Market Efficiency

Inertia from past activities is an overwhelmingly powerfulforce in most hierarchical organizations, where reinforcing the status quo toprotect institutionalized policies, procedures and systems more often ensureagainst the evolution of novel methods to lower cost structure. The problemwith any status quo is that, after precious resources have been “invested” indeveloping new capabilities, however commonplace, there is a naturalinclination toward protecting them, in spite of their importance to customers.Indeed, sunk costs of all kinds often end up as dead weight that customersnever really valued very much in the first place.

Simply put, efficiency boils down to the discipline todiscontinue those activities which no longer matter to customers.

When applied to markets, it means that sacrosanctapparatus ranging from the sales force or customer service might be on thechopping block as more efficient methods to connect and maintain connectionwith a firm’s markets evolve. For example, many organizations have begun usingsocial media to respond to customer complaints or service calls, while mostcompanies have automated their sales process to some degree, many dissolvingthe sales force entirely as sales becomes less a matter of updating customerorder records – a task which might be done online – and more a matter ofbuilding lasting relationships of trust with much more narrowly targetedcustomers based on potential lifetime value.