Spanning Silos by David Aaker

The full title of this book, Spanning Silos: The New CMO Imperative, might lead you to believe that it is a very narrow take on a particular organizational issue (silos) within one enterprise function (marketing). You’d be wrong. This is a wolf-in-sheep’s-clothing book; a book about foundational issues in organization theory masquerading as a specialist read for marketers. I have previously written about silos (see The Silo Reconsidered), so this was definitely not a blank-slate subject for me. I was prepared to be underwhelmed, but to my pleasant surprise, I thoroughly enjoyed the book. It is a quick and easy read, but surprisingly substantial.

The Importance of Being CMO

I am probably unusual among engineers, in that I have never partaken in the ritual bashing of marketing, PR and sales as dumb fluff. As P. T. Barnum sagely observed, without publicity a terrible thing happens: nothing. In fact, in one of my previous pieces, Organizing to Disrupt, I argued that for growth, a focus on creating a corporate Brand 2.0 ranks with innovation and productivity efforts in importance.

All business functions, from sales and strategy to engineering and finance, like to claim that their perspective of a business is the most balanced and comprehensive one. But objectively, marketing has the strongest claim. Even more than the Wall Street-obsessed CEO’s office, it is marketing that constructs and stewards the core image and grand narrative of a company.

That means, if any one CxO can lay claim, de jure, to being the true best-perspective person in the C-suite, it is the CMO: the Chief Marketing Officer. The CMO is the owner of a company’s storyline and therefore its soul; a storyline that, in the best case, integrates concepts and data from every other business function into an aesthetically coherent whole. It has neither the big picture bias of the strategy office, nor the short-term bias of the operational units. Marketing can avoid the blind spots created by the data-paranoia of sales, and can resist the fatal allure of conceptual “cool” which bedevils innovation. Marketing today is increasingly analytics-driven, but its fundamentally right-brained charter keeps it from keeling over left-brained, unlike manufacturing organizations dazzled by Six Sigma.

Despite this significant position, ironically, as Aaker notes in his discussion of issues facing a CMO, marketing has historically been denied a seat at the strategy table (at least over the last few decades):

The fourth barrier is the lack of a strategic marketing culture, which means that the problems, even those that are severe, tend not to rise to the top. Marketing has been considered tactical, something to be delegated to advertising and promotion professionals who are charged with creating short-term sales bumps. Executives do not understand the value of a cohesive, synergistic overall brand strategy.

Aaker correctly notes that this is a result of nearly three decades of dogma-driven decentralization that drove most marketing activity down product-line and country silos. There is a dramatic example of this pathology in the book; the little-known marketing angle to the IBM shift-to-services story:

Silos, which had controlled 90 percent of the some $800 million budget, leaving only 10 percent for the support of the IBM brand, found their share reduced to 50 percent, a rather dramatic change.

Today, IBM has a crystal-clear market position as an enterprise IT services and consulting company. IBM as a mainframe computer company and personal computing pioneer is history in the public imagination. The company did not shake off history and reconstruct perceptions by accident.

Take a moment to ponder the lessons of this story. Yes, in the end customers buy products and service offerings, either a la carte or in smallish bundles. But a company that is no more than the cacophonic sum of a hundred product/service voices, further fragmented by territory, is a company with rapidly depreciating brand equity. Every product that locally optimizes its marketing spend increases the marginal selling costs for the next product. In the worst case, you get every-product-for-itself.

But it takes a lot more than superficial logo-consistency drives to turn the cacophony into a symphony. Especially today, in an age of user-generated content and highly multi-modal perception of corporations, the CMO’s job of creating a coherent grand narrative is fiendishly tough. It is no longer a matter of buying time on one of a few TV networks or a few obvious newspapers. As Aaker notes:

At one time, brand building could be delegated to an advertising agency and focus groups plus segmentation studies were adequate marketing research. Those days are long gone. Today marketing needs to access vehicles and tools such as digital marketing, CRM programs, social networking, blog management, sponsorship management, PR in an Internet world, and on and on. Further, all marketing research is now increasingly both art form with ethnographic research playing a large role and a science with analytical models, databases, and experimentation…

It is a tough time to own your story, as Sarah Palin discovered, as she lost control over her image with a single interview, with no recovery possible under the onslaught of Tina Fey’s brutal parodies.

From Centralized/Decentralized to Networked Marketing Cultures

Though Aaker overuses the adjective centralized, both the book’s title and the specifics of his ideas make it clear that he isn’t advocating subsuming silos into a centralized marketing function. Rather, he explores various ways to get the right sorts of unitary bias into a networked and federated structure. Hence, spanning silos. If strong silo brands with a weak corporate brand lead to incoherence, strong corporate brands with weak product/service brands risk emptiness. Apple, as an integrated brand experience, arises from both the abstract ethos of “user experience design” and its concrete manifestation in the iPod and iMac brands.

So let’s coin a more accurate phrase, appropriate for the 2.0 era: networked marketing culture (NMC).

