Executive talent

Global Magazine from AESC

The Evolution of the CMO: A New Role in a New World

A New Role in a New World

In a role that encompasses everything from sales support to brand steward to chief growth officer, chief marketing officers are bastions of the bottom line and champions of their companies’ aspirations. In the age of disruption, the role has been disrupted, too.

CMO MindsetProfile of a CMO

While there is substantial variation among CMOs across geographies, industries, and organizations of different sizes, marketers traditionally have been responsible for the strategies and execution around identifying opportunities and positioning brands in the marketplace. But traditional competition has become guerilla warfare with unpredictable challengers; customers now choose from a once unfathomable range of options; and brand reputations can be made or broken at lightning speed across social media. CMOs must navigate, and even anticipate these changes while protecting brand assets and expanding market share.

Grant Duncan is a former advertising and marketing executive who leads Spencer Stuart’s Digital Practice in Europe, the Middle East and Africa. Duncan says, “Traditionally, the great marketers had a fantastic combination of magic and logic. At their core they were analytical, mathematically strong, had strong business acumen, and at the same time had an ability to jump outside of that in a very conceptual and creative way to think about creative ideas, and fuse those two things. That’s always been there and remains the case now. But there is no question that things have changed, and that has absolutely been driven by the digitization of market places.”

Jessica Spence, Chief Commercial Officer at Carlsberg Group, says, “For a while at least, it was feasible to be very focused on a set of equity numbers to demonstrate, “the brand was in good shape and to remain somewhat dislocated to the immediacy of sales numbers. Now I don’t think excellent CMOs ever felt like that, but it was more of an option. It really isn’t now. Marketing and its direct impact on sales is under a lot more scrutiny.”

Spence identifies two factors that have shaped the evolution of the CMO role. “One has been the general slowdown that everyone has seen over the last ten years in most markets, where topline growth has just been increasingly hard to access. The other, clearly, is digital at its broadest sense.” Spence explains, “Not digital marketing, which is just learning to do marketing with these sorts of media channels, but the explosion of data and the links between the sales interface and the marketing side that are becoming both much more blurred, and also interlocking in a much more direct and attributable way.”

This observation is supported by Diane Brink, a professor at Northwestern University’s Kellogg School of Management and former CMO for global technology services at IBM. Brink told Kellogg Insight, “While brand building is still essential, there is an expectation on: Where are the new sources of revenue? How can I become deeper ingrained in my existing customers? How can I acquire new customers? It’s all about driving growth.”

In the digital world, access to comprehensive and real-time information is reshaping how marketing is linked to growth. “The good news is that marketing has a more significant role at the table when the CFO is looking at budgets and deciding how much is going to be allocated to marketing—they feel more reassured now because there’s real ROI,” Duncan says. “The problem is that it puts a huge focus on that kind of [data driven] marketing, and the creativity and inspiration that comes from great ideas could be lost in the mix. That’s a real shift, and what it does is puts the focus on the ideal marketer—who still combines magic and logic, but the logic is much more granular, and that doesn’t necessarily reside in the same person.”

However, that data has become increasingly complex, and measuring a campaign’s impact is difficult. Spence explains, “GRP, the gross rating point, was the currency people used to buy in TV advertising. It’s a measure of how many people are going to see your ad and how often. For every single TV station across the world, you knew what you were buying. Now, when you go to Facebook you are buying one type of view; when you go to YouTube they present it very differently and charge you very differently. Then you go to Google where you’re looking at search and how to optimize search. So instead of having a few currencies—one for TV media, one for print media, one for radio, there’s now almost one for every single channel that you’re using. Most campaigns we’re running on maybe twenty-five, minimum, up to fifty channels, each one of which will be measured differently. The data there is hugely rich, but do we have the ability to ingest it, digest it and get insights out when the world changes so frequently? That’s really tough.”

A recent study by the CMO Council and Deloitte found that, over the past decade, “CMOs have been increasingly asked to elevate their activities from brand and marketing plan management to acting as an enterprise-wide revenue driver that taps into the hearts and minds of their customers.”

Today’s CMO, according to Spence, “has to be someone who can identify pockets of growth, who is able to think disruptively about the category they operate in, who is able to take lateral views on where competition could come from or where growth could come from and frame that in a way the business can understand, can get excited about and inspired by.” But in order to influence growth, she says, “the CMO has to impact the broader business; to be able to talk much more to supply chain, financial and selling capabilities than they used to in the past, because that growth has become that much harder to get at and often requires more fundamental organizational change,” she says.

To do that, Duncan says, “In the course of a career, marketers need to get some experience in an adjacent function. It might be sales, it might be operations, it might be supply chain, basically, anything that arms them with a more complete picture of the business. One great bit of advice from a CEO is ‘Don’t be precious, be prepared to take on the unglamorous.’”

