30/03/2016

[En] Is the world upside down? (part 4 of 4)

Por

Managing Partner

This is the fourth and last of a four-parts article wondering on how marketing seems to have lost its inventiveness and irreverence, no longer being able to surprise, and on how finance seems to have reinvent itself and taken over traditional marketing’s primary position in the corporate ladder.

What’s Next?

Having got to this point, where financiers appear to have become too innovative for our own sake and marketeers too conservative for their own sake, many readers would probably expect a discussion on what’s next. Have marketeers definitely given up, or what should they do if they want to go back to the top? And how can financiers overcome the growing criticism threatening to remove them from their current position at the top, or are they so confident that they couldn’t care less?

 

These questions may be spicy but is this approach useful? Is it that important which area of expertise or functional department prevails in the corporate world?

 

First, the experience of how corporate prevalence migrated from marketing to finance suggests that these advantages may be transient. Second, the usefulness of the questions depends on the validity of their underlying assumptions, which can be deducted: (1) There is a constant struggle for supremacy between corporate organizational functions; (2) corporate supremacy can only be held, at any point in time, by one single functional expertise, (3) holding supremacy is beneficial for the prevailing function and its professionals, and (4) all-other organizational functions have secondary roles, limited influence, limited access to the top and are seemingly condemned to oblivion.

 

Let’s briefly discuss these assumptions. The quest for power is probably inherent to human nature, as long as people live in society. Thus, it is only natural that power disputes are inevitable in corporations. The struggle for supremacy can be an individual subject, but more often than not individuals seek alliances with each other to increase their odds of success against the opposition. As alliances more easily develop between people who have converging interests, experts of a given discipline may, consciously or unconsciously, be more likely to join with their peers than with anybody else. Yet, if the struggle for power is indeed in human nature, besides inter-departmental rivalry, one has to think of intra-departmental rivalry as well. If, in a given context, the intensity of intra-departmental rivalry is the highest, it minimizes the importance of inter-departmental struggle, making the first assumption less relevant.

The second assumption is based on a “winner takes it all” mindset. However, there is plenty of evidence, both in politics and in business, that power can be shared. In many countries, governments are made up with alliances of different political parties. Often corporate leadership is shared, rather than concentrated in a single individual. The second assumption is therefore highly questionable. It is quite possible that more than one department might have equivalent influence within a company.

 

Though the validity of the third assumption seems untouchable - i.e. if and when a certain department holds corporate supremacy its members tend, on average, to be more influential, have a faster career path and higher chances to reach top positions in the organization – what matters here is to understand whether the benefits for the function are also benefits for the corporation or if otherwise they may do more harm than good. At this point the discussion involves the fourth assumption as well.

 

How balanced can an organization be if it is split between winners and losers? Can any company performance be driven by just a single function in isolation, or does business effectiveness depend on how well different and complementary capabilities (or functions, or departments) are brought together and organized in efficient interconnected processes? If all functions are necessary, and none is redundant, does it make any sense saying that any of them is more important than all the others? It is well known that a chain’s weakest link determines the weakness of the whole chain. Under this perspective it seems reasonable to say that the most important functions should be the least performing, rather than the best performing. If one department holds supremacy over the others, how much diligence, motivation, and commitment can be expected of those that are lessened?

 

There are then reasons to believe that the underlying assumptions can be challenged and may be biased. The whole mindset may be narrow-minded. Indeed, what makes great companies? Is it the unbalanced exclusive supremacy of any department, function of theory or is it the balanced inclusiveness, involvement and active participation of a diversity of relevant functions? Scholars and business leaders alike have argued that it is organizational coherence, collaboration, and alignment, rather than power struggles, that drive performance. Therefore it matters little whether it is marketing, finance or any other field that holds supremacy. What must matter is to completely erase the idea of functional supremacy all together, because it is a dangerous idea.

 

Functions that are put in positions of secondary importance may experience the daunting temptation of trying to play in the dominant function’s playground. As financiers have now taken the helm, some voices have argued that marketeers should make themselves more alike, in order to regain their lost influence. They should learn what financiers know, adopt their language and use their methodologies and analytical frameworks. But marketeers would be useless to companies if they became travesties of financiers, as much as financiers would be useless to companies if they became travesties of marketeers. The experience of the past two or three decades seems to put in evidence that financiers may be creative indeed, but their creativity is probably a little dangerous and that marketeers may be cautious and conservative but their conservatism is probably hurting companies’ innovativeness and growth.

 

Performance depends on many factors, including increasing sales revenues, delivering high quality products/services produced at low cost, efficiently utilizing resources, controlling expenditure and cash flows, investing wisely, and funding the business appropriately. This panoply of activities, where none is less relevant than the others, requires a range of specialized capabilities performing well together. Each job, function, or department must contribute to the whole by doing very well what it does best.

 

In what concerns marketing, there is an increasing consensus that its focus and major contribution must be on generating ever-growing streams of dynamic, sustained and profitable sales revenues. Nothing else. And in what concerns finance, its contribution should be focused on ensuring the profitability, liquidity and solvability of the company, not on product development or other distractions. Corporations would be better off with marketeers doing good marketing and financiers doing good finance, where good marketing and good finance mean marketing and finance in constant evolution for a dynamic adaption to the ever changing environment, taking in consideration the stage of the business development and the readiness and alertness of the overall organization.

 

The world might be upside down, as many claim, but it is not because financiers became more creative and marketeers more conservative. It is more likely because financiers, marketeers and all others have been spending more energy on supremacy disputes than on combining their complementary expertise to develop innovative new ways to overcome challenges in these times of uncertainty. Companies do not need just one function. They need them all. For their own sake.

marketing finance

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