23 Reasons Not to Talk to Strangers? Or...

...Little Red Riding Hood?

My friend and former colleague Eric Pelletier blogs in a wonderful post, Croissants and fairy tales. How storytelling makes strategy happen that

...when people in a similar context, are exposed to the same facts, they tend to arrive at the same conclusions. And so, when they're in the same organization then, they're also likely to arrive at the same conclusion about the right strategy to take the organization forward.

While he focuses on the power of getting people on board via storytelling to implement strategies, I have little doubt he'd agree about the power of creating shared conclusions on formulating a winning strategy in the first place.

In The Biggest Problem in Strategy? Mindset, I noted how the railroads in post war America missed out on growth opportunities because they saw themselves in the railroad business, not the transportation business, and how Blockbuster missed out on digital distribution, ignoring intelligence on the looming threat. While railroad efficiency made enormous strides post deregulation in 1980, it basically kept the surviving companies in the game. Rail's share of freight traffic in the US (measured in ton-miles) declined from about 75% in 1930 (A Short History of US Freight Railroads, pp3) to 28% in 2000 (Freight-Rail Bottom Line Report, pp 14). Worse, its share of freight revenues dropped to a mere 6%. Blockbuster went bankrupt in 2011, shuttering the last of its outlets in 2013. Other examples of failed strategies aren't hard to find: cell phone manufacturers Nokia and Motorola; bookstores Borders and Barnes and Noble; computer manufacturer Sun; the plethora of desktop application software firms - remember VisiCalc, Lotus 1-2-3 and Freelance Graphics and WordPerfect, all of which dominated at one time?

Storytelling works because of the evolution of the prefrontal cortex of the human brain, which helps us recognize and act on patterns. It also works, as Eric notes, because it creates a shared context, or "experience" (even if vicarious) in the tribe. 

But this pattern-recognizing ability is both a help and a hindrance, for individuals and groups. It helps tremendously when the situation is reasonably stable, but often fails us in times of significant environmental change, when we are unable to recognize new patterns. And the worst failures occur when the "tribe," and especially the decision-making leadership, is unable to jettison outdated mindsets.

The most powerful stories are the ones collectively arrived at, through shared experiences. And the most powerful of these are crises. IBM (where I worked for the better part of a decade), was able to reinvent itself in the early 1990s because the tribe members (the employees) knew there was no other choice, enabling Lou Gerstner to drive a change in the collective mindset. But it was painful, to the tune of 200,000 layoffs.

So I return to a theme readers of my blog will recognize: why not create simulated "crises" to enable decision-makers to "experience" the consequences of potential actions. Militaries, governments and airline pilots (see Chance Only Favors Prepared Minds) do this regularly. And some companies regularly incorporate scenario planning or business wargaming (among other experiential planning techniques), designed and facilitated by experts for maximum effectiveness, into strategy development.

Companies that invest in these now, incorporating the latest available intelligence on potential opportunities or threats, reap huge future returns and often avoid debilitating disasters.

The Biggest Problem in Strategy? Mindset

A question in a LinkedIn forum asks what the biggest problem people haven't yet solved in strategy?

My answer: decision-maker mindset.

In one of the most famous business articles ever, Theodore Levitt wrote about the mindset of US railroad industry in “Marketing Myopia” (Harvard Business Review, July / August 1960):

The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.

Take a more recent example, Blockbuster, which went bankrupt in 2011, closing its last stores in 2013. It didn't fail from a lack of intelligence. “The fascinating issue for me,” wrote Forbes blogger George Anderson wrote in Blockbuster Beyond the Grave “is that Wayne Huizenga and his executive team were well aware of the risks from digital distribution of media and discussed it at times.”

Given the lack of action, the Blockbuster executive mindset was clearly that not only would the near-term future be like the present, but also that they would have enough time to respond to a "real” threat, before a crisis hit. But by the time it did, it was too late.

Mindset is of course, useful. It helps us interpret the barrage of new information that bombards us daily. And it works, so long as underlying conditions remain essentially the same. But it often fails us in times of radical change (brought on by external factors such as changing market or economic conditions or new technologies, or internal decisions, such as launching new products or entering new markets). Unfortunately, senior executive decision makers, because of their long years of experience – they "know" the business, the customers, the competitors, the technology and the industry – are resistant to changing their mindsets.