CMO MindsetCMO as internal influencer:

The chief marketer’s impact on business models, strategy, and culture

As early as 2007, McKinsey was anticipating the evolution of the CMO. As published in McKinsey Quarterly, August 2007, “The accelerating pace of change is creating a wide range of potential new priorities for chief marketers—leading change efforts across the whole corporation, playing a more active role in shaping the company’s public profile, helping to manage complexity, and building new capabilities within (and even outside of) the marketing department.”

Indeed, according to Brink, “Marketing is the one function that can knit the various functions together in an enterprise. How many times have you been around the table and you were orchestrating the conversations between sales, finance, general management, product development?”

Spence identifies with the need for CMOs to be able to “explain to the rest of the business how they need to be aligned, and to ultimately be pushing in the same direction of delivering a fantastic experience to the end consumer to drive growth,” she says. “So communication and influencing skills become in some way perhaps even more important than the more traditional, technical marketing skills that we relied on a lot in the past.”

Duncan points out the value of a broad perspective, for example international exposure. “In your home market you are the customer, you are the consumer. Whereas in another country you’re forced to reappraise their consumption and be genuinely insightful and objective, and broaden your perspective.”

Spence tells a story that illustrates how Carlsberg Group helped a team of their executives expand their perspectives.

“We are a beer company, and it became hugely clear to us that there was a very big alcohol free opportunity.” Spence explains, “We call on the right outlets that these drinks are served in, we’ve got a really big sales group who can do that, we know we can produce these drinks brilliantly in all our breweries, so it should be very easy to do. For some reason it just wasn’t getting traction in the business, even though on paper everything was there. And what really struck us was we have a huge cultural problem. Because people who work in our company often joined because they are passionate about beer and brewing, so from a cultural perspective, they just couldn’t get their heads around why you would want to focus on selling alcohol free drinks. Everything was in place for it to work, but their hearts weren’t in it.”

The answer was to broaden management’s perspective. “We asked some of them to go on a six month beer ban, and said ‘you are not going to drink any beer for six months, just to reflect on the experience and to start seeing this growth opportunity as valuable, as exciting, or something to get motivated about,’ which is quite a draconian thing to do.”

The beer ban for six months was eye opening, Spence says. “They kept coming into my office and saying, “You know, I really wanted a beer and then I drank an alcohol free beer instead and it was fantastic, and it made me think of all the things we could be doing and why aren’t we exploring this?’ And suddenly they started coming back with a completely different view of how our culture and their behaviors were standing in the way of getting us through to a place of growth, to those targets we needed, and it was a very personal experience for a lot of them. It made them think about how they connect with people, how they wind down at the end of the day, how they celebrate, all of those things they started to unpack, and we got them to absolutely change in the way they were motivated and excited about a category that previously they just couldn’t get their hearts and minds behind selling.”

The exercise at Carlsburg was successful in changing perspectives, and it also brought people together across functions. Duncan says, “Great marketers are also great integrators who can pull together different functions, almost as a chief of staff.” He says, “The current climate is very favorable to the idea of integration—it was McKinsey who talked about marketers mastering the fusion of storytelling and science. If you’re doing that, you’re in a strong position to drive that through an organization and to be an orchestrator of the brand and the brand experience, customer data, customer insights, and be a portal to collaboration between sales, IT, HR, and finance.”

How can a marketer achieve that level of influence? Duncan says, first “speak the language of the Board. Marketing is stubbornly perceived as a cost to the business rather than driving value. When it comes to internal succession—even in consumer business it tends to be the CFO that makes it to the CEO. In the FTSE there is a higher proportion of former CFOs sitting as CEO rather than former CMOs. In this context it is critical that CMOs speak in the language of the boardroom. It’s about understanding the balance sheet, not just the P&L. It’s about translating the marketing agenda into future cash flows. It’s putting marketing in the context of the broader business rather than an end in itself. So first, speak the language of the Board.”

CMO MindsetBoards eying the CMO skillset:

Are Boards seeking directors with CMO experience? Should they be?

"The lack of marketing representation on Boards is a pain point smart companies would do well to address, all agreed, if they want to win in today’s consumer-centric market. After all, who is better suited than CMOs to understand the customer and develop plans to effectively drive top line growth?"

Jamie Ray, Neustar Marketing

In response to digital transformation and disruption, new Board searches are increasingly focused on individuals with digital experience. But Duncan explains, “’Digital’ is not a thing.” He says, “To suggest one person can sit on the board and give you access to all areas on digital is wrongheaded. Digital talent is quite specialized. A person can be very strong on mobile or ecommerce or core business transformation. So you can end up with someone with a single skill set. My analogy would be that what Boards are really looking for is an architect, but what they probably end up with is an electrician—it misses the point. You need somebody who can give them insight to what customers are thinking.”

