driving the marketing agenda:

CEOs and CMOs share the same vision but how do they make it a reality?

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49683_Summary 11/17/06 3:19 AM Page 2

Never has there been more pressure on companies to grow revenues and profits.

But instead of the golden age of marketing one might expect, a recent survey of

chief marketing officers uncovered a series of pressing issues that marketers feel

are critical to overcome. First the good news: CEOs and CMOs agree that the

formula for success involves leading innovation, improving marketings alignment

with the rest of the organization, improving alignment with the business strategy

and marketing execution. Now the bad news: Both CEOs and CMOs agree that

marketing is not as effective as it can be. The turnover rate for CMOs remains at

an all-time high and organic growth seems elusive.

A 2006 Spencer Stuart survey of senior-level marketers asked why, regardless of

this shared vision between the CEO and the CMO, there is a continued disconnect

between marketing and the rest of the enterprise. What we found was a discrepan-

cy between how well-connected CMOs view the marketing function versus the real-

ity. And while the majority of CMOs cite external factors as the main obstacles to

connecting marketing, they readily admit to lacking the skills and competencies

strategic adviser, change agent, a better business understanding necessary to

earn credibility with the CEO and other senior-level executives.

49683_Summary 11/17/06 3:19 AM Page 3

1

To further explore this important topic, the fourth annual Spencer Stuart CMO

Summit examined how high-performance companies have successfully shifted the

CMOs role from purely driving marketing initiatives to driving marketing

throughout the enterprise. Hosted by Spencer Stuart, Advertising Age magazine

and the American Marketing Association, this years summit invited the following

executives to discuss how they made their shared vision of marketing a reality for

their organizations:

michele buck, senior vice president and CMO of the U.S. Commercial Group for The Hershey Company

john fleming, executive vice president and CMO of Wal-Mart Stores

debra kelly-ennis, CMO of Diageo North America

rick lenny, chairman, president and CEO of The Hershey Company

david reibstein, the William Stuart Woodside Professor of Marketing at the Wharton School and co-founder and managing director of CMO Partners, moderated the

afternoons discussion.

49683_Summary 11/17/06 3:19 AM Page 4

2

Who is responsible?

How much of the responsibility for marketing falls on the shoulders of the CMO and how much on

those of the CEO? The panelists unanimously agreed that CMOs ultimately are responsible for suc-

cessfully driving marketing throughout the organization. However, this does not excuse the CEO

from being a visible supporter.

Rick Lenny, chairman, president and chief executive officer of The Hershey Company and a former

marketing executive, said: Until the CEO is a strong advocate for marketing and sees it as a source of

competitive advantage, marketing will never have a seat at the table. Moreover, the CEO cant invite

the CMO to the table then pull the chair out from under him or her.

One of the biggest challenges to getting CEO support is the top executives perceived positioning of

marketing. CEOs often tend to view marketing as a series of activities; rather, he or she needs to look

at marketing as an end-to-end way of helping the company win. With this mindset, CEOs are equipped

to make the necessary strategic decisions.

First, CEOs need to think carefully about who they choose for the role of CMO, said Lenny. Does

this person give marketing instant credibility or does he or she create a doubt in the minds of the

organization? Second, to whom does the position report? What are the resources and accountabilities

that are provided to this individual? Then, what are the critical success factors that will truly determine

how successful marketing will be?

And while the CEOs support is critical, it is only the beginning.

I can tell our entire organization that marketing is the strategic

thought leader of the company, but marketing has to back it up by

delivering, said Lenny. It is the CMOs credibility with the CEO,

the organization and the marketing team that will enable him or

her to effectively drive marketing throughout the enterprise.

Until the CEO is a strong advocate for

marketing and sees it as a source of competitive

advantage, marketing will never have a seat

at the table. Rick Lenny

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3

Earning credibility

While the CEOs support is a critical component, marketings success rests with the CMO. Our pan-

elists spent a great deal of time discussing how marketing must go about earning credibility through-

out the organization and with the CEO.

Put the customer first

John Fleming, executive vice president and CMO of Wal-Mart Stores, said: At my first CMO confer-

ence, I was struck by how all the marketers in the room felt

that they either didnt have a seat at the table or that their

function was not respected within the organization. I thought

it was odd, as I was coming from a merchandising back-

ground and have always been a business driver. I think that

organizations that are truly focused on the customers

understand the importance of marketing as being the role

of the customer advocate.