So, to the question, the real challenge for strategy professionals becomes how to change decision maker mindsets. Unfortunately, most traditional “strategy” processes fail in this critical regard (we could have another whole discussion on whether most companies really practice strategy, or whether they practice planning and budgeting…). Given human nature, changing long- and deeply-held mindsets requires a crisis. As English author Samuel Johnson said, "nothing so focuses the mind as the possibility of being hanged in a fortnight."

But rather than awaiting a real crisis, forward-looking organizations find ways to create structured "crisis" experiences, where decision-makers collectively evaluate intelligence, develop new insight and assess the strategic and operational risks of changing customer needs, new forms of competition, changing technologies, new discoveries and emerging government policies.

This also means strategy professionals must change their own mindsets, from “producing” strategy documents and presentations and overseeing planning processes, to creating experiences that enable decision makers to create their own insights. Once they, and not the strategy professionals, “own” the insight, they will change their mindsets. And once their mindsets change, developing winning strategies becomes, if not easy, at least straightforward.  

____

                  

Will Your Assumptions Cost You $24 Billion?

As I passed a shuttered Blockbuster store, one of the last to remain open, I wondered what assumptions its executives used to guide their decisions.

Blockbuster filed for bankruptcy in 2011, closing its last stores in 2013, in the face of competition from Netflix, Vudu, Hulu, Amazon.com and the cable / satellite providers. Dish Network bought Blockbuster's streaming service from the bankruptcy court for $321 million. In contrast, Netflix' market cap is worth over $24 billion today - and Blockbuster could have bought it in 2000 for a mere $50 million.

The Blockbuster executives didn't fail from a lack of market intelligence. NetFlix was founded in 1997 and began video streaming in 1999, followed by Vudu in 2004 and Hulu in 2007. And Blockbuster didn't even enter the DVD-by-mail business until 2004, long after Netflix had proven its success. Forbes blogger George Anderson wrote in Blockbuster Beyond the Grave:

“The fascinating issue for me is that Wayne Huizenga and his executive team were well aware of the risks from digital distribution of media and discussed it at times,” wrote loyalty marketing expert Bill Hanifin in a recent RetailWire online discussion.

Given their lack of action, they clearly operated under two critical - fatal - assumptions: not only would the near-term future be like the present, but also that they would have enough time to respond to a "real" competitive threat, before a crisis hit. But by the time it did, it was too late.

We all have assumptions, of course. They help us interpret the barrage of new information we are bombarded with daily. And they work, so long as underlying conditions remain the same. But all assumptions are susceptible to cognitive bias, particularly anchoring, where humans rely too heavily on the first piece of information they receive, using that as the basis for subsequent decisions.

But assumptions often fail us in times of radical change, when they need to be tested to ensure continued validity. Unfortunately, senior executive decision makers are the most resistant to challenging their assumptions. Because of their long years of experience, they "know" the business, the customers, the competitors, the technology and the industry. In turn, this leads them to lend more credence to facts or information that reinforce their world view (confirmation bias).

Given human nature, changing long- and deeply-held assumptions requires a crisis. As English author Samuel Johnson said, "nothing so focuses the mind as the possibility of being hanged in a fortnight."

But rather than awaiting a real crisis, forward-looking organizations create "crisis" experiences, where decision-makers collectively evaluate intelligence, develop new insight and assess the strategic and operational risks of changing customer needs, new forms of competition, changing technologies, new discoveries and emerging government policies, in structured situations.

They can then decide to weigh anchor - or even break the chains - and navigate to a new destination, before the storm hits.

How Good Are Your Marketplace Insight Capabilities?

Since posting Insight is Where the Game is Won and Lost, many have asked "how can we assess our insights capabilities to identify where to focus?" Building on both internal work I did in the early 2000s, and an article published independently by Herring and Leavitt in 2011,* here is a framework you can use to quickly evaluate your organization's insights capabilities. There are five dimensions to rate your organization on (directions at the bottom):

• Insights culture
• Sources used to generate the information base to help create insights
• Marketplace focus
• Personnel
• Early warning of emerging threats and opportunities

The organization's culture sets the tone for insights creation, which can address markets, customers, technology or competition. Initially reactive (Level 1), executives ask for data and task available personnel to gather information for a presentation or meeting, invariably sourced from easy-to-access published data, such as annual reports, existing market research or industry analyses. The initial focus is on traditional markets, customers, technology and competitors.

Soon, a frustrated executive or ambitious analyst determines that standardized profiles, newsletters and databases will improve organization awareness. Dedicated, often part-time individuals (becoming full-time as demand increases) standardize outputs, create delivery schedules and expand the fact base to include subscriptions to specialized industry publications, and start to focus on partnerships and alliances which impact growth and the ability to compete (Level 2).

