Rearranging the deck chairs?

Advertising Age published an article recently entitled “Reorganization Doesn’t Do It for Marketers.” (I’d give you a link but Ad Age makes you pay for their articles, so you need a login.) The gist of the article is based on research done for the Association of National Advertisers (ANA) in October of 2007, which indicated that close to 60% of the marketing organizations surveyed had undergone a reorganization (significant) in the last two years.

Not surprising to us, these reoganizations did not improve marketing performance and in some cases made it worse. Is this just re-arranging the deck chairs on the Titanic?

Marketing organizations are under tremendous pressure to produce “results.” Chief Marketing Officers are being axed at an astounding rate, and their is even talk of eliminating the position as unnecessary. (One possible problem with that is there will be no C level executive to fire when you need one to sacrafice that really doesn’t do anything anyway. While that sentiment is not necessarily ours, it is the feelings of other pundits.) So, is all this reorganization just a hope that moving the organization around will get better results?

We see two problems with this thinking: First, there is likely to be a lack of agreement on “results” since the role of marketing in most companies is undefined to begin with. And, secondly, even if that is not the problem, Deming taught us many years ago that the problem with most organizations getting the results desired is not a result of the structure of the organization or the people in it, but rather the processes they are working to support.

Every process is perfectly constructed to get the results its getting. Trying to getter better results by changing the organization is truly rearranging the deck chairs. If you want better results, you have to examine the processes you are using. Redesigning your processes to get the results you want may also require a reorganization to facilitate their effective implementation. However, first comes the process redesign, then comes the organizational design to support it. Not the other way around. 

For an additional viewpoint on reorganizations, take a read of our partner, Bayard Bookman’s white paper “Let’s Reorganize, That Way We Won’t Really Have to Manage.”

Mitch

Marketing Pukes

In 1983 I met with the founding team at Sun Microsystems on several occasions to discuss an OEM contract for the original Sun Workstation. Negotiating with the team was tough as they had never put together an OEM deal. At one point in a conversation, I asked them when they were going to hire a VP of Marketing so that we could put a deal together. Scott McNealy looked me straight in the face and said that as long as he was with Sun, they weren’t going to waste their money on any “marketing pukes.” 

Recently I met a guy who had been a senior exec at Sun during its growth from $50M to $750M and he relayed a story to me that was quite amusing given Scott’s statement to me. In its earlier days, Sun, despite its growth and technical prowess didn’t get much publicity. However, there was a point in time during Sun’s heyday and Apple’s demise that a rumor was circulated that Sun was going to buy Apple. That rumor apparently generated a LOT of press for Sun including a mention on CNN.  

My friend tells me that Scott got the 3,000 marketing people that worked for Sun at that time (quite a lot of “marketing pukes” indeed) together and berated them for their failure to perform. He noted that he was going to fire all of them since one little rumor had created more press attention than the 3,000 of them had accomplished and he could save a lot of money by simply spreading a rumor once a year. 

And if that was all he wanted his 3,000 marketing people to do, he was indeed over-spending on that function. I trust after 20+ years that Scott has learned the true role of Marketing in a business. However, I haven’t talked to him in many years, and given the limited understanding of the comprehensive role of Marketing by many CEOs, maybe not.

Mitch

Missed Opportunities

I finally bought a new car. After 11 years of driving my pick-up truck, it was finally time to admit it was time. I had decided on a Pontiac Solstice but had delayed purchase since all the dealers in my area wanted $5K over sticker price for the car, and I just didn’t want it that badly.

 

Fortunately, I met a terrific Pontiac dealer in Detroit during one of my presentations and he told me that selling cars over sticker price just pissed people off, so he did not do that. He also told me he could order the car for me and have it delivered to my local dealer for pick up. 

Sounded great and the local dealer agreed to a usual and customary courtesy delivery fee for their part in the prep and delivery of the vehicle and the opportunity to create a new service department customer. The Detroit dealer did a wonderful job for me and the paperwork process was a pleasure. They stayed in touch with me to let me know when the car would be finished at the factory and on its way. They also coordinated everything with my local dealer for me. 

