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Marketing excellence programmes are popular, important and frequently flawed, says Dr Brian D. Smith
In recent years, marketing excellence programmes have become ubiquitous in our industry. Although going under different names, the urge to improve marketing capabilities has seized most pharmaceutical companies, just as is predicted by industry life cycle theory. This concept suggests that as industries mature and it becomes harder to differentiate technologically, competitive advantage flows from the ability to segment, position and deliver extended value propositions. Yet if one examines the results of this up-skilling frenzy, as I have been doing for 12 years at two of Europe’s leading business schools, one finds a disappointing result. By and large, these firms describe their marketing excellence programmes as costing lots of money, even more time but delivering little tangible improvement in capabilities or performance. Why this is, an important finding of my work, can be summarized in seven fundamental flaws that are often embedded into the structure of marketing excellence programmes.
Sin 1: Data driven, not insight-led
No one would deny that the foundation of marketing excellence lies in market understanding; it’s in the interpretation of that term that things go awry. Because we’re a knowledge based industry, with a culture embedded in the physical and life sciences, we tend to confuse data with knowledge and insight. This leads us to value analysis over synthesis. Real market insight is VRIO; that is, it is knowledge that is Valuable, Rare, Inimitable and Organizationally aligned. This concept, deeply embedded in the management research about how firms compete, escapes many data-obsessed companies. Only a few firms know how to structure data into information, synthesize information into knowledge and then pick out the rare, exquisite gems of truly VRIO insight upon which any strong marketing strategy depends.1Sin 2: Deluded by industry best practice
The idea that there is a single best way of doing something has its origins in manufacturing and has proven to be seductive to marketers looking for the best way of strategic marketing planning. But it turns out to be a marketing mirage. Research into how firms really make strategy, as opposed to how the text books prescribe it, finds that firms blend planning with vision and with “making it up as we go along” and that no particular blend of these three is better than another. There is no single model of strategic planning best practice. What matters is bicongruence, meaning that strong strategies come out of strategy making processes that simultaneously fit (ie, are bi-congruent to) both the market conditions and the company culture. Since no two companies share exactly the same market context or culture, there is no universally applicable best-practice process. Instead, there is only a best process for your firm at a particular point in its development and that is what successful firms craft and use.2
Sin 3: Blind-sided to risk
The mantra of marketing has long been to maximize share and, by implication, sales and profit. In more recent years, this has been expressed in terms of return on investment and shareholder value creation. This is richly ironic since most marketing plans grossly neglect the things that shareholders really care about: risk and risk-adjusted rate of return. The chasm between most marketing plans and investors’ priorities arises from the fact that all marketing plans inevitably carry a risk as well as promising a profit. A tiny minority of marketing excellence programmes recognize this by incorporating marketing due diligence, a risk assessment and management approach that allows boards and investors to see where the business risks lie and how they have been managed. Such an approach doesn’t eliminate risk, but by making it visible it allows accurate assessment of risk-adjusted rate of return. Without marketing due diligence, strategic marketing plans amount to nothing more than a plea to “Trust us, we’re marketers.”3
Sin 4: Putting new wine into old bottles
In turbulent markets and facing tough competition, it is a truism that the best marketing strategies require change to make them happen. Significant changes in targeting and positioning, messages and channels are all typical outcomes of a robust strategic marketing planning process. Bitter experience has taught the best companies that such change is rarely implemented by the same structure and processes that had habituated the old strategy. Yet the typical marketing excellence programme forgets this lesson. Having paid detailed attention to creating the strategic marketing plan, it fails to anticipate barriers to implementation or to pre-empt those barriers by designing new structures and processes that fit the new strategy. The few exemplary companies that place as much emphasis on implementation as they do on planning ask themselves “What’s new in the strategy, so what needs to be new to make it happen?”4Sin 5: Looking under the lamppost
No serious marketing excellence programme fails to mention metrics and key performance indicators. But here, again, the industry obsession with hard data leads us astray. Because we can easily measure some things, like sales or call rates, we measure those things rather than what our strategy implies we need to measure. Many metrics dashboards are therefore reminiscent of the drunk looking for his keys at the foot of a streetlamp, not because he dropped them there but because that’s where the light is. As a result, our metrics tell us only what has already happened and don’t enable corrective action. More thoughtful approaches work backwards from the strategy, using a process known as benefits dependency network. This allows the development of metrics that are both forward looking and proximate, meaning they tell us not just what has gone wrong but how to fix it. In this respect, as in many others, the typical marketing excellence programme is overly simplistic and ignores recent research.5Sin 6: Failing to learn
Almost every marketing plan stands on the shoulders of its predecessors. As a result, the quality of what is learnt from previous success or failure becomes a critical input into each new plan. To recognize this, good marketing excellence programmes contain an organizational learning stage. To the very limited extent that this is done in most firms, it usually consists of simplistic reviews of what worked and what didn’t, with all the difficulty of deducing lessons from that confused picture. The most advanced programmes go a step further by incorporating “double loop” learning. The critical difference lies in explicating the assumptions upon which the last plan was built, testing them in the light of new information and using the new, improved, assumptions in the next round of planning. This doesn’t work retrospectively; only when organizational learning is embedded into the marketing excellence process.6Sin 7: Slaves to a defunct theory
As John Maynard Keynes said of other economists, many marketing excellence programmes are slaves to defunct theory. That is not to say that theory is useless; much excellent management research is of direct and practical use in the real world. But the intellectual roots of many marketing excellence programmes are often shallow and lie not in the rich soil of management science but in the distorted, abused and sloppy concepts of simplistic management fads. This is perhaps the most difficult sin to overcome, since it requires practical executives to get to grips with academic science. But that is only what we’ve expected of and got from our scientific colleagues in R&D for many years In par and isn’t beyond the capabilities of good marketers. In particular, the best marketing excellence programmes synthesize accurate understanding of well-established marketing theory with newer ideas about organizational behaviour and competitive advantage.7
The recent blooming of a thousand marketing excellence programmes in the pharmaceutical industry has been one of the most noticeable trends in our industry, but it has not been surprising. The same phenomenon has been observed in other sectors, from consumer goods to cars, from IT to financial services, as technical innovation became a more difficult route to differentiation. Less anticipated has been the difficulty our sector has had in extracting value from marketing excellence. My research reveals that the reasons for this lie mostly in our industry culture which assumes that a social science-based discipline like marketing can be managed in the same way as we manage natural science disciplines. This is a mistaken assumption, as summarized in the seven sins described in this article, and can damage businesses just as early theologians thought gluttony, sloth, pride and other sins threatened eternal damnation. But the analogy has an up-side too. Contrite companies who learn how to execute marketing excellence without making these mistakes can and do create distinct and defensible competitive advantage.
1. Brian Smith and Paul Raspin, Creating Market Insight (Wiley 2008).
2. Brian Smith, Making Marketing Happen (Elsevier 2005).
3. Malcolm McDonald, Brian Smith and Keith Ward, Marketing Due Diligence (Elsevier 2005).
4. Brian Smith, “Maybe I Will, Maybe I Won’t: What the Connected Perspectives of Motivation Theory and Organisational Commitment May Contribute to Our Understanding of Strategy Implementation,” Journal of Strategic Marketing, 2009 17(6); 469-815.
5. Keith Ward and Brian Smith, Sat Nat Systems, 20076.
6. Donald Schön, The Reflective Practitioner (Perseus 1999).
7. Shelby D. Hunt, Fundamentals of Marketing Theory (Sharpe 2002).
PDFs of items 1,2,3,4 and 5 are available on request from the author at email@example.com