Greg Banks President Javelin

The topic of CMO tenure has been analyzed, debated and dissected by journalists for several years now, to the extent that it’s become a fixation of the business press. From my perspective, this is nothing more than a temporary distraction—it’s not the real story at all, and it will soon fade away. In fact, the trend has already begun to turn in the CMO’s favor, and I’m quite certain this will continue. 

This is a good thing, because now is certainly not the time for such distractions. CMOs have much more important issues to work on, such as driving greater profit and growth in the modern corporation.  In my opinion, the CMO is becoming one of a very small group of senior executives best equipped to fully lead the modern corporation. I’m talking “CEO candidate” here. This is driven largely by the fact that the buyer, instead of the seller, is becoming the more powerful player in the entire economic relationship.

CMOs will soon be reaching their full potential as CEOs of large modern corporations. That’s the real story. But how did we get here and where are we—and the modern CMO—going? A look back provides the answers.

The Granddaddy of Recent Business Changes  

I’ve been a proud member of the marketing profession for 25-plus years, and, in that time, I’ve seen some truly radical changes. But the granddaddy of these changes is the shift from a supply-driven to a demand-driven economy. Scroll back a few decades: our customers looked like one of those old photos of a traditional family gathered around a big, wooden console TV in the living room—which offered only three network viewing options. I had a boss once who called them “the mass market of willing purchasers.” Seems quaint now, doesn’t it?

Marketers—although we weren’t always called that back then—could make a single investment in, let’s say, network TV advertising, and persuade 80% of the mass marketplace all at once. One investment to reach 80% of the market. Those were the days. Today, we’re more likely to need 80 different investments to persuade 1% of  the marketplace—with each one!

So what happened?

In the simplest terms, as noted above, our economy has shifted from supply-driven to demand-driven. In other words, as my Northwestern Professor Don Schultz explained it, it’s shifted from “push” to “pull.” (D. Schultz, “Learn to Differentiate CRM’s Two Faces.”, Marketing News, 20 November 2000, p. 11.)

It Was Simpler Last Century

In the last century, corporations “pushed” products, from the grain in the fields to the loaves of sliced bread in our pantries. Corporations “pushed” the advancements in their research labs to our homes, our garages and our workplaces. Back then, the corporation could better control information. The customer was essentially told what the corporation deemed important. In those days, the marketer’s role was to be found way downstream. The value chain started with a dominant financial stimulus, followed by manufacturing. It then moved to logistics, then to the marketer, and finally, the customer.

When I started my professional marketing career, I worked “downstream” for a large packaged-goods company. My job was to push laundry products to what we lovingly called, “homemakers of America.” My approach was to convince these homemakers that, without our laundry products, they ran the risk of having their family embarrassed by dingy, stained clothing. My primary investment: TV advertising. Daytime soap operas, to be specific.

Life was good. Things were a lot simpler for marketers. We all had a lot more leisure time, and we sold a lot of laundry products. But that’s all changed.

Push to Pull

As we all know, things are more complicated today. The modern marketer must master scores and scores of investment categories. Today’s customer is no longer part of a mass market, but rather part of a mosaic of proud individuals, each with easy access to information, alternatives, and options. He or she calls the shots in the relationship with the modern corporation.

Most of you already know this story: Customers now have hundreds of media and channel choices. They spend their time on the internet and on their mobile devices. They have almost unlimited access to information, and they spend a lot of time interacting with each other, and often helping — or hurting —the success of products and services. A new word recently entered the lexicon: “badvocacy.” Loose translation: a few blog posts or tweets can undo years of careful marketing efforts.

In less than a handful of decades, corporations have had to transition from a supply-driven to a demand-driven economy. The world of corporation “push” has become the world of customer “pull,” and the value chain, described by Michael Porter and others in the past, has been turned upside down.

And information control? Forget about it. The corporation no longer pushes information to the customer. Today, a purchase decision can be influenced by a marketing investment or, just as easily, by an electronic message from Aunt Sally to her friends, and on to thousands of others. The customer could almost be called “The New Capitalist.” Instead of choosing between five brands in any category, today they can choose between hundreds. Looking at the Consumer Packaged Goods sector alone: In 1970, the number of annual new product launches was about 1,200. In 2007, that number was over 25,000. That’s a clear sign of a demand-driven, pull-driven economy.

The Modern CMO: Both Instinct and Measurement

The modern CMO has to manage an increasingly complex environment. Typically, a large U.S. corporation today invests in over 2,500 marketing programs a year, across 50 or more categories, using 20 or more agencies and related suppliers. But the good news is that the modern CMO now has available the tools, and the management systems, to keep up with this complexity and ensure profitability.

Look at it this way: For more than a century, disciplines such as Finance had sophisticated tracking and analysis systems. Starting around the middle of the last century, Operations built systems based on concepts like Total Quality Management and Six Sigma. But the marketer had to rely mostly on instinct.

That’s actually the good news, for marketers were forced to hone their instincts. Today, in addition to instincts, marketers have access to the same caliber of measurement and management systems that were once only enjoyed by groups like Finance and Operations.

The CMO’s Full Potential

According to a recent survey by Spencer Stuart, the CMO is, along with the CFO and COO, one of the top three career paths leading to CEO. That’s affirmation. In my view, the CMO—with this blend of instincts and measurement tools in the era of customer pull—is uniquely positioned to run the modern corporation.

Compared with this tremendous opportunity, the fixation on CMO turnover seems rather trivial. In difficult times, it’s been especially easy to blame the CMO for business disappointments. But smart corporations are now reconsidering the larger role of the modern CMO. I firmly believe that the turnover issue will continue to fade. A while back, David Court from McKinsey Group wrote an interesting article about the new role of the CMO. In it, he predicted that “the CMO will assume a larger role as the ‘voice of the customer’ as companies respond to significant changes in the marketplace.”

I think Court would agree: In the demand-driven economy, the role of the CMO is no longer downstream; it’s upstream, operating as the customer’s advocate.

This enhanced role is, in my opinion, an important step towards what I regard as the CMO’s true destiny: a position as the top corporate leader of the future. Certainly, an effective CMO will understand his or her customers, will appreciate their lifetime value to the corporation, and will know how to maintain their loyalty to the point of converting them into advocates. New measuring tools and techniques will enable him or her to get the very best return on marketing investments. Finally, by becoming the voice of the customer at the highest level of the corporation, the CMO will help the modern organization become better able to thrive in the demand economy.

About Greg Banks

Greg Banks is President of Javelin Marketing Group (www.javelinmarketinggroup.com), a group of Omnicom marketing services agencies.