North American management has a history of popularizing new concepts and then demonizing them with the same energy when they appear to not deliver the spectacular results originally promised. The chief marketing officer is becoming a poster child for this phenomenon and is in danger of becoming more road kill on the highway of discarded management ideas. In fact, Verizon recently eliminated its companywide CMO position, claiming that the restructuring aims to move marketing execution closer to customer-facing operations.
There is a pattern involved here, one that must be broken to achieve the benefit that originally spawned the CMO idea. The revolving-door phenomenon exacts an enormous price on the organization in terms of:
- the cost of hiring and firing;
- the cost of productivity lost by changes in leadership;
- the cost of staff turnover associated with changes in focus;
- continued deterioration of one’s competitive position;
- waste of marketing resources that are misdirected;
- loss of credibility for the CMO position no matter who is hired;
- erosion of company brand due to the revolving door; and
- a short-term orientation that prevents sustainable, longer-term marketing initiatives, such as competency development and aligning marketing to enterprise strategic objectives, from getting needed attention.
The first step to breaking the pattern is to recognize that a CMO is not a rock star or a senior vice president of marketing with a fancy new hat. The CMO is a partner with the CEO in terms of the creation and execution of strategy. This position is critical because the market, media, and customer environments are becoming too complex; CEOs and their boards need insight and ideas that pertain to business models, not just brands. The reality is that most marketing executives have not pursued a career path that qualifies for this role.
On the other side of the spectrum, CFOs are concerned about the economic value of marketing spend. The irony of these twin needs is that it suggests the CMO is bipolar and can simultaneously deal with macro and micro issues (assuming the knowledge to do both). To accomplish both objectives, the CMO needs a chief of staff similar to the role one often finds within sales in a sales operations position. In this manner, both needs are served without dilution of focus.
Thus, to end the revolving door:
- The strategic purpose of the position must be recognized and serve as a basis for hiring.
- A CMO charter document must be created and serve as a source for setting expectations.
- The CMO must be supported by a chief of staff representing marketing operations to complete the balance required for the position.
It can be argued that the CMO position was spawned back in the 1970s when high-profile marketers created high-impact campaigns for the consumer goods industry. Their success made them virtual rock stars, and they were given the mantle of CMO. Unfortunately, these individuals tended to move on to the challenge of the next company. This phenomenon has a counterpart in the annals of CEOs, where individuals have turned companies around and achieved similar rock star status. Despite the recognition that this single-handed turnaround is a rare occurrence and can be a liability, there remains in everyone a yearning for the miraculous solution.
In the latter portion of the 1990s and early years of 2000, there appeared what could be described as the perfect storm in marketing:
- CRM was birthed with the promise of better management of the customer experience.
- The Internet matured and offered new distribution options and empowered the customer with access to unparalleled sources of product, price, and company information.
- Cable TV offered consumers the ability to choose channels based on their interests and, in some cases, commercial-free.
- The Internet became a source of entertainment.
With the collapse of the tech bubble, organizations needed to retrench, and there was (and still is) a desire to better understand the return on marketing investment. This desire is manifest in establishing a ROI for the marketing spend. This pressure has only increased with the evolution of social networks, the complexity of consumer and industrial purchasing processes, and the most turbulent economic climate many of us have seen during our lifetimes.
To unravel all of this complexity and to chart an appropriate course, senior management is seeking leadership in the form of a CMO. Unfortunately, the landscape is filled with hype in every direction, and this complicates defining the role -- much less setting reasonable expectations.
Do we really need a CMO?
Do We Need A CMO?
In the past decade there has been a cry for chief customer officers (CCO), chief revenue officers (CRO), chief security officers (CSO); before that we had the era of the chief technology officer (CTO) and chief Information officer (CIO). Some of these titles have been created by the industry in the hope of elevating their particular issues within the user community, while others reflect concerns about realities in the marketplace. Perhaps by design, the hype in the literature has a tendency to create expectations in the marketplace. All of the visibility given to the CMO role has created an expectation or desire within the marketing environment to hold this title. So whereas a VP of marketing or senior VP of marketing would have been the ultimate goal of professionals, the new gold ring is CMO. This might appear as a trivial point, but it is important in trying to sort the hype surrounding the position.