Success begets more challenging questions, such as what does this data mean? how will the trends play out? and what emerging customers, technologies and competitors should we be concerned about? Improving capability requires teams of skilled analysts under a functional manager (Level 3). Since the answers are rarely contained in published data, analysts must incorporate validated opinion and observations from individuals who don't have the time to write it all down - customers, channel partners, R&D and sales personnel, their own executives, and industry observers and experts.

The expanding organizational knowledge base generates new requirements: what are the implications of these projections? what options do we have? what should we do about them? how might customers or competitors react? how feasible is a new technology? Mature organizations assign or recruit a senior leader to answer these, using increasingly sophisticated research and analysis techniques and a well-nurtured source network. And the organization expands its focus to better understand the interactions within the industry value chain and how these will play out (Level 4).

Finally, a radical shift occurs, from an emphasis on producing reports to facilitating dialog: the organization structures insights-driven strategic decision-making sessions (Level 5). Key executives interact directly with well-prepared internal and external experts, to determine how to best position the enterprise for future success. Topics might include identifying and evaluating the strategic risks of potential new initiatives, untapped sources of customer value, the next generation of customers, emerging competitive threats (frequently through business wargames) and new growth opportunities.

The importance of early warning. 

The organization's ability to avoid surprises - a major executive concern - increases with the sophistication of its insights capabilities. Fledgling operations frequently start by looking at any of a variety of "megatrends" (example here), "boiling the ocean" to try to find a something the organization can act on. They progress to tracking studies, targeted assessments of specific marketplace issues and systematic monitoring of the periphery (emerging customers, competitors and technologies). But real breakthroughs occur when organizations form heavyweight teams, consisting of both internal and external experts, to address critical emerging issues through innovation and new business models.

How good is your organization's insight capability? Identify where it is in each category, sum the associated levels, and divide by five. If it is:

• below 2.0, it is drowning, with little chance of a lifeline in the next round of budget cuts
• between 2.0 - 3.0, it is treading water, with increasing odds of getting a lifeline
• between 3.0 - 4.0, the shore is in sight, but beware of undercurrents
• above 4.0, the beachhead is secured and the insights function is capable of making a real difference

Now ask what will it take to improve? And, importantly, what will be the impact on the business?

* Herring, Jan and Judith Leavitt, "The Roadmap to a World-Class Intelligence Program," Competitive Intelligence, January - March, 2011 

Chance Favors Only Prepared Minds

Creating Crises

On January 15, 2009, US Airways flight 1549, with 150 passengers and five crew, struck a flight of geese two minutes after take-off, losing power in both engines. Four minutes later, Captain Chesley B. "Sully" Sullenberger's crew landed the Airbus A320 in the middle of the Hudson River. Aided by first responders, there was no loss of life, and the five injuries and a number of cases of hypothermia were quickly treated.

How did these teams perform such an incredible feat? Was it a miracle? Perhaps. Most commercial flying is routine and pilots rarely experience a real crisis. The FAA reports the odds of a bird strike are one in 10,000, and experts estimate the odds of losing both engines are one in several million.

Yet the crew and first responders instinctively knew what to do. They had rehearsed responses to low-probability, high-impact events in simulated crisis conditions. It's part of their job.*

The chances of an employer going bankrupt in 2012 were 0.007%**, 70 times higher than a bird strike. How many executives rehearse responses to such a high-impact crisis? OK, maybe that's stretching the point. After all, company bankruptcies don't risk catastrophic loss of life.

But what if the odds of business failure were greater than one in two? Writes Harvard Marketing Professor John Gourville, "most studies estimate new product failure rates at 50% or more," ranging "from 40% to 90% across product categories."***

Alternatively, consider the difficulty of sustaining profitable growth. Columbia Business School professor Rita Gunther McGrath writes that only 8% of the 5,000 companies with over $1 billion in revenues grew sales by 5% annually over a 5 year period, and only 4% grew net income by at least 5% annually - that's less than one in 20.****

Why not increase the odds of success by taking a page from pilot training and have teams "rehearse" in launch or growth simulations?

Master motivator Lou Gerstner, who took over an IBM in its death throes in 1993, determined that the organization had the capability to perform incredible feats, if only he could refocus its efforts. Early on, he challenged his senior executives to attack their businesses as if they were their primary competitors, in effect "rehearsing" competitive responses.

