September 29, 2015
Ambitious CMOs focus on building credibility for their team.
Is that enough?
Some wonder if CMOs have what it takes to become the next CEO.
Are we setting our sight too high?
Actually, I read a report this week that points out that even these ambitions are too low.
The Report – When and How Does Board-Level Marketing Experience Impact Firm Performance? – released by the Marketing Science Institute, looked at the performance of companies based on the backgrounds of their board of directors. Not just ‘some’ board of directors, but 64,086 board member biographies from S&P companies.
Here’s what they noticed.
more a board included people with an executive-level background in marketing, the better the company performed. Interestingly, this wasn’t just under normal economic circumstances. The effect is even stronger when up against a declining market share. And, even more interesting still, companies performed better when there were fewer finance experts on the board.
How can that be?
My bet is that executives with a marketing background understand the need to invest in systems that engage with customers – and then actually engage with them. On the flip side, other disciplines – finance, operations, IT, HR – are all about driving costs out of the business.
But you can’t save your way to revenue growth.
Executives who’ve spent time in marketing are better positioned to understand the dynamics of today’s digitally led, quickly evolving customer. When was the last time you heard a CFO volunteer to spend more money getting to know our customers? Never. How often has a COO said that we need to experiment more and see how we can disrupt conventional thinking? Right after that pair of flying pigs landed.
Some tout that HR is the new marketing. While the HR team certainly plays a strong role in making sure we get the right people in the door, when have you ever heard a candidate say that filing out that online application was a pleasure. Exactly.
And then there’s IT.
In 2012 Gartner predicted that by 2017 marketing would have a bigger IT budget than IT. I don’t know if that will be the case, but it sure has added credence to marketing. While IT can be the partner that creates the systems of engagement along with marketing, they can’t create the customer-driven ecosystem that thriving companies have built through smart marketing.
In fact, a Gartner analyst pointed out that that the reporting structure for IT determined its focus. If it’s under operations, the CIO’s focus will be supply chain and distribution channels. Under the CFO it will be costs.
But under the CMO, the CIO will focus on systems of engagement and the customer while providing a holistic view on how the IT function can be a strategic differentiator for the company.
This all brings me back to marketing’s ambitions.
It’s Still a Long Haul
The study points out that “upper echelons theory states that firms are reflections of their top managers and that firm outcomes can be explained in part by the experiences their leaders have.”
That’s an incredibly important statement. Go back and reread it.
It’s telling us that the outcomes of a company are a reflection of the experiences that their leaders bring to the table.
However, there’s this clash of statistics…
“…less than 0.5% of board members at Fortune 1000 firms are currently leading the marketing function at their home firms, indicating that managerial-level marketing experience is largely missing from boards (Daum and Welch 2013). According to a 2011 survey, only 4% of corporate directors consider marketing an important type of experience for a board member, as opposed to 47% who believe finance experience, for example, is important (National Association of Corporate Directors 2011). Somewhat paradoxically, a recent survey conducted by executive recruiting firm Heidrick and Struggles (Groysberg and Bell 2012) indicated that board members consider marketing-related issue among their biggest challenges. This contradiction suggests that directors don’t see a connection between marketing experience and the ability to address firm-level marketing challenges.”
Experience at the C-level gives directors important expertise to tap as they influence top-level decision making.
So while we’ve spent a lot of time and energy talking about how marketing needs to have a seat at the (C-suite) table, maybe we’re selling ourselves short. Maybe what we should really be shooting for, if we want to drive revenue growth, is a seat on the board of directors.
Download the report and read for yourself, it’s worth the $18 cover charge. What do you think? Do marketing leaders need to aspire to the board table rather than just the C-suite?