George Day: Market Driven Strategies, “Where to Play and How to Win.”

A History of Marketing / Episode 12

“My philosophy about the marketing function is that it's the interface between the organization and its markets.” - George Day

This week, we’re joined by Professor George Day, a renowned author, educator, and researcher. Day is the Geoffrey T. Boise Emeritus Professor at the Wharton School of the University of Pennsylvania, where he founded the Mack Institute for Innovation Management.

Day co-authored Marketing Research with David Aaker and V. Kumar, who were previous podcast guests.

However, Day perhaps best known for his work on strategy. We spend most of this interview on his 1990 book, Market Driven Strategy: Processes for Creating Value.

Listen to the podcast: Spotify / Apple Podcasts / YouTube Podcasts

Market Driven Strategy was a breakthrough because it shifted the focus from a company’s internal capabilities towards an outside-in, customer-centric approach. While newer strategic frameworks have emerged, you can trace many of them back to the ideas popularized by Day in this book.

Now here’s my conversation with Professor George Day.

Foundational Work in "Market Development"

Andrew Mitrak: George, thanks so much for joining us.

George Day: I'm delighted to be able to share my story and reflect on the history of marketing strategy—or what I would call strategy from a marketing perspective.

Andrew Mitrak: Sounds great. Well, let's start with the early days of your story. You started as a mechanical engineer at the University of British Columbia. And in less than a decade, you were teaching MBA students at Stanford's Graduate School of Business about marketing. So how did you go from engineering to marketing?

George Day: It began when I started as a junior engineer in a chemical plant, as an operating engineer. I decided that was arduous and painful, so I talked my way into the Market Development Group. I joined the Market Development Group as part of the R&D Group. They were trying to find applications for the products they were developing. We had a lot of capacity to produce hundreds of products, so my job was to find markets for them.

Andrew Mitrak: A product in search of a market. That sounds like a fun, challenging line of work.

George Day: I transferred to headquarters, and the day I arrived, they fired my boss. So there was a two-person Market Development Group, and I was the lead person. I had to learn a lot very fast.

Talk about the blind leading the halt. I was thrust into an environment and a job which I really didn't understand, was certainly not prepared for. Because with an engineering degree, I was focused and rigorous.

I think a lot of my perspectives came from the questions I asked and the inability of the senior executives of the chemical company to answer them. I decided then, to understand better the situation I was in, I'd get an MBA, and that was a really transformative experience.

Andrew Mitrak: Were there any professors or mentors during that time that shaped your early views of marketing?

Early Influences: David Leighton and John Howard

George Day: Yes, I encountered an enormously influential figure in my life, who I consider a mentor: David Leighton, who subsequently became chair of the American Marketing Association. To illustrate his capacity, he also was asked to be brought in to run the Canadian Winter Olympics, and then became the chairman and managing director of the Canadian government library, symphony, and museum.

So Dave influenced me and encouraged me to go on and get a doctorate. That's when I went to Columbia. I had a Ford Foundation fellowship that I could use to pretty much talk my way into most schools. I went around and interviewed three or four schools and selected Columbia, largely because of John Howard, who was a rigorous, leading-edge scholar. He had an enormous influence on Jagdish Sheth and also on me.

Andrew Mitrak: I talked to Jagdish Sheth a few weeks ago, and he spoke about his collaboration with John Howard on developing the theory of buyer behavior. What was your relationship with John Howard, and did you have a chance to collaborate with him on any of your research works?

George Day: Jagdish at that time was a research assistant or associate of John Howard's, had gone to work with him, and I came in as a doctoral student into the doctoral program. It happened that I worked very closely with him and ran a big research project which we called the buyer behavior project. It was a major research collaboration with the General Foods company.

So I spent a lot of time on that, and that's where I learned a lot of my research skills.

The Analytical Edge: Engineering Meets Marketing

Andrew Mitrak: And did you find that having this engineering background gave you a unique perspective on marketing? Were you sort of an odd person out with an engineering background, or was that more common?

George Day: I think the engineering background certainly helped me because in the PhD program at that time at Columbia, there was a real emphasis on rigor and statistics. So that was pretty easy for me. My dissertation was on continuous time, discrete state stochastic models in marketing. If you can follow that, don't ask me any questions.

Defining Market-Driven Strategy: Where to Play, How to Win

Andrew Mitrak: I want to jump ahead to 1990. This is when you published Market Driven Strategy: Processes for Creating Value. When we were emailing in advance of this show, you mentioned Market Driven Strategy is a good place to start because that book represents your views on the scope of marketing strategy. So, can you share with us, what is the scope of marketing strategy?