In 2015 the Marketing Science Institute (MSI) published an analysis of publicly available information on 64,086 board members for S&P 1500 firms. According to Stephanie Overby at CMO.com, “The MSI study found that Boards with one marketing-experienced director saw a 3% increase in total shareholder return over Boards with none. The impact was even greater for companies in distress. When firm market share was declining by 1.5% percentage points, the presence of a marketing-experienced director generated an average increase of 6% in total shareholder return, according to the analysis.”

What’s the problem? Spence says, “I don’t see enough CMOs on Boards, or people with really strong commercial background, and I think that’s a shame,” she says.

Spence explains, “It really is this quarterly drum beat, and it is incredibly short term. Companies are often told you’re not being visionary enough, you’re not being disruptive enough, and yet often all we get asked about, or all the share price rewards, is a very short-term delivery. It’s a disconnect and I don’t think we’ve got that balance right. So I would absolutely love to see more CMOs on Boards, and I think anyone with a CMO background getting onto a Board should really be coming at it with the perspective of ‘How can I make sure that we’re bringing a longer-term growth perspective?’”

For Duncan, “There is absolutely an important part to play for the person who brings the customer to the Board table: helping the Board understand the importance of customer experience.” He says, “In a previous generation you had much more control over your communication with customers and the distribution channels into customers. If you’re a packaged goods business you controlled the customer agenda because you promoted your brand though broadcast, in conjunction with a retailer you controlled the channel of distribution and pricing and so on. And if you were a retailer you were in compete control of that customer agenda.”

“Now it’s different.” Duncan explains, “First, you’ve got the direct consumer channel; you’ve got consumers who can pick and choose whether to go into a retail outlet, or they simply buy online. You’ve got a choice in the online channel, and online the customer is expecting the same customer experience. Also, the internet has created a return path for customers, where they can express a point of view that’s voluble and visible that can become contagious, creating a reputation problem. The complexity of managing the customer has become much greater and therefore marketing is in the best position to own that dynamic, and in so doing bring that awareness to the table under the banner of the voice of the customer. And that applies to any business.”

CMO MindsetSearch and the CMO

What the profession can adopt from the CMO mindset, and what that could mean for clients of search.

While search firms are focused on their clients, are they also investing in their own businesses? “I think the first question for the search industry is to understand where the growth is going to come from,” Spence says. “The search industry has to challenge itself. With all of the data and the tools available, are they clear on where their revenue is going to be coming from in the future, and how their roles and profiles in their community need to change? That very clear articulation of where they see their business going, where they see the revenue coming from in the future and how they’re equipping themselves to be able to service that, that’s very much for me where the CMO mindset would come in—that search for growth. I think like every other business, search is being disrupted and will continue to be disrupted,” she says. “It would be great to hear more from them about what they think the implications are and what they’re doing to adapt to it.”

For Duncan, “I think we are living in a data-rich world, and the question is, how much of that data are we actually using to add insight to real market and candidate understanding?”

Duncan says, “The magic of our profession is finding the amazing candidate that would not be found by a machine.” However, “You go deeper, and there is probably a lot of data that could help contextualize the market in which clients are sitting, to help clients think in a different way about their needs, which leads to guiding clients on how they might need to redefine roles and the downstream-impact on the shape of the organization based on what the data is beginning to suggest.”

Duncan asks, “What does that mean for organizational design? Does that mean there are new roles to create?” These are areas where the search profession can use the marketing toolkit to serve clients and the profession.

Last thoughts:

"CEOs pressured to lead a force of change during slow growth will bypass numerous CMOs, looking to install executives with broader remits. For example, for a brand like Coca-Cola, this meant sunsetting the CMO position entirely in favor of a CGO (chief growth officer), which represents a burgeoning trend CMOs can only abate by leading strategic growth initiatives."

Keith Johnston, Vice President, Research Director, Forrester

Is the CMO going to evolve out of existence? For Duncan, “Marketers have an advantage—they are responsible for one of the corporations most valuable assets—the brand. They are driving positioning, differentiation, development, brand extension and so on. Also they are naturally good communicators, able to engage with people, motivate people inside and outside of the organization. I do think they bring with them an advantage in that respect. Great marketers think contextually and think strategically. What’s the big picture and what are the new opportunities? Organizations with great marketers make their products attractive and available in the best possible way, and in an online world, in a frictionless and seamless way.

In a world dominated by disruption, Spence sees marketers as an antidote. “I’m somewhat skeptical on the idea of CMOs as primarily disruptors,” she says. “While the external world is constantly demanding a level of disruption, we also have to be conscious of a longer-term plan that asks what are we trying to build? What functional capability and what sort of an organization do we want to leave behind, and how do we make sure that we’re delivering that, versus that constant, short-term disruption loop. Our role has to be to balance agility and disruption with building solid, organizational strength—real muscle. Disruption needs to be part of the role but not all of the role. I think there is a temptation to try to disrupt everything all the time, but a big part of a CMO’s role is about building legacy structures and capabilities that endure.”

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