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"The real danger comes from disconnects and inertia"
For example, the president of a Fortune 100 company had been recently
promoted from a finance career path. Although this character was no
stereotype, he truly despised marketing and marketers, which might have
led to the failed launch of a key product under his watch. With some
coaching from Jack Welch, it took the new president about six months at
the helm to turn himself into a champion of brand management.
The real danger does not come from the lack of knowledge of
specific individuals, but from systematic disconnects as well as
cultural inertia across the organization. This seems to happen most
often when a company is isolated, geographically or professionally
(i.e., law firms, hospitals), and sees marketing as a separate
function.
It does help to have a payroll loaded with MBAs from top schools and
headquarters in large urban centers where information, stimulation and
trends flow. However, if marketing is understood as the corporate
equivalent of a central nervous system, your company could be based in
Cincinnati, Ohio, and still coordinate nearly 98,000 people across 80
countries who steward a portfolio of over 100 top brands. This is the
situation of Procter & Gamble, a chemical company that has built a
reputation for rigorous marketing processes and is considered a university in that discipline.
Following that path, marketing should be both creative
and accountable. It is an art and also a management science, calling
for the implementation of rigorous processes and metrics.
Therefore, it is not surprising that the Baldridge Criteria for
Performance Excellence puts Marketing in a leading role, together with
Leadership and Strategic Planning. It should be noted that, as a group,
the US companies that won the coveted Baldridge Award have routinely
outperformed the S&P 500 Index by as much as a six to one ratio.
"Marketing is the equivalent of a central nervous system"
Without the organizational framework that marketing provides,
the odds are that the strategy will be company-push rather than
market-pull. There are many examples of highly successful company-push
strategies. Akio Morita's Walkman is a well publicized case; most
monopolies may fall into this category as well. However, behind most
cases of successful company-push strategies probably hides the fact
that those companies benefited from weak competitors. To paraphrase
Hans Schultze, the former president of Ritz-Carlton, "it is easy to be
ahead of a lousy lot, but it does not stop customers from complaining."
The customer is indeed at the very heart of the problem. Great
strategies are developed around the customer, and help the whole
organization work as one to achieve its simple fundamental objective:
selling more, and more profitably.
To ensure that business and corporate strategies are
customer-centric is easier than putting a man on the moon. On paper, in
the case of a single-brand company, it is even disarmingly simple.
As a first step, it is good practice to start with the brand
positioning strategy. The latter is indeed the game plan that seeks to
influence consumers' behavior. The marketing strategy is then the second layer, building on
the brand positioning strategy. It not only includes sales,
distribution, and communication strategies, but also drives R&D,
production, and HR strategies. As such, the process helps the
organization avoid releasing products and services that will not sell.
The business and corporate strategy layers come on the top of the
marketing strategy. It deals with the financing needs and other
resource allocation issues that enables the marketing strategy and
ensures the going-concern nature of the corporation.
The merger of P&G and Gillette, for instance, falls in this
category. It is a corporate strategy decision that helps the marketing
strategy in terms of prices, costs, and perhaps an array of
cross-fertilizations, among other factors.
Since this process started with the customer, the corporate strategy ends up being totally customer-driven.
The process loops continuously as to ensure that none of these steps is
developed without a reality check or a market feedback. When both the
strategy is right and the organization delivers reliably, that is
usually when customers say "Wow," and rush to buy more of—or accept to
pay more for—your products or services.
Designed by BMW, the new Mini was such a bull's eye. The
process started with the brand positioning of the old Mini in the mind
of the consumer. The brand positioning strategy tweaked the existing
set of memories in consumer's mind by adding new key attributes such as
safety. The old Mini handled superbly, but had virtually no passive
safety feature; some qualified the British icon as "a coffin on
wheels." BMW had to address those concerns. Not surprisingly, the car's
features include not only specific design and color cues that remind
one of the classic car, but also a set of sophisticated passenger
restraint devices.
Timing is critical as well. Some companies, such as Wal-Mart and Dell,
have recognized early the incredible speed at which our economic and
technological environments are now changing. Their strategy processes
therefore ensure that the loop provides quick feedback, which is both a
guarantee of survival and a hedge against slower competitors. Wal-Mart
thus gained market share over K-Mart, embroiled in a restructuring, and
Dell outflanked HP/Compaq, Sun, IBM and Palm with an array of new
products in categories adjacent to the PC, e.g., printers, servers,
PDAs.
"Resistance to change makes good marketing difficult in practice"
If it is so simple on paper, why is it so difficult to go from
theory to practice? Among the gazillion reasons that are specific to
each individual company, the common factor is the resistance to change
ingrained in human nature.
Resistance to change is a pernicious attitude that is hardly
conscious. For example, conventional organization charts contribute to
reinforcing the wrong behaviors, as they show the CEO at the top and
the receptionist at the bottom. Notice that the customer is not part of
this picture. Actually, the org chart is likely to be a juxtaposition
of silos, those functional departments that communicate much more
vertically (i.e., internally) than horizontally (i.e., across the
organization). When the customer calls on the phone, it is the
receptionist who picks up, not the CEO. Who is the most important
person in that scenario?
A better way to represent an organization is through a value
chain. Then, the customer and the receptionist will both be more
prominently displayed. Unfortunately, since Westerners write from left
to right, supplies enter on the left, and the customer is showed last
on the right-hand side. Those models contribute to corporate-push and
the arrogant attitude that typically goes with it, e.g., "We have to
educate the customer!"
Those organizational issues are marketing issues. Companies
where marketing is given a role that is both strategic and systemic
(i.e., process-oriented) put themselves in a better position to stay
competitive. They manage to live in a symbiosis with their increasingly
demanding customers and their changing environment. As such, marketing
goes beyond its support role and penetrates most aspects of the
organization, as a budgeting system would. In a highly competitive and
fast-changing world, the debate is not whether marketing should be a
priority. Simply put, marketing is the name of the game.
[31-Jan-2005]
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