Customer relationship management (CRM) offers a relevant parallel. CRM represents a set of applications that address the productivity and process needs of customer-facing functions, such as sales, marketing, customer service, help desk, and field service. The applications are integrated with a common database and analytic capabilities. CRM is designed to be an enterprise application. As with any productivity technology, there was a cry for proof that it was effective. Both vendors and the literature responded with case studies where CRM was effective. However, when one examined these cases more closely, it was evident that they typically applied to the use of applications in one function. Is this really CRM?
So if the responsibility of a CMO is really equivalent of a VP or senior VP of marketing, is that really a CMO--or does the title infer a different level of responsibility? To take a case in point, assume that the expectation is to establish a ROI for marketing spend and to explore the use of new sources of media Does that imply the need for a CMO position? Even if the position implies the coordination of marketing activity across SBUs, does that elevate the position to CMO versus senior vice president? Similarly, does the role of emphasizing the voice of the customer experience within the organization elevate it to C-level?
What should elevate the position to C-level status is the responsibility and authority granted in the context of the organization’s business model and strategy. In this context, the business model pertains to how the organization adds value to its target segment(s) and the sources of generating revenue. Since these issues (business model and strategy) transcend the organization and involve board-level contact, a C-level title is merited. This definition avoids trivializing the position and creates a context that is in synch with the issues that confront organizations today.
The CEO’s Mandate For The CMO Position
In the vast majority of cases, the creation of a CMO position is driven by a CEO mandate. One would assume that the idea for a CMO is driven by the twin circumstances of need and suggestion. Demands for innovation and growth become married to conversations with peers and board members who refer to the possibility of a CMO position. The idea has intuitive appeal because most CEOs do not have a marketing background, marketing and sales represent a huge portion of the budget, and there is a dire need for growth. Armed with this rationale, the CEO proceeds with making this position a key aspect of his strategy with subsequent support from the board.
To gain better insight regarding the types of issues that keep the CEO up at night, The Conference Board publishes an annual report that identifies CEO priorities and concerns for the upcoming year. The last available report is based on a survey and interviews conducted in 2007. The top 10 challenges articulated by CEOs based on that survey are provided below in rank order according to greatest concern:
- Excellence in execution: 38.4%
- Sustained and steady top-line growth: 36.8%
- Consistent execution of strategy by top management: 31.8%
- Profit growth: 28.4%
- Finding qualified managerial talent: 27.2%
- Customer loyalty/retention: 26.3%
- Speed, flexibility, adaptability to change: 25.4%
- Corporate reputation: 23.7%
- Stimulating innovation/creativity/enabling entrepreneurship: 18.7%
- Speed to market: 18.2%
Though today’s list might reflect the cost of energy and the need to protect the environment, there is reason to believe that the above challenges remain top of mind. All of these challenges link to marketing at some level; thus, it is no surprise that CEOs are drawn to the need for a CMO role. At the same time, the CMO’s tenure becomes based on CEO expectations and satisfaction.
A Reality Check
With more countries, more customer segments, more media, and more distribution channels, companies are waging a battle with complexity. Marketers and marketing can no longer rely or manage on the basis of the things they control (4 Ps)--marketing strategy must embody organizational strategy. The organizational functions must adapt to the reality of the marketplace as opposed to internally focused, easy-to-measure productivity metrics. The CEO must be able to rely on someone who understands the complexity of the market and can draw insights from it to create meaningful and cost-effective strategies. This means establishing business relationships with partners, customers, and, sometimes, competitors to create new value and opportunity in the marketplace.
The CEO needs an internal partner to evolve strategy and articulate it to the organization. Strategies must embrace new business models and build reputation as opposed to simple building of brands.
