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Change or Die

October 1, 2013

Focusing marketing strategy, structure, and capabilities for 21st-century growth

By Chuck Kapelke

What will it take to be a winning marketing organization in the year 2020, and how can marketing best focus and organize to support business growth in the decade to come? To answer these questions, the ANA and its partners in the World Federation of Advertisers have sponsored an ambitious initiative called Marketing 2020, an unprecedented effort to leverage the insights and experience of thousands of the most successful global chief marketing leaders, brand managers, agency heads, and others, across the U.S., Europe, Asia, and Latin America.

The goal is to help marketers gain clarity — 20/20 vision, as it were — as they steer their organizations through a transformative era, when buzzwords like “social,” “transparency,” and “big data” have become business imperatives, and marketers increasingly find themselves pushed into the driver’s seat to guide their company’s growth strategies.

“There really seems to be a paradigm shift,” explains Marc de Swaan Arons, founder of EffectiveBrands, a global marketing strategy consulting firm that is leading Marketing 2020. “Given the dramatic increase in focus on digital and social marketing, the world has now changed sufficiently for marketing leaders to take a step back and say, ‘What are we doing to grow the organization, and how are we structured for that?’ ”

“So many times in marketing we get so focused on discussions about things like brands and social media that we fail to realize we’re all in business to generate incremental growth for our respective companies,” says Bob Liodice, president and CEO of the ANA. “We fail to ask, ‘Does my staff have the appropriate skills to compete effectively in today’s environment? Are we organized in the right way to take advantage of the opportunities before us?’ ”

The good news? A clear picture is emerging of what the successful marketing organization of the future will look like.

Read on for a look at some of the trends shaping the future, along with tips that your company can use today to set up the right strategy, structure, and capabilities to grow during this dynamic period.

Setting Business Goals

Early results from Marketing 2020 survey data suggest that today’s overperformers (companies that are currently outperforming their peers) are far more likely to have marketing organizations that are explicitly aligned toward a clear strategy. “Just knowing what your strategy is turns out to be a major differentiator,” de Swaan Arons says. “When we asked CMOs to tell us their key performance indicators [KPI], their number one answer is ‘business growth.’”

Ask Joe Tripodi, executive vice president and chief marketing and commercial officer at The Coca-Cola Company, about the top priority for his marketing organization, and he does not waver: “The marketing function needs to be leading the growth agenda for the company,” he says. “We have a companywide ‘big hairy audacious goal’ of doubling our sales between 2010 and 2020. We’re trying to double in 10 years what it took us 120 years to achieve.”

Yet Tripodi also understands that measuring financial growth alone is not enough. “I’d like to redefine EPS from ‘earnings per share’ to ‘economic value, partner value, and social value,’” he says. “Those companies that are ruthlessly focused on earnings will be left by the wayside. It’s not just what you sell, it’s what you stand for.”

‡What You Can Do

While it can be tempting to set a strategy based on ramping up clicks, likes, and retweets, the key is to focus on business goals first. Work with your marketing team — as well as the CEO, CFO, and others — to clearly define the company’s business objectives and purpose, and show the role that marketing can play through your abilities to engage a growing global community of passionate fans.

Defining a Clear Purpose

Seventy-three percent of the marketing leaders interviewed for the Marketing 2020 survey agree that being clear about the company’s (or brand’s) broader societal purpose will be an important characteristic of winning companies in the coming years.

“We need to move beyond seeing people as a head of hair in search of benefits or a pair of armpits to be deodorized, to real people with real lives, and focus on how we serve them,” says Keith Weed, chief marketing and communications officer at Unilever, who chairs the Marketing 2020 Advisory Board. “Marketing got lost in the mad consumption-at-any-cost years. What we’re doing ... is making marketing noble again.”

 Marketers should lead the way in connecting (or reconnecting) their brands to a societal purpose, something that can serve as a lodestar for new products or services that can help grow the business. Think of Nike’s FuelBand, which tracks users’ movements throughout the day. The band makes sense within the company’s product line because the Nike brand is not about shoes; it’s about unleashing the athlete in all of us.

“What insight do you have about your consumers, what is your purpose as a company, and how can you deliver a total experience?” de Swaan Arons asks. “We find that every successful global brand understands perfectly — everywhere in the organization — what universal truth they’re appealing to. If that’s not the case, you’re in trouble.”

