To all those of us from a marketing background this should be obvious – but how many of our community could answer the question in a compelling way that was unable to be reasonably challenged by those who disbelieve the true value of marketing?
In this short paper I will try to provide a simple answer which I have developed and used throughout my career as a CMO, CEO and Chairman, to other C-suite non-believers.
I need to clarify two things and frame the scope of my comments. First, this is not looking at the other old chestnut, but very important question, about “Why are there not more Marketing Directors in the Boardroom?”. Second, I am talking about an Executive Board; that is the CEO-driven operating Board, and not the NED-loaded senior Board overseeing large corporates.
Facts are a good place to start
Why do commercial organisations exist and survive? Actually for one reason only – because they have, and often retain, customers. A very simple, and oft forgotten, dismissed or overlooked fundamental.
Nobel Prize winner Ronald Coase (Coase, Ronald H. (1937). "The Nature of the Firm". Economica) said the reason for a company’s existence was “Satisfying customer needs via relationships we maintain.” – it may be 80 years old but I have never yet found a better, or more succinct seven words to set out so clearly what I believe describes the broad marketing task. Of course there is a huge amount of other ways marketers like to describe their role in life, including some very good ones like “Protecting and extending the cash flows of the business”, amongst many that do no justice to the fundamental importance of marketing at all!
So, if we accept this as a premise, we could enter the other popular debate around “who owns the customer?” But instead let’s just look at who runs the company, and operating team on the Board, and see what CEO’s have on their agenda.
The CEO Agenda
KPMG’s 2017 “CEO Outlook” gives us these as their strategic priorities for growth in the next 3 years:
- Increasing penetration in existing markets
- Innovating new products, services and ways of doing business
- Penetrating new markets
- Expanding into new geographical markets
Does this ring any bells in our marketing community?
Some quotes from the study include:
“We have 23 million customers and their preferences are changing. They want their banks to be more relevant to them. We’re spending a lot of time enhancing the customer experience….” Brian Porter, President and CEO Scotiabank
“We’re harnessing the power of advanced analytics to get ahead of customer trends. We see AI as a business opportunity to redesign operations and create unique customer experiences.” Guenter Butschek, CEO Tata Motors Ltd
In addition, McKinsey, and their peer organisations, are publishing on this topic. Two McKinsey papers focus on “Engaging Boards on the Future of Marketing” and “Rethinking Customer Journeys with next generation operating model”, both of which address our discussion.
So much more evidence can be found on this topic but, for the purpose of a very short think piece, I’ll summarise by saying consider the opening quote by Mr Coase on the purpose of a business, and also my statement that the only reason a business exists and survives is because it has customers. Two very simple concepts.
Which discipline trains us to be the masters of understanding customer drivers and behaviour? Which discipline also trains us to build product / service based value propositions and delivery systems, backed up by support and service models?
How important is marketing at Board level? QED.
Professor Ian Ryder, visiting Professor at Stockholm School of Economics in Russia and Thunderbird Business School, Arizona