The CMO Survey Blog

Marketing in a Technology Company: GE’s Organizational Platform for Innovation

This post was co-authored with Anna Chavis and Jace Moreno, MBA students, Fuqua School of Business, Duke University.

At a recent roundtable discussion at Fortune’s Most Powerful Women Summit, Beth Comstock, the Chief Marketing Officer of GE, described how GE approaches marketing: “You have to create a platform that invites innovative ideas.” Unfortunately, we teach marketing and many companies approach marketing as if the organization does not exist. As a result, marketing often fails because it sits outside, or is layered on top, of the most important activities in companies. Marketing needs to be down in the trenches and marketing leadership needs to foster a culture of innovation that creates new products, new services, and new customers.

GE has written this approach into its DNA. In particular, GE’s culture ensures that technological innovation (the historical backbone of GE) and commercial innovation (managing with deep consideration of the customer’s needs and wants) are inextricably entwined. We interviewed Beth Comstock during her visit for the Distinguished Speaker Series at the Fuqua School of Business, Duke University. From this talk and from other press accounts, we derived four capabilities that constitute GE’s organizational platform for innovation. We discuss these capabilities and offer examples of the new products, services, and customers that have resulted.

Capability 1: Create Marketing Innovation Internally

A big feeder of GE’s marketing innovation is the ECLP—Experienced Commercial Leadership Program—GE’s first externally focused leadership program. ECLP began in 2002 as part of Jeff Immelt’s commitment to grow GE’s commercial pipeline and aims to position GE as the “gold standard in marketing.” The two-year post-MBA program develops a pipeline of future leaders and also teaches the company what good marketing is and how it has the potential to change traditional views of product development. The program is viewed as a mutual learning experience—the graduates bring an external perspective and unique talent to GE and program participants learn from GE’s R&D expertise. As Comstock noted, “Marketing must bring a different viewpoint to tough problems. This involves data analytics that produce customer insights and the ability to address customer needs in a creative manner.” She went on to point out that “The best marketers are the ones who have both the creativity and analytical skills in the right proportion.”

Capability 2: Integrate Collaboratively Within GE

There are two key illustrations of this capability—the Commercial Council and the Imagination Breakthrough Process.
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Innovation, Cash, and Courts: The New Reality of Tech Growth

This post was co-authored with Matthew P. Manary, Ph.D. Candidate, Fuqua School of Business, Duke University.

In addition to studying product-market strategies for company growth, I have also been asking CMOs how they use a set of “firm boundary” strategies to grow. In response to the question to “Allocate 100 points to reflect how your firm will grow during the next 12 months,” The CMO Survey™ (August-2012) reports that the majority (68.9%) of growth is expected to be organic or from within the firm’s own boundary, 12.9% from partnerships (ranging from alliances to joint ventures), 12.2% from acquisitions, and 6.1% from licensing arrangements. Organic growth gives the firm more control because growth activities happen within the firm boundaries. It does not go to the “market” for goods or services and therefore does not have to manage a partnership or licensing agreement. It also does not extend the firm’s boundary (sometimes called a “hierarchy”) to include a new firm which gives more control, but is also more expensive and may dilute the firm’s focus. At the same time, organic growth is potentially more costly because the firm must learn to do things that potential partners or acquisition targets have already mastered.

Results show that organic, partnership, and licensing growth activities have not changed significantly in the last four years of The CMO Survey™, despite minor fluctuations. The use of acquisitions as a growth strategy, however, has steadily increased. Figure 1 shows this progression from 8.8% in February 2009 to 12.2% in August 2012. There may be many reasons for this—companies have cash on hand or can get low-cost loans to make acquisitions, acquisition targets are cheaper, or firms are engaging in riskier growth (new markets and new offerings). The latter appears to be true based on data from The CMO Survey™ as I noted in an earlier blog. (more…)

Why Apple is a Great Marketer

Apple was voted the overall winner of the 2012 CMO Survey Award for Marketing Excellence… yet again. Apple has been selected as the winner or co-winner for five consecutive years by the sample of top marketers. So why is Apple a great marketer?

