1. Centralized structures optimize to efficiencies of scale.  Marketing activities are handled by a central team and scaled across many divisions.  Unlike other structures, decision-making power is concentrated with this central team, which reports up to a CMO.
2. Decentralized Center of Excellence structures optimize customization to a division (product, business unit or geography).  Unique marketing teams report up to heads of divisional marketing; a central team of experts act as internal consultants.  Reporting lines are clear and simple, and there is no company-wide CMO.
3. Decentralized Shared Service structures similarly optimize to divisional customization.  The balance of marketing power lies in divisions, but a central team handles easily-scalable activities.
4. Hybrid structures ideally balance central scale with divisional customization.  Divisional marketing teams report jointly to a central marketing function and to divisions.  This complex structure is increasingly common in large organizations, as it reflects the highly–matrixed constituencies Marketing works with.
5. Segment-Aligned structures optimize customer understanding.  The majority of marketers sit within segment teams while a central team coordinates and handles scalable activities.
6. Project-Based structures optimize flexibility.  In this rare configuration, marketers are deployed to flexible, cross-functional project teams as needed.  Teams are typically temporary, designed to form, deploy and dissolve with the projects they address.

MLC members: Are you contemplating reorganization?  If so, check out our in-depth analysis of each structure including benefits, drawbacks, questions to ask and tests to run.

Few marketing organizations today have the analytical chops and creativity to squeeze gamebreaking insight from these increasingly rich data streams (see this prior post on coping with information richness).   Most marketing leaders will settle for a life preserver—they’ll outsource analytics to vendors or shunt it off to an analytics team buried inside of market research.

By contrast, sage marketing leaders will build surfboards to ride the data waves.  How?

I’d recommend taking a look at Analytics at Work: Smarter Decisions, Better Results by Thomas Davenport, Jeanne Harris and Robert Morison.  The book purports to be a practical guide for boosting the role and value that analytics can play inside of large enterprises.

And in this the book succeeds.  For marketers with limited time, here are the punchiest portions.

The authors have put together a superb enterprise level maturity model, running across five stages of maturity and five elements of enterprise analytics.  Yes, there’s even a clever acronym–DELTA:

• Data—not just any data, you need accessible, high quality data
• Enterprise—well, more precisely, an enterprise orientation
• Leaders—analytical leadership
• Targets—strategic targets (meaning: apply analytics in strategic areas)
• Analysts—for the analytics grunts doing the heavy lifting

If you do nothing else, check out the attached excerpt (reprinted by permission of Harvard Business Press.  Excerpted from Analytics at Work: Smarter Decisions, Better Results by Thomas Davenport, Jeanne Harris, and Robert Morison.  Copyright 2010.  All rights reserved), which captures the key transition points across the model elements.  Assess your marketing team against the maturity model to pinpoint the spots that are inhibiting further progression.  The important insight here is that organizations should take a balanced approach to advancing analytics across these five areas.  Getting too far ahead in one area will waste resources.

For most marketing organizations, the best chapter will be the one on Targets.  The authors’ advice is spot on for marketers with limited resources (i.e., all of us)—focus analytics efforts to advance the firm’s distinctive capabilities.  Don’t just apply analytics to that which can be analyzed.

There are a few other gems worth calling out here:

• Fun factoid: 40% of major decisions are based not on facts, but on the managers’ gut
• Thinking about marketing org structure? The five pages (p. 104-109) on organizing analysts are well-reasoned, and worth reading for the logic that should underpin org decisions for other specialty marketing capabilities (e.g., shopper marketing, event marketing)
• The Hotels.com example may be worth emulating for many marketers—it describes how an analytics leader came into an organization, formed a tiger team, and radically improved the performance of a website in short order (p. 142)

Word to the brave: despite the authors’ best efforts, this is dry stuff.  Dry, but critical for marketing leaders looking to help their teams thrive in an age of social mobility (mobile social-ity?).  In fact, it’s probably like crafting your own surfboard—precise cuts, fits and starts, lots of elbow grease.  But the ride once you get up on that board…sublime.

But frankly, this too often turns retailers into myopic, proximity-biased incrementalists in their customer strategy (too harsh again?). Imagine my encouragement when I see retail CMOs begin to tout the very elements of customer-focused strategy their CPG peers have long known.

This new focus on the customer take two forms: organizational structure and marketing communications execution. Take Express, for instance. Organizationally, Express CMO Lisa Gavales (follow her on Twitter here) now owns all e-commerce activity. From a communications perspective, every touchpoint – be it on the store floor or the web homepage – displays the same visual branding. Express is Express, no matter where the customer encounters it. While a recent development at Express, MLC research would clearly indicate that customer-focused, channel-agnostic marketing communications will yield far higher returns to the whole portfolio than category- or channel-specific campaigns.

