Corporate Boards Begin To Seek Marketers For Digital Savvy
This article was originally published at http://www.cmo.com/features/articles/2017/4/18/-corporate-boards-seeking-marketing-expertise.html#gs.JGMpl9A by Stephanie Overby
Corporate Boards Begin To Seek Marketers For Digital Savvy
Historically, the representation of marketing executives on corporate boards has been minimal at best. Less than half of 1% of board seats in the Fortune 1000 have been held by active marketers, according to one study by Spencer Stuart. And a 2015 report by Marketing Science Institute (MSI), which reviewed publicly available information on 64,086 board members for S&P 1500 firms, found just 2.6% of board members had active marketing experience.
Why this dearth of marketers in the boardroom, which for years has been largely occupied by former CEOs, COOs, or CFOs, awarded their roles after long tenures in the executive suite? For one, the regulatory environment drove many corporate boards to hyperfocus on risk management and monitoring at the expense of other areas of advice or oversight, said Kim Whitler, co-author of the MSI study and an assistant professor at the University of Virginia's Darden School of Business.
In addition, “there is such variance in the roles, knowledge, and skill of marketers that many people incorrectly believe that marketers can’t create value at the board level,” said Whitler, who previously held marketing roles at P&G and PetSmart.
But that is beginning to change. In the age of customer-centricity, and with the next digital disruption seemingly a click away, marketers’ expertise has increasing value to corporate boards. Indeed, demand for digital and social media know-how in the boardroom rose to 21% in 2016 from 16% in 2015, according to Spencer Stuart, and interest in marketing expertise grew to 19% from 14%.
“As consumers become more critically important to the business, having someone on the board who owns that customer relationship is more important than ever before,” said Norm Yustin, co-leader of Russell Reynold’s CMO practice, in an interview with CMO.com “Typically, that’s a CMO.”
To be sure, bringing marketers on board can yield real returns. The MSI study found that boards with one marketing-experienced director saw a 3% increase in total shareholder return over boards with none. The impact was even greater for companies in distress. When firm market share was declining by 1.5% percentage points, the presence of a marketing-experienced director generated an average increase of 6% in total shareholder return, according to the analysis.
Growth Gurus Wanted
Statistics aside, there are a number of recent examples of executives with current or former marketing experience securing seats on boards. McDonald’s recruited Margo Georgiadis, former CMO and then Google’s president of the Americas, to its board in 2015, citing her “technology, marketing, consumer insights, strategy, and business development” expertise. (Georgiadis is now CEO of Mattel and chair of the Ad Council’s board). Harley-Davidson added Taco Bell CEO and former CMO Brian Niccol as a director. Wells Fargo CMO Jaime Moldafsky joined the board for printing giant R.R. Donnelly & Sons. Pier One Imports’ executive vice president of marketing became a non-executive director for shoemaker Aerosoles.
Some consumer-focused brands—consumer packaged goods companies, for example—have recognized the value that CMOs can bring to board operations for some time. Pamela Thomas Graham, most recently CMO for Credit Suisse, has served on the board of Clorox for many years, for example.
Today, however, a wider swath of industries is looking for the kind of know-how CMOs possess. They want growth generators, Whitler said, because “many companies are struggling to find mechanisms to drive the top line.” Not all marketers have the enterprisewide leadership experience to serve as growth sherpas, but those who do can provide governance and stewardship for demand-generation strategies.
Late in her tenure as CMO of Neiman Marcus, Wanda Gierhart was approached by companies from financial services firms and startups to retail and food service companies about joining their boards. The common denominator: They were seeking “that customer journey perspective, which is what [we] omnichannel marketers were great at,” said Gierhart, now an independent marketing consultant. “Growth isn’t coming from cost-cutting anymore. There’s nothing left to cut. It’s not going to do them any good to bring on board another CFO in their 60s. They need differentiation, and they need it now.”
Gierhart joined luxury cosmetic retailer Cos-Bar’s board in 2016 as the only director not either working for the 40-year-old brand or its new private equity owner, Tengram. It seemed an ideal first corporate board experience for Gierhart, who has served on nonprofit boards in Dallas, as she stepped away from the day-to-day demands of her CMO role last August.