Later, in the early 2000s, IBM embedded "crisis" simulation into the strategy process. Executive business unit teams went offsite to confront their biggest challenges, such as reversing a loss or identifying how to grow revenues by an order of magnitude, in response to likely market, competition and technology evolution. To make the "rehearsal" as consequential as possible, the teams had to present their solutions to the senior-most executives in the organization - the stakes were high. As English writer Samuel Johnson said, “nothing so focuses the mind as the possibility of being hanged in a fortnight.” At IBM, the teams had three days.

Organizations can similarly improve results by running simulations focusing on assessing and responding to growth opportunities, marketplace risks, untapped sources of customer value, the next generation of customers or emerging competitive threats.

While each simulation requires a different approach, the key to success is creating a realistic environment - a "crisis" - that challenges existing mental models and addresses the organization changes required to deliver a new initiative (structure, systems, people and culture).

It's hard work, but the results can be significant: IBM's EPS increased eight-fold over the decade following the launch of the strategy simulations, tripling the share price.

As Louis Pasteur said in a lecture at Lille University in 1854, "...chance favors only prepared minds."

*Newman, Rick, "How Sullenberger Really Saved US Airways Flight 1549," USNews & World Report, February 23, 2009
**42,008 bankruptcies in the US in 2012: "Bankruptcy Filings Down in Fiscal Year 2012," US Courts; 6,049,655 employers: "Statistics about Business Size," US Census Bureau
***Gourville, John, "The Curse of Innovation: Why Innovative New Products Fail," MSI Reports, Issue Four, 2005.
****McGrath, Rita Gunther, “How the Growth Outliers Did It,” Harvard Business Review, January – February 2012

You Can't Find What You're Not Looking For

Ask the right questions

Smoke detectors are programmed for early warning. But they don't detect CO2, equally as dangerous.

With a specific threat - or opportunity - identified, designing a system or capability to capture and process the relevant signals and issue an alert is pretty straightforward.

The challenge for companies is to articulate the potential business threat or opportunity. But in a dynamic marketplace, these are everywhere. Organizations simply can’t monitor every Bill and Dave or Steve and Steve in their garages or Jeff in his warehouse.

It is exacerbated when organizations obsess on collecting reams of customer data or developing in-depth competitor profiles, especially when these focus is on what the customers wanted or what the competitor did. The often-unstated assumption – the mindset – is that the future will be largely like the past and, circuitously, the historical facts support the prevailing view.

But there are no “facts” about the future.

Creating the necessary insight requires asking the right questions:

• How will new technologies and business value propositions impact our customers, products, services, and business growth?
• Which industries, customer segments and offerings categories offer the best likelihood of future business growth?
• Who are the most threatening traditional, emerging and potential competitors? Why?
• Where are the greatest long-term profit streams according to the capital markets?
• What is required for future competitive success?

How many organizations have good answers to these questions? How many have the leadership that asks them?

You can’t find what you’re not looking for.

Next: Creating Crises

Avoiding "Surprises"

Early Warning

Early Warning

Had these experienced commanders and executives (see the prior post, "Surprise") known what was coming, they could have redeployed assets and avoided catastrophic “surprises.” Today, of course, we can see that the available information provided sufficient early warning of clear threats - hindsight is 20/20.

But why is it these leaders couldn't see the signs at the time?

In retailing, it is not as if amazon.com and its offshoots were unknowns by the late 1990s. However, the prevailing view of traditional retailers was that marketplace success required opening as many stores as possible to both gain share and blunt competition. These built vast organization structures around site location, logistics, inventory, HR and downstream (promotional) marketing. And the most successful developed sophisticated information systems that reported operational performance variation in increasingly exacting detail. Have a hot selling item in one location? Easy - find excess inventory and load it on the next shipment. Poor performance in another? Schedule a performance review with store management to isolate and fix the root cause.

What they didn't have was an information system to warn of emerging strategic threats. No doubt these executives received information about the impact of Internet business models. But, unlike the internal information, it was unstructured, arriving initially in dribs and drabs. By the time clear trends emerged, the successful early Internet movers had learned from their mistakes and established defensible niches.

Caught in the daily exigencies of running an enterprise, these leaders simply weren't programmed to evaluate the nature of the available early warning intelligence within the context of their brick-and-mortar operational mindset and information expectations. And, eventually, when they did assess the threat, they were constrained by the amount of investments required to overcome the first-mover advantage, which would have required diverting significant resources from successful operations.