At Macy’s, you practically have CMO Peter Sachse committing marketing treason, saying, “What we don’t need to do is get new customers.” Yet he’s right, because he too has placed the customer at the forefront of marketing’s strategy, rather than a distant second to classic merchandising techniques. And what better way to do this than. . .wait for it. . .asking the customer! Sifting through NPD Group data, interviewing shoppers as they left the store, all in an effort to generate customer centricity. Much like Express, the end result is an inevitable broadening of Marketing’s scope of control (which of course we as marketers enjoy). Sachse states specifically that the web should be the brand’s hub, which can lead to innovative uses of the web as a marketing communications vehicle, as in this recent Macy’s campaign.

Yet for many retailers, the transition to a customer-driven marketing organization may not be as simple as having charismatic leaders like Gavales and Sachse. That’s where MLC research can help build the business case for customer focus:

• See how Tesco created an annual customer plan to implement improvements to the shopping experience grounded in customer insight.
• Read how Food Lion co-opted cross-functional partners by pre-committing them to next steps on customer-focused projects.
• See how Victoria’s Secret filters all customer-focused investments to ensure alignment with the brand and target customer.

The trend toward customer focus in retail is more urgent and necessary than ever before, as the sector seeks to reinvent its offering coming out of the recession. Those that fall behind in satisfying customers’ needs will likely get trampled in the next Black Friday rush.

Whither globalization? I beg to differ.

There was a bit of consternation at the Davos confab earlier this year as to whether the era of globalization was the root cause of the global financial meltdown, and as a result, perhaps it was time to roll back some of that interconnectedness. Nicolas Sarkozy was particularly pungent in his argument to this effect. Granted, globalization certainly hastened the onset of recessionary tendencies the world over; international capital flows have only increased since the Asia financial crisis of the late 1990s sent a minor shock wave through the system.

Yet it stands to reason that with the right safeguards, globalization can again be a force for good.  In fact, many Western companies look to the BRIC nations (Brazil, Russia, India, and China) to provide the next wave of business growth. Success in those nations requires continued flows of money, goods, and labor around the world; protectionist measures would only make re-investment more difficult.

As a result, marketing executives must actively consider and act on the consequences of globalization, the recent economic meltdown, and the structural changes that may be required to optimize a global marketing function. To steal the cliché, what is the best mechanism to think globally and act locally?  Members are taking stabs at this from all angles – some pursuing greater centralization, others pursuing regional strategies. Then you have the Goldilocks approach (a compliment here) of HSBC – an amazingly consistent brand image worldwide, yet similarly strong local resonance.

To come out of the recession stronger than before, companies must rebalance their global portfolios to better adapt to emerging market opportunities and capitalize on untapped segments in the developed world. The way marketing structurally supports that global portfolio will have a large impact on company success. Substantive discussions should precede any structural changes to ensure the selected model best meets global business needs.

Personally, I think globalization will do a world of good for everyone, if pursued properly. It certainly makes sitting in an Amsterdam airport more interesting. And there’s my boarding call for BA 8456 to London City…

In the best of worlds, I see Marketing as the general management function of the company (don’t tell Sales). In it resides the most critical elements of commercial success: the customer and associated insight. Subsidiary to that, it contains market assessment, competitive position, brand development, marketing communications, etc. No one makes a customer-impacting decision without Marketing’s input and stamp of approval.  Again, best of worlds.

Yet oh how far most organizations are from that ideal. Marketing clamors to prove value with metrics and dashboards, struggling to remove itself from the dreaded SG&A CFO line item. The term “cross-functional” is more worn than an old suit. Not that Marketing can go it alone, but to live a day without subsisting on the beck and call of the next desired piece of sales collateral – that would be heaven.

Progressive marketing organizations are using the opportunity provided by the recession to rethink old-world organizational relationships. A direct question from a B2B software provider last week: “Who typically owns the customer experience?” Answer: typically no one function. So why not Marketing to drive the required coordination? Another question from department-store retail: “Social media impacts every function in our company – who should take the lead?” Why not Marketing as the subject-matter expert? More companies than ever are asking why their disjointed commercial operations are artificially delineated by Marketing and Sales. Why not an integrated function?

