In today's brave but sometimes harsh new world, CMOs should take a hard look at their departments and make sure they are ready for the new marketing way.
The transition of the marketing function from a cost center to a value center (CMO Memo Nov 14, 2001) requires Chief Marketing Officers to re-think the way they run the marketing department.
The department is now responsible for maintaining and building brand asset value for the enterprise it serves. It is also subject to greater scrutiny for the effectiveness with which it applies its funding and for the productive capacity of the department.
Here are 5 specific actions CMOs should initiate now to be ready for 2002:
Conduct a marketing audit. The audit is a process which began as a tool for the CFO to ensure, via outside scrutiny, not only that the numbers are correct but also that the processes and practices used to develop the numbers are at "Generally Accepted" levels of quality, based on benchmarking against industry standards (GAAP).
Marketing, being a discipline of excellence rather than of averages, shoots for a higher standard. The marketing audit reviews all the processes you utilize to arrive at marketing output -- your consumer research and understanding; your brand equity building process; your copy strategy and advertising development process; your database marketing and direct marketing (Internet, e-mail, regular mail, etc) processes; and your tracking and measurement processes.
The benchmark standard is world-class rather than "generally accepted," using the available standards of acknowledged leaders in their fields (such as P&G in packaged goods).
Codify your brand building model. In the financial world of asset management, the world-class leaders (such as Barclays Global Investors, the world's largest index fund manager and the world leader in risk control) have perfected models over decades to deliver precise financial performance targets.
The benchmark standard is world-class rather than "generally accepted," using the available standards of acknowledged leaders in their fields (such as P&G in packaged goods).
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In benchmarking the world-class brand-building companies, we have found that they also have a process or model for brand building -- both for creating new brands or line extensions and for maintaining as well as growing existing brands. This process qualifies to be called a "model" if it meets three criteria.
First, it is a comprehensive, end-to-end set of processes starting with consumer research and advancing cogently through milestones and gateways to marketplace implementation and measurement. Second, it has numerical measures at every stage so that the effectiveness of strategy is measured by objective data and not by judgment. Third, it can be codified and shared and taught and learned and applied by every marketing practitioner in the enterprise, in every country and on every brand.
Is your brand building model codified in this way? Can you teach it to all your marketers? Do they all apply the same model? In best practice companies, they do.
Select a brand valuation model. The accountants may or may not decide that brand values will be carried on the corporate balance sheet as financial assets. Whatever their decision, all companies should have a brand asset valuation model that they follow. If you know how to value the asset, you can quickly learn what actions add to or detract from that value.
Your marketing decisions will reflect not only consumer understanding (which always comes first) but also a sense of guardianship, which will reinforce your marketing instincts. When you think of a brand as an asset, you make sure that you are always making deposits into your capital account, and you avoid making withdrawals. This is a good mindset to have.
Prepare a marketing excellence ROI. Is your marketing department capacity equal to the task you have set for it? Is your department operating at the right levels of effectiveness and productivity? Are you achieving the results per dollar of marketing investment that you should? Can you reasonably make a case for more dollars, versus the IT department or manufacturing?
These questions can no longer be answered on judgment. They must be proven mathematically, so that the return on marketing investment can be measured using the same tools as return on capital investment. In our experience, when such returns on marketing excellence are modeled, they often reveal the opportunity for hundreds of millions of dollars of gain in return for small improvements in marketing effectiveness and efficiency.
If you are doing these five things, you are a strong and powerful CMO, exerting leadership across the enterprise.
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The CMO must be able to tell the CFO with confidence what the return on marketing investment will be, and what ongoing measurement is in place to ensure that the performance target is met.
Conduct a marketing OGSM. OGSM is a tool that was developed in Japan in the heyday of management process innovation; it shares DNA with the concept of Total Quality Management. Since then, many world-leading corporations have refined it. It is a way to link Objectives and Goals to Strategies, ensuring that the strategies are adequate to meet the goals. The Measures are the tools to ensure that adequacy is in fact being realized (or exceeded).
Marketing departments should have an OGSM. It is a powerful way to ensure that marketing strategies do, in fact, add up to the delivery of enterprise goals and objectives.
Too often in marketing, we use the word strategy (which should translate to "how we will achieve our objectives") without testing them to ensure that they can deliver. With an OGSM in hand – developed by CMOs and their teams, with help from sales, finance, operations and all the relevant support groups – there can be justifiable confidence that the strategies selected (and the tactics implemented to execute the strategies) add up to the objectives that have been set.
If you are doing these five things, you are a strong and powerful CMO, exerting leadership across the enterprise. The year ahead should be a great one for you indeed.
Hunter Hastings is managing partner of EMM Consulting Group, which advises companies on how to implement Enterprise Marketing Management, a multi-faceted system for global brand management combining marketing knowledge, best practice processes and training with collaborative software, marketing tools and infrastructure. He can be reached at HunterHastings@EMMConsulting.net
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