The value of the board experience flows in both directions, Gierhart said. She has provided guidance on the best e-commerce strategy if the company were to acquire another brand, for example. And her board work has forced her to elevate her thinking from the “day-to-day nitty gritty” that a marketing executive can get involved in. “It pushes you to think even more strategically,” she said.
The Target Market(er)
Ramon Chen, CMO and executive vice president of product development of cloud-based master data management company Reltio, had been unofficially advising startups for more than eight years and was looking to formalize that role. A mutual venture capital investor introduced Chen to the board of advisers at Bedrock Data, which provides data synchronization and integration for marketing and sales.
“They were interested in my experience, market positioning, and product management and development expertise, as well as my network and reputation within the market segment they are in,” said Chen, in an interview with CMO.com.
CMOs, in general, can provide a wide range of expertise and guidance to companies, Chen said, and provide market and industry perspectives that may otherwise be unavailable to the board.
“If the CMO is technical and has product management responsibility, they can offer product, pricing, and packaging insight. CMOs who are martech-savvy and data-driven can offer advice on revenue attribution and best practices,” Chen said. “CMOs who are active in the industry can provide introductions and recommendations around analyst influence and awareness or brand-building strategies. CMOs who are well-connected in the VC community can help with fundraising both from an introductions and pitch development point of view.”
Contributing at the board level is significantly more fruitful than advising companies on an unofficial basis. “It's been refreshing to see how much more effective being a formal part of a board impacts and influences the activities,” Chen said. “A big lesson is that getting more inside knowledge about the goals and financials of the company allows the CMO to be more effective in guidance and effectiveness as a board member.”
Best Board Behaviors
A board role is different in many ways than an executive position. “CMOs need to understand the different role of the board and be prepared to adapt. Boards provide advice and guidance—they aren’t operators,” said Whitler, who learned that lesson when she first joined a board of trustees. “I had little preparation regarding the different role I would serve versus being a GM or CMO. It took me some time to recognize that my job wasn’t to ‘do’ marketing, but rather to advise and help support the institution in areas where my knowledge could be most beneficial.”
Boards are less likely to want their marketing members to provide critiques of a specific marketing campaign, for example. “What they’re looking for is business acumen and experience through the lens of marketing,” Yustin said.
CMOs who want to get up to speed should research the differences between boards and operating teams and, perhaps, join a nonprofit or other noncorporate board to gain experience. They also need to educate themselves on the strategies of the firms that they will advise “because it better equips the CMO to understand how marketing interacts with the other functions,” Whitler said.
“Instead of creating the 100-page decks, you’re reading them and thinking about good questions to ask,” Geirhart added.
It’s a significant time commitment—one reason why some companies may not allow their CMOs to join other boards. CMOs who are passionate about being effective board members may also be tempted to give even more time and attention than is required to the board position. Gierhart gets weekly updates from Cos-Bar.
“The CEO may ping me because he’s thinking about a strategic alliance and wants my opinion, and I’ll consider it and send him my ideas,” she said. “You can probably get too involved. I get the weekly business results, but I don't comment on them every week. I’m not getting paid to do that. You have to set boundaries.”
How To Get There
Getting on a board should be on the mind of any C-level executive, Yustin said. “Every good CEO should encourage their CMOs to get some board exposure because they can bring a tremendous amount of knowledge back into the company,” he said.
Gierhart gets lots of questions from her marketing peers about how to join a board. There is no application process for boards, which might not recruit the way a company would for a CMO role, for example. Some may enlist headhunters, but they are more likely to conduct their own searches, reaching out to executives they already know.
“It takes networking to find the right role, and you have to really put yourself out there,” Gierhart said. “If there’s a company you’re interested in, network around to figure out who you already know there.”
Chen agreed: “You have to make yourself available and be proactive,” he said.
Trying to join a public board with no previous board experience is probably aiming too high. Gierhart, for example, started with nonprofit boards and then joined a private board. CMOs can leverage these starter board positions into opportunities at larger or public companies.