There is latitude for organizational realignment in 2010 as executives demand a return to growth, and a pressing need for marketing leadership within a forever-changed customer landscape. Without insight into rapidly changing customer needs, any effort by R&D or Sales will fall short. Without social media guidance, HR and Legal may shut down burgeoning efforts to produce low-cost, high-quality insight. There is opportunity for Marketing to assert its primacy in the portfolio of corporate functions and the case is clear. The only question remaining is whether the function can seize the chance.

So how about an even-handed assessment of things to watch for in 2010? Even the cynic can provide that.  Here are three big macroeconomic and marketing-specific trends every marketer should follow in earnest:

Macroeconomic Trends

1)      Consumer Behavior and Economic Recovery – It’s unclear whether a true recovery stimulated by increased consumer spending will occur. Regardless, marketers should closely track the salience and imprinting of consumer behavior patterns exhibited during the worst of the recession into 2010. Is the ‘cool-to-be-frugal’ mindset permanent? Is consumer spend retrenchment category-specific? How do smart marketers stimulate similar consumer behavior for their brand? Members, join us for a webinar January 28^th to hear our take on the recession lessons marketers might soon forget.

2)      U.S. Federal Debt and the Declining Dollar – With continued weakness in the world’s reserve currency, US-based companies will find overseas operations ever-more expensive, while the US activities of firms headquartered in Europe or Asia will be hit once by the lack of consumption and a second time by miserable exchange rates. As Congress raises the national debt ceiling, foreign governments will continue to raise red flags on US creditworthiness, potentially impacting cross-border direct investment around the world.

3)      Unemployment and Labor Markets – With very few predicting improvement in the overall employment picture, the fact that it correlates too well with discretionary consumer spending bodes poorly for 2010. But for our businesses, there is incredible opportunity to hold on to and find the right marketing talent, without whom the hill to climb will be even steeper.

Marketing Trends

1)      Social Media 2.0 – In case you haven’t noticed, social media is kind of a big deal. 2010 will tell us how big a deal. From how Twitter will endure to the privacy concerns inherent in Facebook, the churning sea of social media will quickly separate marketing winners from losers. Fast-cycling failure and embedding social opportunities into marketing communications planning are just two ways to keep up. Members, see our full suite of social media resources here.

2)      Organization Structure – Now more than ever, marketers are asking us about the ‘right’ organizational design. Whether looking to achieve cost savings through efficiency, embed digital/social without upsetting entrenched hierarchies, or simply find a new way of doing business, structure conversations are unavoidable.

3)      Resurgence of Innovation – As pipelines dried up along with innovation budgets across 2008-2009, there’s a remarkable gap in many categories between the last disruptive innovation and today’s drastically changed customer outcomes. Leading marketing organizations are finding creative ways with budgets to ensure innovation is no longer under-funded as they look to beat competitors into the daylight the economy seems to show.

Best wishes to all our members on a successful 2010. Let’s hope the realist in me becomes a bit happier across the year and puts the cynic to bed.

Unfortunately, many of the marketing reorganizations that will kick off in 2010 will take a year or two to implement.  Right around the time that key players settle into their new roles, teams start to gel, and new processes start to fire on all cylinders, market conditions will have changed, and it will be time to start all over again. 

Having seen this scenario play out more than once, some CMOs are searching for a new model—an organization that adapts to changing markets, and doesn’t require a wrecking ball every three years.  Sounds nice, but what does that actually look like?  Here are a few of the tenets we see emerging:   

• A common view of target customers that spans Sales, Marketing, and other customer-facing functions
• A common view of the company’s value proposition across all commercial functions
• Flexible teams, typically tied to segments and market opportunities, versus functional silos
• Efficient flow of information across Sales, Marketing, and their key stakeholders

Marketers who’ve experimented with this model find that while flexible, customer-aligned teams present their own management challenges—albeit microscopic compared to the challenges of sweeping, function-wide reorganizations.  Similarly, when individuals are equipped with a single view of both customers and company, it’s much easier for them to bounce from team to team and take on new roles—even when teams and roles toggle between the traditional boundaries of Sales, Marketing, or Operations.  

While few marketing organizations will take the plunge and adopt this approach wholesale, here are a few steps any marketing organization can take to start down the path:

1. Establish a common set of priorities across all commercial functions, starting with Sales and Marketing
2. Define distinct roles for Sales and Marketing for achieving those commercial priorities
3. Codify a common base of customer understanding for all customer-facing functions

MLC Members: Before redrawing any lines, we’d suggest establishing some sort of baseline on what is and isn’t working.  Take our Commercial Integration Diagnostic to help you pinpoint breakdowns and spot competing priorities across Sales and Marketing. 

And to celebrate the coming year of the tiger, click here to see the best tiger-related ad of 2009.