George Day: Marketing strategy— there are various ways to define it. I take an expansive view as the answer to the two classic strategy questions: where to play and how to win. Those have been the bedrock questions for all companies throughout time.

But market-driven strategies advocate starting from the market and your previous commitments—that's the nature of your capabilities and culture that shape both the choice of customer value proposition and choice of service market. I think ultimately the core of marketing strategy is how to achieve customer value leadership and continuously innovate new value that customers will pay for.

The other side of it is the companies that win—and I take a strong competitive advantage approach to it—but a lot of my subsequent work over the last 20 or 30 years has dealt with the ability of companies to foresee trends, events, and opportunities. These often come about as weak signals that are flickering out there on the periphery of the organization, and the winners detect and act on those weak signals faster than anybody else.

A selection of books by Day: Market Driven Strategy (1990), Advanced Introduction to Marketing Strategy (2022), Market Driven Organization (1999)

At the core of an innovation discipline is the ability to foresee trends and events that create great opportunities or possible great threats and position yourself to capture them ahead of any of your rivals.

Bridging Academia and Practice Through Consulting

Andrew Mitrak: I love how you frame it as "where to play and how to win." As I was researching this book and your work, unlike a lot of books on marketing strategy that can feel kind of esoteric and abstract, this one feels really grounded in real-world business applications. How much of this was sparked by your academic research versus being informed by your experience hands-on consulting for companies?

George Day: That's a very insightful question, and the answer is both. I am a product of a case background; I use a lot of cases. At the time I got my degree at the University of Western Ontario, that was strongly influenced by the Harvard Business School emphasis on cases. I love cases. I love teaching cases, and the cut and thrust of the dialogue debate in the classroom is really energizing.

I take a little detour there so that you can understand how I came about and developed my consulting practice, which was largely as a leadership facilitator.

I had probably maybe a hundred engagements where a company would come in, and I would only work with the division general manager or the CEO. That was my client, but we would agree that it was my meeting. And so I treated them as live cases.

My job was to identify the critical issues and get everybody on the leadership team to agree these were the top five issues, and then come up with an action plan.

We would not disband—stop the meeting—until there was a detailed action plan assigned to individuals with dates and times when they would deliver it. I made myself extremely unpopular by dragging meetings out until I was satisfied and the CEO was satisfied—you're not going anywhere. But more importantly, Andrew, these were ultimately live cases.

Marketing: The Interface Between a Business and its Markets

Andrew Mitrak: So these live cases you were consulting with—these are some of the best-known companies in the world: AT&T, Ford, Nike, IBM, Cisco, Coca-Cola, Best Buy, JCPenney, Wells Fargo, dozens of others, I could go on. You mentioned that you were often working with the full executive team, not just a marketing department, but your main client was the CEO.

Even though you're known as a marketing professor at Wharton, and 'marketing' was in your title or focus, this market-driven strategy was much beyond the scope of just the marketing department in an organization. You were working with the whole leadership team?

George Day: Oh, absolutely, the whole leadership team. No, I take a comprehensive, integrated view of the organization and how it can compete in the future.

Andrew Mitrak: So back to market-driven strategies, you write about some of the common misconceptions. The first that you cite is that some people misinterpret it as being reactive to the market. I'm going to quote your book here:

"The real gains from being market-driven come from anticipating market opportunities and getting to them ahead of rivals."

So to be market-driven, companies can drive the market and even create new markets where they didn't exist?

George Day: You mentioned the distinction between market-driven and market-driving. To me, that's a distinction without a difference. A market-driven organization is constantly looking over the horizon—maybe out as far as three to four years—and trying to anticipate from the market back what the big threats and potential opportunities are.

My philosophy about the marketing function is that it's the interface function between the organization and its markets—defined by collaborators, competitors, customers, and consumers.

One of my jobs as a facilitator, going back, was to force them into looking at their company through the eyes of their customers and competitors. I would get them to role-play their major competitor.

I would flip the script and have, for example, the chief operating officer take the role of his counterpart, ditto the operations manager and the marketing director and the CEO. They all got into their roles, and then I would get them to play out a role as though they were the leadership team of their major rival and think about the moves they would make. That's an example of outside-in thinking.

Andrew Mitrak: That sounds like a lot of fun. Often on a marketing team, I take a somewhat similar approach of trying to role-play being a customer that uses a competitor's product.

George Day: That's precisely it.

Andrew: One of the other misconceptions that you write about regarding market-driven strategies is around adopting a customer focus. You describe customer focus as a necessary but not sufficient condition. It doesn't mean giving all of your potential customers everything they could potentially want. You write, and I quote,

"Market-driven firms achieve superior profits by selectively nurturing the customers with the highest profit potential."

