Marketing is facing its first real existential crisis, as pressure builds on CMOs to achieve what many are referring to as "the same impact for 60% of the dollars." That's why now's the time for CMOs to adopt and apply to their marketing operations the 7-S Framework, an analytical tool that's been successfully used by hundreds of corporations.
Developed for organizations by McKinsey consultants in the early 1980s, the framework represented a new way of thinking about organizational effectiveness, focused not on structure but on coordination. The concept was simple: Change one of seven interrelated levers, and you must change them all.
CMOs today have remarkable opportunities to engage consumers in a two-way relationship. To do so requires recalibrating their entire marketing operation, from departments to brands to agency partners. Leveraging the principles of the 7-S Framework can help CMOs standardize the process' success and efficiency.
Here's an overview of the seven levers and the ways in which CMOs should apply the framework to improve their own operations.
1. Shared values. The interconnecting center of McKinsey's model, this is where the other six levers come together. Today's consumers admire brands that enable them to participate. So CMOs must adopt narrative-based brand and marketing strategies that can engage consumers, creating brands that are more magnanimous, malleable and functional. Product Red's unique approach reinvented the business of philanthropy by creating reciprocity with the customer while simultaneously demonstrating that its partner brands promote the cause and concomitantly make money by doing good. That takes coordination of all seven levers.
2. Strategy. CMOs are seeking new ways to get and keep customers. According to Verse Group and Jupiter research, more than 60% of CMOs surveyed said traditional advertising and brand positioning are not as effective for attracting customers. So CMOs are looking to improve CPM. Case in point: Reckitt Benckiser's decision to boost TV advertising effectiveness by ramping up online video spend with the likes of Hulu; industry pundits believe online media could be up to $43 billion by 2013. Multiplatform marketing doesn't mean TV is dead, just the "traditional" part. In August, Canoe Ventures will open up two-thirds of American homes with its CAAS system and create a new frontier for hypertargeted "addressable media," a boon for advertisers.
3. Structure. For the CMO, what matters is the structure of agency relationships. Consolidation is king, as evidenced by Dell's worthy but flawed attempt to consolidate 800 agencies into Enfatico. While it's critical to consolidate cost, you can't consolidate creativity. The fix: P&G's "Brand Agency Leader" value-based compensation model, where one agency is responsible for all the other partners, including payments, budgets and hires. The seven variables are crucial for this model to succeed.
4. System. ROI is the system the CMO needs to perfect. To enhance the chief financial officer's view of marketing's value, CMOs are leading the charge for change, as demonstrated by Coca-Cola Co.'s recent initiative to push for the adoption of value-based compensation models. The idea isn't new, but the need has gained momentum as CMOs hasten to cut costs and complain that current ROI tools are inadequate.
|ABOUT THE AUTHOR|
Dean Crutchfield is a brand consultant. He was senior VP-marketing at Wolff Olins from 2002 to 2008. Previously, he worked at brand businesses including Landor, Michael Peters and Luxon Carra.
5. Staff. The CMO is the key to a successful staffing strategy as he or she decides how to build the brand across multiple channels and the people required. Understanding the variables of the 7-S Framework is essential as pressure mounts to reduce headcount but retain the best people for the task at hand. "The Vitality Curve" is one of the best tools for doing so. It prioritizes the top 20% for special treatment, 70% for training and the bottom 10% for firing.
6. Style/Culture. For the CMO, it's the style of marketing communication that can optimize the changing relationship between brand and consumer. Today marketers can hold entirely different conversations with the consumer by shaping brands that enable people to participate. It used to be the 4Ps (price, product, place, promotion); now it's the 4Cs: content, community, commerce and consumers. To tap these, the full force of marketing is awesomely powerful, but there are caveats if you neglect certain levers. PepsiCo Americas CEO Massimo d'Amore's vainglorious attempt to revitalize seven brands simultaneously to save costs, consolidate agency partners and bring a cohesive approach to the brands backfired, costing millions. While big results require big ambitions, appetites need to be separated from requirements (seven of them).
7. Skill. For marketers it's about how to generate more "earned media" from budgets and how brand narratives, non-traditional media and innovation will play a central role, but there's a skill gap between need and capability. Ultimately, with a shift in the world of brands and marketing, new skills are required as ever more complex programs are designed that integrate traditional and non-traditional media. P&G's "Build From Within" program tracks the performance of its star performers, known as Proctoids, via monthly and annual talent reviews. Evidently it's been successful.
The success of contrarian marketing strategies requires CMOs to table prevailing marketing theories and embrace experimentation. There are very few things in business that pay off by waiting. Now's the time for the CMO to leverage the 7-S Framework.