CEOs' Heirs Apparent? Clearly, CMOs

Handle the Brand, and You Can Handle the Top Post

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James R. Gregory
James R. Gregory
In one of my earliest books, "Leveraging the Corporate Brand," I predicted the creation of "a new kind of senior officer, a CCO or chief communications officer," which inevitably gave way to the title chief marketing officer. I am now predicting a trend that will see the CMO inheriting the CEO post.

One major influence has been the flawed accounting practice that ignored brands' asset capabilities and held marketing communications in its grip of second-tier rank within the corporate hierarchy. Branding is now accountable because it no doubt contributes significantly to company value. CEOs and chief financial officers are now recognizing brand value as an asset that can be managed for growth.

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THEY GOT IT: Reebok's Uli Becker, Saatchi's Ian Rowden and GE's Beth Comstock are examples of CMOs who have made the move to CEO.

The bean counters are finally getting it too. The Financial Accounting Standards Board is beginning to understand that "fair value" accounting for the brand is the only way to accurately report the one asset in the company that has the ability to grow in value, while all other assets only depreciate.

Consequently, boards of directors are now demanding management report the statuses and values of their corporate brands. With the momentous changes taking place in the corporate world, it's no wonder boards are asking for continuous reporting on this significant asset.

If the CEO doesn't have a strong finger on the corporate brand, chances are the board will demand to know why this asset is lying fallow. How can a CEO effectively manage a corporation without using all available assets? CEOs who dismiss the corporate brand as fluff will pay the price in terms of their own credibility with the board, and if they refuse to modify their views, don't be surprised to see CMOs taking their places.

CEO-in-training
I believe the CMO spot offers logical training for the CEO position. A CMO has a panoramic point of view and, thus, has a more important and valuable leadership-training position than someone who has gained status and power through finance or through other vertical silos within a company. While you can hire CFOs and general managers, a true leader must have a wider outlook, and most CMOs instinctively have that perspective.

Objectively analyze the CMO's job, and obvious correlations to the CEO-job requirements become quite clear. CMOs are required to benchmark all business units market by market around the world, align the CEO's vision with company culture and business processes, and consistently communicate this information to all stakeholders. They need to project and justify budgets based on sound principles and to forecast return on investment. And they need to be sure all these activities contribute to the positive financial performance of the company, which includes increasing revenue and contributing in a measurable way to stock-market performance. If this isn't ideal training for the CEO position, I don't know is.

Below are some examples of CMOs who have already made the move to CEO:
  • CMO Uli Becker was named president-CEO of Reebok, replacing Paul Harrington, who resigned after a 12-year stint with the company.
  • Ian Rowden, former CMO of Wendy's, became the chairman-CEO of Saatchi & Saatchi's Asia-Pacific region.
  • Patrick Gibbons, CEO at Country Style Food Services, was former CMO at Burger King Canada.
  • Robert Bruce, former head of marketing of Rogers Wireless, became its president.
  • Alex Krstajic, former CMO at Bell Mobility, became its president.
Interestingly, Beth Comstock, the former CMO of GE, became president of integrated media for NBC Universal. While Comstock has returned as GE senior VP-CMO, I believe GE is grooming Beth for a top spot in the company.

So why didn't it happen sooner? The first generation of CMOs, whose tenure was brief, didn't understand their purpose in value creation and reporting. They were forced into a vaguely defined role that was created more out of a sense of fashion than practicality. Without the established rules of engagement, the incumbency of early CMOs, according to a 2006 Spencer Stuart study, was only 23.2 months.

ABOUT THE AUTHOR
James R. Gregory is founder-CEO of CoreBrand. He has written four books on creating value with brand, including 'The Best of Branding.'
While the present second generation of CMOs still doesn't fully understand how to account for brands' value, they are slowly learning. They are much savvier about

C-suite culture and have a better perspective on what is required of their position.

Financial experience
The third-generation CMO, however, will fully embrace the impact of the brand on both the revenue and the reputation sides of finance and will have responsibilities for all communications, not just marketing communications. This means the investor-relations role will become a dual responsibility, with CMOs responsible for the tone and much of the content of the message. This third generation will represent the CEO's vision throughout the company and hold key managers accountable for leveraging the brand at every touchpoint and identifying where and why it is creating value. Obviously, this third generation will be fully prepared to take over the helm as CEOs.

The present Achilles' heel of CMOs is the lack of experience in finance, and, without a doubt, the lack of this vital skill is the biggest obstacle to their ascension to higher levels of leadership. Most CMOs have risen through marketing or communications, where there is little need for strong experience in finance or accounting except during interactions with CFOs at budget time.

When a CEO attends a financial analysts' meeting, the CEO, CFO and the investor-relations head are usually presenting to an array of know-it-all analytical zealots. These jackals find great joy in stumping the corporate panel with obscure questions about the company's financial performance.

That's why it's extremely important for all would-be CEOs to begin regular training in reading financials. If you are the CEO in the boardroom and someone asks about the current ratio or anticipated cash flow next quarter, you'd better darn well have a good handle on any requested information. Even if your CFO is sitting at your right, your credibility will be damaged if you don't have a complete knowledge of the terms and the answers.

Getting this education is an easy fix, given the prestigious schools offering finance and accounting programs for nonfinancial execs. Gain this experience and guarantee your successful transition to CEO.

Five reasons why CMOs will move into the corner office

1. TRADITIONAL ACCOUNTING STANDARDS ARE PASSÉ.

New "fair-value" accounting methods will emphasize corporate growth on intangible assets. Assets that used to be called goodwill are now understood to compose the corporate brand.

2. CMOS ARE RESPONSIBLE FOR MANAGING BOTH PRODUCT BRANDS AND THE CORPORATE BRAND.

Understanding both sides of this dual, value-creating equation provides a unique opportunity to harness the power of the money machine called the corporation.

3. IN THEIR ROLE, CMOS GAIN A WIDER POINT OF VIEW OF THE CORPORATION

than executives who are in the traditional management tracks to the CEO position. Very few leaders who come from other disciplines have such a panoramic perspective.

4. CMOS HAVE INQUIRING MINDS AND ARE WILLING TO TRY NEW THINGS THAT WILL ENHANCE THE BUSINESS.

They also understand how to limit risk by testing marketing before larger bets are made. There will be fewer bet the company gambles with a CMO at the helm.

5. BOARDS ARE NOW MORE INTERESTED AND RESPONSIBLE FOR EXAMINING THE WHOLE CORPORATE PANORAMA,

so they need a CEO who can paint the vision of the future and describe how all the parts are functioning for the good of the whole. CMOs are well trained to articulate a vision.
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