When I picked the car up, the process was quick and easy and most of the time was spent by the sales manager telling me that I did not need to buy the car from a dealer in Detroit that they would have sold it to me without the $5K mark-up over sticker too. I pointed out that they chose not to do that several months ago, which was how I ended up ordering from the Detroit dealer to begin with. He grudgingly acknowledged that a few months ago, that might have been true. 

Anyway, he removed the window sticker and gave me the keys. I asked him to remove another sticker in the window which he did and posted the operating permit in the front window. I signed the Motor Vehicle Department paperwork and was on my way.  

As I was driving the car home, I noticed that it was a bit difficult to see through the dirty front window and the car did not have the typical new car shine because it was covered with a film of dust. 

No worries, my son is happy to earn some money washing my new car and I now know this dealer is not about quality service, so I will go elsewhere with my service business. 

They did get their modest delivery fee, but they not only did not earn a new customer, they created what JD Powers calls an Assassin. As you can see by this blog post.

Mitch

Ed Zander steps down at Motorola due to failed Marketing

But how can that be true you say, the Razr ads are cool. The brand is well known. How did failed Marketing cause Mr. Zander’s (don’t know him, so Ed seems a little presumptuous) need to step down? 

If you have been reading this blog for a while, or if you have read our book, Value Acceleration, you know that Ralph and I (and all of the members of Customer Manufacturing Group), believe that the marketing tactics most people see and believe to be the primary role of Marketing, are simply the back-end of Marketing. And while important, it’s the front-end of Marketing that will kill you if you don’t get it right. All the money in the world spent on the promotion of products and services nobody wants is a losing proposition. 

With all of this in mind, I was amused (I’m sure Mr. Zander was not) that Business Week, in their December 17, 2007 issue noted that Ed Zander “… hung up his job…” because he failed “… to intuit what the market wanted next ….” 

In a company Motorola’s size, it’s hard to believe that Ed Zander should be personally responsible for “intuiting what the market wants next,” but he should have had people working in Marketing that could do that. However, given that Mr. Zander spent time with Scott McNealy at Sun who once told me that Sun was “… not going to waste money on marketing pukes” maybe Mr. Zander missed the critical role of Marketing in a company’s success.

Mitch

Listen to our radio interview … free

Ralph and Mitch were recently interviewed on a business radio program on their views of the current trends and pressures on marketing and sales people and processes. You can listen to this mp3 file by using this link:

http://audioam.blogtalkradio.com/show_116650.mp3

A bit more on CMO turnover

The business week article that Ralph mentioned in the previous post also noted a “fatal” flaw in the role of marketing in most companies. If you read the article (can’t find it on the BW website to link to, sorry), you’ll notice that the apparent definition of marketing (which is vague in all cases, as Ralph noted in his post) is limited to the “back-end” of marketing. That is, the so-called promotion and sales support aspects.

 If marketing is not also responsible for strategy, product/service offering identification, market targeting, etc., then the job of promoting poorly selected and defined products and services is bound to end up as a “scape goat” position. Until and unless marketing is viewed as a true business process that is tasked with the alignment of the company’s capabilities with customer needs, wants, and demands, the CMO will have a short tenure … or position elimination.

Mitch

CMO instability due to lack of process management

The current issue of Business Week has an extensive article on the short tenure of CMOs.  It seems that they have a shorter life than any other position in the C-suite. 

This really isn’t very surprising to us.  After all, few people define “marketing” correctly, in our opinion, and as the article so well documents, few CEOs can define the role of the CMO well.

It’s impossible to define a management role for a function that’s not well defined, and we believe that that’s the root cause of the issue.  As we detail in the book, defining marketing (as a process) is the first step to managing it.  Which is why we propose our process-based model of marketing, the Customer Manufacturing System.

One of the blowbacks from this confusion is that there’s a movement afoot to do away with the CMO role and go back to dividing up marketing responsibility among the sales VP, CIO, COO and CFO.  We think that this is precisely the wrong thing to do; why go back to something that wasn’t working to begin with?  Further, marketing is a process, and like all essential processes, it cuts across the old functional lines.  Like all essential processes, it too should be managed by a process owner: the CMO.

The real issue is to define marketing properly by a correct process model.

Ralph

Long-term value vs. short-term value

The current issue of Business Week has a story on the rise of sovereign funds (funds controlled by a foreign government) as a significant factor in the global investing market.  These funds have taken control of many businesses over the last few years. 

