Though the CMO role is critical for all companies, the position is still very much in development, according to Bob Lurie, director at Monitor Deloitte, the strategy practice within Deloitte US.
So where is it heading? The ability to answer that question involves a look back to see why the CMO role developed and rose to the C-suite. The CEO's desire for stability and consistency has much to do with it, Lurie said.
In an exclusive interview with CMO.com, Lurie provides a historical deep-dive into the development of the CMO role. His observations include a parallel to how the CIO role came about (a rough start for both), why CMO tenure is so short, CMO know-how in a digital world ("traditional" channel experience remains very relevant), why the notion that CMOs will soon spend more than CIOs is misleading, and marketing's Holy Grail.
CMO.com: Please describe your role at Monitor Deloitte.
Lurie: I am a director, with a focus on organic growth–largely strategy and marketing, but also innovation and sales. I work across industries, and, since I’ve been at this for a while now, have a lot of experience in consumer packaged goods, consumer durables, pharma, industrials, and materials, along with some work in high tech. I like and do both B2B and B2C.
CMO.com: What’s the impact of the marketing operation, or the CMO, on a company’s overall business?
Lurie: That’s a very important question, which I have thought a lot about. I think the CMO role should be critical for firms, but it is still a role in the making. People are just now starting to figure out how to define the role properly so it can have the impact it should--and firms are just now starting to figure out what kinds of people with what kinds of skills they need in the role in order for it to have a critical impact.
I suspect some will find it odd to say that it is still a role in the making because it seems so ubiquitous. It’s very important to have a historical perspective on the whole phenomenon. When I started consulting, it would have been very hard to find--in literature or in common use--the words “chief marketing officer.” It’s actually a relatively new phenomenon, something that has been in general use for only 10 to 12 years. People were VPs of marketing, or VPs of sales and marketing, and they reported to the heads of business units. Unless combined with sales, it was usually a BU-level functional role. So why did the job of marketing get elevated to the C-suite? What drove it all of a sudden?
The driver is the fact that CEOs hate variability–or to put it more strongly, they don’t thrive, and often don’t survive, unless they have consistency. CEOs want to be seen as people who promise and then deliver on expectations, both because that’s the nature of the job and because the stock market really, really rewards it. The stock market mainly rewards consistency in growth. You want your P/E multiple to go up? Deliver growth in earnings for 12, 16, or 20 quarters straight. You want it to go up even more? Then grow revenue for 20 quarters straight as well.
CMO.com: But what does that have to do with CMOs?
Lurie: Well, put yourself in the CEO’s shoes. One thing they’ve learned in the past 20 years is that they can take the variability out of the cost side of their businesses. ...[But] nothing can be further from the truth on the growth side of things. To a CEO, revenue doesn’t feel controllable. And, in fact, it’s not. It’s a crap shoot, a roll of the dice. Partly that’s the economy, and the increasing level of "me-too" competition in markets is part of it as well. The swift introduction of lots of new ways of communicating with customers has added turmoil. But, mostly, it’s that there are not good, well-proven methods for reliably dialing up revenue growth. They know that marketing matters, but they have no idea of whether what the marketing guys say they are going to do will work–or when it will work. Sometimes it does and sometimes it doesn’t.
The same thing holds true for sales, though sales are a bit more repeatable than revenue. And innovation–don’t get a CEO started on that. Believing breakthrough innovations will happen on schedule is actually a great way to shorten their careers. The point is, from the CEO’s perspective, revenue growth is not very controllable. It’s a big, messy problem that most of them do not feel they have the time, and in some cases, the qualifications to deal with.
So, historically, what happened? Well, back in the '80s and into the '90s the management focus was on delivering earnings growth through lower cost–delayering, process re-engineering, and operational excellence. Remember all of that? And that stuff worked–for a while, CEOs could grow earnings enough on the back of cost reduction. But they ran into decreasing returns, and the digital revolution hit, which worried people, so they had to do something about revenue growth.
Their response was a classic CEO thing: They made an organizational change. They said, “We need to pay more attention to revenue growth, and it seems to be a technical job. We need people who know what they are doing with respect to customers.” So they did two things. They created a C-suite job to indicate the importance of the issue and give it some leverage, and they went looking for marketing people to fill the job.
Now, there’s a very interesting parallel between the history of the CIO and the history of the CMO. The role of the CIO was created when it became apparent to CEOs that their spending on IT was outstripping any other kind of cap ex and that it was very hard to either get big IT projects done on time and budget, or get business results out of those projects–much less get both. Sound familiar? CEOs now had a highly variable, very visible, and expensive problem/opportunity area that was being handled, back in the day, by people whose title was manager of information services. Remember them?
