Is It Time for a New Marketing Organization? by Chris Trayhorn, Publisher of mThink Blue Book, March 30, 2009 Psst, want to know the secret to better marketing ROI? Just hire a statistician, add some complex analytical models to measure the marketing mix and voilà! That is overly simplistic and wrong, isn’t it? If it were that easy, we’d all know exactly what we were getting for our marketing dollars. The truth is that it isn’t even close to being that easy. Many ascribe the difficulty of marketing measurement to the unique art/science blend of marketing itself. This is partially true. Marketing is certainly not as much of a quantifiable science as we’d sometimes like to believe. However, marketing is not alone in that boat. Information technology, operations and even finance feel similar pressures to quantify their performance and pain in going about it. Yet what separates these other functional areas from marketing and gives them the appearance of greater accountability is the degree to which they have organizationally, culturally and operationally embraced the acceleration of science within their disciplines to reduce uncertainty. If marketing is to make a successful transition from its creative roots to its true strategic calling, we need to look at how we use our political capital to organize, structure, train and manage our human capital. We need to establish an irrefutable reputation for accountability and gain recognition as excellent stewards of the company’s resources. The very first ingredient of marketing accountability is alignment (see Figure 1) – between CMO and CEO, between company goals and marketing goals, between marketing and the rest of the organization and, last but not least, within the marketing organization itself. After all, absent strong alignment behind a shared set of clear and measurable goals, no one is really accountable for more than his or her own interpretation of his or her individual job responsibilities. CAUSES OF MARKETING MISALIGNMENT Marketing carries with it many more challenges today than it did even five years ago. Many internal and external forces work to undermine marketing alignment in ever more subtle ways: Target audiences are fractured into ever smaller and smaller segments, each having unique needs and definitions of value. Media options, already highly fragmented, show every indication of becoming more so (perhaps by yet another factor of 10) over the coming decade. Data, which only a few years ago was unavailable to marketers, is readily accessible to almost everyone in the organization and, consequently, open to interpretation by nearly every parochial interest. An explosion in the number of marketing programs or initiatives spawned by these factors makes it increasingly difficult to determine the results of any single effort; a melting pot of tactics all lay claim to the desired outcomes. Web-enabled data sharing has given birth to geographically scattered work teams that may be closer to the customers but often are held together only by a common logo on their paychecks. These new realities are corrosive influences on old marketing organization models, eating away at both effectiveness and productivity, while simultaneously causing marketers to work harder to protect the illusion of control. PEER PRESSURE As if these factors weren’t sufficiently occupying, today’s marketing organization likely attracts the keen interest of the chief marketing officer’s peers on the executive committee, as they all struggle under the weight of escalating top-line growth expectations. Today’s organizational model seeks to create customer value by encouraging all major functions in the company to collaborate on strategic initiatives. The departments work together on strategic development, value propositions, channel management, information and communications management, and performance measurement. Many of these historically marketing-driven activities have expanded to include finance, human resources, information technology, operations and other internal disciplines, putting quite a few cooks in the kitchen. And while it would be difficult to argue that the end product isn’t bettered by cross-disciplinary scrutiny, “efficient” isn’t often a word applied to this collaborative effort. CONFORMING AMID COMPLEXITY So how can you stay focused and aligned in a world requiring the assimilation of more facts, more data points, more options and more opinions than ever before? How do you continue to improve efficiency and effectiveness when the very definitions of both seem to be in a perpetual state of flux? And how, in the era of Sarbanes-Oxley, do you maintain the proper balance of controls and freedoms to juggle discipline and responsibility with creativity and innovation? A few ideas and examples of reorganizing marketing for greater success follow. THE PARADOX OF STANDARDS Thomas Malone, professor of management at MIT’s Sloan School of Management, has spent the better part of a long academic career researching organizational effectiveness. In his book, The Future of Work: How the New Order of Business Will Shape Your Organization, Your Management Style, and Your Life (Harvard Business School Press, 2004), Malone points to a “paradox of standards.” He says that, by clearly