Booz & Company Orlando, May 15, 2013

The Organizational DNA of Effective Marketing How to do the right things right Thomas A. Stewart Chief Marketing and Knowledge Officer Booz & Company

Booz & Company 1

Marketers today face a daunting—and exhilarating—strategic agenda

Jonathan Becher’s Five Imperatives for Marketing

Source: SAP CMO Jonathan Becher

Most employees can’t see the market. Marketing does—or should. Marketing

must be the cultural catalyst that gets the company thinking about the market.

Represent the

Voice of the

Market

When people interact with brands, they still have relatively fragmented

experiences—online is different from in-store, etc. Marketing must lead the

effort to address this fragmentation.

Be the Champion

of the Overall

Experience

Companies may own their brand, but they no longer control it. Those outside

the corporate walls have more power over your brand than you do. Marketers

must adapt to this brave new world.

Be the Brand

Steward

For the first time, marketing can get a view of customers in real time. But data

without insight is irrelevant; insight without action is worthless. CMOs must

become better at both art and science.

Capitalize on

Insights

Marketing must rise above company silos and divisions (including its own) and

think holistically about the company’s value proposition, integrating messages

and insights across business units, geographies, and functions.

Be an Integrator &

Force Multiplier

Across the Co

Booz & Company 2

As CMOs, we all know: The heat is on

Pressure to do many

more things

From understanding media to

creating and managing media

From segmentation to analytics;

from “insights” to “big data”

From a few channels to many

From a few geographies to many

Pressure to be cheaper

and more effective

Availability of outsourced

suppliers

Marketing as a “cost center”

The never-ending search for

marketing ROI

Pressure to become even

more strategic

The need to contribute to global,

cross-functional capabilities

The need to “grow our own

growth”

Booz & Company 3

The ability to execute is driven by four pairs of building blocks that constitute a company’s Organizational DNA

Decisions &

Norms

What People Do Decisions describe the underlying formal

mechanics of how and by whom decisions are truly made while Norms represent the unwritten rules of

how we do things around here.

The Four Pairs of Organizational DNA Building Blocks

Information &

Mindsets

What People Pay Attention To Information describes how performance is measured, activities are coordinated, and

knowledge is transferred while Mindsets describe the deeply held beliefs that employees apply when

processing information.

Motivators &

Commitments

What Drives People Motivators are the objectives, incentives and

career alternatives available to employees within an organization while Commitments are the unwritten aspirations that drive and motivate people for the organization and themselves.

Structure &

Networks

How People Relate Structure represents the formal organizational

model, including “lines and boxes” while Networks are informally connected groups of individuals

used to communicate, make decisions or obtain support.

Booz & Company 4

Our research shows that enterprises often fail at execution because they go

straight to structural reorganization and neglect the most powerful drivers of

effectiveness – decision rights and information flow

What Matters Most to Strategy Execution1

Average Strength Index Score (Out of 100)

An organization’s DNA is critical to driving successful strategy execution

1) 26,743 respondents are from 31 different companies

Source: Booz & Company Org DNA Profiler® analysis

25

26

54

50

Structure

Motivators

Decisions

Information

(including Metrics)

Booz & Company 5

“As good as it gets…” Flexible enough to adapt quickly to external market

shifts, yet steadfastly focused on and aligned behind

a coherent business strategy

“Succeeding by the skin of our teeth…” Inconsistently prepared for change, but can “turn on

a dime” when necessary, without losing sight of

the big picture

“Flying in formation…” Often driven by a small, involved senior team, it

succeeds through superior execution and the

efficiency of its operating model

“Everyone agrees, but nothing changes.” Congenial and seemingly conflict-free, this

organization builds consensus easily, but struggles

to implement agreed-upon plans

“Let 1,000 flowers bloom.” Contains scores of smart, motivated, and talented

people, who rarely pull in the same direction

at the same time

“We’re from Corporate, and we’re here to help.” Multiple layers of management create "analysis

paralysis“ in a frequently bureaucratic and highly

political environment

“The good old days meet a brave new world.” Too large and complex to be effectively controlled

by a small team, it has yet to "democratize"

decision-making authority

The Resilient Organization

The Just-In-Time Organization

The

Military Precision

Organization

The Passive-Aggressive Organization

The Fits-and-Starts Organization

The Overmanaged Organization

The Outgrown Organization

“Weak Execution” Cultures

“Strong Execution” Cultures

Sequence your own

organization’s DNA at

www.booz.com/orgdna

We have identified seven organizational “cultures” based on how an organization’s DNA comes together

Booz & Company 6

Marketing organizations display a distinctive profile of organizational “pathology”

Marketing Benchmark Percentage of Responses By Organization Type

4%

16%

13%

14%

9%

6%

8%

12%

18%

"Weak" Other

Outgrown

Fits-and-Starts

Overmanaged

Passive-Aggressive

"Strong" Other

Military Precision

Just-in-Time

Resilient

44% of Marketing

are “Strong”

