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Marketing and Sales

From Brand Custodian to General Manager

The New Role of the CMO

  • July 2011

In the age of digital media where the power of brands of all sizes has been democratized, customer focus has become a strategic imperative for every company. This has strengthened the role of marketing and revolutionized the profile of the Chief Marketing Officer. The onetime custodians of the brand have been transformed into generalists with strong business management skills.

Digital deluge, destruction and development

Marketing has changed radically in recent years – and the transformation is not yet complete. If you ask – as we did – CMOs of large international corporations about their roles and responsibilities, they reveal the wide scope and complexity that this position carries today. In a growing number of firms, marketing acts as the voice of the customer, initiating, enabling and driving market-oriented corporate governance. This often means that under its direction, processes and structures undergo a full-scale realignment.

As it has moved to center stage, marketing has changed from the ground up. From a single, limited function that dealt primarily with communication and creativity, it has grown into a multifaceted field that integrates a variety of functions and has a material influence on the strategy and organization of the company. Marketing is becoming a driving force within the company. This has also meant redefining the role of the CMO, which is expanding to include responsibilities and powers similar to those of a general manager. In many consumer goods companies, this understanding of marketing and the role of the CMO already dominates; in other sectors, it applies to an increasing degree.

Without a doubt the primary engine of this change can be found in the digital media, which are developing at a rapid pace – with tangible results. In the consumer goods sector, many retail businesses are competing for a larger share of the online market. At the same time, completely new products and services are being created by the convergence of formerly separate technologies such as internet, television and telecommunications. New markets are developing. Thanks to blogs and social networks such as Twitter, YouTube and Facebook, the virtual world also influences real life. Consumers use communications and media differently; new consumption patterns and lifestyles are created. Digital media give consumers unprecedented influence. The internet has become an assessment tool for purchases, as new instruments and platforms are constantly developed to allow consumers to do research and share opinions before they buy a product. People are taking increasing advantage of “virtual” options for participation and control. The power of the consumer is growing.

Direct to the consumer

This has wide-sweeping implications for companies. The digital revolution has affected every industry. Barriers to entry, such as capital-intensive distribution models, are being swept away. In most consumer goods sectors, profits are under pressure because people are choosing to buy products online. We need only to look at Amazon to see the dimensions of this change: In the United States the online store now accounts for almost 20 percent of the total sales of the 500 largest retail businesses. It is hardly remarkable that consumer goods manufacturers who previously distributed their products through retail channels are now looking for ways to approach the consumer directly. As part of this growing worldwide trend, many now completely circumvent retail stores or, like Apple, use them primarily to present their brand world.

With the growing influence of e-commerce and online and mobile communication, there has also been a change in the relationship between company and consumer. The company’s view of their business has taken a 180-degree turn. Instead of taking the product as their starting point, they now have to begin with the person who buys the product. The consumer’s current preferences and needs have become the measure of all things. This has boosted the strategic importance of digital marketing, which is driving the transformation of the company into a consumer-oriented organization. All the more so because this has proven the best way to reach young consumers, an elusive yet highly influential group.

Almost incidentally, digital media also serve as an important resource for sharpening customer focus – they are the source of copious and often highly differentiated market and consumer data that allow companies to measure marketing success. They provide information from around the world, 24/7 and at a minimal cost. Analyzing and applying this data effectively, however, requires skill and experience. Many companies have put together special online teams and appointed marketing managers who are experts in the field of digital media.

But companies need to go a step further to make optimal use of the data that comes in every hour of every day. Actions must follow on the heels of information, meaning decisions have to be made more rapidly than ever before. This requires flatter organizational structures and good teamwork, especially across the boundaries of departments and divisions. Cooperation and partnerships – inside and outside the company – are important determiners of success today. Companies that hold protracted coordination meetings on several hierarchical levels risk being trumped by the competition.

New marketing opportunities, new competences

All this has created numerous challenges and caused an upheaval in marketing departments that can be characterized as epochal. On the one hand, models that were successful for decades have become obsolete; as customer contacts become increasingly individualized, mass communications and standard sales formulas are flopping. On the other, interactive media shaped by users – such as blogs and social networking groups – are opening up completely new marketing opportunities. There are also hurdles to overcome, however. Marketing must succeed in becoming relevant for media users and insert itself into the flow of digital communications without appearing heavy-handed or inauthentic. Against this backdrop, today many companies are rethinking their marketing activities. Long-term investments in the brand, communication strategies, commercial relationships on different channels, the depth and breadth of the product portfolio – all are being reexamined.

As the company’s strategic focus turns to the customer, new and increasingly complex responsibilities are falling under the purview of marketing. Creative and operational tasks take a back seat as conceptual demands grow. In growing numbers of companies, the board requires marketing to have a clear strategic orientation while taking on responsibility for sales and profits. At the same time, marketing managers are also finding it increasingly difficult to balance long-term strategic goals with the need to achieve short-term economic success.

The new CMO

Around the world, we can currently observe how deeply this has changed the profile of CMOs. In leading companies they have long since moved away from the role of brand custodian, instead managing a wide spectrum of often highly complex responsibilities. They are involved – or ideally, instrumental – in developing the overarching corporate strategy. It is also their job to ensure that their company has a strategically oriented customer focus. This includes bringing departments on board, bridging their differences, and initiating and directing change processes. In many points, the responsibilities of the “new” CMO overlap with those of other divisions such as IT, sales, R&D and even touch on process organization. Close coordination is required by CMOs to push forward with a comprehensive product marketing plan that centers on consumer requirements – from idea to production and distribution. The success of their activities is monitored using KPIs that could also serve as general indicators of the company’s success.

Figure 1: Competencies

Given the type and scope of these responsibilities, it is natural to conclude that nowadays the competence profile of a successful CMO is similar to that of a CEO. And indeed, an analysis of anonymized data from management evaluations conducted by Egon Zehnder revealed significant overlap. In large portions of the performance assessment with eight defined competences, there were few differences between CMOs and CEOs. This shows that CMOs are just as results-oriented as CEOs and have equally well-developed competences in teamwork, organizational development, change management and market expertise.

What does this tell us? Although some still believe that CMOs don’t have what it takes to be CEO because they have a narrow perspective and are not sufficiently results-oriented, this view is clearly outdated. The striking similarities in competence profiles leave no doubt that today’s stellar CMOs take on large-scale responsibilities requiring business management expertise. Given the trend towards increased customer focus, this competency profile will apply to even more marketing managers going forward and ultimately will serve as the benchmark for successful marketing executives. In the future those who want to succeed as CMOs will have to possess the wide-ranging skills of a general manager, and be more than comfortable with digital media and the accompanying challenges. This is good news for successful CMOs who are considering making the move to CEO. They can be certain that they are already well equipped to meet the demands of the position to which they aspire.

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