Tuesday, May 26, 2009

The Value of a CMO?

The last years there have been quite a few discussions about the true value of a CEO. The related research work tries to understand the casual correlation between the performance of a CEO and a company performance. As Harris Collingwood describes in this month’s "The Atlantic" the majority of researchers argue that there is not a strong correlation between both factors, unless the CEO is performing very poorly. It seems that leadership (and CEO’s performance) matters sometimes but not very often. Even Jack Welch agreed (half seriously) that in the early and mid 90ies a German shepherd could have managed.GE successfully. 

This whole debate brings up the question: How important is the CMO for the health of a brand and the success of a company’s marketing? I am not aware of any research that tries to tackle this issue, so I have to satisfy my curiosity with a few thoughts and hypothesis. 

It seems to me that the key job of a CMO is focused on four core tasks:

  • Brand steward: Position a brand competitively in its category with a clear understanding of what the brand stands for (and what not)
  • Budget Owner: Decide how most effectively (short and long-term) to spend the overall marketing budget across all channels, consumer segments, product portfolio, and regions
  • Consumer Advocate: Understand the core target and consumer of the brand
  • Marketing Innovator: Innovate against all dimensions of marketing, from price to product to communication, etc.

Surprisingly quite a few CMOs don’t really change anything in any of the four above described dimensions while being in their position. Often, they continue the previous marketing investment strategy with slightly modified creative, they barely gain a deep understanding of the brand’s consumer, and they limit the marketing innovation in small areas with low risk that does not fundamentally change the brand’s success or failure. 

Therefore my hypothesis is that the performance of most CMO’s has an even lower casual correlation to the company performance than the activities of a particular CEO. CMO’s have due to the scope of their jobs less impact on a company’s performance, and they change significantly less than one would expect 

But there are always exceptions, and these exceptions are the reason why our industry continues to be exciting. And quite often, the true CMO is the highly involved and brand centric CEO like Steve Jobs at Apple.

10 Comments:

Anonymous Anonymous said...

Timely blog as if it is a planted PR for The Shift. Check it out for the impressive research that you thought didn't exist.

Three questions:

1. What do you mean by casual correlation? Wonder if you meant causal correlation. Any clue how causality is established, data guru?
2. Do you think far too many CMOs come to the role with only knowledge about communications and Advertising? Adam Stotsky and I do.
3. A CMO's job, particularly for a successful CMO,will be a shift from merely creating marketing strategies to driving business impact. The CMO should give good importance to elevate the marketing dialog to a strategic dialog, to inspire the organization's long term goals and objectives - I am surprised that business impact did not feature in your list. Apparently you were thinking communications and advertising only. Would you re:think?

7:24 PM  
Anonymous Yuva said...

Nice inquisitive post. I believe that if a CEO can have his fundamentals correct and strong all else will fall in line.

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