Now’s the Time for CMOs to Adopt the 7-S Framework
Dean Crutchfield article, June 1st 2009, Advertising Age
By Dean Crutchfield
The stretching of marketing boundaries is propelling brands to seek new and innovative approaches. We need what the Economist describes as “calibrated boldness”. Breakthrough marketing and innovation are borne when there’s a tension and pursuit of opportunity without regard to limited resources. When this happens, marketers are more open to rethinking the fundamental way we do marketing. It’s a gamble and in that poker game you need a stacked hand in your favor: a royal flush powered by McKinsey.
In the early 80’s the 7-S Framework was formed by authors Tom Peters, Robert Waterman, Richard Pascale and Anthony Athos and was later adopted by McKinsey as one of its core tools. The premise of the framework was aimed at corporations and can be adopted by marketing operations. The framework describes 7 factors that holistically determine how a corporation operates; if you change one, it affects the other six:
Shared values are what the organization stands for
Strategy is the allocation of resources across the enterprise
Structure is how the organization’s units relate to each other
Systems are procedures, processes and routines
Staff relates to the numbers and types of personnel
Style is about the culture of the organization
Skills are about personnel and the organization overall
This interdependent framework is a powerful tool for the CMO:
Shared values with the customer
What is the brand’s value transfer to the customer? Today’s consumer admires brands that enable them to become involved; it’s much more of a reciprocal relationship. The changing relationship between producer and consumer has become blurred and we must shape brands that engage and enable people to participate.
Brands need to embrace more freedom and relinquish some power and control to the consumer by adopting narrative based brand and marketing strategies that can impact multiple platforms to engage consumers: creating brands that are more magnanimous, malleable and functional.
Strategy for customer acquisition
What makes a brand great fades with age and the credit strapped, over extended, saving short US shopper has retrenched requiring an entirely different marketing approach.
The language of the new consumer is changing. It’s all about precision (of message), flexibility (of relationship) and reciprocity (of value). In this new paradigm, media is shifting online from the $23.4B spent in ’08 to what some industry pundits believe could be up to $43.4B by 2013. It’s not that people are watching less television; according to Nielson the last quarter of 2008 was an all time record high! It’s just a question of how and where we’re consuming content.
Structure of the agency relationships
The invidious combination of marketing challenges, plethora of marketing personnel and the multitude of channels often create an unwieldy concoction of brand managers and agencies. Consolidation is King as is evidenced by Dell’s worthy attempt to reduce 800 agencies into Enfactico and PepsiCo attempting to consolidate into TBWA/ChiatDay and Arnell Group. While it’s critical to consolidate cost you cannot consolidate creativity.
Who should be the CMO’s lead agency partner? All too often we assume it’s the advertising agency, but in a recent survey by Verse Group and Jupiter research over 60% of the CMO’s and marketing managers surveyed said that traditional advertising and brand positioning are not as effective as they used to be for attracting customers. The problem defines the solution and the CMO needs a media agnostic partner.
Systems for ROI
Without non-financial goals your ship is rudderless: never has it been more important to improve the dialogue with finance. We know brands are businesses greatest assets by the rampant rise in the value of intangible assets. In 1982 the net tangible assets on the Balance Sheets of the companies comprising the S&P 500 accounted for nearly 90% of their value; by 2005 it was just over 20%. Therefore, to enhance the CFO’s cogitation about marketing’s value, we need tools and measurements that are more robust. Current methods of ROI using marketing-mix models that rely on econometric analysis have their drawbacks: working closer with the CFO will yield a better result, including how to incentivize and reward agency partners.
Style of marketing communications
The full force of marketing: advertising, branding, digital, direct marketing, innovation, media, mobile, public relations and retail are awesomely powerful. Which ones should be used by your brand depends on the brand ambition and what approach will deliver it in a compelling and engaging way that provides consumers a reason to participate.
Misconduct by big brand names and shifting consumer behavior has changed the perceived value exchange between brands and consumers. This has created many opportunities for brands to hold entirely different conversations with the consumer with new methods of approach that enable customers to better connect with the brand. It used to be the 4P’s (price, product, place, promotion) now it’s the 4C’s: content, community, commerce and consumers.
Staffing the marketing operation
Today, your people are understandably scared. Building trust that has clear meaning to your teams and agency partners requires delivering short-term actions that can take the CMO’s attitude deeper into the relationships.
To reduce headcount and retain the best people, the CMO needs to focus internally on the human aspects of the business. There are many sources of internal motivation. Brand experiences are personal, so organizations can’t dictate them, but they can optimize their control and flexibility. The CMO is the key to a successful staffing strategy as they set the example on how they’re going to build the business going forward and concomitantly build the culture? Probably the best tool for retaining stars and reducing head count is “The Vitality Curve” as it prioritizes the top 20% for special treatment, 70% for training and the bottom 10% for firing.
Skills required for brand next
CMO’s are demanding the same marketing performance for 60% of the dollar investment and finding the resources for growth is extremely arduous. Recent studies suggest that as marketers seek to generate more “earned media” from marketing budgets, brand narratives, non-traditional media and innovation will play a central role, but there’s a skill gap between need and capability.
The majority of CMO’s have difficulty managing their brand across multiple platforms. Having the wrong skills in the team is like having a loose fitting part flailing around in a machine: not only will the engine not run well, it could eat itself up. Ultimately, new skills are required both within the marketing operation and with agency partners as ever more complex marketing programs are designed that integrate traditional and non-traditional media.
Hard facts are stubborn, but what ought to be can be with the means to make it so. The success of contrarian marketing strategies requires CMO’s to vitiate prevailing marketing theories and the experts we respect and embrace experimentation. Finding the winning hand in this 7-S Framework makes a royal flush. There are very few things in business that pay off by waiting and the CMO needs to separate appetites from real requirements. This begs the question: what’s your growth strategy? As Mr. AG Lafley, P&G’s CEO would tell you, “When times are tough, you build share.”