Corporations Are an Endangered Species, says Joseph Jaffe
By Christopher Tolve | 9.22.19
“The very factors that helped corporations grow — size, scale, economies of scale, efficiencies of scale, cost-cutting — are now a growth inhibitor,” asserts Joseph Jaffe, author of Built to Suck and cofounder of strategic consultancy HMS Beagle.
It has been a quarter-century since digital came on the scene, and most marketers have been scrambling to keep up with the resulting strategic innovations and rapidly evolving consumer tastes and preferences. That task is especially difficult for large brands corporations. Change can be challenging when you’re turning a tanker versus a speedboat. The rise of fast-moving direct-to-consumer brands has wrought waves of disruption that leave the future of many big businesses in question.
Jaffe, known for his candor, uses Built to Suck to call out the challenges competing in this market that, ironically, enterprises have brought on themselves through their past successes. He also shares advice on how marketers from companies of any size can navigate today’s changeable environment.
In an interview with DMCNY’s MKTGinsight, Jaffe gives a sneak-peek into that insight.
Why do you consider corporations to be an endangered species?
There is a quote widely attributed to Darwin that basically says, “It is not the strongest species that survives, nor the most intelligent, but rather the one that is the most adaptable to change.” So, the question is: Are corporations changing fast enough and profoundly enough? And the answer is an unequivocal no.
In my book, I lay out a very simple framework of past, present, and future. What percentage of your time, energy, talent, and resources are you spending on the past? That includes things like history, heritage, and best practices. Then there is the present, which includes operational efficiencies, excellence, and service. But the future is where the transformational stuff is, the stuff that disrupts.
Evolution isn’t about doubling down on the past or trying to maintain the present; it’s about looking to the future.
How does marketing fit into this?
Among thousands of the world’s largest companies, only 26 board seats belong to marketers. So, marketing has become delegitimized, marginalized, and even made into a joke. But if the corporation dies, then marketing, advertising, and publishing die with it. Fifty-one percent of the Fortune 500 companies have had declining revenues over the last three years, and that is the beginning of the end. That is akin to the Titanic trying to turn itself around.
How can marketers adapt and evolve?
Marketers are in the survival business…. If you perceive it as a negative, then you are in flight mode, which is self-preservation. If you perceive it as a positive, then you are in fight mode, which is adaptation.
Survival is glorious. If you wake up tomorrow and you’re alive, then you’ll have another opportunity to get things right. Survival is a process, a journey, and a means to an end. That end is to thrive, and thriving is returning to real, organic, customer-driven growth. If a company is not growing, then that company is dying.
Is it possible for a company to change too fast?
Yes. Going too fast looks like what JC Penny did a few years ago. It brought in Ron Johnson [as CEO] and he just cut-and-pasted the Apple Store’s model for success into the company. Well, it failed miserably.
The rate of change has to fit the company’s culture. That doesn’t mean it will be comfortable; it should be uncomfortable. As [Tony Robbins says], “Change happens when the pain of not changing is greater than the pain of changing.” Of course, there will be pain, but it should not be so much that it shocks the system and sends it into cardiac arrest.
Your vessel has to be sea-worthy — that is, have a modern brand; have a crew to steer the ship — that is, have talent design; and, finally, have a map and be able to set sail — that is, transform your business). You have to crawl, walk, and then run.
What are large corporations doing wrong?
You can’t limit yourself. You have to build bridges to the outside world. Every large corporation has suffered from its inability to play nice with the outside world, whether it’s the hubris of trying to build everything itself, or even worse, doing massive deals with giant consulting companies such as Deloitte,PwC, KPMG,andAccenture.
The result is an 800-pound gorilla playing with other 800-pound gorillas, which only leads to more size and girth, and less agility and flexibility. Every one of these legacy deals should be signed with a one-year renegotiation clause, instead of being five- or 10-year deals.
What role can marketing play in all of this?
Anything that touches the customer directly or indirectly, whether it’s B2B or B2C, should be a part of marketing’s portfolio. That is not up for debate.
Right now, the only thing that marketing seems to truly own is marketing communication and advertising, and that is probably why CMOs have become an endangered species within an endangered species.
I saw a good example when I worked at Nando’s Chicken [in South Africa]. I describe it as Starbucks meets Subservient Chicken on crack, because it’s a premium-priced, experiential brand with incredibly provocative, irreverent advertising and marketing.
Do you see any signs of change in the role of the CMO?
We have seen some interesting generational shifts in the tenure of the CMO. Some companies have tried bringing in the young digital natives, and that didn’t work at all. What they needed to do was bring in CMOs who actually had enough experience integrating digital, or just elevate the chief digital officer. Now, 15 or 20 years later, that may finally be happening.
But it is important to emphasize that the need to adapt doesn’t end with digital. It is a shifting goalpost that has moved from social to mobile to emerging technology … to AI. So, the lesson I have learned is that you need to be a generalist, not a specialist. And if you are going to be a specialist, then you need to specialize in change.
Another way that companies have tried to innovate is by creating new titles such as chief customer officer, chief technology marketing officer, chief innovation officer, chief conversation officer, and so on. But a title and a new business card do not fix the rotten organizational structure that refuses to support the marketing function.
What does the future look like for CMOs?
The question is: Are CMOs set up to succeed? And the answer is: Hell, no. Until [the role and marketing industry are] structured to succeed…, it will continue to be musical chairs and Groundhog Day. We always think we will figure it out in the end, but we never do. We keep making simple mistakes, even with something as easy as investment versus consumption.
I was once at a Unilever conference, and someone stood up and shouted, “Twenty-three percent of all media consumption is online, and yet if we doubled our investment in digital, we would only be spending 3 percent.” All of the people who predicted that digital was going to rise were correct, and then, of course, everyone else had to catch up. It is the same story with social, mobile and emerging technology. You do not have to be a genius to see where the pack is heading; you can just see it.
Now we are making the same mistake with AR and VR. The consumers don’t care about corporate prioritization; they just continue playing, experimenting, and getting more comfortable, and before we know it, something else is mainstream and everyone is trying to catch up again. Just when we feel like we have level footing, the next wave crashes on us.
About the Author
Chris Tolve is an editorial intern for DMCNY, as well as for The Drum. He attends Ithaca College.