Why the rise of chief growth officers should sound a warning bell for CMOs
- 17 September, 2019 07:54
Marc De Swaan Arons
The rise of the chief growth officer should be a warning sign to CMOs that too many of them have sacrificed their positions driving real organisational growth and lost face in the boardroom.
That’s the view of Institute for Real Growth (IRG) co-founder, Marc de Swaan Arons, who caught up with CMO in advance of this year’s AANA Reset conference to discuss the role of CMO in modern corporate growth strategy, digital’s impact, and why more and more companies are turning to ‘humanised’ growth strategies in order to deliver sustainable returns for all stakeholders.
De Swaan Arons comes to the subject with 30 years’ marketing experience, including 14 years with Unilever in marketing and brand roles. In the early 2000s, he was chairman of EffectiveBrands, a consultancy business under Kantar helping newly established global brand leaders, such as the first global brand director for Dove, refine strategy and approach.
In the last six years, de Swaan Arons has spearheaded several thought leadership initiatives. The first, Marketing2020, was featured in Harvard Business Review and focused on the modern marketing leadership conundrum. The second, Insights2020, concentrated on the insight functions and driving customer centricity.
Eighteen months ago, de Swaan Arons co-founded IRG with the mission of defining what sustained, ‘real’ business growth means and the massive opportunity it presents for chief marketing officers. As he puts it, IRG’s objective is to help marketers not only make better marketing decisions, but also “put on the right shoes” and take their rightful place as growth champions within their organisations.
Along with extensive research, this will see IRG running marketing leadership programs from November, starting in London and New York. IRG is supported by Google, Facebook, LinkedIn, New York University, Oxford University and Spencer Stuart.
Lost CMO influence
Informing IRG’s work is interviews with more than 500 CMOs, CEO, CFOs, chief growth officers and CXOs. Through these, de Swaan Arons has reached the conclusion marketers have lost influence and reputation among their business peers with regards to business growth.
“Marketers are perceived to be distracted by the digital bells and whistles,” he tells CMO. “There’s a lot to be said for marketers focusing on digital. Marketers have had to deal with completely new set of channels, technology, partners and metrics, and there’s been a lot to learn.
“Digital also helped marketing deal with that big chip on their shoulder, which has been about which dollars are working across the marketing mix. And it wasn’t just marketers looking to solve this, it’s everyone around us.”
As a case in point, de Swaan Arons notes one CMO of a big energy company who had a board member insisting the company get as many Facebook likes as Coca-Cola. “All of this has pushed marketing to focus on understanding this new digital area,” de Swaan Arons says.
But where things have gone wrong is in the emphasis on how to win. According to de Swaan Arons, too many marketers focused on communications aspects of the role, and neglected longer-term market creation and growth.
“Marketers in my book are still people who create markets. That’s also where marketers used to collaborate with colleagues. There’s a real sense now that has been lost,” de Swaan Arons argues. “What marketing is perceived to lack focus on today are the other parts of the CMO equation: Where to play, where is our market, who is the next consumer, where’s the white space and what’s the size of the economic pool that company can tap into?”
Companies have reacted by looking for growth in others ways. A notable one for de Swaan Arons is the ‘chief growth officer’ (CGO) position.
“The fact J&J’s Alison Lewis took the CGO title when she joined Kimberly-Clark actually has a damaging effect of the role of CMO,” he claims. “It’s admitting this role has something additional than the focus of a CMO. That can’t be right. A CMO isn’t a communications person, the role is about marketing.”
Recognition of digital in recent years as a whole-of-business game changer has also left many communication-oriented marketers lacking the gravitas and influence to spearhead sustainable growth, de Swaan Arons says.
“I think a lot of communications people started calling themselves CMOs and for longest time, it was OK because a lot of the digital changes were about communications,” he says. “Now it’s about business challenges. Marketers are being caught with their pants down as they’ve either not thought about it or are not ready to participate in that discussion with colleagues about what business they’re in.
“For instance, what is the market opportunity with digital, what could it be, and what role do we play? Could we move into services and other experiences? These are big strategic business questions some marketers are ready for, and some are not.”
