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August 2008 - Strategy Magazine
Forum

From arrogant to astute: how to grow CFO-friendly CMOs

by John Bradley
page 53

As a young brand manager in 1980s Britain, I was a member of the Marketing Society (equivalent to our CMA), which was really just an opportunity for mass backslapping by the acknowledged Masters of the Business Universe. I became reacquainted with this organization a few days ago, when an old colleague forwarded me a publication of theirs that summed up how much times have changed for our beleaguered profession. Let me give you a couple of quotes from their Manifesto for Marketing:

"Business needs marketing more than ever before to deliver profitable growth, but there is a widespread view that marketers are not rising to the challenge...they are perceived to be inflexible and arrogant, lacking the discipline and capabilities to drive profitable growth...CEOs don't want functional marketers who are not aligned to the priorities of the business, who are resistant to change and are often some of the least accountable people in the business."

And this is what the Marketing Society is saying; just imagine how the Society of CFOs is feeling right now.

Coincidentally, I recently attended a seminar given by Prof. Robert Shaw and organized by his Canadian partners, the Business Workshop, that made a good claim to uncovering the root cause of this calamitous decline in our standing. Shaw's big schtick is "value-based marketing," the premise of which is that marketing has, over time, become decoupled from the creation of economic profits and shareholder value. In other words, the pursuit of revenue, brand image, market share or competitive goals in many cases actually destroys shareholder value, and if these are the predominant goals given to the marketing department, then you are in deep trouble.

From the hundreds of companies Shaw has looked at, there are a set of symptoms from which he can diagnose a marketing department that lives down to the Marketing Society's gloomy outlook: a disconnect between finance and marketing; a reluctance to listen to customers or learn from product failures; evident innumeracy of senior marketers; and fragmented use of available tools.

On this issue, he was preaching to the choir. In the late 1990s, my then-employer wholeheartedly grasped the concept of putting economic profit at the heart of its decision-making, treating us all to a massive training program to equip us with the mindset, processes and tools to make decisions that increased value. Of all the training I've had, this was the best. Colleagues who moved elsewhere still tell me that when they unveil this training to their new organization, it's treated like the Second Coming.

There are three key stages: identifying the sources of and causes behind value creation and destruction, identifying the key value issues being faced by the organization, and developing and evaluating strategic alternatives to address each issue. I simplified this further in my own mind down to the simple phrase "How do you know?" How do you know where your business creates shareholder value? How do you know which issues you should be spending your time on? How do you know the most appropriate course of action? If you don't know, you are just guessing. And guess what? We didn't know.

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