Waiting until information is absolutely certain (right hand side of the chart) results in a crisis, forcing leaders to rapidly rethink critical assumptions: maintaining outdated mindsets when bombs are falling or bankruptcy looms is suicidal. But it may be too late: they have very little flexibility in how to respond – you can’t re-position a fleet immediately or turn a brick and mortar operation into an e-commerce one overnight.

On the other hand, way back in relative time (the left hand side), leadership has more leeway in deciding where to deploy assets. However, the uncertain and often conflicting information makes it difficult, if not impossible, to challenge the existing organization mindset.

Avoiding “surprise” requires speeding up the processing of relevant information, moving the information certainty line upward and the intersection of the two lines to the left, when there is more decision-making flexibility.

Creating the intelligence necessary to challenge assumptions earlier requires choice and focus – every startup or new technology is a potential threat. And, perhaps perversely to some, the solution is not simply amassing and sorting through vast amounts of data. 

It requires asking the right questions.

Next: You Can't Find What You're Not Looking For

Rice, Autos and Online Retailers

Winning Marketplace Strategies

The biggest threat to success comes from failing to understand and incorporate all aspects of a winning marketplace strategy.

Success arises from differentiation in one or – better – more of three domains:

• Customer strategy (identifying and meeting unmet needs, branding – not just advertising – or finding new ways to go to market); 
• Factor strategy (raw materials, supplier relationships, logistics, manufacturing, technology); or
• Organization strategy (new business models, different systems and processes, new culture).

Many marketers focus exclusively on the first. But because differentiation is critical, marketing, perhaps surprisingly to some, has a significant, if not dominant role to play in understanding buyer behavior through the second and third, and then driving necessary changes through the organization.

To many Americans, rice is a simple foodstuff, something we eat in place of potatoes or bread, and as a side dish in Asian restaurants. And, like many, I grew up on Uncle Ben’s, Rice Krispies and Rice-a-Roni. Yet a master sushi chef in Japan might insist on Uonuma Koshihikari, which costs an order of magnitude more than the rice you’ll find in supermarkets (you can buy a 5kg / 11lb bag online for $130).

In 2009, both GM and Chrysler (for the second time) declared bankruptcy. Yet in 1990 – 20 years before – three MIT academics, James Womack, Daniel Jones and Daniel Roos published The Machine That Changed the World, a book detailing the Toyota Production System (TPS) that simultaneously cut costs and increased quality. Worse, intelligence on this radical new production and organization system was available to Detroit in the 1960s – the ideas that led to the TPS came from Ford, which opened its doors to extensive benchmarking by Toyota executives in the 1950s.

And new internet-aided business models can inhibit if not completely destroy your business. Perhaps the best known examples are the bankruptcies of Circuit City and Borders 2011 and, just this month, the announced closing of the remaining Blockbuster stores, driven by online retailers modeled on amazon.com, founded in 1994, almost 20 years ago…

Rice retailers, restaurants and food processors have multiple factor strategies to choose from, influenced by and influencing their customer strategies. And imagine if, when Chrysler first declared bankruptcy in 1979, US auto marketers had focused on understanding the role of Toyota’s factor and organization strategy on consumer behavior. Finally, only a radical shift in strategy to embrace an Internet business model confounded expert opinion that Best Buy would soon follow Circuit City.

Next: Surprise

Winning Over Time

Market insight and analysis

Insight is where the game is won and lost: without superior insight, winning over time is simply not possible. Here’s what two leading CMOs have to say:

“The CMO role is getting the company to understand where the opportunities are, taking a very strong and upfront strategic approach so that the company invests where the opportunities lie and where the company has the capability to win,” said Joe Tripodi, chief marketing and commercial officer of The Coca-Cola Company. 

“Great CMOs understand the customer," says Maureen McGuire, Bloomberg CMO. "They can imagine the future and understand what the world might look like three to five years from now. If you believe the CMO should be the accumulator, aggregator and ‘understander’ of customer data and be the one to conduct market research, then yes, the CMO needs to incubate and imagine the future and the new products and services.”*

Creating differentiation

Success means creating differentiation. This requires capturing “change insight” before rivals. The real battle is which organization “sees” the underlying change more incisively than the competition. Often this means changing the shared mental model of the company leadership. Answering questions such as these will help the successful marketing executive become the chief “understander” of the evolving marketplace:

• What are the pain points? What keeps people up at night?
• Who’s responsible for solving this pain point on the client side?
• Who might influence their thinking and decisions?
• Who would they call today to solve their problem?
• How do we compare and contrast to the other choices in the minds of the problem owners?
• What is the conventional approach the problem-solving owner can expect our competitors to take?
• How is our approach to solving this problem different?
• What incremental value does this provide to the client?
• What must we do to enable our clients to stand out?
• Why should they believe us? Facts, statistics, customer references, thought leadership.

