Tag Archives for strategy

What should CMOs be doing? Transformation!

This is the first in a series of short posts related to The CMO Agenda research. Informed by recent CMO conversations and CMG Partners‘ collective experience helping top marketers develop marketing strategy, we have compiled a list of seven ideas or jump starters for further conversation. These are meant to spark discussion, ideas, and action as we all enter a difficult 2009.

As one CMO I recently spoke with said, “We should define marketing as a verb rather than a noun. We need to be more proactive.”

Marketing should be a transformational change agent
Companies looking to grow are often in need of a new way to look at their business and a new vision to work toward. If your title is CMO, the job of creating this vision and pushing the organization to achieve it falls on you. More than any other function, CEO’s should look to marketing to lead the charge for change.

Why is marketing “right” for this?
Marketing is the most cross functional part of  many organizations due to the customer orientation that puts them in contact with engineering to customer service. Would you really want IT to lead your customer centricity effort?

Marketers by definition should be driving better insight, understanding and motivating desired behaviors inside and outside the enterprise. Marketing should be driving the organization to capture value.

Now might be the perfect time to ask yourself whether you’re shaking things up enough.

Mirror post at www.cmgpartners.com/blog/

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CMO research available on March 17, register now!

With colleagues at CMG Partners, I have been working on an exciting CMO Agenda research effort and are ready to release the finding to the public on March 17th. Register to receive the free detailed report.

About the research:

What is the “right” role of the chief marketing officer (CMO) and by extension, marketing, within an organization? Should marketing have a seat at the executive table? Should the CMO lead or follow in the pursuit of strategic initiatives? Do the answers to these questions vary depending on industry, company size and type, etc.? How has marketing changed over the last 10 years?  And what will the next 10 years bring?

In talking with more than 30 CMOs and lead marketers from mid-sized organizations to Fortune 500 companies across a variety of industries, we found commonalities in practice and differing perspectives on the role marketing can and should play within the organization. Some of the most innovative and cutting edge marketers we spoke with articulated the lead marketing position as a transformative role, working as both a team member and an agent of change within the c-suite.

Marketers openly spoke about their current priorities and critical challenges, and provided candid commentary on how they were approaching each.  One of the most thought provoking aspects of our research was a discussion on the evolution of marketing.  By capturing thoughts on the swinging pendulum between the art and science of marketing we were able to portray an interesting view on past and future practices.

Register to receive the free detailed report.

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Michael Porter: Still got it!

University of North Carolina at Chapel Hill
Image by TimDan2 via Flickr

Recently, I attended a University of North Carolina lecture by Michael Porter, Harvard Business School professor, who has made many foundational contributions to the field of strategy.  You can download the slides from the presentation.

Some thoughts from the lecture that continue to apply in today’s landscape:

  • The worst error in strategy is to compete with rivals on the same dimensions — be unique.
  • The fundamental goal of a company is superior long-term return on investment (ROIC)
  • Setting unrealistic profitability or growth targets can undermine strategy

Five tests of a “real” strategy:

  • A unique value proposition compared to other organizations
  • A different, tailored value chain
  • Clear tradeoffs, and choosing what not to do
  • Activities in the value chain that fit together and reinforce each other
  • Strategic continuity with continual improvement in realization

The Bottom Line:

Porter made great points and for many in the audience it was a refresher on strategy 101. The main message at the very end of the lecture was strategy is very hard to develop, but execution is even harder. In organizations today, there are so many agendas largely driven by the dynamics of humans (a concept I reference as lust, fear and greed). As companies develop strategy to get through this hard time, please keep in mind the realities of execution to have a greater likelihood of success.

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“Fill all niches” product and brand strategy adopter, GM, is falling on hard times

General Motors CEO Rick Wa...
Image by Getty Images via Daylife

As I read about General Motors going before congress and the recent story, “Big Three May Need to Trim Number of Brands“, published in The New York Times, I have been giving thought to the “a car for every purse and purpose” strategy made famous by Alfred Sloan. The proliferation of products and brands is made crystal clear by the graphic in The New York Times article, which notably only captures a portion of GM’s total global line-up.

As I researched more, I found “GM: Live Green or Die” a story from BusinessWeek where it details how long it took for the Richard Wagoner Jr., Chairman and CEO of GM, to pursue hybrids. It was Bob Lutz that had vision but was not just not heard.

So what went wrong?

A lot… Gas prices, growing discrepancy between unionized labor contracts and non-union labor costs, soaring health care costs for retirees and union workers, and the list goes on.

One area that has yet to be covered in depth is how the fill all niches strategy for GM products and brands has burdened them with inefficiencies and growing trouble to differentiate between products. It is not clear to me how this issue manifested itself over the decades, but the result of all of this is represented below in GM’s stock performance (Black line) as compared to Honda (blue), Toyota (yellow) and Ford (red). {CHART NOT WORKING – Apologies}

Courtesy of BigCharts.com

Courtesy of BigCharts.com

The bottom line:

A “fill all niches” strategy works as a defensive measure when the company can more credibly deliver a product than the competition and thus prevent them from gaining sales. These strategies also work best in high margin environments like CPG (e.g. cereal, cigarettes) where if you need to abandon your defensive strategy you are not burdened with high fixed costs like specialized workforces, plant and equipment. Finally, please do your homework on the strategic economic impact both positive and negative of executing this strategy. For help on this last point, seek out David Ravenscraft at Kenan-Flagler Business School, UNC Chapel Hill for help on game theory.

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TiVo on the slide; is this a death spiral?

In TiVo Swings to a Profit posted by The New York Times, it is clear the TiVo continues to shrink. It is a sad day for the small technology brand that could. Subscribers are now at 3.5 million from a peak of 4.4 million. Net subscriber additions are down and have been shrinking all year long.

Net Adds for TiVo Service as reported by tvbythenumbers.com

Net Adds for TiVo Service as reported by tvbythenumbers.com

The cable companies are the major immediate threat and have been, but in the larger context Apple (iTunes), Hulu, YouTube and other similar services are changing the consumption behavior for video content.

See my last post Netflix & TiVo join forces, it does not seem TiVo is positioned well even in the strategies they are employing to get out of this tough spot. It is time to rethink the business model.

The Bottom Line:

TiVo needs to pull themselves out of this death spiral, but it will take grand action not incrementalism. They could become a software and information services provider for the competition (cable and satellite TV providers). Cable companies love to outsource this type of thing and they have been on a whirlwind of deals to work together in wireless communications, advertising networks, and interactive TV initiatives.

Netflix & TiVo join forces

The Wall Street Journal just ran a story on the collaboration between Netflix and TiVo (http://online.wsj.com/article/SB122533284014583011.html).

This is a brillant play by both companies….

For Netflix:

  • Increased distribution to an avid fan base of TiVo users, who are by definition lead technology users (assuming they are not one in the same)
  • Providing a home entertainment device option for streaming content (Apple is looming with their Apple TV solution coupled with iTunes software)
  • Provides a proof point for the satellite and cable companies to deliver their content library

For TiVo:

  • Provides relevance again… the cable companies are really eating their lunch
  • Provides value by association (to something that is cool now) to an avid fan base
  • Differentiation in a commodity consumer electronic space

The bottom line: I think Netflix gets more out of this partnership strategically and could position them as a content supplier “middle man” between the movie studios and those companies that own the living room (e.g. Cable and satellite companies). If Netflix does not capitalize on this though, the TiVo outlet will probably not perform to the level that makes this a breakeven deal.