What You Can Do

Find and define your brand’s purpose, if you haven’t already. For some, this can be as simple as rereading your company’s founding documents and discovering roots that were lost over time. Another approach is to use consumer research and turn a nugget of insight into opportunities to deliver a total brand experience. A well-known example is Dove’s Real Beauty campaign: Unilever’s marketers latched on to research showing low self-esteem rates among young women; from there, they redefined what the brand stood for by rolling out a global campaign to boost how people feel about their appearance.

Inspiring — and Aligning

Survey data from Marketing 2020 confirms overperforming companies are more likely than their peers to engage with their employees and consumers around their brand purpose.

In an age when every customer experience is subject to scrutiny and the slightest hiccup can quickly find its way to your permanent record, marketing organizations have to be proactive in ensuring that their brand is woven throughout their company’s fabric. That means expanding the focus on your products to include getting involved in your company’s internal communications, human resources, customer service training, and other facets of operations.

“Who gets hired at the stores, how people are trained, what they’re told to say — that’s where the rubber hits the road,” says Elisabeth Charles, senior vice president and chief marketing officer at Petco Animal Supplies Inc. “No matter how much great marketing or advertising we do, it can all fall apart if you go into the store and it’s dirty, products are out of stock, or people are not friendly to you. We have to have the right products, the right store experience and engagement model, and then the right marketing to get people there.”

Some companies, including IBM, have started measuring employee engagement as a KPI. “We’re going to have a much greater degree of collaboration with human resources,” says Jon Iwata, senior vice president of marketing and communications at IBM and a member of the Marketing 2020 Advisory Board. “It will be more than messaging to employees; it will be actually influencing the criteria of hiring, onboarding, management, training, development, recognition, and reinforcement — the rituals and practices that define any corporate culture. We will be partners guiding the cultures of our companies.”

What You Can Do

Marketers can help build the connective tissue within their organization by doing what they do best: delivering great internal communications and finding fun, creative ways to get people on board. For example, marketers at Dulux, a brand of paints owned by Netherlands-based AkzoNobel, have taken about 80 percent of the employees to local communities to paint neglected structures in vibrant colors (and has seen its market share rise). “That’s not just inspiring people — it’s about giving direction and making clear to everyone in the organization the effect that the company’s products have on its consumers and the world around them,” de Swaan Arons says.

The payoff is that everyone in the organization becomes a de facto member of marketing, a brand ambassador with feelers out for ways to better serve the customer. “Once you get other disciplines to understand what you want to stand for, they can apply their expertise in ways that you, as marketers, never could think of,” de Swaan Arons says. “It’s about inspiring the rest of the organization to apply their expertise to a common purpose.”

Establishing Roles and Responsibilities

To minimize tiffs and turf wars between the central and divisional (or global and regional) levels of the organization, marketing leaders should focus on bringing absolute clarity to everyone’s roles and responsibilities.

As a case study, consider the experience of Larry Light, chief brands officer of InterContinental Hotels Group, who during his first year on the job led a brand-based restructuring of his company. He renamed hotel general managers as “brand managers” to reinforce their role in serving the brand; rolled out a companywide brand-measurement tool; linked executive bonuses to brand performance; and most controversially, created a system that gives local managers and global leaders shared ownership of the company’s brand standards on a 50/50 basis. (See “How InterContinental Hotels Group’s Larry Light Is Revolutionizing the Global Marketing Organization” to learn more.)

“The number one challenge in companies like ours is, how should we be organized?” Light says. “Everybody always goes to the org chart first. What we really should be doing is saying, ‘What are our goals? How will we define success? What will be our process for achieving that success?’ Only then can we consider how we can organize to deliver that process most effectively.”

What You Can Do

Use your brand strategy as a framework to define responsibilities and establish incentives based on business performance. Also make sure that performance is measured in the same way at every level of the organization, and check progress often enough to keep everyone aligned. “If you were driving from New York to Chicago, you would probably check on a regular basis whether you’re on the right road, but in business, we sometimes only check our progress once per year,” says Light, who as part of his restructuring, implemented monthly rather than annual performance evaluations. “We need to do it with sufficient frequency so that if we get off track, we still have time to course correct.” 