Next: Don't Talk About Marketing

*“What Do You Want From Me? How High-Performing CMOs Exceed Expectations,” SpencerStuart, 2010

What Have You Done for Me Lately?

The third year.

By now, you've gone through two annual performance reviews (good ones, if you've done everything right), and you’re really in the groove. You know the markets, the competition, the product, the organization and you've learned what levers to pull to get things done.

This is your most dangerous time. But within the danger, there is also opportunity, if you recognize and seize it.

Now’s the time to “get out there, try something and learn from it – you’ll make mistakes, but you must learn from each one. The metrics available today allow learning in a real-time manner that was never possible before,” says Sandra Zoratti, Global VP Marketing, Ricoh. “Avoid paralysis and fear about trying a new way.”

The risk is complacency on your part and boredom on the part of the rest of the organization: your team, your peers, and your boss. Let’s take them one at a time.

1. Your team. You've done everything right, weeding out the chaff, selecting new talent and providing everyone with challenging opportunities. But they've now been doing the same thing for two years, and are starting to get restless. The stars (like you) are thinking about their next move and the good performers are falling into a routine. If you’re not careful, you’ll find a team that is quietly becoming dysfunctional.

2. Your peers.  What was once unique is now mundane. The good news is that they've now learned what marketing really is, are asking better questions and starting to develop a marketing mindset to everything they do. But they’re also starting to ask “what have you done for me lately?”

3. Your boss. Your most difficult – or easiest – challenge. His or her world has changed in the last two years – the success you've helped create has both positives and negatives. Of course, your boss is delighted with the results, because that helps with the board. But the board is starting to ask what next? and wondering if s/he can take the company to the next level. S/he is, in turn, wondering the same about you.

Never forget, says Eric Fletcher, CMO, McGlinchey Stafford, that “relationships trump everything – science, metric frameworks – it about connecting relationships and leveraging them. Make sure you have regular, frequent in-depth dialog with the CEO, COO, CFO, the rest of the c-suite and the governing board. Most marketers get into trouble because they are operating out of an island.”

Next: Setting the Agenda

Day 91

The next nine months.

Phew.

Day 90 has arrived, and you've successfully managed the transition. Take a break, have a nice relaxing dinner and don’t think about what’s next.

Until day 91.

Now is the time to consolidate and build on the successes you've created in the whirlwind. You've got your team in place, you've begun building coalitions and know what has to be done. What you do next will ensure your success through the next two years.

Says Karen Masullo, EVP Social Media, Firestorm, now’s the time to “work really, really hard. There’s no room for laziness in marketing. If I don’t drive actionable items to the sales team, I’m not doing my job. Never get too complacent. You have to take a stand. Stick to your guns – you’re working with senior leadership, and you must give them your best insights and recommendations. Finally, your responsibility is to unify senior teams, especially technical teams. You need to know everything about the company.”

Visa Global Chief Marketing, Strategy and Corporate Development Officer Antonio Lucio, who has beat the average, says the secret to longer CMO tenure is simple: “You have to be effective and deliver strong business impact.” He’s been able to stay in his role by delivering against three parameters: business results, brand results and broader organizational impact. CMOs who last, he says, have an impact as leaders that has “probably been felt more broadly than in just the marketing agenda."*

Pete Krainik, Founder and CEO, The CMO Club, who’s held a variety of CMO and senior marketing positions at M&M/Mars, Avaya and DoubleClick says “Focus all your energies in things that help build relationships with customers – everything else is just noise. It is easy to get caught up in all the other stuff.” And never forget that “execution determines success. Great ideas without execution don’t matter.”

“Listen,” says Gary Slack, Chairman, Slack and Company. “Go see customers, after you've spent time with the rest of the company. Get to know your staff. Work hard on relationships with peers. Talk to prospects and to defectors. Develop a deep understanding of customer awareness, attitudes and perceptions.”

Next: What Have You Done for Me Lately?

*Rooney, Jennifer, “Average CMO Tenure Hits 43 Months,” Forbes, CMO Network, June 14, 2012.

