Last week I was with a marketing professor who lamented that in his interactions with public policy makers, he observed that they did not respect marketing. In my book, Marketing as Strategy, I presented data to demonstrate that executives who had grown up in the marketing function rarely made it to the CEO position. For example, few CMOs (Chief Marketing Officer) are promoted to the CEO position relative to COOs (Chief Operating Officer) or CFOs (Chief Financial Officer) being elevated to CEO. Furthermore, my data suggested that even in consumer goods companies that presumably should be placing higher value on marketing, accountants outnumbered marketers as CEOs.
The lack of respect for marketers
The fundamental problem with CMO is the nature of the job. They typically approach the CEO and the board for more money for the marketing budget. Usually, depending on the industry, a large proportion of this budget is for branding and advertising activities. Unlike search advertising or promotional expenditures, it is hard to directly link branding and advertising efforts to increased sales. The consequence for marketers is therefore entirely predictable:
- Marketers are viewed as having a “spend” rather than “make-and-save” mentality. Furthermore, in their role, they are supposed to be the customer’s advocate in the firm, demanding better services, more features, and limiting price increases. All of this only feeds the narrative that they lack financial discipline. And, this can hardly help marketers in being considered for the role of CEO.
- Since companies cannot count on their marketing departments for results, CEOs instead turn to operations and finance to increase profitability by cutting costs or reengineering the supply chain, and mergers and acquisitions to grow revenues. Having demonstrated bottom line impact, the heads of these functions gain greater credibility in the organization as CEO material.
- One must also concede that those entering the marketing profession often do so because they love the more creative aspects of the job. What can be more fun that engaging with the advertising agency and imagining all kinds of messages to help the consumers fall in love with the brand. It is almost a dream job, working with celebrities and models in exotic fun locations, all on company money. Of course, I am drawing a caricature here of marketing executives to make my point.
- Typically, marketers are less proficient in finance and less enamoured by analytical approaches to expenditures. This is reinforced if, while on the job, they pride themselves as being “right brain” (side of the brain that manages emotions, creativity) people and not “left brain” (part of the brain that manages math skills, analytics). Any finance that they did learn during their education soon becomes obsolete through neglect. In contrast, finance and operational professionals are more fluent at speaking the shareholders’ language which helps gain credibility with the CEO and the board of directors.
Diminishing relevance of marketing in the Boardroom
All of the above, especially the inability to demonstrate positive bottom line impact of marketing, means that marketing’s share of voice at the corporate level, which was never high to begin with, has declined. Research now demonstrates that, at large companies, only 10 percent of executive meeting time is devoted to marketing.
With its focus on advertising, branding, and promotion, the entire function appears tactical rather than strategic to observers. Here, as a marketer, you are talking about how to position the brand versus competitors to create meaningful differentiation. In contrast, the CFO is demonstrating how the proposed acquisition will increase shareholder value by a billion dollars (ignoring for the moment that most acquisitions fail to create value for the acquirer). Or, the COO is arguing how redesign of the supply chain that consolidates several factories spread across the world will save several hundreds of millions. It is not a fair contest.
After having served on more than a dozen boards, one cannot fail to realize that for the CMO to get any face time with the board is challenging. The only issues that come before the board are strategic and bottom line oriented. This face time is critical because ultimately, while the CEO may recommend a candidate, hiring a new CEO is the board’s responsibility. Compared to the COO and CFO who are regularly presenting to the board and often included in board discussions, the CMO is virtual stranger to the board members. Even controlling for all other factors, this alone would bias the CEO decision against the CMO.
In the classroom, one of the jokes that often got a big laugh for me was the following:
Who really goes into marketing?
Well, at a certain stage of your life you realize that you have grown up with no particular skills. Then, you say I am pursuing marketing as a career.
Unkind, but the harsh reality that marketers face in their battle to become CEO.
What is the way out? As I argued in Marketing as Strategy, if marketers wish to be included in board level conversations, then they need to lead organizational transformations that are strategic, cross-functional, and bottom line oriented. Digital provides this opportunity today.