Structure

The Networked Organization

Tomorrow’s successful marketers will have to balance the tension of global and local brands, and facilitate the creation of a common platform of creative that is consistent yet customizable for the local level. The doctrine that “global” comes from headquarters is being turned on its head in the digital age, as Marketing 2020 team’s interviews with CMOs hint at the emergence of a new model: the networked organization.

As an example, Coca-Cola has begun using “global centers,” regional divisions given responsibilities for packages of content meant to be shared. For instance, Germany was given responsibility for developing content around Christmas, based on the division’s past performance. “Global used to be at the highest on the food chain,” Coca-Cola’s Tripodi says. “But now the real opportunity is going to be the networked entity. It’s going to be all about finding where the people are who do the best work, let them do it, and let it get socialized around the world.”

IBM also has been shifting toward a networked model. After the company purchased Unica, a maker of automation software for lead nurturing and marketing, the company set up knowledge centers in Romania and India. “We had the choice of putting Unica skills in every country or creating these centers, and we decided to go [the latter route],” Iwata says. “You get a lot of really good work done in these parts of the world.”

What You Can Do

Enable local teams to contribute and share in the development of marketing’s outputs. Set up digital spaces where teams can share and collaborate on materials that can be customized for use in other markets. “We deliver 80 percent of the solution to the field and let them customize the remaining 20 percent for their market,” Tripodi says. “The cost savings are enormous, and the level of quality has actually gone up.”

A Commonwealth of Partners

Many of the CMOs interviewed for Marketing 2020 conveyed that they see the traditional model of a single agency of record becoming increasingly untenable, and they are settling into a role of coordinating a platform of partners, in-house and out. “The concept of a one-size-fits-all shop is rapidly becoming obsolete,” says Gannon Jones, chief marketing officer for PepsiCo’s Global Nutrition Group. “The idea of finding the best in class in each area and creating a commonwealth or multidisciplinary team is the model that is emerging.” The research from Marketing 2020 supports this trend, as overperforming marketing organizations are more likely than their underperforming competitors to have five or more agencies (55 percent compared to 33 percent).

Of course, overperformers were also far more likely than peers to say that creativity will be important in the future. According to de Swaan Arons: “What they said was, ‘We need our creative partners to think bigger, to apply creativity to a bigger question.’ They see that creativity will only get more important to cut through the clutter and offer something that drives share and growth. You need creativity for your communications but also to help think through total experience solutions. That’s where agencies can start competing with traditional consultants like WhatIf and Ideo.”

What You Can Do

Build a team inside and out that can play in unison, and provide enough direction that everyone is clear on the tune they’re playing. To find the right team, consider hiring out projects on a project basis to see what different agencies can offer. “There’s lot more project work going on today, versus retainer,” says Nancy Hill, president and chief executive officer of the American Association of Advertising Agencies (4A’s). “People are using [project work] as a way to date agencies.” Moreover, she adds, “everyone should be clear on the definition of the project, the scope, and the compensation.”

Capabilities

Big Data Mastery

The ability to use data for strategic insight is quickly proving to be a differentiating capability: Winning companies surveyed through Marketing 2020 were far more likely than their peers to say that they can leverage big data to support their marketing strategy, and that they have the ability to manipulate or leverage data to service their strategy.

“I don’t think there will be a marketing intelligence department five or 10 years out that doesn’t have some degree of predictive analytic capability,” IBM’s Iwata says. “We will have to build the capability to understand and engage customers and prospects as unique individuals based on what we know about them and where they are in their journey, and how they prefer to interact with us, by device, time, or channel.”

Walmart has established its own research center, @WalmartLabs, that brings together marketers and technologists. It has developed tools like “The Social Genome,” described as “a giant knowledge base that captures interesting entities and relationships in the social world” that can determine whether someone who tweets “I love Salt!” is talking about the movie, not the seasoning, and can scan Facebook postings to know who should get a coupon for gourmet coffee.

“It feels like we’re just scratching the surface on what’s possible,” says Stephen Quinn, executive vice president and CMO of Walmart U.S. “What’s going to be a massive add-on [to our existing use of big data] is to merge our data with other databases, for example, from the media world. Looking at the connections between those data, that’s just starting now.”