Now what was interesting is that having realized they needed to deal with IT more seriously–by defining a C-suite job–the first thing that CEOs did was go out and promote MIS people to be CIOs. They were the obvious people–after all, it seemed like the issues were technical, so you had to have a technical person. Actually, that first generation of CIOs worked out pretty badly; most of them flamed out. Why? Well, they did know how to run the data center and the help desk. Many knew how to get code written, but they didn’t understand business or how to use IT to accelerate and improve business. What the CEO actually wanted was a person who could think through the business purpose of IT and lay out a plan that would deliver more dependable, more reliable business results through IT. They needed a general manager who was IT-savvy, not an IT expert. It wasn’t until 10 to 15 years after the CIO role was first created that CEOs learned both how to define the job properly and find people who could do what they wanted properly.
Similarly, when CEOs created the CMO role, they promoted the people they thought had the right technical skills–who turned out to be marcom people, advertising people. CEOs tasked them with growing the company’s revenue–which is something that can only be done by integrating smart things to do with all the traditional P's. ...but seven out of 10 times the new CMOs had no authority other than advertising. I saw this over and over again. Some poor guy would get the great, new title, and the CEO would give him 12 months to show up with a higher growth rate–but tell him, explicitly, that he had no authority to tell the sales team what to do, no control over pricing, and should stay away from the product team altogether.
CMO.com: Could that be the reason CMO tenure is so short?
Lurie: Yes, absolutely. So now we are into the tail end, first generation of CMOs. Their tenure is so short because they’re set up to fail–and even when they aren’t, they often don’t have the right mind-set or skills. When CMOs are really successful–there are some very successful CMOs–it is because they are general managers at heart who happen to understand advertising and adopt to new technology rapidly. But most importantly, they are in an organization that gives them enough authority to make an impact on the revenue side.
I think there were/are two fundamental mismatches going on. One is between the mindset and skills of the people that are available and the expectations set for them. Early on, when companies went out to hire a CMO, they looked first to poach from industries where they knew marketing was done well, like CPG. What they found was a pool of people who were marcom experts–either from the TV/print advertising school or the DM/telemarketing school. ...They knew how to communicate, but the expectation was that they’d know how to define all the things that go into faster growth–better product, better channel, better pricing, etc.–and how to orchestrate them across a firm. The expectation was for general management behavior, but they’d hired a functional expert.
The second mismatch is the catch-22 or double whammy. It’s that even when a company got a person with the right skill set, when they got that general manager who really understood marketing and product management and sales, they often handcuffed them. They’d bring the new CMO in and say, “Orchestrate, coordinate, influence,” and do it really fast and really well so we are growing consistently starting two quarters from now.
But because the new CMO really had no leverage, no authority for critical revenue levers, even if they had fantastic influence skills, time would run out on them. They knew what to do, but the process of convincing and cajoling people in other areas to do something new and to do it in an integrated way in a short period of time takes either a very, very strong personal network or positional authority. All too often, CMOs were new to a company and so had no personal network and severely limited positional authority. Result: failure.
There’s one other source of failure and turmoil, which is technology. Not so long ago, if you were a B2C marketing executive you just needed [to have] a major in TV with a minor in print. If you were on the B2B side, you mastered sales support, trade shows, brochures, and the like. And just to be clear, I’m not saying that any of that is going to go away because it’s not. But in the last 15 years we have layered on at least five to 10 major types of media that you also have to master. To be blunt, many people simply weren’t interested or able to learn. They’d spent many years mastering something, and all of a sudden they’re being told to go back to school and start all over because they don’t understand anything about placing ads on the Internet. ...These people found themselves behind the eight-ball. It’s a very treacherous time to say you are in marketing. It’s fun, but it’s treacherous.
CMO.com: You keep mentioning the old-school marketer. Are they going extinct? Are you finding marketers with a tech background are the ones having less trouble keeping up with digital landscape? Are they the new breed of marketer?
Lurie: Yes, I can say that marketers with more of an engineering/technology background are more comfortable with digital. Often these types of marketers seem to be filling the gap at companies. And the old-school marketers—who went to business school, learned about TV, and communications—are the folks that are behind the curve if they haven’t made an extraordinary effort to keep up. They are definitely the ones getting hammered more frequently.