You're Not an Island

Cultivating the best talent.

To accomplish your objectives, you’ll need to rely on your team, which requires a combination of recruiting, training and leadership. “Your team is what makes matters most,” says Kristin Hambleton, VP Marketing, Neolane Communications, now part of Adobe. "You’re not an island – you need collaboration and leadership.”

Successful marketing executives recruit the best people they can. 

Kimberly Clark CMO Tony Palmer says, “the smartest thing I did when I started was to go out and hire four or five of the best people I could find in the disciplines. They were people who had a lot of weight in terms of skill set and experience, and that helped enormously. I think that very early on, the organization saw them as a skill set that they didn't recognize, and they tended to therefore be invited in more.”*  Adds Tony Wells, CMO of ADT Security Services, “surround yourself with good people – hire people better than you.”

Then, they build their team’s capabilities. 

Most importantly, says Ted Rubin, Chief Social Marketing Officer of Collective Bias, “teach mid-level marketing execs to speak to the c-suite in a way they understand – learn to speak their language – talk to me about sales / conversion.” Says Wells, “always look to develop people – make it possible for them do the best work of their career.” And Bloomberg CMO Maureen McGuire says “development of people is a daily task…It’s about coaching people through the process, helping them to understand the business and what’s good or bad about the work that they've done at the moment.”**

Finally, leadership is critical. 

“Know yourself, your job, your people, their strengths and weaknesses, says Tony Wells, CMO ADT Security Services. There should always be something exciting going on. Create energy.” Unfortunately, says Karen Masullo, EVP Social Media of Firestorm, “many marketers who move into executive positions tell their teams what to do without soliciting their input – allow your team to help you. Avoid being dictatorial.”

The management consulting firm Hay Group suggests using a variety of leadership styles,*** noting that a poor leader uses a single style, effective leaders use at least four and superb leaders can use six, and know when to use them:

Meaningful Metrics

First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. Allies, Agnostics and Antagonists focused on the second, building meaningful relationships with functional and business leaders. 

The third is agreeing on how to measure success.

Once you've agreed on the marketing mandate and started the process of building meaningful relationships, it is absolutely imperative that you agree on how success will be measured.

Joe Tripodi,  Executive Vice President and Chief Marketing & Commercial Officer of The Coca-Cola Company, advises CMOs to make the CFO a partner in their leadership teams as they develop marketing budgets and metrics. “Unless you have full transparency on everything going in your budget, you’re going to continue to have this marketing-as-a-black-box philosophy. Once you bring people into the tent and then say, ‘Listen, we have nothing to hide here,’ and jointly determine the metrics for measuring marketing effectiveness, you take marketing out of the little black box”

Says Maureen McGuire, CMO of Bloomberg, “every marketer has had this kind of experience: You want to run an advertising campaign to raise awareness and then everybody’s looking for leads and revenue and you say, well, the metric to measure this is whether or not we actually raised awareness. But people are saying, ‘How many leads did it drive and how come my phone wasn't ringing off the hook?’ One of the most difficult things to convince people of is that you should measure your marketing effort according to the objective you’re setting.”*

John Dragoon, CMO of Houghton Mifflin, says “we've rotated (maybe over-rotated) to marketing metrics – I’m fond of the term ‘the ROI of a handshake.’ No one’s written about the softer things – just because you can’t measure it doesn't mean it shouldn't be done.”

So, how do you set meaningful metrics?

Allies, Agnostics and Antagonists

First Things First discussed the first of five key things the CMO must do well*, getting the marketing mandate right. 

The second is building meaningful relationships with functional and business leaders.

After the CEO, the most important constituents for the CMO are his or her peers. Senior leaders look to the CMO to be a thought leader on the businesses’ critical issues. They want the CMO to learn how other functions and businesses work and what their challenges are and be willing to engage them early in the development of marketing plans.

“I want my CMO to be sincere about enabling cross-functional success; he’s in a position to tear down walls. Get out of the office and spend time with customers, at the factory, attend the national sales meeting. Take an interest in other functions,” said the president of US sales for a consumer products company.**

“As much as possible, try to understand where they’re coming from and make them the hero. Come in humbly and say, ‘You make great things. I can help you tell the world about them. Let’s figure out how our skills are complementary,’” said Andy Berndt, Head of Google’s Creative Lab.***

This is going to require all the political and networking skills you've acquired over the years. You’ll find allies, agnostics and antagonists:

First Things First

Congrats! You're a Marketing Exec - Now What??? listed the five things SpencerStuart* identified that CMOs must do well:

• Get the marketing mandate right
• Build meaningful relationships with functional and business leaders
• Agree on how to measure success
• Collaborate with external partners
• Cultivate the best talent 

Let's take these one at a time.

