9 October 2006

"In our industry, the winners will be determined because of marketing. By that I mean true marketing, not sales support, which is what the insurance industry is about in the United States."

C. Robert Henrikson, Chairman and CEO of MetLife, at the Wharton School, Sep 06

What roles does marketing play at your company?  This is the question that researchers from Booz Allen Hamilton (BAH) asked in a study published in July 06.  They found that most organizations have a set of common tasks that they call on marketing to perform.  Many of these are related to publicizing a company’s products and services -- activities like public relations, advertising and promotion.

At the same time, however, for a large number of companies, marketing’s role in new product and business development appears to be much more limited.  In the BAH survey, marketing had little involvement in innovation in fully 35 percent of all organizations.

            According to the BAH study, most marketing departments are not focused on growth.  Of the six kinds of marketing organizations described in the BAH study, only one had a growth focus.  And less than 10 percent of all marketing organizations fit into this category.

The six types of marketing organizations

            Does this make a difference?  It might.  According to the Booz Allen consultants, growth champions occur in companies that are 20 percent more likely to “exhibit superior revenue and profitability growth relative to their industry.”    If your marketing organization is a growth champion, chances are a little bit better that you’re a high performer.

As Mr Henrikson of MetLife demonstrated in his remarks at Wharton, many executives appear to be aware of this gap in their marketing organizations.  Most executives surveyed by Booz Allen believed that marketing’s importance has increased significantly, while at the same time reporting that marketing departments were increasingly ineffective. 

For example, in North America, 63 percent of marketers surveyed believed that their organizations were unhealthy, and 70 percent of marketing departments had undergone a re-organization in the past three years.  The average tenure of the chief marketing officer was about 23 months, according to executive recruiter Spencer Stuart.  This is half as long as the average CEO tenure.

How did marketing get itself in this situation?  Researchers like Richard Rawlinson and Clayton Christensen have highlighted problems of increasing specialization and an over-focus on quantitative market research.  This has resulted in a group of technical marketing specialists who are able to work with other specialists but lack the kinds of skills and perspectives that can deliver growth.   

What makes a “growth champion?”

Here’s a description, from the Booz Allen study, of the role played by IBM marketing during the period 1994-2000, when it was leading the business.  It reveals the breadth of the function and its considerable influence on practically everything the company did, from product development to sales and service:  

·        “Big Blue’s CMO is a member of the executive committee and advises the CEO on strategy.

·        “Central marketing defines corporation-wide marketing plans and objectives; analyzes, segments, and targets markets; positions brands; and monitors and consolidates communications.

·        “They suggest appropriate channels for products; they research the behavior of current and potential corporate customers, both as buyers and influencers; and they take part in the innovation process for new services and products. 

·        “Marketing people work alongside sales reps to locate opportunities

·        “In 2005, Bruce Harreld, who oversaw strategy for IBM, was given jurisdiction over both marketing and strategy.”

This description reveals a multi-faceted marketing organization, one that played significant roles in areas ranging from corporate strategy to sales support.  This in turn was driven by marketing’s unequalled understanding of both existing and potential customers.  This kind of understanding enabled successful growth initiatives, and it’s what more and more companies are looking for from marketing.

More Information:

1. The Henrikson quote (CEO of MetLife) comes from a report on a Wharton panel discussion on Innovation and Leadership that is written up here.

2. The July 06 Strategy & Business article discussing the marketing survey results from Booz Allen Hamilton can be purchased here.

3. The application of the jobs framework to marketing is described by Clay Christensen, Scott Cook and Taddy Hall in a Harvard Business Review article of December 05.  You can purchase a reprint here.

4. Richard Rawlinson wrote about the evolution of the marketing function in July 06 Strategy & Business. You can find a reprint here.