Here is Aaker’s list of symptoms indicating a drive towards more NMC is needed:

1. Marketing resources are misallocated
2. Silo-spanning brands lack clarity and linkage
3. Silo-spanning offerings and programs are inhibited
4. Marketing management competence is weakened
5. Success is not leveraged across silos
6. Inadequate cross-silo communication and cooperation

I’ll add a seventh: the corporate brand and its story are incoherent.

The CMO grappling with these issues and hoping to create an NMC faces two challenges. First, how can the company move towards a more optimal mix of network-centric vs. silo marketing spend? Second, within the latter, what product and geographic-territorial silos should receive priority? We’ll get to the first question later, but for the second question, Aaker offers up the following advice:

[Silo prioritization] judgments require a hard-nosed analysis of the potential of the business in terms of growth, profits, and shareholder value, an analysis that compares the silos on an apples-to-apples basis. It also involves cross-silo data plus frameworks and methods that are specialized and will seldom be developed outside of a central marketing unit. Everyone has a growth story, even the most hopeless product and country silos [emphasis mine].

The last line is among the more memorable management lines I’ve read. It is definitely true, with the nominal exception of stuff that has formally been designated end-of-life. If you are interested in the analytics approach hinted at in the quote above, you may want to check out my review of Competing on Analytics.

Rebalancing Central and Silo Spending

Back to the first question. Recall the IBM example. How, absent a crisis of the proportions that IBM faced, can a company move more money towards integrating its brand and reducing balkanization of perceptions?

The book actually has an unusually substantial how portion devoted to this. It begins with a discussion of the various personas the CMO might want to present to silo leaders (facilitator, consultant, service provider, strategic partner, strategic captain), depending on the political situation. Next, there is a nuanced discussion of various organizational forms (such as cross-functional teams and task forces) and how they can be used to gradually gain credibility and build confidence in the NMC initiative through small wins. Throughout, there is a reiteration of the importance of cultivating quality talent over systems and processes (I find myself getting alarmed when business book authors get process-happy to the point where they miss this fundamental idea).

It is the people who make it happen. The right people can probably make virtually any system work, and the wrong people can make the most “optimal” System fail.

The How thread of the book concludes with an alarmingly detailed First-Ninety-Days road-map for the new CMO.

Integrated Marketing Communications 2.0

While much of the book is about timeless organizational issues, there is one that is particularly topical: the idea of integrated marketing communications. This idea is apparently much older than I thought (I was under the impression that it is an Internet-era idea):

In 1971, a Y&R CEO, Ed Ney, announced that the firm would create a team of specialists representing different modalities, such as advertising, direct response, PR, design, and promotion, in order to provide a combined team approach to a client’s communication needs. The effort, supported by acquiring firms, was labeled “the whole egg” and was implemented in part by an acquisition strategy. For the last thirty-five years, Y&R and other advertising firms and communication conglomerates such as WPP, Interpublic, and Publicis have attempted to deliver the whole egg. They have had, on average, a remarkable lack of success, particularly long-term success… a basic limitation of the IMC team is that the vitality of periodically having an open competition for ideas is missing.

But the climate has changed, and along with it, the urgency of IMC. Since there is a lot more going on, let’s call it IMC 2.0.

Recently, the need for IMC has become intense. Reliance on mass media as the cornerstone of the communication program is fading. In Its place is an array of tools that are much more important than ever before, such as sponsorship, PR, digital marketing, social marketing, event marketing, media buying, and more. The concept of “media neutral”integrated communication has become more valued and, for many, critical.

The Glaring Missing Link: Integrating Sales and Post-Sales into Marketing

The one big gap in the book’s treatment is the missing discussion of integrating sales-cycle communication with marketing, and integrating relationship marketing with post-sales customer interaction around maintenance. It isn’t just narrowcast and razor-blade markets, such as defense (one ultimate customer: the President) that need to worry about integrating sales and marketing.

The increased importance of sales-marketing integration is due to two forces. The first is the rise in 1:1 outbound marketing technology. The second is the visible and public duplexing of all customer communications. Whether or not you create public discussion forums for your products and companies, if your customers want to talk, they’ll create their own fora. Even your broadcast advertising will get YouTubed and commented-on.

So when every marketing impression is a sales-conversion opportunity, and every sales contact event pumps marketing content down a word-of-mouth micro-channel (Jeremy Epstein, WOM guru, calls it a 6-billion channel universe), and every completed or customer contact is just another move in a long conversation, shouldn’t the distinction between sales and marketing vanish?

A Thought for a Second Edition

Though the book is clearly written by a seasoned expert with formidable credentials (Aaker is an Emeritus Professor from the Haas school at Berkeley), and despite the excellent content, the book has one structural problem. It’s conceptual framework is classic rather than modern.

While Aaker clearly appreciates the impact and importance of social media, 1:1 marketing and direct Internet sales, his adoption of a classical marketing framework leads him to under-emphasize some of the most interesting discussions. This could have been the heavyweight book that would have blown lightweights like Naked Conversations away, and treated the subject better than tactic-focused celebrities like Seth Godin. It doesn’t do that, but hopefully there will be a second edition written from a solid 2.0 perspective.