The CMO’s role in defining strategy has been saved
The CMO’s role in defining strategy
Steve Goldbach, chief strategy officer at Deloitte, offers marketers advice on how they can help drive their organisation’s broader strategy.
CMOs increasingly make critical strategy decisions that go far beyond promotional campaigns and branding, helping to drive competitive differentiation, topline growth, and other business objectives. “The CMO sits at the heart of strategy at most organisations,” said Steve Goldbach, chief strategy officer at Deloitte, to a group of rising marketing executives in January.“The CMO is the guide to organisational growth.”
Marketers now have a wide array of tools to inform strategy choices, from behavioral data to consumer feedback on social media channels. However, Goldbach said, “One of the toughest challenges CMOs face is how to make sense of everything that is thrown at them.” They must also deal with disruptions in the marketplace, including new competitors and changing consumer preferences. “The fundamentals of strategy—carving out a position relative to the competition, delighting customers, investing to grow—haven’t changed. But the specific choices CMOs make in strategy probably need to change.”
What Is Strategy?
Strategy is the sum of every choice an organisation makes to win in the marketplace with its target customers, Goldbach said. “It is what organisations actually do—not just what they say they are going to do.” He presented five essential questions that define strategy—the “strategy choice cascade” developed by Roger Martin, co-author of “Playing to Win.”¹ They are:
What is our winning aspiration? Answering this question defines the organisation’s broader objective. A good objective is typically market-facing and centers on a company being the best at delivering a product or service.
Where will we play? It’s important for an organisation to map its playing field—including customer segments, product categories, geographies, and other aspects of the business landscape.
How will we win? Why will customers choose an organisation over its competitors? How does the company make money consistently over time?
What capabilities must we have? Which critical activities will make a difference in delivering an organisation’s where-to-play and how-to-win choices?
What management systems do we need? What structures, systems, and measures are needed to support an organisation’s choices?
How to Make Strategic Choices
So how can CMOs affect their organisations’ strategies? Goldbach said it is critical to make the choices together and to support the where-to-play and how-to-win choices by investments in the capabilities and design of management systems. In the absence of these investments, organisations may find themselves developing good theoretical strategies that do not deliver in the real world. Smart CMOs work across different parts of the organisation to fortify the connection between choices and target customer needs.
“Many organisations fail to make real choices about where not to play and define customer targets too broadly,” Goldbach said. If the customer target is defined too broadly, companies risk losing out to competitors who are willing to do what it takes to win against a more tightly defined set of customers. To make effective strategy choices, marketers can consider the following tactics:
Don’t let “industry” define the competition. “‘Industry’ is a potentially dangerous word in strategy,” Goldbach said. Typically, when organisations focus solely on traditional industry competitors, they miss adjacent competitors targeting their customers with dramatically better value propositions. For example, a low-cost airline may fail to consider bus and rail companies as direct competitors. A more effective way to define competition is “any company making a similar where-to-play/how-to-win choice,” Goldbach said. This framework forces marketers and organisations to define the battle for customers’ wallets more holistically.
Prototype and test new marketing techniques. Marketers have a wealth of data and marketing tools to help them understand customer needs, attitudes, and behaviors. However, Goldbach said, “Waiting until these tools are fully proven guarantees the organisation will play from behind; if the tools are also available to the competition, they won’t be an advantage.” Therefore, it’s important to prototype and test new marketing tools and techniques. “This makes it more likely organisations will have a unique offering their competitors don’t.”
Measure what matters. Often companies make the mistake of accepting the world of data as it is given to them, Goldbach said. Instead, consider measures of success that are highly specific to where-to-play and how-to-win choices. For instance, instead of measuring overall industry share, organisations can measure share within a target customer segment. Goldbach cautioned that a wealth of data can be a double-edged sword. While data allows marketers to obtain specific, on-demand insights into how customers are behaving at a given point in time, in a rapidly changing world, data about the past is less likely to help inform the future. Effective CMOs will know when to follow the data and when to disregard it to create new and innovative strategies.
As new technologies, competitors, and business models continue to change customer preferences and behaviors, it will become even more important for organisations to differentiate themselves with well-defined strategies. By making clear choices, investing in systems and capabilities, and experimenting with new marketing techniques, CMOs can help their organisations grow and win.
—by Steve Goldbach, chief strategy officer at Deloitte.
1. Roger Martin developed the “Strategy Choice Cascade” while previously serving as co-CEO of Monitor Group, now Monitor Deloitte.