argue that though a market orientation provides strong norms for learning from
customers and competitors, it must be complemented by entrepreneurship and appropriate
organizational structures and processes for higher-order learning to occur.
Organizational learning
Organizational learning is the development of new knowledge or insights that have the
potential to influence behavior. Presumably, learning facilitates behavior change that leads to
improved performance. All businesses competing in dynamic and turbulent environments
must pursue the processes of learning, behavior change and performance improvement.
Types of organizational learning
Adaptive learning: the most basic form of learning, occurs within a set of recognized and
unrecognized constraints that reflect the organization’s assumptions about is environment
and itself.
The learning boundary constrains organizational learning to the adaptive variety, which
usually is sequential, incremental, and focused on issues or opportunities that are within the
traditional scope of the organization's activities.
Generative learning: occurs when the organization is willing to question long-held
assumptions about its mission, customers, capabilities, or strategy. It requires the
development of a new way of looking at the world based on an understanding of the systems
and relationships that link key issues and events. Systems thinking disciplines the
organization to focus on interrelationships and dynamic processes of change rather than on
linear cause-effect chains. Generative learning is frame-breaking and more likely to lead to
competitive advantage than adaptive learning. Revolutionary periods of generative learning
may provide a window of competitive advantage that can be kept open only through
continuous improvement. Eventually the window will begin to close as knowledge about the
innovation diffuses to competitors.
Processes of organizational learning
Organizational learning is a three-stage process that includes information acquisition,
information dissemination and shared interpretation.
Information acquisition: Information may be acquired from direct experience, the
experiences of others, or organizational memory. The learning curve, or experience curve,
shows the clearest illustration of acquiring knowledge from internally-focused experience
and the effect of cumulative production and user experience on productivity in
,manufacturing. Organizations must continually balance between learning from exploitation
and exploration because too much reliance on the former is unlikely to lead to generative
learning, whereas too much reliance on the latter is expensive and may produce too many
underdeveloped concepts and ideas.
To avoid the adaptive learning trap, executives ensure that their networks include people
with different perspectives from those who are dominant in the organization.
It is essential that important knowledge be codified or recorded in information systems,
operating procedures, white papers etc.
However these memories may constrain generative learning or even encourage ineffective
learning if they focus the organization inappropriately. In other words, new procedures or
capabilities may be more effective than old ones, but the organization is unwilling or unable
to reject the capability in which it has invested. In this situation, the organization must
promote active unlearning and motivate its personnel to take risks.
Information dissemination: organizational learning is distinguishable from personal learning
by information dissemination and accomplishing a shared interpretation of information.
Effective dissemination, or sharing, increases information value when each piece of in-
formation can be seen in its broader context by all organizational players who might use or
be affected by it and who are able to feedback questions, amplifications, or modifications
that provide new insights to the send
When organizations remove the functional barriers that impede the flow of information from
development to manufacturing to sales and marketing, they improve the organization’s
ability to make rapid decisions and execute them effectively. The quality of the info sharing
process between organizations has also been found to be critical to the success of
partnerships and alliances.
Shared interpretation: The final stage of organizational learning is shared interpretation of
the information. For organizational learning to occur there must be a consensus on the
meaning of info and its implications for that business.
Effective conflict resolution may require the use of structured processes for surfacing
disagreement. Conflict resolution is further enhanced by the development of group norms
that encourage open sharing of information and remove constraints on information and
communication. To ensure that all information is considered, organizations must provide
forums for information exchange and discussion.
The influence of knowledge on behavior
Behavior change is the link between organizational learning and its ultimate objective,
performance improvement. There are three ways that learning can influence organizational
behavior:
1. Action-oriented use is the direct application of knowledge to solve a problem.
2. Knowledge-enhancing use influences managerial perspectives on problems but is less
likely to change behavior directly.
3. Affective use increases satisfaction or decreases dissonance with a change that
already has been made. Consequently, we believe that it is incorrect to expect direct
and immediate behavior change on the basis of new knowledge.