Congrats! You're a Marketing Exec - Now What???

Throughout your career, you've focused on becoming better and better at your job. You've deepened your technical skills, you've learned how to keep your boss happy and you've learned how to manage. But the game has now changed completely.

First, you’re going to get LOTS of advice and counsel about what marketing is and needs to do. You’ll get it from the CFO who fancies him- or herself a creative copywriter, the top sales person who is convinced that one more event will generate enough leads to meet his or her quota, the head of product development who just knows that if you can write that brochure describing every single one of the features of the new product customers will be beating down the door. And, of course, from the CEO and board.

Some of this will be well meaning, some will be self-serving, and some of it will be uninformed bordering on ignorant.

Unfortunately, you can't ignore it. You've got to listen and find ways to incorporate these suggestions into your programs, or risk alienating your constituents.

You've also got to establish your independence.

How do you walk this fine line?

Let’s look at some research. SpencerStuart, the executive search firm,

What Do CMOs Actually Do?

The stereotypical view of the CMO has been the Chief Advertising Officer, reinforced by the popular AMC series Mad Men (I admit to being addicted to the show…).

But the CMO’s remit from the CEO and management team is much broader than creating winning advertising campaigns, argues Joe Tripodi, chief marketing and commercial officer of The Coca-Cola Company. “They want the CMO to be the chief growth officer of the company. They want the CMO to drive cultural change, and they want the CMO to build capability with people.”*

Nigel Dessau, currently CMO of Stratus Technology and ex-CMO of both AMD and StorageTek, says “I spent 40% of my time marketing, 30% on corporate issues and 30% on the road, mostly with customers. It is surprising how little you get to do your nominal job as head of marketing.”

“There is a very unique strength that most leading CMOs have: helping to lead a group of professionals from marketing as sales support to strategic marketing,” says Suzanne Lowe, author of The Integration Imperative, a book written for professional services marketers. “Professional services marketing is a very young profession; construction management, for example, is RFP driven. All professional services marketers need to shift from being order-takers / responders to move to focusing on identifying the critical factors of competitive success for their firms. And they need to help their firms make this shift.”
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Next: Congrats! You're a Marketing Executive - Now What???

*"What do you want from me? How high-performing CMOs exceed expectations," Spencer Stuart, November 2010,

Forget Everything that Got You Here

You've just landed that CMO or executive marketing job you've wanted for years.

Congratulations! Bask in the glory.

For about a minute.

Now focus on this: 45 months* - or if you're in healthcare, automotive, restaurant or communications / media, 28 to 32 months.

That’s the average life of a CMO (and if you're not the CMO, you need to start thinking about his or her replacement...)

And that’s the good news – the lifespan is up from 23 months in 2006! But less than four years is hardly a career, and what you do during three critical time periods will determine your success, and your tenure:

Generating meaningful insights

with Liam Fahey

Intelligence that makes a difference – that creates insights – is almost always the result of collaboration between intelligence professionals and decision executives. Neither one alone can create and leverage intelligence. 

Executives influence the direction of intelligence work. They shape the context for the work: they identify the current and emerging issues and decisions, questions they want addressed, areas and topics they would like explored, and, the nature of the dialogue they desire with the intelligence professionals. 

Intelligence professionals create understanding and meaning out of disparate and always incomplete data, disconnected viewpoints and perspectives, and an ever-changing competitive environment. 

When they work in tandem, they co-create an understanding of change and its business implications. This understanding influences what the organization thinks about (e.g. which emerging opportunities or risks need attention), how it thinks (e.g. identifying, challenging and refining core assumptions), the decisions it makes (e.g. what strategic moves to make, what business unites to support) and the actions it takes (e.g. where to allocate resources).

The critical role of the executive in intelligence

with Liam Fahey

Insight is where the game is won and lost notes that "Intelligence as an influence on decision making has not yet fully bloomed in many companies," listing a number of reasons why.

What an intelligence organization looks like notes that "...today’s most successful intelligence teams have adopted a post-industrial, networked model, co-creating insights with decision makers..."

These lead to a series of observations gained over several decades working with some of the world's leading organizations: