9 out of 10 corporate boardrooms lack marketing expertise in an age where customers are in the driver's seat of revenue creation.
As the power of customer experience has risen sharply over the last 15 years, driving marketing strategy has become one of the most critical business levers CEOs have in their arsenal. However, a staggering statistic published in the Journal of Marketing in 2018 reveals that only about three percent of board members across the S&P 1500 had any marketing experience whatsoever. This fact represents a widely untapped opportunity available to CEOs to increase board effectiveness and alignment. The same study also revealed that CMOs only report to boards 6-percent of the time.
Given the predominant approach that most companies have to appoint board members with audit, finance, legal, or risk management expertise, these research findings may come as no surprise. However, considering the revenue implications of today’s customer-driven sales cycle, it’s becoming imperative that at least one director on the board understands and advocates for the company’s most valuable asset — its customer base.
After conducting extensive research, the authors of the previously mentioned study concluded that more marketing-experienced board members would not only increase growth by helping companies prioritize it as a strategic objective, but would also contribute the expertise necessary to improve revenue-generating strategies. According to the study, “Organizations with at least one marketer on the board had at least a 3-percent point increase in total shareholder return compared to a board with no marketing-experienced directors.”
As executive coaching and strategy engagement experts, the team at Transcend has seen CEOs, boards, and C-Suite leaders reap the benefits of diversifying their board rosters to include directors with marketing expertise, as well as broadening the access to board meetings for all members of a company’s senior executive team.
While the potential benefits of encouraging your board to include marketing-experienced directors are many, here are four that will significantly enhance alignment with the organization’s strategic direction, revenue goals, and culture. When your directors have a deeper, more aligned understanding of what will make the company thrive, the effectiveness of the board will increase exponentially over time by simplifying the decision-making process and reducing the amount of time and energy spent on managing expectations.
Maximizing Strategic Board Integration
Your CMO and marketing team should be one of your most powerful catalysts for growth, effectively synchronizing critical areas of the business: product development, technology, data insights, and customer service. These work together to exceed the expectations of your customers, generate continual demand for products or services, provide critical competitive intelligence, and shape the market’s perceptions of your brand, your employees, and your value proposition. When the CMO’s role is valued in the C-Suite and is combined with the expertise of at least one or two board members with similar experience, the enterprise will see significant gains on the level of strategic integration, buy-in, and consistency of implementation between the senior leadership team and the directors.
Delivering 360-Degree Insights for Effective Boards
In companies where marketing is focused primarily on creating and distributing content through a one-way stream of outward-facing programs, such as social media, influencer marketing, advertising, product packaging, and lead generation, heads of marketing are less likely to have a seat in the C-Suite or report to the board. This externally driven approach, while not necessarily ineffective, is incomplete. It only represents half of your company’s two-way relationship with multiple audience segments, both internally and externally. When managed well, an integrated, 360-degree marketing program can be used to monitor, evaluate, adjust, and strategize based on two-way dialogues with critical audience segments. CMOs who go beyond the external manifestations of the brand to utilize this effectively will have the ability to deliver actionable, real-time insights into the boardroom.
Discovering and Driving Competitive Edge in the Board
Competitor intelligence, market research, and integrated feedback from every aspect of the customer journey (initial brand exposure through post-sale behaviors) provide strategic guidance for decision-making across the enterprise, especially in the boardroom. Utilizing marketing experience on the board will allow you to stay ahead of competitor encroachment and drive the market, creating greater board effectiveness. Marketing experts have the skills necessary to guide potential M&A strategies, determine future product investments, and select brand-appropriate charitable platforms. They are, in essence, essential for sustainable corporate valuation.
Motivating Innovation and Inspiration through Culture
The most effective corporate marketing programs are akin to a reversible down jacket — both sides are designed to be equally effective and appealing, yet each one is best suited for a specific purpose, either internally or externally. CMOs who are integrated into the corporate strategic planning process and contribute to shaping the mission, vision, and values of the organization are better able to align their marketing and employee communications programs to drive the kind of cross-departmental results the board and shareholders are looking for.
With such clear evidence that marketing can make a huge impact on a company’s success across various revenue-influencing arenas, the question remains: Why aren’t corporate boards clamoring to recruit seasoned CMOs?
One element of the answer is the lack of cognitive diversity in most boardrooms. While there’s been significant improvement in boards becoming more inclusive of demographic diversity — 59 percent of the directors added to S&P 500 company boards in 2019 were women or men from an ethnic or racial minority — the reality is that most boards appoint new members based on how well they will fit in with the current lineup rather than what can help board effectiveness. This often happens because it feels easier and more efficient to stack a board with those who have similar experiences, expertise, and mindsets. Furthermore, most boards are primarily tasked with financial oversight and legal-related governance issues and are commonly comprised of investors, financial experts, and attorneys.
In an article in Harvard Business Review entitled, “How Diverse is Your Board, Really?” author Jared Landaw challenges the commonly-held viewpoint that demographic diversity automatically generates a variety of viewpoints, perspectives, and backgrounds. According to Landaw, “Our research revealed that improving cognitive diversity on a board can significantly enhance its performance, particularly when cognitively diverse directors are added with professional backgrounds, skills, and perspectives in areas pertinent to a company’s business or strategic plans who lack ties to the CEO and other directors.”
Regarding marketing-experienced board appointees specifically, there is a lingering — and often unspoken — misconception among CEOs and directors that the discipline is more of a “soft” skill focused on objectives, driven largely by creativity versus data, science, or business strategy. Although creativity is an essential ingredient in developing emotionally connective and engaging campaigns, today’s savvy CMO is just as focused on data, research, and analysis when leading teams of brand planners, demand generation specialists, and social media experts. Increasingly, companies are realizing the incredible value of having their customers’ voices represented in early-stage product development, package design, and process innovation. For enterprises looking to grow with a robust M&A strategy, marketing’s insight into brand valuation, reputation, and cultural alignment is essential during the due diligence phase of deal evaluation.
Diverse Board Composition for Greater Effectiveness
Ideally, the boardrooms of the not-too-distant future will be both cognitively and demographically diverse, with members who are welcomed to the table because their presence will deliver broader viewpoints and deeper insights, while helping to fuel informed discussion, challenge the status quo and generate a higher level of performance. While this ideal vision of alignment between board members and C-Suite leaders will never occur with flawless perfection, the healthy tension and friction that will be naturally produced through more meaningful and authentic dialogue are guaranteed to produce better companies with happier employees and ultimately higher and more sustainable growth in the long-run.