When Apple, Inc. (then Apple Computer, Inc.) incorporated in January 1977, its investor/advisor, Mike Markkula, assembled a 3-point marketing philosophy. Amazingly, thirty-five years later, this philosophy remains at the core of what makes Apple so effective at creating and profiting from loyal customers. This, in my view, is the definition of a strong marketing capability. Here are Apple’s original three points:

  • Empathy – We will truly understand their [customer] needs better than any other company.
  • Focus – In order to do a good job of the things we decide to do, we must eliminate all of the unimportant opportunities.
  • Impute – People DO judge a book by its cover. We may have the best product, the highest quality, the most useful software, etc.; if we present them in a slipshod manner, they will be perceived as slipshod; if we present them in a creative, professional manner, we will impute the desired qualities.

Apple has used these principles to become the world’s most valuable company (measured by market capitalization) and one of world’s most valuable brands. Here are ten strategies Apple has used to become one of the world’s greatest marketers:

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How Does Your Company Grow?

The CMO Survey has been tracking company growth strategies for four years. Respondents allocate 100 points among four well-known growth strategies to reflect what their companies have done over the last year and plan to do in the next year.

The four growth strategies are differentiated on two dimensions. The first dimension is whether the company is growing by deepening purchases from current customers or entering new markets (new from the standpoint of the company’s portfolio). The second dimension is whether the company is growing by trying to sell more of its current products and/or services or by offering new products and/or services. These two dimensions produce a 2×2 matrix of growth strategies (Table 1) called the Ansoff Growth Matrix.

Table 1. Types of Growth Strategies

Table 2 shows the percent of company expenditures for each strategy for the past 12 months and for the next 12 months. Most companies continue to grow through market penetration. This low-risk strategy usually yields more certain but lower returns. However, this number is expected to decrease. Companies are expected to take on more risk by increasing use of the remaining three growth strategies with an emphasis on product/service development (developing new offerings for existing markets) and diversification (targeting new markets with new offerings).

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What Customers Want

The CMO Survey asks top marketers to rank order the following factors in terms of their importance to customers: low price, superior product quality, superior innovation, trusting relationship, excellent service, and brand. The specific question is “For your largest market, rank your customers’ top three priorities over the next 12 months” where 1 is most important. I charted these responses over the last three years to get a sense of how priorities have shifted, especially during these tough economic times. (more…)

The Marketing Ivory Tower Needs to Get a Grip

In the August 2010 CMO Survey, I asked top marketers the following question:  What is marketing primarily responsible for in your firm?

Marketers were then asked to check from a list of strategic, tactical, and financial activities in firms. What I found is in the table below.

At least a couple worrisome thoughts arise from these results. First, while marketing is playing an important role in brand and social media in most organizations, marketing’s contributions to the key strategic activities of the firm are sadly absent.  This includes marketing’s weak contributions to key strategic activities such as market entry, innovation, CRM, sales, distribution, and targeting.

Ask any top business school marketing professor what marketers do and they will likely respond with something like the 4Ps (price, promotion, place-distribution, and product) and the 3Cs (customers, competitors, and company).  This leads to the second worrisome thought. I think it is pretty clear that marketing is NOT doing what ivory tower marketers think it is doing or would like it to do.  This little fantasy that marketing does important things contributes to a problem among many marketing academics, which is that they don’t contribute to building knowledge about successful marketing.

What’s happening in companies that keeps marketing professionals from making the contributions we train them to Kanskje stikker du av med jackpoten…?Gratis bestenorskecasinos.com spill med bonusNoen casinoer kjorer en ganske omfattende og morsom bonus uten innskudd. believe they should be making?  Or is the problem that academic marketing research and training need to change to increase the value of marketing to companies?  If not us, who?

What is Marketing Responsible for in your Firm? (n = 332 responses)

Activity Number of people checking Percentage of
total
Positioning 261 78.6%
Promotion 256 77.1%
Brand 255 76.8%
Marketing research 240 72.3%
Social media 231 69.6%
Competitive intelligence 208 62.7%
Public relations 193 58.1%
Lead generation 192 57.8%
Market entry strategies 190 57.2%
New products 170 51.2%
Customer relationship management 147 44.3%
Targeting/market selection 136 41%
Sales 123 37%
Pricing 119 35.8%
Innovation 111 33.4%
Customer service 83 25%
Stock market performance 4 1.2%
Distribution 0 0%