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Now is the time for CMO’s

Now is the time for CMO’s.

Eric Kramer

Netherlands Country Manager

WPP

Eric.Kramer@wpp.com

Big news for the world population – and for CMOs, specifically – appeared on the front page of the Dutch Financial Times on August 19th 2019. The release of a new agreement, the Statement on the Purpose of a Corporation, was announced, and came signed by 181 U.S.-based CEOs, amongst them the heads of Amazon, Apple, Coca-Cola, General Motors, and Procter & Gamble; even corporate banking giant Goldman Sachs signed up.

In the statement, the CEOs committed to leading their companies for the benefit of all stakeholders – customers, employees, suppliers, communities, and shareholders. Before this, most all collective statements of this kind since 1997 had endorsed principles of shareholder primacy – in other words, that corporations existed principally to serve shareholders.

With the new statement, these major companies committed to five principles. First, delivering value to customers and leading the way in meeting or exceeding customer expectations. Next, investing in employees, which starts with compensating them fairly and providing important benefits, as well as supporting them through training and education that helps them develop new skills for a rapidly changing world. Third, dealing fairly and ethically with suppliers and serving them as good partners. Fourth, supporting and respecting the people in communities, and protecting the environment by embracing sustainable practices across businesses. And last but not least, generating long-term value for shareholders, who provide the capital that allows companies to invest, grow, and innovate.

The new statement was received with hope and cynicism across a wide spectrum of involved stakeholders. A group of more than 30 American business leaders, including the heads of outdoor clothing brand Patagonia, The Body Shop owner Natura, Ben & Jerry’s (a part of Unilever), and Danone’s U.S. business, took the extraordinary step buying a full-page ad in the Sunday New York Times to champion what they say is an even more ethical way of doing business and “putting planet before profits.” The advert was aimed at members of the earlier group of 181 CEOs.

We will just have to see over time whether the cynicism or hope will be right. However, now that these statements are out there, the momentum is right for CMOs to talk with their CEOs about a more balanced way of generating value, especially in the long term. The outcomes of the second annual BrandZ™ Netherlands report can be of great value in that discussion, as BrandZ™ is one of the strongest measures of the long-term value marketers can create.

While there are many great examples of value creation, many brands struggle with finding growth. Many of these brands are being disrupted or simply stuck in a no-growth business domain. And their marketers are under pressure to deliver quick short-term results.

The discussion of “shortism” has become increasingly prominent in recent years: many see that there’s been a loss of balance between long-term and short-term thinking, with a growing pressure to focus more on short term results. The issue is that for most brands, this short-term thinking doesn’t seem to lead to much financial value creation at all, let alone more balanced value creation. As a result, sustainable top-line growth is the number one issue on marketers’ minds. It’s time for a big reset for marketing. The time is right. The only question is: just how to do it?

Upon the opening of the WPP Campus on April 2nd of this year, we launched the outcome of the research done by the Initiative for Real Growth. Having interviewed CMOs and CEOs all over the globe (including a good number in the Netherlands) we now have available a benchmark of what the best-in-class brands are doing to drive sustainable, top-line growth. Mark Read, our WPP CEO, has warned that Chief Marketing Officers have become "too much" like Chief Communications Officers, because they have been focusing on communications and forgetting the importance of the wider marketing strategy. And that is where it starts: bringing the word “market” back into marketing.  It is very hard to find growth within current market definitions. Boundaries are disappearing, and breaking the rules and definitions of your industry now seems to be a requirement to find growth. Broadening horizons and approaching your market share in a different way – defining it differently – is what overperformers do.

The key word in “creating value” is “creating.” Yes, data-driven insights, smart strategic thinking, organizational strength, and a focus on delivering brilliant execution are all essential. However, if there is one thing that embodies “creating” more than anything, it is creativity. There’s no denying the strong positive relation between creativity and higher value creation when focused on the long term. And with 181 of the world’s largest companies focusing on delivering sustainable value for all stakeholders and on generating long-term value, creativity creates a massive opportunity for CMO’s to show what they are worth. Now is the time.