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CMOs Moving Up the Ladder
July 16, 2008
Third generation CMOs are in training to become CEOs
By James R. Gregory
As early as 1997 we foresaw the creation of a new senior corporate officer, a CCO or "Chief Communications Officer," which eventually emerged as the CMO or "Chief Marketing Officer." It is now apparent that the next trend for CMOs is a move upstairs to inherit the position of Chief Executive Officer (CEO).
The reasons for this great change in the business noble class order are multi-faceted. One major influence, however, has been the flawed accounting practice that has long ignored the brand's asset capabilities and, consequently, locked marketing communications in a second tier rank within the corporate hierarchy.
If the CEO doesn't have a strong finger on the corporate brand pulse, chances are the board will demand to know why this asset is lying fallow. CEOs who dismiss their corporate brand as "fluff" will pay the price in terms of their own credibility, and if he refuses to modify his views, don't be surprised to see the CMO take his place. And why not? The CMO spot offers logical training for the CEO position.
CMO Credentials
Today's CMOs enjoy a panoramic corporate view and has a more valuable leadership training position than someone who has gained status through finance or other vertical silo structures. While you can hire CFOs and General Managers, true leaders must have a wider outlook, and most CMOs demonstrate that perspective.
If the CMO's job is analyzed objectively, the obvious correlations to the requirements of the CEO position become clear. CMOs are required to benchmark all business units market by market around the world, align the CEO's vision with the corporate culture and business processes, and consistently communicate this information to stakeholders. Further, they need to justify budgets based on sound accounting principles and to forecast ROI. And, they need to be sure 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 the ideal training for the CEO position, what could replace it?
CMO Generational Growth
First generation CMOs, whose tenure was generally brief, didn't understand their purpose in value creation and reporting. They were forced into a vaguely role that was created more out of a sense of fashion than practicality. Because it was the vogue for respectable CEOs to have CMOs, there was little rationale for these early CMO position. Without the established rules of engagement, the incumbency of such CMOs was only 23.2 months, according to a Spencer Stuart 2006 study.
While the present, second generation CMOs still don't fully understand how to account for the value of brands, they are learning. They are much savvier of the culture of the C-Suite and have a better perspective of what is required of their position.
The emerging third generation CMO, however, will fully embrace the impact of the brand on both revenue and reputation and will have responsibilities for all key communications, not just marketing communications. This means the role of investor relations role will become a dual responsibility with CMOs, being responsible for the tone and much of the message content. This third generation will represent the CEO's vision and hold key managers accountable for leveraging the brand at every touch-point and opportunity to create added value. Obviously, this third generation will be fully prepared to take over the helm as CEO.
Outstanding Obstacles
The present Achilles' heel of the CMO is a lack of experience in finance—the vital skill most needed to propel an ascension to higher levels of leadership. Most CMOs have risen through marketing or communications with 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 IR head present to an array of know-it-all analytical zealots who take great joy in stumping the corporate panel with obscure questions about financial performance. Any stumbling by a member of the corporate team produces a highly detrimental reflection on the CEO. Therefore, it is extremely important that would-be CEOs begin training in reading financials.
Five Reasons Why CMOs Are Becoming CEOs
1. They Grow the Invisible Brand. Traditional accounting standards are passé. New "fair value accounting" methods will put an emphasis of corporate growth on intangible assets. Such assets that used to be called goodwill are now understood to comprise the corporate brand, which is measurable, manageable, leverageable and valuable.
2. They Understand All Brand Facets. 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. They Have a Panoramic View. 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. This wider CMO perspective becomes part of the CMO's DNA. Very few leaders who come from other disciplines have such a panoramic perspective.
4. They Are Open-minded. 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. They Are Visionaries. 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, whereas many CEOs have difficulty expressing their point of view and, therefore, stifle the corporate value of their companies. The Boardroom will no longer tolerate CEOs who cannot communicate vision.
Sidebar: Establishing Trendsetters
Here are some examples of CMOs who have already made CEO. While the list is still short, surely this practice will become a trend.
• March 5, 2008: CMO Uli Becker was elevated to president and CEO of Reebok, replacing Paul Harrington who resigned in April after a 12-year stint with the company.
• February 12, 2008: Ian Rowden, former CMO of Wendy's, became the chairman and 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 (NYSE: GE). While Comstock has now returned as GE SVP & CMO, GE may be grooming Comstock for a top spot in the company.
James R. Gregory is founder and CEO of CoreBrand (www.CoreBrand.com).
Sales & Marketing Management Magazine
This article is brought to you by Sales & Marketing Management, the leading authority for executives in the sales and marketing field.
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