George Day: Exactly. So there are two aspects to what I consider to be a market-driven strategy: that is, think like a customer and always benchmark yourself against your major competitor. I consider customer value to be a relative concept.

Andrew Mitrak: Right, exactly.

George Day: The customer picks the one that delivers the most value, whether it's price value, relationship value, quality.

Understanding Customer Needs: Beyond the "Faster Horse"

Andrew Mitrak: Right. I'm reminded of that Henry Ford quote that might be apocryphal about, "If I had asked customers what they wanted, they would have said a faster horse." Somebody could read the title of Market-Driven Strategy without reading the substance and taking the message, "Oh, you have to think of the horse market or think of how to build the fastest one." We're not realizing—well, truly being customer-centric is understanding the job to be done, understanding what it is they really want at the end of the day, and building products that satisfy their needs, even if it means going to a new market or building a new product.

George Day: Exactly. Yes, it's adopting the customer's perspective.

The Role of Path Dependency in Strategy

Andrew Mitrak: One of the themes of the book and your work more broadly is this idea of path dependency. Can you elaborate on this notion of path dependency and what it means for marketing strategy?

George Day: We are dependent on our past choices.

There's the old saying, "past is prologue."

We are constrained by our past choices—our culture, our capabilities, where we've been, and the market positions. But those are also strengths that we can leverage and adapt. So the ultimate question for all organizations is, what's coming next? And how do we position ourselves with our capabilities and our culture to capture the value that's created?

Case Study: Sonoma County Winegrowers

Andrew Mitrak: When it comes to market-driven strategy, and when you first released and published this book, did you have any favorite stories of companies that adopted this mindset and successfully implemented market-driven strategies to turn their product lines or their business around?

George Day: I have lots of those stories, but I'm going to jump to my favorite long-term client. I have been running a think tank for Sonoma County Winegrowers.

Sonoma County Winegrowers was my laboratory to put all these ideas into play.

Sonoma is the second largest wine-growing region in the world after Bordeaux, and it's enormously complex. So I'm looking at all the strategic issues that affect them: regulations, the changing political climate, changing markets, distribution methods. Obviously, immigration and worker policies are huge. Now we're working with the president, who's a real visionary, in designing the farm of the future.

I'll frame this aspiration as part of the overall perspective on strategy.

Strategy is about the choices of markets and directions, but it's also about your level of aspiration and ambition.

Their ambition is to be the Silicon Valley of farming, using advanced technology, mechanical pickers, on and on. We have a lot of advancements in generative AI because if you put a sensor in every square meter, that's an enormous amount of data. So I love looking over the horizon and saying, "Okay, what's coming next? And how are we going to prepare for that?"

Andrew Mitrak: By the way, I love that example because you're taking wine, which is one of the oldest consumables ever, but you're talking about applying generative AI to it, applying robotics to picking. The innovation story in the market strategy portion of it just never ends.

George Day: Yes. You absolutely hit the nail on the head there.

“Market-Driven Strategy” in the Evolution of Business Strategy

Andrew Mitrak: So when you look back on Market Driven Strategy, where do you think it sits within the evolution of business strategy overall? Because as I was researching it, for me, it felt like a direct predecessor of The Innovator's Dilemma by Clayton Christensen. You talk about the idea of market leaders and their “advantage erosion” from new entrants, which sounds a lot like disruptive innovation. So I guess where do you think of it sitting within the overarching arc of how business strategy has evolved?

George Day: I see market-driven strategy or strategy from the outside in as interchangeable terms that reflect on the progress of the organization in satisfying its multiple stakeholders, including anticipating technology changes. I knew Clay [Christensen] pretty well, and it was a tragic loss when he passed away.

But I think market-driven strategy is a much broader concept than disruptive innovation because it certainly feeds it and is a valuable perspective, but technology trends and developments are only one factor in the evolution of a strategy.

See Sooner, Act Faster (2019)

Further Reading: See Sooner, Act Faster

Andrew Mitrak: Well, Professor George Day, thank you so much for sharing your experiences and wisdom with us today. The time just flew by. I wish we had more time together. Where would you direct listeners who want to learn more about your work?

George Day: I wrote a subsequent book with a colleague of mine, Paul Schoemaker, called See Sooner, Act Faster that is really literally a manifestation of outside-in thinking. Not only does it require you to take the perspective of competitors of various kinds, but also to understand market evolution and position the organization. Ultimately, it's all about leadership.

That's perhaps the defining message of my experience.

Andrew Mitrak: George, thanks so much for speaking with us. I had a lot of fun.

George Day: Well, I hope we can continue this conversation. Thank you, Andrew. I really appreciate you taking the initiative to do this and bring us all together.

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