Peter Drucker said the "the purpose of business is to create and keep a customer." In order to keep a customer, the CEO must know the customer's needs. The challenge for the CEO today is steering his or her organization in a rapidly changing marketplace. Changing consumer behavior and media habits are disrupting the marketing, product development, consumer research, sales, IT, legal functions and advertising agency relationships at their companies.

How should a CEO address these changes? First, the CEO should recognize that the overall marketplace is going through a ten-year disruption cycle. Second, the CEO needs to put together a plan to structure the organization to capitalize on changing consumer needs and expectations. Third, the CEO needs to create an urgency to act and to innovate. If you are not able to innovate quickly enough to meet your needs, then you should re-think your approach.

How did this happen? In the last ten years, there has been a mash-up of technologies (Internet, Broadband, Cloud Computing, Mobility & Social Media) that is revolutionizing basic consumer behavior. In the next three years, smartphones will increase from 140 million in 2013 to 207 million in 2017 in the US* and to 3 billion worldwide*. This increase in distribution, along with innovations within the smartphone, will be a disruptive force on the marketplace. The typical smartphone today has motion sensors, a gyroscope, location and proximity sensors, voice sensor, compass and magnetic sensors, camera, fingerprint sensor, payment system and more.

Even established players can be disrupted. Facebook saw its preference by US teens fall in the last year to 23% in 2013 from 42% in 2012.* IT departments now live in a world where 2.5 quintrillion bytes per day (18 zeros)** are produced every day but there are not enough Data Scientist and Data Analysts to process. The changes extend beyond smartphones. The growth of connected cars, wearables and machine-to-machine computing integrated into the Internet all contribute to a changing and dynamic marketplace.

How do you focus the organization to capitalize on the disruptive market forces at work? Clayton M. Christensen author of "The Innovator's Dilemma," offers some simple advice. "Watching how customers actually use a product provides much more reliable information than can be gleaned from a verbal interview or a focus group."

What is the ROI for such a customer focus? The Futures Agency estimates that the majority of a company's 2018 revenues will likely come from products and services that don't exist today. Listening to your customers, innovating and anticipating their needs are the key to success.

Sources:
* Emarketer 2013
** Predictive Analytics 2013

Dan Hodges is Managing Director of Consumers in Motion ( www.consumersinmotion.com), aDan Hodges strategic consulting company that provides business, marketing and technology services to clients.

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