Having spent his first 19 years in merchandising before

transitioning into marketing, Fleming brought a unique per-

spective to the discussion. As a mer-

chant, you think about the products but

not specific customers, he said. I

focused on products when I was a mer-

chant at Marshall Fields. Then, when I

went to walmart.com, I quickly couldnt

think about products any more because

online you get immediate feedback all

the time and you cant ignore your cus-

tomers. It is this background that gives me the credibility to go into Wal-Mart and put the customer

first in all decisions.

Demonstrate results

Marketers need to play a role in establishing the business strategy and the growth imperatives for the

company. Our moderator and the William Stuart Woodside Professor of Marketing at the Wharton

School, David Reibstein, asked if marketings lack of respect in the organization is related to its diffi-

culty in being seen as a growth driver and proving its value. For many outside of this room, market-

ing is viewed as an expense and our inability to demonstrate in financial terms the long-term value of

marketing is only making this worse, Reibstein said.

At my first CMO conference, I was struck by

how all the marketers in the room felt that they

either didnt have a seat at the table or that

their function was not respected within the

organization. John Fleming

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4

Debra Kelly-Ennis, CMO of Diageo North America, said: We

spend a lot of our time looking at the key growth drivers of our

businesses. What we find again and again is that first-rate

marketing and brand building is not viewed as an expense, but

rather as an imperative to future growth. We must invest in our

brands to drive growth.

I wish that some of our competitors viewed marketing as an

expense, but they dont. At Hershey, we look at marketing through

the lens of brand growth, market share gains, profitability mar-

gins, etc. If you take this thinking down a couple of

levels, it really drives home the critical role that

marketing plays in delivering profitability and build-

ing shareholder value. We need to be thinking

about what it is that were spending this year to

build for years to come, and thats a hard thing to

measure, said Lenny.

When spoken of as a spend, it is with the implication that marketing would drive results from that

spend, according to Fleming. But its not enough just to produce sales, its how customers think about

the experience, he added. Its about shifting and shining a light on the more important metrics, the

ones that ultimately gauge customer satisfaction and customer loyalty.

Michele Buck, senior vice president and CMO of the U.S. Commercial Group for The Hershey Company,

agreed: If you view marketing in strictly the functional sense, there tends to be this kind of squishy

halo that marketing is all about creativity. When you view it from a general management perspective,

marketing is what drives the marketplace and leads to revenue gains. You have to tie it to the metrics

that people can track so they can see and feel that youre driving the numbers and making an impact.

Bucks CEO, however, did not want to lose sight of an important point. Marketing is also about testing

ideas and thats where the mindset of expense is bad and cant be measured. It can, unfortunately,

become a point of friction in the company that CMOs and CEOs must manage, said Lenny.

Communicate the vision

Communication the ability to articulate the organizations vision for marketing is critical to over-

coming this type of friction.

When Buck first joined Hershey, she was charged with helping to transition the company from a confec-

tions portfolio to a broader player in the snack world. I had to lay out the case for why this strategic5

If the companys marketing vision is

communicated consistently from the top

down, then theres a good chance that

the organization will align behind it.

Michele Buck

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direction was important to the company this was how I built credibility for myself and for the

group. People needed to see where we were going and why, she said.

Buck further explained that communicating marketings agenda throughout the organization is not

dissimilar from change management. When looking at where to take the companys marketing

youre frequently looking at changing some existing procedures, strategies and capabilities which

is why marketers tend to be change agents. You have to find an equal balance between gaining inter-

nal alignment and then bringing your strategies and programs together to life externally with cus-

tomers and consumers, she said.

Think like a marketer, act like a merchant

According to Fleming, merchants and marketers can learn from

one another. Merchants traditionally hate being questioned and,

as a result, are quick decision makers. Marketers, on the other

hand, need to get comfortable making decisions based on 80 per-

cent of the data. The phrase Ive coined for my organization: We

need to think like marketers but act like merchants, he said.

Thats a huge change for marketers, who always want 99 percent

of the information. Putting the two together strategy and quick

reaction is the future for great retailers.

Marketers also need to know the ins and

the outs of the business, just as mer-

chants do. To build alignment and credi-

bility within the company, you have to

spend the time to really understand the

issues facing your functional colleagues particularly your sales and supply organizations. If you

dont do that, not only will you not understand what marketing needs to accomplish, but you also will

not be able to build strong relationships with and support from other functions, said Kelly-

Ennis.

