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New Business Opinion 1

MARKETING IN THE BUSINESS LANDSCAPE

Marketing is the head but not the heart of business

The following is a précis of “The Coming of Age of Marketing: What is the role of marketing and for marketers in solving business challenges?” (McKinsey’s and The Marketing Society).

In the study, twenty CEOs and twenty CMOs from a range of sectors were interviewed to determine their most pressing business issues in relation to marketing. The research uncovers a growing tension between marketing departments and other elements in organisations. The main recommendation is that marketers must jump over a higher bar in terms of attitude, training and ability - if this is done, the report predicts everyone will benefit. CEOs are polarised in their perceptions about marketing (see below). But which points form the "remarkable consensus" amongst the surveyed CEOs and CMOs regarding what they desire from their marketing function?

Twelve things a marketing function should ensure:

1. Sustainable, organic top line growth
2. Strategies for coping with increasing regulation
3. Cost management, in terms of business efficiencies and smarter processes. This is good news for agencies, as intelligent cost management - rather than budget slashing - means more outsourcing, off shoring, improving specifications to suppliers (i.e. you) and the better use of technology to create really efficient and effective systems (the best possible news for digital agencies)
4. Speed and responsiveness. The "need for agility" is mentioned by CEOs and CMOs many times, but always in terms of measured responses - nothing should be rushed
5. Effective - but accountable - investment in brands
6. Better customer understanding
7. Breakthrough innovation, rather than just incremental change. There is widespread acknowledgment that the future of any business depends on innovation
8. Better balance between implementation and strategy, to ensure better executions of strategies. Feedback here includes "There are many more examples of world-class strategy than world class execution" (CMO FMCG)
9. Better definitions of accountability. CMOs and CEOs agree marketing needs to achieve real accountability, using metrics that impact on strategy and implementation, just as there are in other business disciplines
10. Better people: marketers should realise they need to demonstrate broader skills and embrace different attitudes. The growing fragmentation and business specialising further indicates this need. Marketers are seen to lack a broader armoury of processes and models within a more commercially focused vocabulary. McKinsey's survey speculates that training - or even different people - are needed in the marketing function. Indeed, it also asks if certain segments of the marketing community even want to develop business skills outside their remit.
11. Getting marketing out of the marketing communications dept. The survey says many CEOs want to create a marketing orientation, which will facilitate a more effective customer focus. One comments that "Marketing leads, Operations works out how, Finance assesses" (CEO Financial Services)
12. Hard data to support the organisation's point of view about the future

Rainmakerlive’s Analysis: What does the McKinsey’s/Marketing Society survey mean for agencies?

Though many of the findings mentioned are givens in the agency world by now, this piece does serve to underline some important propositional choices for consultancies of all colours. We can conclude you need to think about the following: -

Ensure you offer not just new thinking, but practical ways for companies and other organisations to achieve 'breakthrough' innovation to drive their products and services. This is illustrated in the increasing number of design/insight-led agencies - or those that support creative business thinking and NPD - entering the market. It further reflects the need for speed, responsiveness and agility, to supply and stimulate rapidly evolving demands.

Of course, you've got to be accountable. This is a truism that too many people bang on about but you're either effective or you're not. However, agencies need to spell this out - for the sake of all the numbers-focused individuals along the decision-making pathway in any company, be that prospect or client.

The survey reminds us why thought-leadership is such a powerful agency differentiator. Your regular communications with prospects should reinforce that you are able pathfinders, helping brands through the challenges they face today, tomorrow - and in the future. Remember, helping organisations to find their point of view about the future requires your agency possessing a close knowledge of - and appropriate tactics to expedite - the future regulatory environment.

We're told here that CEOs and CMOs believe cost management is about business efficiency. McKinsey’s and The Marketing Society underlines that this means companies should outsource more and get better at briefing suppliers. Agencies, therefore, might find it is a good idea to present their offer not only as a revenue generator but also as a cost management programme.

Bearing in mind this survey takes in the views of CEOs as well as CMOs, it's perhaps not surprising the piece concludes that contributions from the marketing function are important - but lack in accountability. The quote that best sums up this thrust is "marketing is the heart of the business - but not its head."

If we put aside the thesis of this survey - that the tension between marketing and other functions is growing - we find the idea of a tension itself is a bit of a stereotype. It is never easy to find polymaths, as creatively talented as they are commercially scientific, and CEOs need creative thinkers. Are some marketers really reluctant to be accountable or desire not to be so? If CEOs insist on accountability over creativity, then they might well end up with poorer productivity in the end, no matter how well it's measured. Perhaps then we should recognise that one person's 'tension' is another person's 'balance', depending on how you look at it.

On the other hand, a "growing" tension is a difficult thing to qualify. If it is growing (and there's no hard data in the piece to actually suggest this), perhaps it's due to the increase in competitive pressures being placed on all organisations/CEOs to perform, rather than a new failure or change in the way marketers specifically are carrying out their functions and measuring their results.

However, we must always listen to CEOs, and so we'd urge all agencies to reconsider how, and if, the 'science' in their offer is coming across. In terms of marketing accountability, we've witnessed highly successful agency positionings in the course of Rainmaker planning that weave into themselves the communication of 'accountability'. Balancing the communication of the 'science' in an agency's approach, alongside a communication of its creative strengths, achieves this.

So what can we conclude? The most valuable lesson to be learned from this survey is that agencies should always remember to look at their messaging from the other fellow's perspective. This means they should not forget to emphasise their creativity is a thing of power - not a distraction or a question of cost. Whilst not losing sight of the fact that creative agencies must be creative, their 'power' in this respect must yield X or Y quantity results on customer acquisition, retention, development, stakeholder value, brand equity enhancement etc.

CEOs are polarised when asked their perceptions about marketers: -

The Good

• Creative
• Committed
• Hardworking
• Inspiring
• Essential
• Passionate
• Talented
• Energetic

The Bad

• Narrow
• Expensive
• Undisciplined
• Inconsistent
• Self-important
• Not commercial
• Not accountable
• Not value-orientated

A final word - “Marketing is the only place left where the department heads just expect to be given a budget without any real justification. This just can’t happen anymore” (CEO FMCG).