Executive Summary
Marketing's Contribution on a Board
There is an unfortunate, not to mention utterly baffling reality
occurring in organizations today of all different sizes, scopes and
industries: the under-appreciation of the function of Marketing as a
significant and valuable force in conducting successful business.
Instead of seeing Marketing as it should be, that is, a powerful engine
of research, innovation, development and communication, the Boards often
misjudge it as a pseudoscientific art that has little impact on their
bottom line.
The Boardroom is where the overall business goals are introduced,
discussed, reviewed and approved, and yet quite commonly, a Board
Director with a background in the function that is the muscle power of
developing corresponding strategies and tactics to achieve these very
goals- i.e.: Marketing- is completely absent. Board Directors with the
typical Financial, Operational or Legal backgrounds are not familiar
with and therefore do not appreciate such vital activities as
communicating directly with customers, developing brand image campaigns
or conducting research on customer behavior in order to determine how
best to position the product- a Marketing professional however is.
Whilst Financial, Operational and Legal backgrounds are strong
contributors on the Board, it is time to emphasis the missing gap: the
strategy driving Marketing function. The root of the issue essentially
boils down to an underlying misunderstanding and undervaluation of what a
Marketing Board Director can contribute.
Demonstration Of Marketing Value
The Gap Of Undervaluation
The article, A Seat At The Boardroom Table, mentions that Robert
McLuhan, the Managing Director of Alexander McLuhan & Son, admitted
he referred to Marketing as "practitioners of the dark arts."[1] My own
father, Neil Merlot, CFO of Grace Worldwide, referred to Marketing as
"The ministry of good times and novel contributions."
In order for a Board to see the value of a Director with a Marketing
perspective, the value of Marketing's contribution to organizational
success must be correctly demonstrated. The time has essentially come to
foster a culture that looks beyond the tainted reputation of gimmicks,
give-always, cheesy jingles and pretty pictures that Marketing has
unfortunately gained throughout the years, and instead rebuild a solid,
respected reputation for the function as an arsenal of powerful, driving
solutions for the ultimate benefit of the organization; only then will
the Board Members believe that Marketing is an asset in the Boardroom.
Marketing's negative reputation is compounded by the fact that, unlike
other functions that are always on a Board, such as Legal Counsel and
Finance, a Marketing Professional can often be seen as a practicer of
pseudo science or an 'ace-in-the-hole' when the sales team need that
little extra support to reach a set target. That's because Marketing is a
function that isn't always accurately measurable or rational on paper-
both at strategy and result levels. It's very difficult to justify an
expensive communication campaign to raise brand awareness in a target
market that is comprised of unique people. Scott Stratton describes it
perfectly in his book, Narrating[2]. He says it's not solely ROI (Return
On Investment), an accurate and commonly used measure, that drives
business success; it's more ROHR (Return On Relationships) which
Marketing cultivates that produces the greatest outcome; and that is
really hard to calculate tangibly. Therefore, the buck stops with
Marketing to overcome this 'gap of undervaluation': the Board won't
decide to include and appreciate Marketing with no evidence- it must be
proven and justified as an asset, both in and outside of the Boardroom.
Marketing's role is to externally communicate to unpredictable Human
Beings; you cannot plug in lines of accurate code with people to have
them all behave in a way profitable to a business; some of the segment
will reject the message, others will love it, more still will
misinterpret the campaign and others will be too busy to even notice.
There is no perfect solution to a problem when working with people,
whether they are running organizations or individual consumers, hence
the misconception and resulting undervaluation of the role of Marketing
in an organization.
Marketing: Helping Guide The Submarine
Therefore, it's time to dispel these misconceptions and take Marketing
off the side-line. Marketing needs to be seen not as an offshoot of
support to the Operations/Sales teams, but as a strategic partner worthy
of valuable contribution in the Boardroom. After all, due to the very
nature of how Marketing works, it is the function with the finger on the
pulse of the industry and its customers: how can a Boardroom steer an
organization to greater heights whilst such an informed contributor is
not present?