and firmly defining a few rules (controls) in the riskiest areas of the organization, creativity can be set free in all others. For example, eBay doesn’t “control” much of what happens on its vast global network. It allows buyers and sellers to interact as they will. What makes the network so successful is the clear framework of rules (the exclusion of certain product categories and bidding processes, for example) that are just firm enough to protect the interests of the greater good and no more restrictive. Marketers have long understood this paradox in key efforts like ad copy briefs. Conventional wisdom says that the best creative briefs focus on a distinct business objective and impose few firm parameters. The creatives must work within the parameters to find new dimensions of communications effectiveness that achieve the business goal. Apply too many parameters, and you’ll get boring, uninspired copy. Define too few, and the ads fall away from the strategy, becoming unusable. One way to deal with the explosive complexity of today’s marketing organization is to evolve from a command-and-control approach to one that is initially focused on defining the right set of controls that, in turn, applies all energies to drawing the best out of decentralized contributions. Many marketers adopt this approach as a brand framework that speaks less to logo size and color than to the desired impact on message recipients and their perceptions. A Flexible Framework McDonald’s has embraced a Malone-like flexible framework in which to deal with the hundreds of customer segments it serves worldwide, across dozens of cultures. To rebuild its brand relevancy after several years of sales attrition, McDonald’s required that communications be open, honest and fully transparent, even while speaking in the consumer’s own voice. Beyond that, McDonald’s sets firm expectations for business outcomes and allows the creative teams to interpret the brand for each culture in ways most appealing to the local customer. Lest you control freaks believe that the inmates have been left to run the asylum, be assured that McDonald’s diligently measures the evolution in its brand equity around the world and correlates it closely to sales and transactional behavior. The framework says that marketing initiatives must be successful at generating substantial payback in the form of in-store profits. That ultimate accountability causes regional McDonald’s marketers and agencies to think two, three or four times about improving the expected return before they exercise their autonomy. In building your own flexible framework, you will probably develop it in stages, selectively peeling back the layers of parameters and restrictions that allow the organization enough time to acclimate. You might first consider looking at the regular reporting requirements imposed on your staff and seek to turn the focus from activity- oriented metrics (e.g., what did you do last week?) to results-oriented ones (e.g., what did you accomplish last week?). From there, you might want to work with each individual subgroup to map out key initiatives and to ensure alignment with your broader objectives. Once people understand how their work will be evaluated and their results monitored, creativity and autonomy can most productively thrive. The Integrated Marketing Organization When most marketers see the word “integrated,” they think “communications.” They envision public relations, advertising, direct marketing and promotions all working together harmoniously to deliver a uniform message across channels. That’s the ’90s assumption. In this limited, but still common structure, marketing has a box on the organizational chart reporting to the chief executive officer. Implicit in the functions of that box are the usual marketing responsibilities – advertising, promotions, sponsorships, trade shows, direct and database management – all the traditional elements of managing the brand. Communications programs are managed for ROI against benchmarks. Media mix models may be employed to maximize efficiency of advertising dollars, and brand equities may be tracked to gauge how well they favorably influence perceptions. But chances are that few, if any, of these measures get play outside the marketing department. Yet each year marketing budgets reflect the desire of the rest of the company to minimize marketing’s waste. The new meaning of “fully integrated” for the marketing department is one that places the emphasis on active collaboration with most, if not all, other departments in the company to improve the appeal, volume and profitability of the company’s products or services, and to achieve the maximum value from each customer relationship. A quick glance at Figure 2 will tell you how your marketing department stands with respect to other roles in the fully integrated organization. The fully integrated marketing department of today manages the brand on a much more expansive level, taking a clear role in defining and handling many aspects of the customer value proposition – from product or service conception to forecasting to sales effectiveness and to touch-point experience. The fully integrated marketing department is much more likely to be aligned closely with the overall