The fourth business lecture (The 2020 CMO – Leading Business Transformation) was given by Karl Weaver and Ruth Saunders.
Karl, one of our liverymen and a Court Assistant, developed his consulting skills at WPP’s The Henley Centre. As Managing Director of Mindshare’s Advanced Techniques Group, he then developed and ran a global network of marketing effectiveness consultants. Later, as CEO of Data2Decisions, he grew the business from 2 to 150+ people across 12 markets. After a spell as Chief Growth Officer for Dentsu Aegis, he is now CEO of Isobar’s UK operations, leading a team of 400 experts, who are combining technology and customer experience capabilities to help his clients transform digitally. Karl has co-authored several award-winning papers, including an IPA Effectiveness Grand Prix. His experience in acquiring and integrating businesses has led to work as an angel investor and as a mentor for the London Business School’s MBA entrepreneurship school.
Ruth uses her 30 years of experience as a strategy consultant at McKinsey & Co, marketer at P&G, advertising planner at Saatchi & Saatchi and market researcher at Mars Inc. to help clients develop, get Board buy-in to and implement innovative marketing strategies that deliver tangible business growth. She is also a trainer, speaker and coach, as well as the author of Marketing in the Boardroom – Winning the Hearts and Mind of the Board.
A Silo Busting Systems Integrator
Karl began by considering what it takes to be a successful CMO in today’s changing environment. In his view if CMOs are to avoid marginalisation, they have to take a lead in transforming their business to meet the challenges thrown up by the new technology discussed in the previous business lectures. Their goal should be to accelerate innovation in their business. To achieve this they need to:
- break down the silo structure common to so many businesses,
- act as the focal point linking the creation and maintenance of the business brand to the experience of the consumer, and
- exploit the new technology and its potentialities for analysing market data.
This creates an acceleration in innovation that delivers higher revenue and lower costs, resulting in increased profits.
Where the Value Comes From
Karl pointed out that a business generates value (i) through the strength of its brand (which attracts and retains customers) and (ii) the extent to which it is able to drive innovation to create new products and services that are attractive to its customers, thereby strengthening its brand still further.
In other words, the customer experience is what drives value. Forester Research/Watermark Consulting conducted a survey of companies on the S&P 500 Index, separating those that focused on improving the customer experience and those that did not. Over a five year period, the leaders in this area improved the index rating by 23% whereas the laggards worsened it by 46%.
The Dangers of Complacency
Nevertheless, many CEOs do not see the problem. Bain Consulting produced a survey which demonstrated that while 80% of CEOs believe their customer experience is superior, only 8% of their customers agree with them. The CMO needs to be aware of this issue and make the CEO aware of it too. However, part of the problem is that many marketers share in their CEO’s complacency. They focus on out of date KPIs, such as data from their CRM systems. While customer complaints are dropping, they might miss the growing number of complaints made through social media, which seriously damage their reputation.
The Need to See the Business as a System
All businesses aim at sustainable, incremental profitability. But they can only achieve this if they understand the business as a system, which should work efficiently to deliver this goal. Thus, operational transformation is needed to marry strategy and activation.
In more detail the CMO should start by understanding what the business is trying to do. Is the goal to:
- win new customers,
- retain existing customers,
- develop new products and services, or
- reduce costs?
Once the goal is identified, the CMO should then examine the functions within the business, which can be mobilised to achieve the goal, and look for any problem areas in the way they are currently operating. These would include:
- measurement and reporting,
- insight and targeting,
- brand and customer experience,
- channels, media and content, and
- agility and innovation.
If the functional areas are operating efficiently, the problems of the business may lie much deeper in its foundations. The business may have adopted technology that is fit for purpose but be failing to exploit it, or failing to use operational and customer data as a guide to decision-making. Worse still the technology may not be fit for purpose or the data collected may be insufficient or irrelevant. Issues in these areas are often reflections of underlying problems in the leadership and direction of the business, or in the mix of its people and culture. However, needless to say, even where there are no such issues, these underlying problems may still be present.
Resistance to Change
The CMO may understand the problems and have the desire to fix them, to create a functioning system for the business, but very often he or she will meet resistance to change at the Board level.
