How Chief Marketing Officers are approaching another "VUCA" year
By Dominqye Turpin and Willem Smit
Back in 2007 Main Street had never heard of Lehman Brothers. Greek government bond yields were comparable to Germany's, and Italy's state debt relative to GDP was at a historical low. Kodak reported a profit of $676 million and Facebook had only 50 million members. Consumer confidence ratings in the US and Europe were at their peak.
Looking back, two conclusions can be drawn. Firstly, we are still lousy at predictions. Secondly, in an ever more volatile, uncertain, complex and ambiguous (VUCA) world, business success will increasingly depend on being able to respond rapidly to change. With many economies experiencing a double-dip recession, this will remain the case in 2013.
The bumpy ride during these last five years has brought both pleasant and unpleasant surprises for firms, leaving their Chief Marketing Officers (CMOs) to struggle with many demand shocks and unanticipated customer behavior.
Shocks, especially in demand, are best managed when information is communicated accurately and in a timely fashion throughout an organization, and preferably an entire supply chain. Something easier said than done.
Being responsible for strategic marketing, a role that goes beyond PR and communications, CMOs or CCOs (Chief Customer Officers) take the lead in understanding, co-creating, delivering and communicating value to customers. Anticipating changes and shocks in customer needs and behaviors is obviously one of their top priorities.
To find out how CMOs deal with uncertainty and how to create growth opportunities for a challenging 2013, IMD joined the CMO Circle Conference to talk with CMOs of prominent brands in a wide range of industries about their current challenges. Their current marketing issues seem to fall into three categories:
To quote Jack Welch, the former head of GE: "When the rate of change outside exceeds the rate of change inside, the end is in sight." For the CMO of a major international insurance company, a flexible structure and a culture of agility are the keys to success. This CMO focuses on going back to basics and putting the customer at the center of all business processes. This means enhancing emotional connections with customers by cultivating a genuinely caring attitude in all employees.
Similarly, the CMO from a leading manufacturing company has worked on making this firm more customer-focused by drawing on customer insight along the entire value chain and touch-points. Using the net promoter score (NPS) methodology, a client loyalty metric, he set up a marketing information system to analyze the complex buying centers at customer sites and aggregate the data to guide strategic decision-making.
The "react" strategy also requires identifying changing patterns early and leveraging the vast informational resources available within firms. For the executive of a leading IT and software provider: "Our role is also about knowing how to deal effectively with the data explosion and social media opportunities. This means a stronger say in all of the marketing Ps, and not only the P of Promotion." Another player in the same industry sees opportunities for top marketers in the speed at which data and information is generated and disseminated. For him, "Real-time insights now, with 80% accuracy, are more important than 100% accuracy in three months' time."
Influencing consumer demand and creating a following of fans and friends is another key strategy. It relates to the core of marketing strategies -- differentiating the value proposition and reinforcing the brand.
A marketing executive in the fast-moving consumer goods industry warns that technological advances should not distract marketers from the basics: "We are in danger of losing perspective and focusing on the newest shiny but less important things in our quest for modern marketing… Next to going 'back to basics' it's about 'going social.' Not only by really embracing social media, but also by being more social and purposeful as a brand… Sociable marketing is the way to build strong brands and business in the future," he says.
Even in a VUCA world anticipation can be strategically valid, providing that it is done at the right level. CMOs must pay attention to all major trends shaping the business world (demographics, communications technology, social and economic trends, etc). Since demographic change is one of the key drivers of every business, firms and CMOs alike should anticipate their position in respect to an ageing population, more single households, health and wellness growing, one billion consumers in emerging markets and polarization in consumer choices between the "best" and the "cheapest," especially in developed economies. CMOs also need to develop their answers to the predictable and bigger macroeconomic questions.
The three categories—"react," "influence" and "anticipate"—are not necessarily mutually exclusive. While short-term imperatives may require a strong focus on one, a long-term perspective may force marketers to play with another and manage a dual approach.
Each strategy requires enlarging the mandate of CMOs beyond a constrained set of responsibilities (such as PR and communications). Fortunately, it looks like the potential of CMOs is being unlocked. Spencer Stuart's recent report shows that average CMO tenure has risen to 43 months (up from 23.2 in 2006), although it remains shorter than for others in the boardroom.
Although the panelists' strategies vary depending on their industry and environment, their mindsets are interestingly similar. They all see change as a great opportunity, also for 2013 and beyond. Many agree that marketers and CMOs tend to look on the bright side and always see the glass as half-full. It is the 'nature of the beast.'
Originally posted on the IMD website:
Dominique Turpin is the Nestlé Professor and President of IMD. He co-directs IMD's Orchestrating Winning Performance program. Willem Smit is Adjunct Professor at Singapore Management University, and chair of the European CMO Circle Conference.www.cmo-conference.org