The concern with them is their lack of transparency (among other things), but their cited virtue is that they invest for the long haul.  We think this is good news.

There has been entirely too much short-term investing over the last couple decades by funds and investors of all sorts.  Typically they will squeeze operational efficiency and cash out of existing operations and assets (usually a good thing, but not always), flip the business, and move on.  A lot of money is made this way, but does this really best serve the cause of creating long-term value?

Sometimes.  Sometimes not.

Our focus with Value Acceleration is on both the long term and the short term, and results can be generated with VA methods in both camps.  But our heart is really in the long-term, and we are most pleased when we can help create a long-term, sustainable value proposition with a client.  Short-term bumps in profit, sales or cash are great, of course. But the long term is where we—and our children—all ultimately live.

Six-Sigma Not so Valueless Afterall!

Earlier this week my wife (who works with us sometimes) was at the Boston Knowledge Management Forum, where one of the trendy things to talk about was how six-sigma is now an dated old tool, useful in the manufacturing environment where systems are predictable, but not useful for complex systems…like managing a modern corporation. 

Well…duh!

Part of what we are seeing above is, of course, the need for academics to look down their nose at anything not on the horizon, or not of their own invention.  And part of the above is the stating of the obvious as if it was a revelation from on high.  (We often state the obvious to clients too, not as a revelation though, but rather as a reminder that basics count.)

Or is it so obvious?  Take a look at the latest Business Week (10/8/07), page 88.  The article there describes how six-sigma is used to foster innovation at some leading companies.  More specifically, it shows how it is used to implement innovative ideas and roll them out company-wide.

The truth is that six-sigma is a tool.  It applies to any repetitive activity (that would be a process.)  It applies at the meta-level to many strings of non-repetitive activities (a meta-process.)  It applies to a greater or lesser degree. And it most certainly applies to many marketing and sales processes.

Ron White likes to say “You can’t cure stupid”, which is true  Our version of that is much more positive, though: “You still need management smarts.”

What A Difference A Decade Makes

About 10 years ago I locked my keys in my Hertz rental car in 8 below weather in Minneapolis. I called Hertz for help and they told me (seriously) to bring the car back to the airport and they would give me another set of keys. I pointed out that if I could do that, I would not have called. I asked if they could send a locksmith out to make a new key. She said no they did not do that. I was stumped until I remembered I belonged to AAA and they would help me. They came out, unlocked the car (it really is pretty easy to break into a car if you have the right gadgets) and I was all set. No cost and just a 45 minute wait.

Needless to say I was less than impressed with Hertz’s #1 service and I let them know. Not that it mattered to them.

Here it is 10 years later and this time I lost my Hertz car keys. I’m really not sure how it could have happened, but people who have known me for years seem to find it highly plausible. Anyway, this time I called the AAA first and they came out and unlocked the car, but the keys were not in it. So now I really am in a bind. I reluctantly call Hertz, since based on my prior experience, I do not expect any help. Boy was I surprised. You’d have thought the Hertz customer service person had personally lost my keys herself. She apologized for me having the problem and then began to work through the solutions.

First she offered to send out a locksmith to make a new key. I pointed out that I had rented a Volvo and that I thought they had special keys. She confirmed I was right and that option would not work. She then went to plan B, which was to send a tow truck out to tow the car and provide me a ride to the airport. Her #1 concern was whether that would take too long and cause me to miss my plane. No problem we determined.

She then said she would arrange everything and call me back in 10 minutes. Eight minutes later she called back, apologized again for me being inconvenienced and told me a tow truck would be there within 45 minutes. I asked her how they were going to tow a vehicle that was unable to be put into neutral, she said “they have their ways.” However, about five minutes later she called back with the tow dispatcher on the line who wanted to confirm there was enough space around the car to work their “magic.” There was.

At about the 35 minute mark, the dispatcher called again to say they were running behind and it would be another 20 minutes before the driver could get there. He arrived, hooked up my 4-wheel drive Volvo to his tow truck and we were off to the airport. He dropped me and the car at the Hertz car care facility where they promptly checked me in and gave me a personal ride to the airport.

What a difference a decade makes!!

 Mitch