This article was first published in Cambridge Marketing Review in Summer 2011
There were times, the last 50 years to be precise, when we all thought we knew the name of the game, how to play it to win and, well, which way was up. Now we have all been dumped into what we are comforted to know is a ‘Recession’ and are patiently waiting for the uncertainty to pass and then the levers that we know how to pull to start working again!
I hate to be the bearer of bad news but these patient organisations are probably reducing their chances of survival with every week they wait. If you believe (as I do) that this is not a Recession but a change in the Economic cycle identified by Nikolai Kondratiev (1892-1938) then the ‘good times’ are unlikely to make a return much before 2030. Now, what does this mean for ‘marketing’?
The last 50 years has been typified by what Kondratiev termed the economic Summer and Autumn seasons, we are now in the Winter period. During summer and autumn periods (roughly 1960-2008 in our case) everything grows and it is really quite difficult not to make money, in such bountiful times, marketing only has to worry about communications to have an impact and can happily abdicate responsibility for product, price and distribution. Now that things have changed, we are obviously left wondering whether marketing departments will be able to rise to the challenge – in fact, research from the London Business School showed that a majority of CEOs recognised that the changing business environment required significant changes in their organisations; they recognised that these changes should be driven by their marketing people; unfortunately they also considered their marketing people unequal to the challenge.
We all know what marketing was meant to cover, it was laid out in Levitt’s iconic article of 1960, “Marketing Myopia” and later stylised into the marketing mix of P’s (first 4, then 7 now 11!). Originally, marketing was intended to be an integrative function, helping everyone else in the organisation better align their efforts with the needs of the external market – a subject where marketers were expected to be expert. All those Ps to mix and manage and what happened? The single P of promotion seemed to dominate all the thinking; in marketing departments, business schools and institutes alike. Product, pricing and distribution decisions are now controlled by other functions in the organisation. Functions with an internal view of the world rather than a market view, and we all know the consequences – reasonable long-term returns (or spectacular short-term returns) all the time the market seemed easily predictable and easily pleased. Things have changed.
The easy times are gone and it is now time for REAL marketing to take the lead; if it can. Einstein said “The world that we have made as a result of the level of thinking that we have done so far creates problems that we cannot solve at the same level as they were created.” Most of our problems have been caused by management’s obsession with internal issues, today’s challenges will only be met by solutions found outside the organisation. If (and it is not easy) you are able to take the first step and abandon yesterday, then you will start to see the nature of the business environment that we face. The key characteristics of today’s environment are:
- Change: Is a constant, not a temporary or unusual situation. Like it or not, customers and their lives continue to evolve and so do their needs and wants. Recent research has shown that the current change in customer demand started in the early 2000s, and was not a direct result of the financial collapse
- Unpredictability: Is another constant. Control, predictability and planning are mere illusions that inward looking business functions believe ‘ought’ to be possible. According to Henry Mintzberg, “Setting oneself on a predetermined course in unknown waters is the perfect way to sail straight into an iceberg.”
- Tools: Since the vast majority of the management and marketing tools we have learned to use were created in the times of plenty and growth they are simply irrelevant to today’s circumstances – no matter how well you implement them
- Organisation: The present dominant organisational form remains only slightly modified since the Roman Legions and is probably past its sell-by date – if it cannot deliver the value that the market demands (and most cannot) then will cease to exist. Much of the ossification of organisations and their structures is due to management which seems intent on clinging to the outdated ‘hierarchical command and control’ reminiscent of its military origins.
- Metrics: In times (normal) change and unpredictability the question ‘How are we doing?’ tends to be asked more frequently. Unsurprisingly, the answer “This was our profit 18 months ago” fails to delight. The trailing indicators of the past 50 years need to give way to new forms of leading indicators, that can inform managers about what investment decisions to take now
Lastly, if marketing is really responsible for creating the cash flow of the organisation, then it’s time to start behaving like a serious force in the business – its time to look outside our self-made communications bunker and see the implications of external change on the rest of the organisation and take some responsibility for helping others to adapt to the new business reality. Darwin said that “It is not the strongest of the species that prospers, nor the most intelligent, but the one most adaptable to change” Recent research is suggesting strongly that, by the end of this decade, some of our biggest, strongest and most intelligent organisations are unlikely to exist, at least in their present forms. Why is that? Because adaptability is not taught in business schools, because adaptability is not a ‘model’ offered by consultants, because adaptability is not a single-silo idea, it must be drive across the entire business, because the ‘Business Pioneers’ who promote it are seen as dangerous heretics by the status quo who have too much to lose from such counter-cultural ideas.
A recent survey of CEOs by IBM showed that the vast majority of those interviewed:
- Saw the rapidly changing environment as their biggest issue
- Knew that they had to change the organisation to meet the environmental requirements
- Did not know how to achieve this – there were no successful examples to follow.
Luckily not everybody has been cutting costs, blaming the sales force, restructuring blindly, rushing out as many new products as possible and reducing prices to try and compete with the Chinese. Soon the business Pioneers will be getting the support that they need to help focus the rest of their organisations on where all the money comes from – the Customer!
For those of you that can’t relate to the message of this article; keep focusing on digital marketing & social networking – the answer might be in there somewhere………….
– by Dr Paul Fifield. As published in Cambridge Marketing Review, Summer 2011