3 Steps to Effective Growth (and Job Security!)
As part of our continuing commitment to our members’ career development, AMA Philadelphia regularly recommends books and articles by third parties for their usefulness in solving real world challenges. This article is particularly useful for senior marketing executives and comes recommended by our chapter president, Matt Roberts.
In a recent article, McKinsey & Company reports on their findings from interviews they conducted with 100 C-level growth officers (Chief Marketing Officers, Chief Growth Officers, etc.) and 21 CEOs from B2C and B2B companies of all sizes across multiple industries. The article is more than simply an interesting read for all CMOs, aspiring CMOs, and all those marketers interested in growing their businesses. It is important to note that the McKinsey authors report that one in four companies fail to meet their growth goals and that only 10 percent of S&P 500 companies have reported growth above GDP for the past 30 years. Against this sobering backdrop, the authors contend that organization leaders can and must follow strategic plans to achieve their goals for growth.
A simple solution to marketing and growth achievement?
So, where exactly can one go to address failures in growth achievement? Too often, the blame is laid at the feet of the marketing team and its leaders — which has contributed to both precarious job security trends for marketing leaders and the retasking of non-marketing experts in the organizations to make up for shortfalls.
Actually, the authors observed something that they found to be astounding. They argue, based on their research, that the key to improving a company’s growth can be as simple as improving the working relationship between the CEO and the CMO and other marketing officers.
“The world has changed with data and technology that has enabled measurement. Marketers are speaking a complex language and drown CEOs and CFOs in data. But they need to answer the question: Why is this a good business decision?”
Sometimes CEOs feel they are missing the link between marketing measurement and business impact. When CEOs and CMOs aren’t focused on the same metrics, they aren’t running to the same finish line.”
Brodherson M, Ellinas J , See E, Tas R. The power of partnership: How the CEO–CMO relationship can drive outsize growth. October 2023. McKinsey & Company.
Can the real answer to solving this problem be as simple as metrics? The researchers feel it is a case of which metrics and which priorities:
“When we asked CEOs and CMOs of the same companies what their top three marketing metrics were, they only agreed half the time. CEOs are focused on business outcomes such as year-over-year revenue growth and margin improvements, while CMOs often report operational metrics such as brand awareness and recognition. It’s imperative for CEOs and CMOs to prioritize the same metrics to ensure they are also working toward the same objectives.”
Brodherson M, Ellinas J , See E, Tas R. The power of partnership: How the CEO–CMO relationship can drive outsize growth. October 2023. McKinsey & Company.
Step One: Aligning Marketing with Leadership’s Goals
The first big takeaway from the McKinsey researchers just may be that marketers need to focus on ensuring their metrics align with the needs — and priorities –— of their chief executives and boards. However, there’s a crucial step worthy of careful consideration before discussing alignment. According to the authors,
“Even worse than not understanding marketing metrics, many executives aren’t convinced of their accuracy. Without credible measurement, CEOs can neither track marketing’s impact on growth nor hold their CMOs accountable. As the head of marketing for a large retailer told us, “There’s no consistent way to convey the value of marketing and what it is driving to help grow the business. There are a million ways to get to one number.”
Brodherson M, Ellinas J , See E, Tas R. The power of partnership: How the CEO–CMO relationship can drive outsize growth. October 2023. McKinsey & Company.
Step Two: Back Your Case with Trusted Data
So what are CMOs, aspiring CMOs and marketers to do? McKinsey gives CEOs a clear directive:
“Our research is clear: companies that place marketing at the core of their growth strategy perform better. CEOs can no longer afford to underestimate marketing as their growth partner and can get started now with the following steps:
- Clearly define a C-level growth role with marketing at its center.
- Engage with CMOs to discuss the business’s growth strategy and build conviction in marketing’s role within it.
- Together with the CMO, define a clear cascade of business outcomes into marketing KPIs to ensure the strategy has a direct impact on the bottom line.
With this road map, any organization can reposition marketing so that it’s at the core of its growth engine to capture the incremental sales potential of marketing-led growth.”
Brodherson M, Ellinas J , See E, Tas R. The power of partnership: How the CEO–CMO relationship can drive outsize growth. October 2023. McKinsey & Company.
Step Three: Involving Leadership in the Marketing Process
The next big takeaway from this article is that marketing leaders and their subordinate managers need to take the time to collaborate with chief executives in determining precisely which metrics will be of greatest interest and highest priority. This needs to happen even before agreeing on their pedigree (or believability) and their process of collection. As the authors caution:
“Growth requires the careful orchestration of multiple customer-facing levers—product, pricing, promotion, and many others—to serve the customer. The person tapped for this C-level growth role should serve as a general manager of growth, a convener with deep expertise in growth functions who thinks in terms of solving business problems.”
Brodherson M, Ellinas J , See E, Tas R. The power of partnership: How the CEO–CMO relationship can drive outsize growth. October 2023. McKinsey & Company.
In terms of real action steps, CMOs and their marketers need to carefully consider the ways in which to improve communications and working relations with their CEOs. The McKinsey authors suggest that for CMOs, re-engaging with their CEOs does not have to be a big swing. In fact, they insist, it can be taken in small steps. They offer a few suggestions from CMOs who have had success:
- Periodically send the CEO simple but rich articles about marketing strategy, data and analytics, and the latest innovations.
- Always have a simple one-page summary ready for that opportune moment to explain to the CEO the company’s current martech stack and how it is driving growth.
- Bring in the CEO to attend key research activities pertinent to your industry, such as customer focus groups, agency media days, consumer in-home visits, store visits, or even international marketing conferences. This way, the CEO and the CMO can align on the metrics and understand what is happening with growth.
There’s good reason to both engage CEOs and to expose them to the processes of market data gathering. As McKinsey’s authors put it, there’s a real gap in the perspectives of CEOs and marketers — and it’s imperative to narrow it as soon as possible.
“Contributing to this gap is the fact that most CEOs lack a marketing background. Based on publicly available data, we estimate that only 10 percent of Fortune 250 CEOs have marketing experience, and only 4 percent have previously held a CMO-like role. In contrast, more than 70 percent of Fortune 100 CEOs have an operations or finance background. It stands to follow, then, that many C-suite members underestimate marketing’s potential to create growth, despite the rapid growth in marketing capabilities.”
Brodherson M, Ellinas J, See E, Tas R. The power of partnership: How the CEO–CMO relationship can drive outsize growth. October 2023. McKinsey & Company.
When organization leaders fail to bridge this gap, companies have looked to compartmentalize and task people with additional roles that tend to dilute the role of the CMO. Some examples are: Chief Brand Officer, Chief Commercial Officer, Chief Creative Officer, Chief Customer Officer, Chief Demand Officer, Chief Growth Officer, and Chief Revenue Officer.
We recommend that marketers read the entire article yourselves (see link below). Then, depending upon your relationship with your CEO (or CMO), share it as a prelude to a strategic planning discussion. That’s our last big takeaway for you: Use this article as a non-threatening basis for solidifying the objectives, data sources, and priorities for your marketing team’s actions. After all, without a road map, how can you have faith that your progress is in the right direction (according to your CEO)?
To read the full article, please click the button below.
Looking to discuss this issue with fellow marketers? Need a professional sounding board before bringing this to your company’s leadership? Attend the next Marketing Mix @ Six to talk shop and get a perspective from your fellow local marketers in a relaxed setting.