Posted: February 17, 2015
In the first part of this editorial series I highlighted the way that our technical capability is driving, not only new businesses, but the way in which businesses operate. Now I’m going to explore what this means for marketers and marketing
A few years ago a major international financial services groups hired me to answer the question “If we were building our business from scratch today, what would it look like?”. I assembled a team of specialists in disciplines from across the business sphere and a few months later delivered a blue-print for a tech-based financial services business that looked nothing like the business they had. They couldn’t put it into play of course, that wasn’t the intention, but just as Formula One cars drive the innovations that go into production cars, this organisation launched a number of products based on ideas included in the business model that the task force produced.
This was clearly a very enlightened thing for any business to do and something that I can recommend to any business. However, I can’t help thinking that had I given the product ideas to start-ups, we would probably, by now be seeing new financial services powerhouses that had grown out of these ideas.
Unless you’ve been living under a stone for the past five years, you’ll recognise our new technical capability is driving the birth of radically different kinds of businesses. In fact, whole new sectors are being created simply because there are things that we can do today that we couldn’t imagine doing only a few years ago.
For decades businesses have been keeping up, as best they could, by adding patches and adaptations to existing business models to enable them to gain some benefit from a few of these innovations, but as a result they’ve become inefficient and ungainly. Start-ups, on the other hand, unhindered by the structures and processes of an established business, can be put together in a way perfectly suited to their purpose. With no operational compromises new model businesses are simply more efficient and as we all know, the single biggest differentiator of successful and unsuccessful businesses is efficiency. This has introduced a new phenomenon, a surge of small new tech businesses acquiring larger, established competitors at bargain-basement prices, simply because the small businesses hold the key to the survival of the larger competitor and has all the bargaining power.
From the start the current paradigm shift played out amid a big game of musical chairs where there was more sales capacity than customers. The only realistic source of new customers for most businesses these days is (and has been for some time) your competitors’ customer base. This has caused the focus in many businesses to switch from the challenge of finding customers to that of holding onto them. Repeat sales or customer loyalty are more critical than ever to the success of any business.
This is where brands and branding come into play. A strong brand may well increase your operational efficiency by among other things ensuring that you are offering the products and services that consumers most want at the price they are prepared to pay for it, but it offers another equally important, more emotional and less tangible benefit. It’s the feeling of belonging that a strong brand gives customers. It is this, as much as anything else that will guarantee customer retention.
The combination of all these factors influences the shape of many businesses in many ways, but one of the most fundamental differences between the old and new business models is the that marketing is now central to any business.
Because marketing is about identifying and leveraging an organisation’s resources in order to deliver answers to consumer needs it falls to marketers to guide the actions of everyone in every department. This in turn places a burden on marketers that most are not equipped to handle. To even get to first base today’s marketer has to be sufficiently familiar with all the disciplines that make up a modern business to be able to influence them. The more they know and the more sensitive they are to the functions and limitations of each department the better they will be at their job. However, marketers also need the authority within the organisation and a platform from which to operate. I’m still surprised when I encounter quite sizeable organisations that still don’t even have a marketing seat in their boardroom. Apart from anything else, this demonstrates failure to understand how businesses now work. A failure, which, by all accounts, will probably prove fatal. Nevertheless, I can understand that a real marketing director’s role is tough to fill and we need to start developing marketers with a wider range of skills and broader perspective. Have no doubt about it, marketing is very much in the driving seat of most of today’s successful organisations. The question is who will sit in it?
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