A CEO I was working with at a Fortune 500 asked if I could leave my company and join his exec team as their (latest) CMO. I loved the company, its customers, and the team so I was seriously tempted. Yet, I knew the chances of surviving and thriving in that context were let’s just say somewhat like a snowball’s chance in hell. And hell it would be.
There are typically 4 “C” Level positions at a company: CEO, CIO, CFO, and CMO. 3 of those have a high rate of influence in the board room and at the E*Team. One does not.
Perhaps this statistic will be revealing. The average Chief Marketing Officer (CMO) only lasts 23 months on the job (See June, 2006 Spencer Stuart study in Brandweek: Length of CMO Tenure Continues Decline). CMO job tenure has been moving in a downward spiral for several years. Think about that. 23 months is not even 2 years. Not enough time to influence more than 1 planning cycle, and certainly not enough time to influence a long-term direction. Which I would think a “C” level person should do.
In contrast to CMO turnover, the Spencer Stuart study revealed that CEOs average 44.4 months on the job; CFOs 39.4 months and CIOs last 36.4 months. So a CEO which has many interrelated functions to manage is given nearly twice the run way of a CMO.
This factoid is actually one piece of a much larger issue at hand. And it represents a crisis of enormous proportions.
The marketing discipline needs a revolution. And it’s coming at a dear cost. Pricing, perhaps the point at which value is either lost or gained is not maximized because value has not been (a) built due to lack of customer insights, (b) or, not communicated in meaningful terms, and thus useless, or (c) not credible given the company’s brand or position in the marketplace.
Rather than being a strategic thrust with clear charter, marketing within a company has become much like the children’s game of telephone. In this case, the knowledge and insights regarding customer needs are diluted and distorted on its way from idea to product or service. Organizations are not harnessing the power of their customers—and what knowledge they do have keeps leaking during the process. Decisions that drive fundamental profitability and competitiveness are distorted by this game. The inefficiencies in the traditional marketing process show up in many ways. One of the most insidious is that downstream groups don’t trust—or perhaps don’t understand or receive—the information and insights gathered by upstream groups. As a result, research is repeated and insights are lost. Companies incur higher costs from duplicated effort, and yet operate on fewer real insights.
We are not talking about hypotheticals here. Smaller firms are often able to out produce larger firms in terms of internal marketing efficiencies. Understanding and acting upon customer insights and avoiding leakage between concept and delivered product is what successful small firms do well. Small firms, however, often run into growth ceilings with regard to external efficiencies such as sales, distribution and the ability to generate buzz. Smaller firms have less leakage and distortion because they have fewer people involved in the process so they act as a more cohesive unit. The challenge is figuring out how to manage the marketing process in larger organizations so that they can compete against smaller competitors.
Jeff Hawkins and Palm are a great example. Jeff had an insight into what consumers really wanted. He did not offer the first PDA, but the original PalmPilot 1000 was different: it fit in a shirt pocket, it had handwriting recognition that worked, and it ran for weeks on two AAA batteries. It did not even try to be a “portable computer.” The product was well-designed, the functionality was limited, but focused appropriately, and the messaging was tight, realistic and believable. Jeff’s vision was clear and shared by Donna Dubinsky who ran marketing so it was executed throughout the marketing value chain, although they certainly did not call it that.
As Palm grew and generated more competitors, especially Microsoft’s PocketPC, Palm’s greatly expanded organization responded with bloated products that competed with long list of features. The battery life dropped, the messaging became less focused, and Palm lost its commanding market position.
What is going on?
There are 4 reasons why marketing has been distorted.
1. The charter of marketing is murky.
2. CMOs want high impact but pay a lot of attention to shiny objects.
3. Marketing is run as disparate functions with no clear owner.
4. The must-wins are unclear.
Lets explore each one of these, shall we?
1. Charter of marketing is murky.
While few people in most firms really understand the specifics of engineering and R&D, they all know what engineers do: they build stuff, invent stuff, improve processes, etc. By contrast, very few people can articulately explain what marketing does—and this includes most marketers and the CEO. In far too many people’s minds, Marketing is associated with t-shirts, PR, lame sales tools, brochures and the people who want to change the logo every couple of years. Great quote that captures what many of my clients would say:
“Marketing owns nothing but influences everything” is a phrase I’ve heard many times in my career”
And marketing people are viewed as doing “soft stuff” while the engineers, finance folks, IT and CEOs “lead the big stuff”. Alrighty then. These are fighting words. But then as I look at it, marketing really is not assigned one or two major objectives, is it? I checked around with CMOs I know and the issue is that they own “supporting” the major companies objectives but not directly owning anything.
As long as the question of what marketing owns is unclear, the role of marketing executives will never be successful in the long run. The marketing organization needs to have a few key metrics defined, then consideration needs to be put in place how long should it take to influence that objective.
And then here’s the final rub. Marketing is caught between product management / engineering who makes the stuff and sales who sells the stuff. When sales isn’t getting what they need from “corporate”, they turn to their marketing teams and when things are missing, they blame marketing. A situation in the last year I’ve had a chance to witness is when sales didn’t have the things they needed for a SMB market place push, and they blamed marketing. The reality is that that marketing didn’t have the content to create what sales needed, but it came across as a pointing the finger thing. On the other side, BU heads and folks who run Engineering think that marketing is adding little to no value as they focus discussions on budget – and so they focus on the amount of variable budget the marketing team has to spend.