Consider this analogy: It's like a submarine (the organization) without a
periscope or sonar (Marketing), instead, relying on mathematical
instruments (Finance) and a previously drawn map (Operations) alone to
guide the course and hoping it reaches the destination successfully
(Strategic Business Goals). What if the water current changes (market
trends)? What if the depth is unpredicted (market demographics)? How can
you keep an eye on other submarines (competitors) to ensure no
collisions or direct attacks? Marketing cannot be on the beach, with a
two-way radio to the Board Member crew; it needs to be there playing its
role actively together with the rest of the crew.
The world's industries are changing at an exponentially increasing rate
and organizations cannot afford to wait to finally come to the
realization that the role and importance of Marketing has never been
greater. Marketing is the function that is researching the shifting
trends and fluctuating demographics of an organizations' customers in
order to predict and respond appropriately for the benefit of the
organization. How can an organization rely on a Board with such a vital
contributor is absent?
Application Of Marketing Techniques
Placing The Correct Value On Marketing: Contribution and Results
As outlined above, Marketing revolves around creating and monitoring the
essential flow of information to and from external sources and the
organization, and in doing so, it defines, locates and retains customers
for financial gain and organizational growth. The value of Marketing to
the Boardroom therefore equates to both its initial tactical
contribution at the goals and objective setting stage, and the
measurable results and outcomes of its efforts.
Marketing's Contribution
To a Board planning and developing future goals and targets, Marketing's
value lies both in:
1. The provision of information regarding external trends,
characteristics, opportunities and threats that will effect these
objectives, as well as;
2. The conceptualization of a marketing strategy which effectively
harnesses the strengths of the organization, aligned to meet these set
objectives.
Referring back to the submarine analogy, a Board setting goals must
appreciate and be aware of the current and predicted future market
landscape. Marketing, as a function, should be a major asset here as
their efforts lie directly in contact with the market itself. If a
competitor is having a particularly strong effect on the market, the
major consumers are becoming more price-inelastic, or a recent
breakthrough has made certain products redundant, Marketing can not only
share this vital information with the Board, it can explain what
impacts this will have on the current organizational objectives and
suggest multiple options and tactical strategies to circumnavigate
detrimental hurdles, as well as appropriately pursue advantageous and
innovative opportunities. This is the benefit of inviting Marketing to
participate in the Boardroom: such critical information should not be
discounted or dismissed entirely. Such an oversight is an unnecessary
detriment to organizational success.
Why would an organization, therefore, think to exclude Marketing on the
Board? Are the Board are willing to forego such advantages as already
described above?
Marketing's Reciprocal Obligation
Expectantly, it is a two-way street for Marketing to be included in the
Boardroom. A Board with a Marketing member can assess and evaluate the
Marketing concepts and strategy to ensure that the function has fully
appreciated the other functions' roles, responsibilities and
perspectives. The Board can also actively interpret and ensure that the
Marketing Okapis' align with budget, organizational and financial
objectives, essentially removing the 'practicing of the dark arts'
perception: by inviting Marketing to the Boardroom, the organization
shines a large light over Marketing's efforts, which in effect, will
assist with dispelling the pseudo science misrepresentation.
Marketing's Outcomes and Results
Pinning down Marketing's often intangible outcomes and results can be a
difficult task- one that significantly adds to the under-appreciation of
the function itself. However, it isn't as shrouded as it may seem to
other Board members, should a Marketing Board member be included.
Every function's responsibility essentially lies with their direct
impact and performance success on the organizations' business plan and
marketing is no exception to this. All functions are tasked with their
objectives to make their appropriate contribution to the organizations'
goals and, in Marketing's case, that is tangible and intangible
corporate value.
Tangible value is the most solid due to the hard facts. In reality,
straight hard figures reverberate the most in the Boardroom setting and
include metrics such as direct customer responses to advertising,
revenue growth, statistics from traceable online advertising, and
figures from such activities as Product Familiarization/Loyalty
Programs.
However this is scratching the surface: as mentioned, it can be the
intangible Return On Relationship (ROHR) results that demonstrate
Marketing's effectiveness, however measuring these can be difficult.