Build an exceptional team

Successfully developing the next generation of marketing leaders is another key to marketings ability

to be seen as a credible business partner throughout the company, according to Kelly-Ennis.

Fleming said: For marketing to truly lead the organization and have it focus on the customer, I need-

ed people around me that had deep marketing skills outstanding marketers from the consumer

packaged goods space, manufacturing and so on. They bring a lot of discipline, which allows me to

lead the charge from a merchandising perspective.6

We must invest in our brands to drive growth.

Debra Kelly-Ennis

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The CEO connection

While it was agreed that CMOs are responsible for successfully integrating marketing throughout the

enterprise, all of the panelists concurred that the relationship between the CMO and the CEO was crit-

ical to making this a reality. Going beyond having the CEO be merely a figurehead supporter of mar-

keting, CMOs needed to make their strategic relationship with their CEO a priority.

When Kelly-Ennis joined Diageo, she built her relationship with the CEO by collaboratively working

with him on a vision for the North American brands and spending a lot of time talking through the

growth drivers of their brands. Our CEO brings a unique perspective on the challenges that were fac-

ing as we build our brands. Not only does he understand what my team does, but he is very support-

ive of the initiatives weve wanted to undertake and encourages us to build that broad cross-functional

support that is so critical to our success, she said.

Buck was in a similar situation when she joined Hershey. There are those CEOs who have deep mar-

keting backgrounds and some who dont. It would be foolish of me not to leverage some of Ricks vast

marketing insights and expertise. If the companys marketing vision is communicated consistently

from the top down, then theres a good chance that the organization will align behind it.

When asked what advice he would give a new CMO, Lenny said: If you want a seat at the table, you

have to ask for it. And, then once youre there, you have to know what to do with it. CEOs and CMOs

can help each other by clearly articulating the expectations of the role and the critical success factors.

Going forward

In addition to discussing how CMOs and CEOs need to work together to integrate the marketing

agenda, the panelists discussed how marketing is changing and how these changes are impacting

the skills required of todays marketers.

Changing marketing models

When I look back at when I started in marketing, it was much simpler because there was one form of

media through which you could really reach most of the population, said Buck. Today, theres the frag-

mentation of audiences and changing demographics, coupled with emerging media, that are difficult to

track. Managing this whole new mix and optimizing our spending is now at the heart of what we do.

Kelly-Ennis added: The effects of globalization can be felt everywhere the world is a smaller space.

We also are facing consumers who are looking for more opportunities to experience premium, everyday

luxuries. The combination of these two factors has changed how we go about speaking to consumers

and making them life-long advocates of our brands.

49683_Summary 11/17/06 3:19 AM Page 9

7

The changing needs of the customer also are impacting Wal-Marts marketing strategy. The con-

sumer is gaining more and more control and the Internet just took it to a whole other level. There

was a school of thought 20 years ago that you built the store in a way to get them through the whole

box to buy more stuff. That just doesnt happen any more. We can no longer push product; rather, we

have 130 million people in our stores every week and we have to figure out a way to give them what

they want. That fundamentally changes a lot of things, said Fleming.

Evolving marketing skills

We hear a lot of people talking about how marketing has changed. So, the next question begs, what

are the skills needed to manage this new reality? asked Reibstein.

According to the panelists, todays marketers need both a depth and breadth of skills. In the past,

CMOs came up purely through marketing. While marketing and sales experience is still crucial, compa-

nies are encouraging marketers to get a breadth of expertise, especially as it relates to innovation and

globalization. At Hershey, its no longer solely about depth, but about breadth as well, said Buck.

Diageo developed a program for its marketing professionals that covers all aspects of marketing. It

supports our need for both functional mastery and cross-functional expertise, said Kelly-Ennis. We

refer to it as the Diageo way of brand building.

Fleming recalled when a friend asked him why 80 percent of new products still fail, especially when

you think of all the tools we have today versus 20 years ago. I told him that CMOs have to feel com-

fortable and committed to spending time with the customers and ask the question What does it take

to win in your store? rather than say Heres our new product, said Fleming. This involves possess-

ing a better understanding of customer marketing and spending time with the customer. Wal-Mart,

once known for being generalists in marketing, is now building specialized skills in the areas of cus-

tomer knowledge.

Lenny agreed that having both breadth and depth in the marketing function was critical. The chal-

lenge, he said, is that there still is a legacy mindset that causes people to avoid horizontal moves.