Shortening CMO tenure
Adding to the mix is shortening CMO tenure. “One of the big dangers is the rest of the company don’t really know what CMOs do,” de Swaan Arons continues.
“It’s very clear only senior business leaders who say they understand marketing then prioritise it. The number one reason for CMOs being let go is a lack of alignment between CEO and CMO on what job actually entails. This has led to this decline in tenure.”
What’s more, companies are desperate for growth, but not seeing marketers as part of the solution.
“If marketers start discussions around emerging markets, deeper consumer needs, and bigger experience proposition development opportunities, I don’t think a lot of peers would say marketers aren’t part of the growth discussion,” de Swaan Arons says. “But if marketers are not driving such strategy and understanding discussions, can you blame CFOs or sales thinking marketers are just playing in their own space and not thinking about the wider business?”
It’s not all marketing’s fault. Adding to the issue is the way businesses have increasingly perceived growth as a short-term activity. As an example, de Swaan Arons points to Brazilian investment firm, 3G, which gained a reputation for culling anything not driving short-term profitability. This list of brands under 3G control includes Heinz, Kraft, Tim Hortons and Burger King.
“This strategy worked for about four years, and the brands were doing OK, until six months ago, when the house of cards came down. This is because at some point, you need innovation, deep insights and to understand how the market is growing,” de Swaan Arons claims. “The company is now taking a step back because shareholders are saying we don’t want this short-term growth, we want sustained strategies that drive sustained profits. That’s real growth.”
In addition, the evolution of CEOs and investment firms towards supporting purpose-led organisational growth has opened up a massive opportunity for CMOs to take their rightful place as growth drivers, de Swaan Arons says. He notes the shift within many organisations to deliver not just for shareholders but the four ‘C’s’ of stakeholders: Capital markets, colleagues, customers and communities.
“With this recognition of the importance of all stakeholders, companies will really need to understand the underlying needs of all parties and drive propositions valuable to all stakeholders. Who in the boardroom is ideally placed to lead that discussion? The CMO,” de Swaan Arons says. “I see this as a huge gap for the CMO to step into and lead.”
To get there, marketing needs to become more commercially minded. For de Swaan Arons, accurately portraying ROI on marketing spend is not enough.
“CMOs do need to course correct to do this, as we’re not having enough business discussions, or around market definition and branding outside product we sell,” he says. “Commercial acumen is not just understanding the P&L, or explaining marketing spend, it’s thinking about where the P&L can go, such as into new business models, or partnerships that form new experiences.
“That commercial orientation is missing because it’s either a communications person in the CMO role, or because it’s a muscle that hasn’t been flexed in a long time. “
Another vital ingredient is c-suite collaboration. IRG research show companies where marketing and sales work collaboratively well together, especially in ecommerce, dramatically outperform others for growth where such collaboration doesn’t happen. Working closely with the CFO and procurement is another must.
“The second opportunity is in defining the purpose of an organisation and redefining the playing field, which definitely requires collaboration with HR on the way companies work,” de Swaan Arons says. “IRG data shows collaboration between senior and junior leaders requires open culture. The other key for companies is partner ecosystems. Again, you have to have HR and CEO support there.”
IRG sums this approach up as ‘humanised growth’, or growth based around understanding human needs. This not only requires data, but an ability to draw insight across all stakeholder groups.
“Our research data shows clearly companies starting with data at the heart of their strategy outperform others. I see that as a hygiene factor,” de Swaan Arons says. “That being said, we’re now seeing companies be so data-driven, with such emphasis on A/B testing and optimisation that at some point, the idea runs dry. Then you need a new idea.
“This is where humanised growth strategy comes in. Data without knowing true consumer insights is useless.”
For de Swaan Arons, humanised strategy takes data and insights, technology and creativity, and a whole-of-team approach.
“I don’t think you can train data analysts to be consumer insights or vice versa. It’s a different type of person. What we can do is ensure both are respected and heard,” he adds.
“Insights and creative people need to be brought back in the room together, and they need to collaborate with data people to create new solutions and experiences that consumers love. You can create an environment that promotes collaboration and a whole-brained approach to growth.”
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