Are CMOs Becoming An Endangered Species?

Are CMOs Becoming An Endangered Species?
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In this post, Raz Chorev (pictured below), CMO at Sydney marketing executive-as-a-service firm Orange Sky, argues marketers are increasingly lost about their actual role and it’s time to rediscover it before it’s too late…

In the past two weeks, we’ve witnessed two of the largest consumer brands losing their CMOs. Coca Cola’s Global CMO was let go due to a restructure, and in Australia Unilever’s CMO was made redundant. This topic flamed a conversation I had with a potential partner, as he challenged the relevance of the chief marketing officer in today’s market. His doubts weren’t unfounded – it appears there’s a trend (his words) where chief marketing officers are losing their footing in large organisations; Coca Cola and Unilever, arguably the largest marketing organisations in the world, are just the latest examples of this trend.

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Without nit-picking on the word “trend” and panicking over the demise of the marketing role, let’s examine what actually happen with these organisations:

Coca Cola has undergone a major corporate restructure. They’ve brought together global marketing, customer and commercial leadership roles, and corporate strategy has been brought under one roof. Although the CMO role was axed, the two other functional leaders will keep their job, but report to a ‘Chief Growth Officer’.

What I find interesting is that a new role was created separately from this new cluster – Chief Innovation Officer, which reports directly to the Global CEO. Personally, I find it odd, and I’ll explain why shortly.

As for Unilever, the CMO role in Australia was cancelled only 13 months after it was created. Previously the CMO function was jointly owned by local VP of Marketing and the VP of Food and Refreshments. This is obviously a very different scenario to the Coca Cola one, hence a “trend” it isn’t…

I won’t try to analyse the reasons behind the two separate instances, as I don’t have the information beyond what I’ve read in industry publications. What I can do is make some assumptions, and see if other organisations might be able to learn from it.

The legendary management and marketing guru, Peter Drucker famously said: “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Today, when top management is surveyed, their priorities in order are: finance, sales, production, management, legal and people. Missing from the list: marketing and innovation. When one considers the troubles of the world’s brand icons in recent years, it is easy to see how Drucker’s advice might have helped management to avoid the problems they face today.

So when Coca Cola created a role for the chief innovation officer, separating it from the traditional marketing function, and from the newly created Growth office, I raised an eyebrow. I understand that businesses are trying different things, different roles, structures and functionalities, but I’m struggling to see how creating different types of silos is going to help the organisation move forwar

A couple of weeks ago I had a LinkedIn discussion led by Andy Lark – an accomplished corporate CMO. Andy stated: “Reality is marketing and CMOs have never been more misunderstood. Real reason they are losing their jobs is hypocrisy and naivety amongst CEOs and their boards. And that’s sad.”

[Context: Andy responded to a claim made by a data analytics CEO, who said “Recent CMO Council research indicates that a record # of CMOs lost their jobs in 2016, and that the #1 reason was “failure to show business impact.” That CEO was actually indicating that CMOs weren’t using the right tools, and his AI analytics platform was what was missing from the CMO’s MarTech arsenal.]

I tend to agree with Andy. Boards and CEOs don’t understand what the marketing function is, and reduce the role as merely an execution arm of the business primarily in charge of promotion (the third “P” in the marketing mix.). When CEOs and boards understand the scope of the marketing realm and breadth of responsibility, the marketing as a function will be restored to its old glory, and direct enterprises into a more stable and predictable future.

When boards and CEOs reduce the marketing leader’s role to manage brand and promotions, it makes it increasingly difficult to show business impact. Arguably, it’s the marketing professionals’ own fault that their role and profession is so misunderstood. I believe it’s down to us to promote our impact on business, to showcase our worth and what our roles are worth. A CMO who is offered a role that will only allow him/her to manage the brand and promotional activities, should, in my opinion, decline the opportunity.

Let me explain why.

A true marketer, should be the person in charge of creating a customer. Whitney Hess sums it up perfectly by quoting Peter Drucker (I know, it gets old…), saying that the sole purpose of a business is to create a customer. Whitney defines a customer as a person (or entity) who pays for a good or a service. She focuses on the term “pay”, as opposed to the common misconception that a user should also be treated as customer. The fact is, businesses cannot survive without users, as until there’s a monetary exchange, there is no business.

She goes further to explain: “the function of marketing is to attract the prospect. The function of innovation is to transform the prospect. The prospect can’t be changed if they’re not paying attention; they won’t pay attention if they sense they can’t be changed. Both functions, in harmony, are required to seal the deal: to convert a prospect into a customer, to get paid.”

So if the marketing and innovation functions are both the foundation of the business – creating the product/service and converting prospects into paying customers, it makes no sense that the two functions aren’t working together under the same structure (see my earlier comment about Coca Cola).

I do, however, understand why there’s no need for local CMOs of global businesses (e.g. Unilever). If a CMO needs to attract the prospect, but has no impact on product / service innovation, they will get into all sort of trouble and forced to create “commercial impact” in questionable ways (see Nurofen debacle).

It’s time for the marketing profession to rise back into its former glory, and for us, as marketers, to take charge, educate and influence our peers on what marketing really is. I find it absurd that marketers can’t “attract their own prospects”, and create a customer for their profession. Let’s gather as marketers, and stop that “trend” from ever becoming one.

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Designworks Orange Sky Peter Tanner Raz Chorev

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