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A senior executive's instinctive capacity to empathize with and gain insights from customers is the single most important skill he or she can use to direct a company's strategic posture. Yet most top managers at industrial companies consider customer contact the bailiwick of sales and marketing staff. And even if they do believe market focus is a priority, most retain only limited contact with consumers as their organizations grow, relying instead on subordinates' reports to define and sense the market for them. Such approaches are dangerous. First, most industrials define "customer" as the next entity in the distribution channel and requisition reports accordingly. But to get a true sense of the market, senior executives should consider the wants and needs of every step in the distribution chain. Another danger is that senior executives at industrial concerns often confuse information with knowledge. Managers faced with too much general market data tend to average results, blur boundaries, and miss distinct, segmented market opportunities. Finally, unless senior executives make market focus a strategic priority, they will not be motivated to initiate organizational change.

This eight-step process for designing a distribution system calls for in-depth study of what services and conveniences the company's customers value and then segmentation of the market according to those values. At several crucial stages, the process requires getting outside checks and hard data for market segments, company objectives, and the projected costs of distribution outlets. The climax of the process is an off-site meeting at which top management tests its prejudices against evidence that researchers have gathered.