Sunday, July 15, 2007

CMOh, No!

Top secret agent James Bomb was about to go out on a very important mission to try to stop the evil schemes of dastardly Dr. Whoa. Before embarking on his mission, James Bomb went to the agency’s top secret lab to find out what kind of customized sports car he was getting.

“This automobile is state-of-the-art in fighting evil,” gushed with pride the scientist who customized the sports car. “It has everything you need…a machine gun, a rocket launcher, a grenade launcher, and even a torpedo launcher, in case you end up near the water.”

“I looks ingenious,” said James Bomb. “Now show me how they work.”

“Well, therein lies the problem,” sighed the scientist. “Because the sports car is so sleek, there was no room for the bullets, the grenades, the rockets or the torpedoes. I was able to squeeze in all the launchers, but none of the things they launch.”

“What, then, am I supposed to do?” asked Mr. Bomb.

The scientist replied, “In the glove compartment, there is a small pistol which shoots little BB pellets. I’m sorry, it was all I could find at the last moment.”

“Hrrummph,” murmured the disappointed Mr. Bomb. “Well at least I can hope to find some pretty women on the mission.”

Just as in the spy world, there are important missions in the business world. It may not be the dastardly schemes of Dr. Whoa you are fighting, but there are forces out there that can seriously damage the future of your business unless you stop them.

They can give you a fancy mission and they can give you a fancy title (like top secret agent). They can even give you what looks like a powerful platform from which to do battle (like that sports car). However, if you have no bullets or rockets or grenades, you will lose that battle. All you have to look forward to is nabbing a little beauty on the way down.

I think a similar situation is occurring for many of those placed in the Chief Marketing Officer position, known as the CMO. They have been given a fancy mission: to protect the brand long-term and to help it grow over time. They have even been given the fancy title of CMO (they get to be part of the “C”-suite). And as part of the C-suite, they have what appears to be a powerful platform from which to operate.

Unfortunately CMO’s, as a whole, appear to be failing in their task. I think a lot of it is because they do not possess all the tools to get the job done (their version of grenades and bullets). They can make some beautiful ads on the way down, but that’s about it.

In last week’s issue of Advertising Age magazine (dated July 9, 2007), one of the cover stories was about a study of the effectiveness of CMOs. The study, by marketing professors Pravin Nath at the LeBow College of Business and Vijay Mahajan of the University of Texas at Austin, looked at 167 companies over a five year period.

What they concluded was the following: CMOs on top management teams don’t have any effect on a company’s financial performance. Let me repeat that: CMOs on top management teams don’t have any effect on a company’s financial performance.

This study will be published in the January 2008 edition of the Journal of Marketing. To quote Advertising Age, “Pay attention CMOs: If you’ve been fighting for more influence with top management, hide this publication—now.”

I guess then it should be no surprise that in a different article which appeared last year in Advertising Age, it said that the average tenure for someone in the CMO position continues to drop and is now less than two years. It appears that boards and CEOs are not waiting for this study. They are already frustrated and have taken to canning the CMO.

What’s going on here? What is the problem? I think the problem has a lot to do with the principle of Expectations and Capabilities. In other words, if people’s expectations exceed your capabilities to meet them, you are bound to fail. It’s like super secret agent James Bomb. He is expected to defeat the evil Dr. Whoa, but his capabilities are limited to a little BB gun.

The typical expectations for a CMO are to:

1) Increase Sales Near-Term
2) Increase the Business Even More Dramatically Long-Term
3) Protect and Strengthen the Brand over Time

In many businesses, the CMO is pretty much the only one in the C-suite with a mandate to focus primarily on the long-term interest of the company. That is quite a tall order. And to top it off, if near-term sales take a dip, all the work on the long-term becomes somewhat for naught, as the pressure builds to forget long term and get the near term fixed. And if the average tenure is less than two years, how is anyone in the CMO position going to have enough time to see the fruit of their labors?

And for all of this responsibility and all of this stress, what are the tools this person has to work with? Typically, it is little more than advertising. In the fight for the future, advertising is like a BB pistol. It has some impact, but it is not enough. The fight for the future needs more.

In a prior blog, I talked about how if someone comes from a narrow professional background, they will see all problems as requiring their narrow background for the solution (see “Henry the Hammer”). In other words, if your background is advertising, you will see nearly every problem as requiring advertising to fix it. Most CMOs tend to come out of a narrow advertising background. Hence, they tend to rely on advertising as their primary tool to get their job done.

However, much of what it takes to protect and grow a firm long-term has little to do with advertising. It is far more complex, involving finance, strategy, asset alignment, personnel choices, and so on. All of the intricacies of positioning, pursuit and productivity which I briefly outlined in a prior blog (see “Same Title, Different Jobs”) come into play. Advertising is only a small part of the puzzle.

My conclusion is that the position of CMO is failing because the design of the position is such that it is almost impossible not to fail. The capabilities do not match up to the expectations.

My solution? Bring back the chief strategist. Strategic planning as a full time job in companies is becoming obsolete. Yet there is nobody more qualified to handle the expectations of preserving and building the future than the strategist. Strategic planners tend to have broader backgrounds than CMOs and are more capable of getting their arms around the big picture. Because they are pulled less in two directions (look out for the future AND get out next week’s ad), they can do a better job of focusing on and articulating the full scope of what must be done to grow the company.

Yes, outside strategic consultants have their value. However, would you ever consider outsourcing any of your other C-suite functions to an outside consultant who only shows up on an infrequent basis? By having someone on premise all of the time worrying just about your future, you get far more than just the advice of someone out for billable hours.

Advertising and marketing are very important, but they are not the whole job. Giving a VP of Marketing the title of CMO doesn’t really change anything but their title (and, I suppose, their compensation). Adding a Chief Strategy Officer to the team, however, can give a much needed fresh broad perspective to winning the future.

Protecting and growing the future of your firm is an important task. It is important enough to require having someone on senior staff, full-time, just worrying about the future. The CMO is usually not capable of doing this, regardless of expectations, because they are distracted by the “tyranny of the now” on their advertising responsibility as well as not usually having a broad enough background to cover all the aspects related to the task. Instead, the best solution to the problem is to have a senior executive schooled in the art of strategic planning.

It is interesting to note that, while the study mentioned in Advertising Age saw no positive impact from CMOs on financial performance, it also concluded that “CMOs do not have a negative impact on financial performance.” Well, there you have it. Something to call home about and to put on your tombstone: “I did not have a negative impact on financial performance.”

If you have CMO in your title, I would suggest that you always be out there networking, because the nature of your position tends to cause short career stints.

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