organizational planning process, in many instances helping to set the strategic agenda for the entire organization and establishing key cross-functional milestones, such as customer satisfaction, share-of-customer penetration and perceptions of quality. It is also more likely to be speaking the same language as the rest of the company – revenues, operating margins, efficiencies and process improvement. And the budgeting process for the fully integrated marketing department uses the company’s overall sales and strategic goals as an input variable, not as an afterthought. CROSSING THE CHASM For those of you thinking, “Yeah, I’d like to get my marketing organization more integrated with the rest of the company and stop being the kid with his nose pressed up against the candy store window,” be warned: Many marketing careers have been ruined when ambition and a sense of entitlement outstripped organizational ability. Successfully integrating marketing into other parts of the organization often is not something for which other functional department heads are clamoring. It might not even be on the CEO’s list of good things to do this year. You may need to commit yourself to a slow, steady, stealthy path of gaining the permission to contribute and building a reputation for adding value without usurping control. Watch for landmines along the way. FOUR WAYS TO LOSE YOUR WAY 1. Losing Track of Your Base Before you seek to expand into new areas of influence, make sure you have strong processes and people managing the current scope of marketing responsibilities. You’ll also need strong measurement abilities to get early warnings of problems forming at home, within the marketing department. Identify the biggest risks to your present activities, and develop mitigation strategies for each. You can’t open new frontiers while fighting wars on the home front. 2. Sticking Your Nose Where It Isn’t Welcome Before you leap to conclusions about how something outside your traditional scope could be improved, ask the people managing that part of the company. Find out what worries and frustrates them. Ask them how they measure success, and see if there are more customer-centric approaches. Use your credibility and capacity in customer research to help them achieve their goals. If they perceive that your interest is motivated by self-aggrandizement, you can forget about cooperation. The door will close hard, and your swollen nose will be on display for the rest of the company to see. Ground your interest in achieving measurably better results for everyone. It’s a difficult proposition to resist. 3. Stretching Your Skill Supply Lines Too Far</p> Apart from the two gaffes listed already, the biggest mistake in seeking to expand influence is to get enthusiastic support from other functional heads, only to deliver suboptimal execution a few months later. The skill set of your staff must support the value-added tasks for which you volunteer, or your weaknesses will show themselves quickly. If you’ve taken the time to diagram where in the company you would like to get involved, take a few extra weeks to think through the skills necessary to succeed there. You may need to add those skills to your arsenal either by hiring staff or consultants or by developing existing employees. Many times the reason the value-added activity isn’t being done (or done well) is because the current manager doesn’t have the requisite skill set on his or her team. Jumping in before sizing up the challenge properly can make for a particularly unpleasant experience for everyone involved. 4. Dying by Scope-Creep There’s only one real downside to success: popularity. Once you’re successful at creating value across many areas of the organization, everyone will want your help. Before you know it, your marketing team is being pulled in so many directions that it’s spending too much time on trivial requests from newfound friends around the company and not enough on high-leverage initiatives that really drive results (see Figure 3). Protect your focus diligently, and work with sales, operations, R&D, etc., to develop some clear rules of engagement marketing. SETTING PRIORITIES TO SUCCEED The surest way to realize the role of marketing you seek is to begin with the right vision. That means dissecting the customer value chain and finding all the places where marketing can and should play a role in improving it. Once you’ve mapped that out, prioritize the opportunities according to their likely impact on business results and the anticipated receptivity from the current functional owner(s). Your two-by-two matrix of opportunities will highlight those areas in which your approach will be received warmly. Build your marketing scope one step at a time. Filed under: White Papers Tagged under: Pat LaPointe, Perform, White Papers About the Author Chris Trayhorn, Publisher of mThink Blue Book Chris Trayhorn is the Chairman of the Performance Marketing Industry Blue Ribbon Panel and the CEO of mThink.com, a leading online and content marketing agency. He has founded four successful marketing companies in London and San Francisco in the last 15 years, and is currently the founder and publisher of Revenue+Performance magazine, the magazine of the performance marketing industry since 2002.