However, those are great opportunities to learn and grow while helping the organization. The way to

get there is putting your best people in different positions. For example, we have a small part of our

business outside of the U.S., yet were starting to populate the international group with people who

are strong leaders and perceived as being critical to Hersheys long-term success, said Lenny.

Capitalizing on global talent also is imperative at Diageo, where its marketing professionals get con-

stant direct exposure to the global marketplace. In North America, marketers are encouraged to

work in other countries and work with our global brand teams, said Kelly-Ennis.

49683_Summary 11/17/06 3:19 AM Page 10

8

Getting the right marketing talent

Reibstein concluded the afternoons discussion by stating that one of the most important enablers to the

success of marketing is its level of talent. He asked each panelist to describe how they develop and recruit

their marketing talent.

My No. 1 priority is building strong leadership capabilities and developing talent, said Kelly-Ennis. One

way we do this is by moving many of our high-performing people across the globe to other countries. As a

result, I have other parts of the world feeding into my talent pipeline and vice versa.

This development approach has reaped other benefits as well. At Diageo, weve seen a lot more diverse

thinking because there is significant interaction with global teams. Thats a great education tool to help

people in the U.S. understand the different behaviors, trends and taste preferences of other populations,

she said.

Hershey is focused on having the right balance of technical, gen-

eral management and personal leadership skills. Its not enough

to be smart, added Buck. You have to be able to mobilize the

organization to make things happen to drive results.

Wal-Mart, which has had a reputation for being internally focused,

needed to encourage more diversity of thought, according to

Fleming. About a third of my time is spent on talent acquisition

because its that important, he said.

And then another big portion of my time

is spent on talent development, taking the

people who I know are in the organization

and getting them in the right jobs. It was

a huge weight off my shoulders when I

figured that out four to five years ago.

Conclusion

While the support of the CEO is imperative to marketings success, the responsibility for integrating mar-

keting throughout the enterprise ultimately resides with the CMO. However, as both our panelists and

survey revealed, there are some best practices that CMOs should adopt and skills and competencies they

should develop in order to make their vision for marketing a reality.

CMOs have to look for those opportunities where they can make a difference and improve marketings

impact on the organization, said Lenny. They cant wait for the perfect opportunity. Marketers will have

to step up if they believe they deserve a seat at the table.9

We hear a lot of people talking about how

marketing has changed. So, the next question

begs, what are the skills needed to manage this

new reality? David Reibstein

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10

Spencer Stuart survey results

Survey results from nearly 300 senior-level marketing executives show that while CMOs and their

CEOs may share the same vision for marketing, respondents do not believe that CEOs are filtering

that support throughout the rest of the organization. As a result, the function is not seen as a strate-

gic adviser to the CEO and, worse, is not properly aligned with the rest of the organization, according

to the recent Spencer Stuart survey.

How CEOs rated

Approximately 85 percent of respondents said it was either extremely critical or very critical for

CEOs to communicate with marketing. However, only half found that happening.

When asked how critical it is for a CEO to hold his or her direct reports accountable for ensuring they

partner with marketing, 78 percent ranked it as extremely critical or very critical. But, again, less than

half of CEOs appear to be doing so, according to the marketing respondents.

And when asked how important it was for their CEO to project an image of cohesive CEO and CMO

relations, nearly 80 percent felt it was either extremely or very critical. However, just 19 percent said

that CEOs were excellent at this and only 33 percent rated CEOs as good.

Obstacles to connecting marketing

Despite the poor showing for CEOs, lack of support from upper management only ranked sixth out

of seven obstacles to connecting marketing throughout the organization which was surprising.

The top three responses were too few resources (56 percent); shortage of good talent in the market-

ing group (29 percent); and lack of trust and credibility with the rest of the organization (28 percent).

Main obstacles to connecting marketing

1 Too few resources

2 Shortage of good talent in the marketing group

3 Lack of trust and credibility with the rest of the organization

4 Inability to communicate a clear, consistent message to the entire organization

5 Lack of innovation in finding new ways to better connect marketing

6 Lack of support from upper management

7 Marketing does not have a clear strategy platform to convey to the rest of the organization

49683_Summary 11/17/06 3:19 AM Page 12

Marketings responsibility

The CMOs themselves, however, also bear some of the blame. Respondents listed strategic vision

(62 percent); the influence to build relationships throughout the organization (44 percent); the ability

to act as a strategic adviser to the CEO (34 percent); and exceptional communication skills (31 per-

cent) as the most important skills for a CMO. Yet, strategic adviser to the CEO was rated the skill

most lacking, with the ability to build relationships coming in fourth.

