Market design – A blast from the past or a new path to greener growth pastures?
Author Suvi Nenonen
Published on April 13th in categories Blog.
During the last few years I have had the privilege to discuss market design with various business executives and academic researchers. The notion of manageable markets seems to have a universal appeal and applicability, but every now and then I am confronted with the following question: “The idea of continuously exploring for new market opportunities is robust and viable, but how does this differ from the diversification strategies of the 1970s? Is market design just a new label for an old growth recipe?”
It is true that management fads seem to come and go with a sort of pendulum movement: there are theses (such as ‘diversification strategy’) that are usually followed by anti-theses (such as ‘focus on your core business’). Even though market design shares some characteristics with the traditional diversification thinking (e.g. the notion of exploring customer needs and firm capabilities for new growth markets), it would be harsh to say that adopting market design mindset is equal to buying a ticket to a time machine and returning to the heyday of the portfolio strategies, oil crisis, progressive rock and truly questionable fashion sense. In my opinion the main difference between the market design thinking and traditional diversification thinking resides in the way how markets are conceived. Traditional diversification merely looks for growth markets whereas market design also looks for ways to influence markets. The last 40 years have seen the development of concepts such as customer relationship management, value networks and business models – and in so doing given us the needed toolkit to design markets for our own benefit.
However, these discussions have prompted an interesting question to our minds: how do Finnish companies actually perceive markets? Are markets seen traditionally as given objective places where demand and supply meet or do firms actively consider ways to shape their markets? It is clear that some leading Finnish firms have adopted the market design thinking (just look at KONE’s People Flow strategy or Kemira’s water quality and quantity management market definition), but what is the overall situation? Is market design still an underutilized ace for the majority of the Finnish firms or are we preaching to the converted?
In order to answer this question we have just initiated a survey among the hundred largest Finnish corporations. In this study we will investigate how the Finnish firms define their markets, where do they look for new growth markets, and what are their main ways of shaping their markets.
Such a study has never been conducted before, so needless to say that I am more than eager to get my hands on the results. Being something of an optimist, I am personally hoping to find new best practices from this survey which could then be shared within the Finnish business community – for the benefit of the firms and the Finnish society alike.
The results of our very own TE100 survey are expected to be ready in early June. So, stay tuned for the survey results – or better yet, enroll to our early summer breakfast Forum to discuss the findings in person! Invitations will be sent out in a few weeks time 