Society as a whole is sceptical or even fearful of the new technology. Dentsu Aegis Network, Digital Society Index 2018 reveals that as a global average:
- 54% of people feel that the pace of technological change is too fast.
- 29% of people agree that emerging digital technologies (e.g. AI, robotics) will create job opportunities over the next 5 to 10 years.
However the second statistic (29%) is seriously skewed by China (with an optimistic 65%). The next highest is France at 35% while the UK and Germany are the most pessimistic, both at only 18%.
This scepticism often colours the Board’s thinking when the CMO brings new proposals and projects for their approval. Thus, the natural aversion to risk of many Boards prevents acceptance of the innovation necessary to maintain and improve the brand. An additional problem is that the brand is no longer the sole property of the business. More than ever, customers decide what a brand stands for. The opportunity for a brand, in such a potentially homogeneous world, is to clearly articulate a point of view and stand out. That will give business a strong customer based platform and a right to innovate.
Transformation in the Boardroom
Once Karl set out the challenges facing the CMO, Ruth then explained how the CMO should go about gaining support in the Board Room to deal with these challenges. Her first point was marketers often struggle in the boardroom. The CMO Council found that “Nearly two thirds of CEOs think that their marketers don’t provide adequate evidence of Return On Investment to gauge marketing’s true performance.” CMOs have the shortest tenure (48 months) of the C-Suite (CEO 80 months, CFO 71 months, CIO 64 months). There is a common view in many Boardrooms that was summed up by David Packard: “Marketing is too important to be left to marketing people.” This opinion leads to the removal of any element of strategic input from the CMO and reduces the marketing function merely to that of Marcoms.
Board Games – Who’s Right and Who’s Wrong
Ruth saw the cause of this problem in the different mind sets of senior managers and marketers. Neither side talks the other’s language. Senior management is charged with managing the company successfully and thus relies on an analytical focus, and sees the need to manage risk as a priority, with a short to medium term mind set. Marketors focus on creativity, with a readiness to take risks to reap rewards and have a medium to long term mindset. Both mind-sets are necessary for a successful business, but marketers must recognise that the boardroom is not their territory. In order to convince senior management, they must think like senior management.
Engaging Senior-Level People
Ruth then gave guidance on how the CMO should approach senior managers to gain support for their projects. Senior managers are invariably time-starved. They are concise in both print and verbal communications, prone to take a commercial approach to delivering business growth and credible in how they will deliver a strong sustainable return. This leads them to require clarity from the CMO in setting out his or her proposals and the actions needed to implement them. Engaging them in plain English, without using marketing jargon, is really important in this context.
Some Decisions are More Emotional Than Others
Senior managers are human and want to be involved in solving whatever problem the CMO has identified, so that it becomes a solution in which they see themselves as a stakeholder. Nevertheless, they (like the rest of us) are driven by a mixture of reason and emotion. In some circumstances a purely rational presentation, logical, fact based and with a strong business case will win the day, but many decisions will be more emotional. They will raise concerns like:
- “This is not good for me and my team; it will stop us making our targets”,
- “I will lose power”, or
- “It will force me to do something that others will disapprove of”.
Ruth cited as examples of such emotionally charged decisions:
- moving to one global brand,
- investing in building a stronger brand, and
- moving from a local to global positioning.
How To Deal With Emotional Resistance
In Ruth’s view, it is important to recognise when the situation is likely to be emotional, close the meeting and regroup to conduct a fact-finding meeting with each relevant senior person early on, with the aim of understanding their view and issues, and, if needed, identifying a win/win solution that will work. The second meeting is often more rational, once the emotion of the first is exhausted. If this fails, escalation may solve the problem.
Sometimes, however, it is necessary to recognise that the timing is just not right, and to retreat gracefully. One should, however, assess what needs to change, and continue to collect data and facts to prove the case, while awaiting a new opportunity to bring the project forward again.
New developments that can lead to acceptance of the project include:
- the emergence of further, more convincing data, perhaps by way of case studies providing new proof,
- external factors that make change necessary such as declining sales or regulatory intervention,
- internal change that creates a new point of view or a different culture such as the appointment of a new CEO or the completion of a major project previously engaging senior management’s whole attention.