Execution Cultures

Source: Booz & Company Org DNA Profiler® analysis (overall benchmark includes over 12.4K responses since survey re-launch in May 2011 - Marketing is a subset of overall benchmark)

56% of Marketing

are “Weak”

Execution Cultures

with Outgrown,

Fits-and-Starts and

Overmanaged

percentages higher

than the overall

benchmark

Booz & Company 7

Compared to IT and sales, marketing significantly lags in its capacity to execute and in its organizational coherence

Overall

Benchmark Marketing IT Sales

“Strong” Execution

Cultures1 48% 44% 48% 53%

Organizational

“Coherence Index”2 39% 33% 39% 42%

Org DNA Profiler® Results Percentage of Responses

1) “Strong” execution cultures include Resilient, Just-in-Time, Military Precision and “Strong” Other

2) “Coherence Index” scores of 80 or above which is based on the answers to 5 Org DNA Profiler® questions: 1) Are important decisions quickly translated into action?; 4) Are we

disciplined in focusing our efforts where we can win?; 5) When we look at new opportunities, do we look first at financial attractiveness or at fit?; 7) Do we have a distinctive culture that

gives us competitive advantage?; 12) Do senior executives walk the talk?

Source: Booz & Company Org DNA Profiler® analysis (overall benchmark includes over 12.4K responses since survey re-launch in May 2011 – Marketing, IT & Sales are subsets)

Shows how well an

organization is lined up to

deliver its strategy

Booz & Company 8

With new access to data, marketing can prove

its effectiveness better than ever before

Creative and adaptable – open to new ideas and

eager to learn

Compared to IT & sales, marketing orgs:

– Are more likely to be motivated by values and

pride than by money (53% marketing versus

45% IT and 41% sales)

– Believe their organization has about the right

number of layers (marketing same as sales at

63% and 54% IT)

– Admire expertise: Honor credibility, results and

relationships more than hierarchical authority

(57% marketing, 59% IT and 54% sales)

Trust gap

Too much fondness for the new and crazy

– Not enough effort on focus and discipline

Cultural differences with sales and IT are a

prescription for conflict

– Sales and IT appear to be more execution-

oriented than Marketing

– New technologies likely to bring these

differences into high relief

May not be well lined up to deliver its strategy

Our work and data reveal some interesting strengths and weaknesses of marketing organizations

Strengths Weaknesses

Insights Into Marketing Organizations

Bottom line, marketing organizations have a significant strategic opportunity in front

of them and may not have the current skills to achieve success

Booz & Company 9

We need more than a Model-T engine to win a Formula 1 Race

How can we represent the voice of the customer when we have trouble getting information and data

across the silos between marketing and other organizations, and within our silos?

How can we champion the whole customer experience when our smart, talented people rarely pull

in the same direction?

How can we capitalize on insights when many of our organizations are “outgrown”—too big to be run

centrally, but not yet set up to deliver rapid response to our BUs?

How can we be brand stewards when there is a trust gap between marketing and the rest of the

organization—with your decisions second-guessed a lot?

Above all, how can we be force multipliers when our formal and informal organizations do not work

coherently together?

?

Booz & Company 10

Next steps: Five ways marketers can increase their organizational effectiveness

Rank Organization Trait Building

Block

Strength

Index (Out of 100)

1

Everyone has a good idea of the

decisions and actions for which he

or she is responsible

Decisions 81

2

Important information about the

competitive environment gets to

headquarters quickly

Information 68

3 Once made, decisions are rarely

second-guessed Decisions 58

4 Information flows freely across

organizational boundaries Information 58

5

Field or line employees usually

have the information they need to

understand the bottom-line impact

of their day-to-day choices

Information 55

Top 5 Fundamental Traits of

Organizational Effectiveness

Source: Booz & Company analysis

Sample of Actions That Can Be

Taken By Marketers

1) Assign process owners for key marketing

processes to coordinate activities and assume

accountability

2) Clarify marketing goals and streamline

operational decision making at each level to

increase coherence and reduce the “let 1,000

flowers bloom” approach

3) Introduce information systems that allow staff

to report strategically relevant on-the-ground

information to headquarters in real time

4) Leverage your openness to new ideas to

create cross-functional centers of excellence,

especially with IT and sales, to destroy silos and

cut down on second-guessing

5) Leverage your belief in expertise to become

more evidence-based in everything you do

Booz & Company 11 Booz & Company 11

Here are some tools and articles that may be of use to you

Take our Booz & Company Org

DNA Profiler® survey at

www.booz.com/orgdna to

understand the “health” and overall

effectiveness of your organization

Our Booz & Company authored articles

on the right can be found at

www.booz.com or www.booz.com/orgdna