But they aren’t extinct, and the skills they have never will be. I’ll explain with an analogy. Ten to 12 years ago, all you heard about in the consumer banking industry was the imminent death of the branch. Bricks-and-mortar are expensive, all you’re really doing is moving money around which can be done more cheaply electronically, and the younger generation wouldn’t be caught dead in a branch. And do you know what’s happened? We have more branches than ever before–alongside of lot of new digital ways of doing things. The branches do what they did before, and more. We add channels that do new things ... but useful channels rarely go away. I look at what firms are trying to do, and I can tell you one thing for sure: TV–or its equivalent, long-form visual advertisements–is not going away. There is no better place to tell a compelling story effectively and efficiently. And digital is not going away either. That means that what you’re going to need is people who are multilingual. Not one or the other.
CMO.com: Marketers are expected to spend more on technology than IT by 2017. What does that mean for the next couple of years for marketing?
Lurie: I’ve seen that statement a lot recently. I think it’s true, but more or less misleading. Yes, firms are spending more for IT applications that support marketing-related activites–and it may, in fact, be true that marketing will be the purpose for the majority of IT spending, at least for a while.
What it means, though, is many things because that IT spend goes into very different uses. For one thing, a good chunk of that spend is for things that you could just as easily classify as essential business infrastructure. Firms are spending money to automate marketing operations–the process of producing, storing, handling, shipping, etc., marketing and sales materials. Firms are spending money for systems and training to achieve consistency and greater precision in pricing. Firms are spending money to improve the usability and clarity of their Web sites.
The point is that a good bit of the marketing-related IT spend is for things that are classic "plumbing"–automating the handling of marketing and sales materials for marketing is like automating the end-of-month closing process for finance. These things are important, very important, and may, in fact, represent the bulk of marketing-related IT spend, but I don’t think they are newsworthy in the sense of a headline like “marketing biggest driver of IT spend.”
What I think people are getting at with that headline is that marketing, like manufacturing and R&D, is becoming a part of business where competitive advantage can be gained or lost through technology. That is newsworthy. It ties back to the discussion we just had about marketers with a tech background. The point isn’t that marketers with a tech background are somehow intrinsically smarter or better or whatever. The point is that marketing is no long predominantly or only about the brand or product story, about the creative and the offer. Marketing is also–and ever more so–about analytics, and about how and where and when you get permission and access to tell your brand or product story. Both of these things are increasingly determined or driven by technology.
The promise of far more sophisticated big data type analytics is, of course, a major driver of marketing-related IT spend. As companies build their ERP systems, as they adopt cloud-based systems, as they gather huge amounts of data about customers’ online and offline behavior, they will be spending on the hardware, software, and people to make good use of it all. There is already a specialty within the marketing insights world for marketing analytics–which is code for the folks crunching big data. And that will be a growth profession for the next 10 to 15 years. Indeed, marketing analytics is likely to become the preferred entry job for marketing and growth-related people, rather than the brand assistant job of the past four or five decades. It will be a foundational skill set for anyone wanting to call themselves a marketer.
At the same time, marketers who understand the array of technologies, who anticipate their evolution, who understand which customers are most likely to use which technology when–they will be more successful because they will be getting better access for their story and offer. So the point about growing IT spend is a reflection of the way competition is about getting the right kinds of technological access–mobile, desktop, streaming, etc.–to people.
There is another, subtler, but no less important challenge and opportunity represented by that rise in marketing-related IT spend. The challenge is that each different communications technology demands that the product or brand story be told in a different way. [Marshall] McLuhan said, “The medium is the message.” Yes. But, actually, the medium shapes the message. What marketers have found out–the hard way, in many cases–is that you cannot develop a story or campaign for TV and then streamline it or adapt it to put it on a mobile device, or for an in-store electronic display. You have to develop variants of the story that are feasible, that "pop" given the limitations and the opportunities represented by a 2x3-inch screen as opposed to a 60-inch screen.
CMO.com: You'll be speaking at Brandworks University 2014 in May. Can you talk about the session? What are some of the key takeaways the audience will get?
Lurie: The basic notion is that having your brand become a habit is the Holy Grail of marketing. That’s when people literally don’t think about whether or not to buy your product. They don’t think about its price. They just want it and they buy it. But this is very hard for a brand to achieve. And so during my session, I am going to do two things. First, I am going to talk about–from an application of theory-to-practice perspective—how one would go about researching the potential to create or reinforce a habit. What kind of research does a company need to do, what should it look for, and where does it make sense to look?
The second thing I am going to do is talk about is something I am deeply interested in. It’s this idea around the way a company organizes and incents its people that can actually actively interfere with habit-making marketing strategies.
Editor’s Note: Ken Strasma will speak at this year’s BrandWorks University annual conference May 13-15, explaining how data modeling can reveal habits people don't realize they have, and messaging and media strategies that can tap those behaviors before they happen. CMO.com is a media partner.