These realities are reflected in the following list of desired CMO traits as created by the CMO Council:
- strong business acumen and boardroom stature;
- strategic long-term view--essential confidante to the CEO;
- consensus builder and inspired leader across functional areas;
- polished, articulate, and confident communicator;
- communications and advertising campaign prowess;
- inherent customer sensitivity and staunch defender of user experience;
- exceptional measurement and analytical capabilities;
- deep channel understanding and program expertise;
- deep domain knowledge of the company’s market;
- sales organization intimacy, credibility, and experience;
- ability to look across the organization and tie all disparate pieces together;
- financial management rigor, competencies, and discipline;
- product design, development, and manufacturing group synergies; and
- technology/Internet expertise in specifying and deploying solutions.
Three career-path conclusions.
Also recognize that these attributes could easily fit the characteristics of a CEO or COO; if one had these attributes, would he or she be interested in the CMO position unless it had a clear career track to the COO or CEO position? Further, how likely is it that one would find such a person within one’s particular industry? The other issue of high relevance is that the incumbent by necessity has a career path that includes sales, operations, general management, and, ideally, experience in a developing country. This generates three conclusions:
- Search firms should not be concentrating on marketing candidates who have not had other operational experience.
- No matter who the candidate is, it is likely that they will need support from other areas to create a full spectrum of knowledge.
- Companies should be examining their career path strategies to start growing this talent internally.
If these attributes and positioning of the role of the CMO are correct, then organizations must develop a recruitment and change management strategy to minimize the risk of failure and subsequent turnover because the implied costs are too great.
The CMO Charter Creates A Shared Vision
A CMO charter positions the CMO’s role and responsibilities in providing leverage for the company's success. A shared vision of the CMO's role, within marketing, and among the other organizations throughout the company creates momentum, reduces redundancy, and strengthens the position's strategic capability. Accordingly, the CMO charter creates a common framework across each division and each region relative to strategy and marketing. The framework lays the foundation to address current challenges of knowledge flow and smooth hand-offs of deliverables, inbound channels for establishing customer requirements, silos of marketing effort, and synergistic roles for the functional areas of product marketing, marketing communications, field marketing, and sales, customer service, and the operational functions within across the company. The CMO charter also includes areas of authority, criteria for success, and the tools necessary to achieve success.
The charter should be considered a starting place for the search for a CMO. As indicated in the previous section, it is likely that each candidate will bring a unique set of knowledge and skills to the position, and therefore the charter will need to be honed after the CMO is hired.
The CMO And Marketing Operations
This whitepaper justifies the CMO’s C-level status on the basis of its role in setting and orchestrating strategy. Given this emphasis, the incumbent is likely to have a diversified background. However, regardless of the incumbent’s experience base with marketing, there will be a need for a “chief of staff” of marketing who will embody marketing operations.
Marketing operations provides the organizational glue that enables the function to work seamlessly and coherently. Marketing operations helps enterprises stay in integrity by ensuring that their deeds match their promises. It puts operational muscle, measurement rigor, and holistic, cross-functional alignment behind the strategy, so the CMO can be optimally effective and focus on working with the CEO to develop new growth opportunities.
The combination of a CMO and a marketing operations chief of staff is synergistic in that most organizations are struggling with complexity andaccountability. If the CMO has to deal with both issues simultaneously, then one area will be addressed at the detriment of the second or, worse yet, neither will be effectively addressed.
This whitepaper also has presented the prohibitive cost associated with excessive turnover in the CMO ranks. To change the current course, we need to carefully assess what aspect of this position truly merits C-level positioning. It has been suggested that given the position is created through a CEO mandate and given today’s priorities, it is most useful for the CMO to participate in the development of and execution of strategy. This role justifies the C-level status and the qualities desired in the incumbent. To further define the role so as to reduce turnover, it was suggested that a charter document be created to guide recruitment and serve as a reference for managing expectations across the organization. Last, it was suggested that the CMO be supported by a chief of staff representing marketing operations. This enables the CMO to concentrate on strategy while ensuring that the marketing function is operating on the basis of accountability and best practice.
Complexity tends to freeze decision-making; it is only when we gain insight that we can connect the dots and gain competitive advantage. The CMO is potentially the source of that insight, but only if the right person is selected. The charter document stands as a vehicle to truly bridge the needs of the organization. The investment in time might be painful, but when compared to the opportunity cost of making and supporting the right decision, it becomes inconsequential.