Insight

‘I would put their location next to each other in the company and urge the CMO to say to the CFO: "Can we go to lunch, once a week? I want to tell you what’s happening. I want to tell you how I’m spending your money. I want to tell you what the metrics are that I’m using. I want you to criticise the metrics and I want you to work with me on the metrics that would satisfy you." And then if that happens it will be the CFO probably who becomes the advocate of the money that is spent on marketing – because he/she helped design the metrics. If they don’t talk to each other it’s fatal.

Then, at board level, executives deal with profit and loss accounts but they often don’t get a good handle on marketing spend, so it’s difficult to see whether marketing is working. A board should prepare not only a financial scorecard for their meeting, but also a marketing scorecard.

A marketing scorecard is more predictive of your future than a financial scorecard, which is really history. In the marketing scorecard I’d like to know how many new customers have we gained, how many customers have we lost, what is the quality of the customers that we are gaining and losing. What are the ROIs on marketing campaigns? What is our brand equity – is it growing, flat or declining? What are our interest, preference and the awareness levels? I’d also like a measure of our customer equity which is customer lifetime value – a measure of whether that is growing. Do we have a stronger group of customers that lasts longer or is it weakening?

Andy Grove, who ran Intel, once complained at a board meeting: "Gentlemen, for two hours we have been talking about the financial numbers, none of you have asked me whether our customers are happy. Let’s talk about what is happening to those that buy our chips."

This is probably even more important in these turbulent times. Turbulence itself is a condition where change is accelerating and surprises are occurring more often – pleasant and unpleasant ones. A company has to move with these changes. One step to take is to assess more accurately what is actually happening to customers, suppliers and employees. That is an early warning system, something to catch the flavour of the change that is going on very rapidly now, although there are some things that you’ll never catch, like the Mumbai hostage crisis or maybe a competitor that goes crazy and cuts his price in half. So, while contingency planning is a step in the right direction, scenario planning is even more stimulating. People need to be in a mindset of what might happen and what will need to be done. If a environment of change has become the status quo then companies need to set up damage control systems so that they are not easily surprised.

Change is not always a bad thing though. If I was in geometry, I would have quit long ago – because for 2,000 years it would have been the same thing. In marketing though we haven’t become scientific enough and I’m hoping for some breakthroughs. Finding so much material, new case studies like a Starbucks or an iPhone, keeps me in a learning mode and I’m sure someone will eventually come and do some really new things in marketing. They could prove that I have been wrong all this time and I would accept that. I’m waiting for something better and, if I don’t get there myself but find it elsewhere, I'll be the first to renounce everything I’ve said so far.’

For more information on the Leaders in London event visit: www.leadersinlondon.com