Posted on September 14, 2012
It puzzles me that some corporate executives still view business strategy as fundamentally different from, and somehow more crucial to organizational success than marketing strategy.
As a consultant I have had many conversations with senior and C-level executives. Our discussions often reveal these misconceptions:
- Corporations win when they focus on profits
- Business strategy defines the firm’s competitive strategy
- Marketing strategy’s scope is limited to marketing communications
This fuzzy thinking can be seriously damaging to the organizational focus and cohesion necessary for building strong brands and businesses.
Corporations win when they focus on customers
A business is successful when it profitably delivers a compelling value proposition to its customers. Profit is important. But, it is the by-product of successfully creating, delivering and communicating the compelling value that customers are seeking.
The value that is perceived by customers to be both relevant and unique is such a powerful source of competitive advantage. Profit is not, and cannot be, an end in itself. Without the compelling value proposition and the winning of the customer, profit becomes a moot point. Profits are the reward a business receives when it makes money winning customers.
As Henry Ford once famously stated,” Business must run at a profit…else it will die. But when anyone tries to run a business solely for profit…then also the business must die, for it no longer has a reason to exist.”
Marketing/business strategy define competitive strategy
Marketing strategy is synonymous with business strategy, not marketing communications. To limit marketing strategy to marketing communications is giving it short-shrift.
Marketing strategy goes beyond marketing communications. This proposition is compatible with an important tenet of management first advanced by Peter Drucker: “Concern and responsibility for marketing [customers], must…. permeate all areas of the enterprise.” Originally recognized as the central concept of marketing, “it has become increasingly important as a central concept of management.”
It takes a well-conceived and executed marketing strategy to build a strong brand and business. Sometimes you’ll see it stated differently and business strategy will be substituted for marketing strategy. Marketers see these two terms synonomously and use them interchangeably. Either way, it’s about focusing corporations on creating, delivering and communicating a compelling value for its customers.
Every marketing strategy must answer two key questions: Where to play? and How to win?The answers to these two questions define competitive strategy.
Where to play? requires decisions about the product markets in which the business will compete and the level of investment that it must make to be successful.
How to win? requires decisions regarding the value proposition that a business seeks to deliver to the customers it chooses to serve, the assets and competencies required for this purpose, and the functional strategies to be employed in order to deliver on the chosen strategy.
Every business strategy stems from answers to the same two questions.
Given the congruity between business strategy and marketing strategy, why do so many corporate executives continue to view business strategy as fundamentally different from marketing strategy and more crucial to organizational success?
It appears that three factors play important roles in shaping and fueling their views.
The role of higher education
Every major business school comprises numerous faculties (i.e., Strategy, Marketing, Organizational Studies, Accounting, etc.). Each of which makes a valuable contribution to research and teaching at these institutions. This traditional structure ensures a narrow focus within all faculty silos.
This focus has a downside that often manifests itself in the education received by business students. This traditional manner of instruction ensures that students gain a sound understanding of the body of knowledge in each faculty’s area of specialization. But, this silo approach to business education comes at a cost—students sometimes fail to understand the important similarities and linkages between the knowledge base of each faculty.
This problem tends to be magnified in the cases of Strategy and Marketing for two important reasons:
- Historically, the Strategy Faculty has been responsible for researching and teaching courses in business strategy. The Marketing Faculty has treaded very carefully in course description and construction, respecting the territorial integrity of each Faculty’s domain. That’s why Strategic Market Management and Brand Management are described as courses in marketing strategy rather than business strategy.
- The capstone course for many MBA programs is a Strategy Field Study and usually falls under the purview of Strategy faculty. So, even though this course is intended to be integrative in nature—students are expected to draw on their knowledge from all areas of study in completing it—students and prospective employers too often view this capstone course for MBA programs as a Business Strategy course rather than a Strategy course which integrates leading thinking in both marketing and business strategy.
The role of corporate leadership
It is not surprising that some corporate executives continue to argue that business strategy is more important to organizational success than marketing strategy. That is what they learned in their MBA program.
In these organizations, business strategists are frequently accorded more prominent roles within strategic planning functions than their counterparts in marketing. Marketing strategists usually find themselves relegated to developing marketing communications strategy.
This practice can be seriously damaging to the organizational focus and cohesion necessary for building strong brands and businesses that can win customers. Infighting typically occurs as marketing strategists attempt to increase their orbits of responsibility, often with a genuine desire to improve the customer-centricity of these organizations. Meanwhile the strategic planning team moves aggressively to protect its turf.
This is amplified even further in those organizations where corporate executives erroneously believe that the way to win in the marketplace is to focus on profits, not customers.
The role of the marketing community and industry observers
The marketing community is its own worst enemy in the diminution of the meaning and value of marketing inside many organizations. There is a commonly accepted practice for practitioners across every area of specialization within the field of marketing communications to refer to themselves generically as marketing practitioners, or worse, as marketing experts.
Pundits from the media who follow the industry exacerbate this problem by mimicking this practice.
Being a practitioner or expert in one’s own field (e.g., advertising, social media or public relations) doesn’t make you a marketing practitioner or marketing expert. It makes you an advertising, social media, or public relations practitioner or expert. Each field is only a subset of the total marketing picture.
Through this generic usage, marketing has taken on a meaning and a status that is far less than it is and needs to be. This has lead to the view that business strategy is fundamentally different from marketing strategy and more crucial to organizational success. This contradicts Drucker’s basic tenet about marketing.
So let me say it again here: marketing strategy is synonymous with business strategy not marketing communications.
What’s the way forward?
Dealing with the organizational dysfunction that frequently results from this friction requires change across all three of the factors I’ve discussed:
- Business schools should move more aggressively to break down traditional silos between departments and move towards more integrative practices in scholarship and instruction. This would be especially useful between Strategy and Marketing faculty as this would result in students—the business leaders of the future— understanding and valuing the congruity between business strategy and marketing strategy.
- Corporate executives should learn from, and mirror, this ethos, embedding customer-centricity within the fabric of their organizations. Marketing can, and should, play an important role in shaping business strategy for these corporations together with their traditional role of leading marketing communication activities. This will go a long way towards bolstering the organizational focus and cohesion necessary for building strong brands and businesses that can profitably win customers.
- The marketing community and industry observers should carefully consider how their generic use of marketing diminishes the perceived value of marketing as a strategic management discipline within corporations. Perhaps it’s time that high-profile marketing associations such as the AMA and CMA initiated a dialogue in this regard within the North American marketing community. This community must find a better way to profile its full range of expertise and capabilities if it is to play a more potent role in influencing and shaping competitive strategy within corporations in the future