What You Can Do

Work with your marketing team and outside experts to determine how your business can ask the right questions from available data sources. And invest in creating a culture of learning to help your team grasp the potential of data analysis in the modern age.

The ANA will be expanding its training in emerging areas such as big data, and companies can develop their own innovative approaches. SAP, for example, has set up a regular forum called Marketing and Communications Live, where outside speakers come in to discuss cutting-edge topics.

Diageo has brought more than a thousand of its senior executives from all functions to Facebook to immerse themselves in the digital world, and Anheuser-Busch InBev started a garage-training program at Stanford to encourage senior executives to experiment. Unilever’s Weed also has been relentless in making his marketers more digital: He has enlisted training companies like Hyper Island, which specializes in data and digital; sent people to Facebook and Google to learn from the inside; and embarked on a “sheep dip” to get everyone at Unilever up to speed in what Weed explains as “a massive training program around the world that everyone has gone through.”

Cross-Platform Social Media Engagement

Tomorrow’s marketing organizations will have to sustain conversations with consumers across evolving social media platforms. “If the consumer’s engaging with you, you’d better be able to engage back,” says Hill of the 4A’s. “If you’re not able to have that one-on-one conversation, you’re not a brand that is going to be around for a long time.”

A model for success came from the 2012 Barack Obama reelection campaign team, which was praised not only for its ability to run models to predict voter behavior but also for how its digital team pumped out tweets, videos, blog posts, and emails to build the movement in the first place. By Election Day, President Obama had amassed a base of 34 million Facebook fans in the United States, who in turn were friends with 98 percent of Facebook’s U.S. population — a powerful resource for sending out messages, recruiting volunteers, and fundraising.

“We knew that if we could serve them with the kind of experience that keeps them feeling invested, we could serve the entire country,” says Teddy Goff, digital director for the campaign. “And [our Facebook supporters] could do it more powerfully than we could, because people are skeptical of political rhetoric, but one thing people trust is their friends.”

Goff says that one of the keys to his team’s success was a structure that eschewed bureaucracy and empowered people in the campaign to act at the fast pace of social media. “We were empowered to approve our own content with an honor code,” Goff says. “It’s not that we didn’t collaborate, but we had a structure that was built for speed.”

What You Can Do

Do what the Obama campaign did: Build a strong digital team that gets the most out of every major social channel. “If you were to ask a CMO at a big company to restructure from scratch, they’d want something like we had: a digital department that works with other teams and has its own approval process,” Goff says. “It not only allowed us to speed up, but it was beneficial in terms of orientation and incentives and the kind of personnel we were able to hire.”

A culture of empowerment needs to start with a degree of risk tolerance at the top, Goff says. “Digital has got to be respected at the senior level; there has to be one person who doesn’t have to fight to meet with the CEO every six months, but who reports to the CEO, and who thinks about and gets digital. It’s that important in almost every business context.”

Leadership

The Winning CMO

It will take a certain kind of chief marketing officer to lead the development of a winning marketing organization in 2020. In 2006, an ANA survey found that only about 38 percent of marketers worked closely with the CEO to drive business strategy; as of 2013, that number had risen to 60 percent.

“We’ve seen a decade of movement where the marketer has gone from the profile of the big spender who didn’t have a lot of respect in the boardroom, to having a shared sense of responsibility and accountability about the effectiveness of that spend,” EffectiveBrands’ de Swaan Arons explains. “The marketer is the only one at the table who really gets this new world, who understands this transparency, this 24/7, always-on economy, and is being asked by the CEO and peers to show the way.”

The ability to combine big ideas with big data is a prerequisite. “I don’t think you’ll be able to escape the logic side with big data,” Unilever’s Weed says. “Those who are purely the creative loveys won’t become CMOs anymore.”

 Another hallmark trait will be the ability to exert influence within the C-suite and inspire organizational change. “You have to be creative, analytical, very strategic, and influential, and you have to understand and represent the customer voice,” Petco’s Charles says. “You have to be able to influence the CEO, the CFO, and work with IT. You have to be a jack-of-all-trades.”