And as a result, regardless of the goodness and talent of many CMOS, a great many are going to end up on the chopping block. I would argue until the category of CMOs get together and reform their role, no CMO is going to be successful.
2. We want high impact but we respond to shiny objects and silliness
CMOs are chartered with many things. Many, many things.
“Despite the importance of the marketing function, it isn’t uncommon to find, when you move to a new company, that some of the key executives won’t truly understand the role of marketing and, as a result, expectations between the marketer and those executives aren’t aligned,” explains Carter Cast, CMO of Walmart.com. “For example, the marketer may want to better understand the customer purchase experience by digging into customer service issues, only to find that other executives might question why he or she is doing that. To some executives, marketing might just be defined as advertising or marketing communications.”
The very word “Marketing” can mean anything from “product requirements” to “sales tools”. While few people in most firms really understand the specifics of engineering and R&D, they all know what engineers do: they build stuff, invent stuff, QA product, and make the stuff that ultimately leads to revenue, etc. By contrast, very few people can articulately explain what marketing does – and this includes most marketers and CEOs. In far too many people’s minds, Marketing is the stuff of logos and advertisements. Advertising, while costly and visible, is one tool of a many varied toolkit.
So while any CEO I know wants “high impact”, the actual thing they hold the CMO accountable for is something short of that.
As Ben Kline, the new CMO for Leo Burnett, explains, “many companies are asking the CMO to be the ultimate change agent, yet most aren’t prepared to give the new marketer enough time to be truly effective. The best situations are when the companies’ senior most leadership paves the way for the innovative thinking of the new CMO. In order to be successful, an entire cultural shift needs to be unveiled in unison with the newly appointed executive.”
A dinner with a colleague who is running a part of HPs branding has recently “been told” by the GM of the division that their team needs to have an “ad campaign like the PC group does”. And there were no metrics of revenue attached to this task but a need to ‘keep up with the coolness factor” of the PC dvision. And then they wonder why marketing gets chasticed for being “tactical”.
3. Functionally, marketing is run as disparate functions unlike any other parts of the business.
Most CEOs are not ignorant of marketing, but rather they have little knowledge or appreciation of how the individual marketing functions interact and function together. Thus, when something is going wrong, they cannot participate in its resolution. Lastly, we need a complete transformation of the way the organizations are lined up. Marketing has a “matrixed” or complex reporting relationship. When asked whether they have the resources to do what they are tasked with reporting to them, most laugh. Marketers are expected to “influence” the other parts of the organization for alignment. Does engineering need to do this to make their objectives? No! So of course the deck is stacked against CMOs.
First off, in many firms, no one person owns the entire marketing organization. Sure, there is almost always a “VP of Marketing,” but this person frequently does not have responsibility for all four marketing functions. In some organizations, Product Management reports to Engineering or Product Development. In other organizations, Field Marketing may report to Sales, or Brand Management may report to “Corporate Marketing,” a function that is generally run and populated by PR types rather than marketers. In organizations where the marketing functions are split, they may not come together until a Senior VP with lots of other responsibilities, the President, or even the CEO. I can guarantee that very, very few of these senior executives are looking at and managing marketing as a single value chain of inter-related functions.
Another factor in the fragmentation of marketing is that all of the functional areas do not share a common vocabulary and the communication between functions is often problematic. Imagine playing the game of telephone, but where they players are using job-specific jargon.
4. The must wins are unclear.
Finally, the lack of coordination means that marketing wide “must wins” are not clearly understood. Activities like pricing which are incredibly important are treated as a black art or simply as impenetrably complex. Downstream groups either don’t get—or don’t trust—information and insights from upstream groups, so costly and time-consuming research is repeated and knowledge gaps are not well understood. The result is that customer wins are easy to measure, but the more informative customer losses and risks to the business are not studied, much less measured.
What is the underlying root cause?
There is no ownership of the full value chain. A CMO at any company doesn’t own all marketing. They don’t even own the vision for the market. They own parts of the pie that are partly owned or eaten by other parts of the organization.
The vision for the market is not often owned by the CEO. Each piece reports into the different functional focus. And the must wins are unclear or not clearly understood across the organization. Activities like pricing which are incredibly important are treated as a black art of simply as impenetrable. Downstream groups either don’t get – or don’t trust – information and insights from upstream groups, so costly and time consuming research is repeated and knowledge gaps are not well understood. The result is that customer wins are easy to measure but the informative customer losses and risks to the business are not studied much less measured.
What must CMOs do? What must CEOs do?
So what can be done?
What must CEOs and CMOs do?
First, we need to acknowledge the role these interdependent groups have on each other and for the company. These roles comprise the key set of knowledge-based activities that connect the customer needs and desire back into the company, and are the biggest source of un-optimized activity in most firms. I propose we need to create a Marketing Value Chain much like supply chain management united tactical parts of a company into a strategic and cost-saving initiative. We need to addresses the knowledge efficiency of marketing: product management, product marketing, field marketing and brand management.
I would propose we have a Marketing Value Chain Management is the management of the entire Marketing chain, from product requirements to product marketing right through to sales and the final customer. The marketing roles comprise the key set of knowledge-based activities in most firms, and the biggest source of unoptimized activity. Just as Supply Chain Management addressed specific, measurable goals, the Marketing Value Chain Management would have three primary goals:
1. Increase competitiveness by increasing the relevancy of the solution
2. Increase sales by being better positioned and understood, and
3. Increase gross margins by lowering the amount spend on messaging