Ranking of top skills CMOs should possess

1 A strategic vision

2 Ability to build relationships throughout organization

3 Exceptional communication skills

4 Strategic adviser to CEO

5 Strong team player; collaboration

6 An innovator

7 Actively involved in upgrading level of marketing talent

8 Change agent

9 An understanding of business and financial management

...And the skills CMOs are most lacking

1 Strategic adviser to CEO

2 A strategic vision

3 Change agent

4 Ability to build relationships throughout organization

5 Actively involved in upgrading level of marketing talent

6 An understanding of business and financial management

7 Exceptional communication skills

8 An innovator

9 Strong team player; collaboration

11

49683_Summary 11/17/06 3:19 AM Page 13

About Spencer Stuart

Spencer Stuart is one of the worlds leading executive search consulting firms. Privately held since 1956, Spencer

Stuart applies its extensive knowledge of industries, functions and talent to advise select clients ranging from

major multinationals to emerging companies to nonprofit organizations and address their leadership require-

ments. Through 50 offices in more than 25 countries and a broad range of practice groups, Spencer Stuart con-

sultants focus on senior-level executive search, board director appointments, succession planning and in-depth

senior executive management assessments.

About the American Marketing Association

The American Marketing Association (AMA) is the largest marketing association in North America. It is a profes-

sional association for individuals and organizations involved in the practice, teaching and study of marketing

worldwide. It is also the source that marketers turn to every day for professional development, information and

networking. AMA members are connected to a network of experienced marketers nearly 40,000 strong and include

leading marketing professionals and academics from every industry. The AMA is information, ideas and insight

that marketers can use daily, along with the knowledge to help them grow in their careers. AMAs principal roles

are to advance marketing practice, be an advocate for marketing and act as an essential resource for marketing

information, education and training. For over six decades, the AMA has been the source that marketers turn to

first.

About Advertising Age

For 75 years, Advertising Age and The Ad Age Group have been on the cutting edge in delivering news and trends

on marketing, advertising and media, generating in excess of 1,400,000 weekly impressions among key industry

professionals through its numerous media properties. Always adapting to the evolving needs of its readers, The

Ad Age Group continues to raise the bar on how the industry and the most important trends are covered through

web sites, e-newsletters, blogs, podcasts and videos. The Ad Age Group properties include Advertising Age (print

and digital editions), Advertising Age Online (www.adage.com), Point, Creativity, Creativitys AdCritic (www.adcrit-

ic.com), Madison+Vine (www.madisonandvine.com), American Demographics, Ad Age China (china.adage.com),

e-newsletters, custom publishing and events.

* Photos courtesy of the American Marketing Association.

49683_Summary 11/17/06 10:29 PM Page 14

Amsterdam T 31 (0) 20.305.73.05F 31 (0) 20.305.73.50

AtlantaT 1.404.504.4400F 1.404.504.4401

Barcelona T 34.93.487.23.36 F 34.93.487.09.44

BeijingT 86.10.6505.1031 F 86.10.6505.1032

BogotaT 571.618.2488F 571.618.2317

BostonT 1.617.531.5731F 1.617.531.5732

BrusselsT 32.2.732.26.25 F 32.2.732.19.39

Budapest T 36.1.200.08.50 F 36.1.394.10.97

Buenos AiresT 54.11.4313.2233F 54.11.4313.2299

ChicagoT 1.312.822.0080 F 1.312.822.0116

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Silicon ValleyT 1.650.356.5500F 1.650.356.5501

SingaporeT 65.6586.1186F 65.6438.3136

StamfordT 1.203.324.6333 F 1.203.326.3737

StockholmT 46.8.534.801.50F 46.8.534.801.69

SydneyT 61.2.9247.4031 F 61.2.9251.3021

TokyoT 81.3.3238.8901F 81.3.3238.8902

TorontoT 1.416.361.0311 F 1.416.361.6118

Vienna T 43.1.36.88.700.0 F 43.1.36.88.777

WarsawT 48.22.620.80.87F 48.22.620.81.87

Washington, D.C.T 1.202.639.8111F 1.202.639.8222

ZurichT 41.44.257.17.17 F 41.44.257.17.18

2006 Spencer Stuart. All rights reserved. For information about copying, distributing and displaying this work, contact permissions@spencerstuart.com.

49683_Summary 11/17/06 3:19 AM Page 15

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