Successful CMOs must be inclusive servant-leaders, who can listen to what business units or local market teams are asking for, rather than issuing directives from on high (for more about this concept, see “Five Ways to Deliver Global Marketing”). At the same time, CMOs have to take a stand, buck norms, and push change to do what’s right for the customer. “Ideally, you create alignment without compromising the best direction for the brand,” says Lisa Cochrane, senior vice president of marketing at Allstate Insurance. “You have to be bold. You can’t be afraid. It helps to be proven. But you have to be decisive, based on what’s right for the customer.”

“If you’re the chief marketing officer, you’re working with other disciplines, and you’re an orchestrator,” de Swaan Arons says. “What profile does that sound like? Ultimately it’s getting much closer to the CEO job profile.”

Moving into the next quarter and the next decade, regardless of whether advertising is delivered through people’s wearable devices or beamed directly into their brains, the fundamental truths of the digital marketing landscape — the need for transparency, customer-centricity, and mastery of data — are unlikely to change. As a result, the marketer’s role will only continue to be more valued within business than it is today — which creates greater potential for tomorrow’s marketers to step up to the next rung of the ladder.

KEY INSIGHTS

Case Study
How Intercontinental Hotels Group’s Larry Light Is Revolutionizing The Global Marketing Organization

If there’s an exemplar for what it takes to overhaul a legacy model and unify a global network of marketers, it might be Larry Light, who during his first year-and-a-half at InterContinental Hotels Group (IHG) has redefined more than 300 job positions and forged a new, customer-centric model.

“I call it a transformation, but around here they are calling it a revolution; it’s been a shock,” Light says. “We defined our purpose. We have a new mission statement. We have a new attitude. We’re retraining, changing job descriptions, changing metrics, all around a simple idea: that the future will belong to bigger, better, stronger brands.”

BIGGER, BETTER, STRONGER

“Bigger means outpacing the competition,” Light says. “We want to grow share, not just size. Better means improving the quality of every aspect of the guest experience. We’ve defined the whole journey, from awareness and consideration throughout the guest experience. And stronger is being the preferred alternative. All ties should break in our favor. We shouldn’t have to build preference by being cheaper.”

Light worked collaboratively with his teams — and with human resources — to develop what he calls a brand-business scorecard designed to be usable by every one of IHG’s 4,600 hotels. Each metric was scrutinized to make sure it would endure over time. “We said, ‘Will there ever be a day that we believe we won’t care about brand preference or guest satisfaction or employee engagement, or when we won’t want bigger market share or profit?’ We used those questions as a filter, because if we have metrics that we believe will change every few years, the odds of producing durable, enduring, sustainable, profitable, growing, healthy brands is zero.”

Light also rejected the doctrine of “thinking globally and acting locally,” which he calls the “two-box” model. “The local people are not proud of what they accomplish, and the global people don’t feel accountable for results because they always blame it on the poor execution by the locals,” he says. Instead he has implemented the “three-box” model.

THE THREE-BOX MODEL

“The first box is global vision,” Light explains. “This includes the mission of the brand, and asks, ‘What is the space that this brand wishes to dominate in a niche segmentation?’ About 80 percent of the responsibility for getting that right is held at the global center.”

Box two clearly articulates each brand’s identity and standards, down to details such as what quality of sheets are used. “Box two is the most important and most difficult; it is what has caused the revolution,” Light says. “Box two says there has to be 50/50 collaboration between global and regional. People find that very difficult. They say, ‘Who’s responsible?’ I say, ‘I’m not even making it 51/49. We’re going to lock you in a room; you’re jointly responsible. You will sort it out.’ Everybody jointly agrees that these are the boundaries of the sandbox within which all action will take place. That document becomes the guardrail that says, ‘This is how we will bring the brand to life.’”

Finally, box three is about delivering results. “Results are created locally, but global leaders are still guardians of the framework, and they have a responsibility to make sure what we’re doing is consistent with the vision they helped create.”

This shift toward a three-box model has led to newly defined job roles: The global and regional teams are now “brand leaders,” while the hotel general managers are now known as “brand managers,” to reinforce their connection to the brand. “We’re retraining all our general managers, because the brand experience is created in the hotel,” Light says. “Nobody calls my office to make a reservation or ask for room service.”

Source

"Change or Die." Chuck Kapelke. ANA Magazine. Fall 2013.

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