Wealth creation: the mandate of the marketer

Any firm that exists to take its products or services to the marketplace is, by definition, a marketing company. Unfortunately, this is still news to many executives and directors. 
 
Within the scope of governance, directors who are professional marketers contribute to the professional diversity of the board, adding value through expertise which is directly relevant to the board’s functions – advisory, monitoring, oversight and ratifying.

French economist Jean-Baptiste Say (1767- 1832) proposed it was the entrepreneur who directed resources to their most productive use, resulting in wealth creation. Jumping forward to Peter Drucker’s book, Management: Tasks, Responsibilities, Practices (1974), he proposed the concept that the entire organisation be market focused. 
 
A more recent definition of marketing is the four Ps: price, product, promotion and place (distribution). This concept may have impacted on the market orientation of the organisation to reduce marketing to a functional department, most often associated with promotional activities. Many people still hold this limited view.

Today, marketing is a highly sophisticated global industry which encompasses a range of commercial activities, including manufacturing, market research, packing design, digital communications, brand development, sales and e-commerce. Newer terms, such as supply chain (distribution and logistics) and value chain (pricing and value-add), are still just core marketing operations. 
 
The mandate of marketing is wealth creation, where all activities are implemented and ‘transcend the transactional’ to create both medium- and long-term strategies that maintain competitiveness and future income. At senior executive level, marketing is strategically focused. 
 
While the mandate of finance is to manage the firm’s income, they don’t create it, marketing does. It follows that if any organisation needs a chief of finance (CFO), it also needs a chief of marketing (CMO). 

Professional diversity is one way to add valuable expertise which can contribute both to the oversight of management proposals and performance, and to robust board discussions by presenting alternate views which may facilitate improved decision-making and better company outcomes. 

At board level, independent directors who are professional marketers add value to the board through their depth of knowledge and expertise in competitive strategy, which is crucial to the firm’s performance. The proposed strategy document may lay out a single- or multi-year overview of market initiatives. 
 
Reviewing and debating proposed competitive strategy relates directly to the board’s involvement with developing competitive strategy (in consultation with senior executives) and monitoring its implementation and market results. 
 
In sophisticated markets, strategies may need to be more ambitious, or more aggressive, especially in current economic conditions. The proposed strategy must address many complex factors, so a depth of knowledge is essential to analyse market forces, the drivers of competition and the creation of competitive advantages. 
 
A major independent study of New Zealand’s economy, completed in 1990 and named Upgrading New Zealand’s Competitive Advantage, noted “the economy has fallen out of alignment with the mandates of modern international competition” and “New Zealand’s institutions . . . have retarded progress . . . and company strategies still cling to past modes of behaviour”. The study’s findings are still relevant today. 

The project director and one of the authors, Graham Crocombe, questioned why New Zealand seemed unable to compete successfully in the global economy. He also noted New Zealand companies were administered rather than led, and proposed the following factors which reduce competitiveness: 

• • Administrators replacing company founders/builders and entrepreneurs – their focus becomes maintaining the status quo, losing competitive focus and competitive advantage to rivals 
  • Fewer new initiatives, reduced innovation and less risk-taking (slow death to any company) 
  • Reduction of rivalry – as above 
  • Focus on increasing the share of existing pie (market) rather than growing the pie 
  • Reduction of employee motivation 
  • Rewards becoming unrelated to performance (especially achieving the company’s market objectives)

If we accept most companies are marketing companies, then logically they need CEOs who are themselves highly competent professional marketers. 

Another way that marketing brings value to the board is to establish and ensure professional standards in executive leadership roles. In all the international markets where New Zealand trades and competes, we will be one of the smallest, with resources to match. 

To present an ‘A Team’ of marketers who can compete against the best in the world, we must have expert professional marketers throughout the organisation, including CEOs. 

Marketers can also contribute to a value-adding board by offering balance in terms of perspective. Many boards may be dominated by the financial concept of control and be top heavy with directors from finance and accounting. 

I once remarked to a friend, “. . . the career path for accountants leads all the way to the board, the career path for marketers leads all the way to the airport”. 

In finding a career path to the board, we should begin with recruiting CEOs who are professional marketers, best suited to leading our marketing organisations. More immediately, CMO roles can be established and filled by experts who can build and lead an ‘A Team’ of marketers who can compete and win. This depth of expert marketers could become a source of competitive advantage. 

CMOs will then become viable chief executives and prospective directors who are able to contribute on many value-adding boards. 

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Andrea Mullane MInstD is the founder and managing director of Moxy Marketing. She holds a Postgraduate Diploma in Business (Marketing) and a Master of Management degree, both from the University of Auckland. Her master’s thesis investigated marketing in governance – NZX10 firms.