,Organizational learning and competitive advantage
The ability to learn faster than your competitors may be the only sustainable competitive
advantage. An organization has a foundation for sustained competitive advantage when it
possesses skills or resources that:
1. Provide superior value to customers
2. Are difficult to imitate
3. Capable of multiple applications.
Organizational learning is valuable to a firm’s customers in this context because it focuses on
understanding and effectively satisfying their expressed and latent need through new
products, services and ways of doing business. This should lead directly to superior
outcomes. Furthermore, effective organizations are loosely coupled with their environments
because there is a buffer between the organization and the environment that enables them
to avoid a reactionary response to every event. A learning culture is just such a buffer in
three different ways:
1. Particularly generative learning is typically forward-looking, which reduces the
frequency and magnitude of major shocks. This also helps to reduce the impression
of an environmental complexity that could cause strategic paralysis. In other words,
the perceive complexity makes it too difficult for decision makers and learners to map
their environment.
2. Because learning organizations have close relationships with customers, suppliers and
other key constituencies, there is a cooperative attitude that facilitates mutual
adjustment among them when the unexpected occurs.
3. Because of its inherent flexibility, the learning organization is able to quickly
reconfigure its architecture and reallocate its resources to focus on the emergent
opportunity or threat.
Culture and climate in the learning organization
culture is the deeply rooted set of values and beliefs that provide norms for behavior in the
organization.
climate describes how the organization operationalizes its culture, the structures and
processes that facilitate the achievement of the desired behaviors.
It is important for the culture and climate to be complementary because it is difficult to
develop and sustain appropriate behaviors if the corresponding organizational values are not
in place and values are difficult to sustain if the appropriate incentives and examples do not
exist.
The two key elements of culture: market orientation and entrepreneurship and the three
elements of climate: facilitative leadership, organic and open structure and decentralized
approach to learning and performance. Culture and climate must reinforce each other. We
describe these five components and their influence in the subsequent sections.
, Market orientation
Is the principle cultural foundation of the learning organization. Definitions: the culture that
places the highest priority on the profitable creation and maintenance of superior customer
value while considering the interests of other key stakeholders and provides norms for
behaviour regarding the organizational development of and responsiveness to market
information. Because of its external emphasis on developing info about customers and
competitors, the market-driven business is well positioned to anticipate the developing
needs of its customers and respond to them through the addition of innovative products and
services. This ability gives the market-driven business an advantage in the speed and
effectiveness of its response to opportunities and threats. Thus, a market orientation is
inherently a learning orientation. However, a market orientation may not encourage a
sufficient willingness to take risks. Such a company will emphasize product-line extensions for
its current customers, rather than pursue a deep understanding of the latent needs of
current and new customers and, hence, innovative new products and opportunities in new
markets. Another concern is that the primary focus of a market orientation is on creating
superior customer value which is based on knowledge from customer and competitor
analyses. A business must be careful not to underestimate the potential contributions of
other learning sources. Furthermore, an organization may not see threats from non-
traditional competitors.
To be a powerful foundation for a learning organization and provide the opportunity of
generative learning, the scope of market orientation must include all stakeholders and
constituencies that possess or are developing knowledge that has the potential to contribute
to the creation of superior customer value or are threats to competitive advantage.
Entrepreneurship
Entrepreneurial cultures are often characterized as valuing traits, such as high tolerance for
risk, proactiveness, receptivity to innovation and active resistance to bureaucracy. These
traits are strongly associated with:
1. Knowledge acquisition through exploration
2. Challenging assumptions to create generative learning
3. The rapid development of new behaviors to leverage learning
Entrepreneurial values support the creation of new businesses within the existing business
and the renewal or revival of on-going business that have become stagnant or in need of
transformation.
A fundamental entrepreneurial activity is not only to create products ahead of competitors
but also to create them ahead of the recognition of an explicit need by customers, focusing
on the customers’ latent needs. This is a risk activity, particularly when product innovations
are often copied by competitors within 9 to 15 months. To minimize the risk and maximize
learning, successful innovator frequently works intensively with lead customers, undertake
numerous low-cost market experiments or continuously experiment through ongoing quality
or cost-reduction programs.