This in mind, a Boardroom can invite Marketing and focus on the value
leveraged from the concept of marketing assets[3].
Marketing Assets are the leverage able value from intangible marketing
elements, such as profitable good-will, reputable brand names,
successful brand image, deep brand awareness penetration, the discovery
of a profitable niche, a compelling advertising campaign, contributing
marketing intelligence and so on. The issue here is that, often a Board
vaguely accepts the value of these Marketing Assets, but fails to truly
appreciate the scope of their impacts on organizational success and
profitability. You cannot put a yearly mathematical depreciation formula
on a brand name, for example. Therefore, by including Marketing in the
Boardroom, the vagueness can be removed by an explanation of how to
assign correct metrics to such Assets in order to demonstrate the impact
they have.
These metrics are best assessed in a dynamic way by comparing continual
past and future results of each Marketing Asset each time the Board
meets. By viewing the value of each asset over several periods, unusual
outliers and unexpected circumstances 'smooth out' and true value can be
calculated. For example, Marketing can provide intelligence about
competitors in the market through their research. This can be valued by
the Board based on how such ongoing knowledge not only allowed the
organization to be better prepared over the last few quarters, but how
well the developed Marketing Strategies assessed such threats and turned
them into opportunities.
Another example is the value and contribution of a Brand. Brand
awareness and perception are difficult to mathematically assess, however
dynamically comparing unprompted and prompted consumer response to a
brand, as well as its relevance in the market will indicate the
potential earning capability it could generate. For example, Apple as a
technology brand was seen as a technological leader and innovator in the
market from around 2010 to 2012, and therefore, Apple's Board, with a
strong appreciation of Marketing, could accurately assess high
profitable return to be leveraged off this good-will. However in 2013,
to their detriment, Apple's Board could view the Brand was weakening in
the market now due to aggressive competitors and a far less innovative
brand offering[4]. The Late and Former CEO of Apple, Steve Jobs, was
always a strong advocator of the value of Marketing at Board level
toward organizational success[5].
The Apple example provides a good basis for the argument. The Board can
assess past Marketing and organizational efforts that strengthened the
Brand in previous periods (2010-2012) and investigate why a change has
occurred in more recent periods. The Board, with Marketing present,
would most likely determine that there was a distinct and direct
correlation between the decline in their Brand's strength and their
falling market share, due to their recent Apple products being far less
ground-breaking and their marketing campaigns far less unique and
consistent with Apple's funky, fresh image. Therefore, the next time the
Board meets, the role of Marketing can be appropriately valued and more
aggressively targeted to boost the next period's results. By including
the Marketing function in the Apple Boardroom, the Executive Team are
better equipped to appreciate the decline and re-evaluate the
organizational goals and strategies to address the treats to the
business.
Organizational Synergy: A More Complete Boardroom
A successful Boardroom contributes best when it correctly appreciates
all of a business' separate systems: this should definitely include
Marketing, not because it is a budget-draining misunderstood 'pseudo
science' of unproved, unpredictable and immeasurable efforts, but a
powerful contributor and resource. A Boardroom with a Marketing member
that understands this will be better equipped to value, manage and
utilize the function for the extremely valuable contributions it can
produce.
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References
[1] Linder, J. A Seat At The Boardroom Table. Business Review Weekly.
August 1-7, 2013. PG 47-49.
[2] Stratton, S. (2012) Narrating. New Jersey: John Wiley & Sons,
Inc.
[3] Australian Marketing Institute. Deloitte. Marketing's role in the
boardroom- An evaluation framework for boards and directors. July 2013.
Page 10.
[4] Marketing Mag. Corporate Reputation Index: Apple falls, Toyota Rises
and banks bite back. 22 April 2013. Accessed 24/08/2013.
[5] Reynolds, G. Steve Jobs on marketing and identifying your core
values. October, 2011. Accessed 27/8/2013.
Christopher Merlot
Merlot Media: Freelance Copywriting
http://melottimedia.com.au
