Harvard Business Review Video in the Future of Marketing
Reprint: R1010H Until a few years ago, General Electric believed that its products could virtually market themselves. Marketers had been express to passing information along to the people centrally responsible for innovation—typically in R&D or engineering—with the issue that brilliant minds were languishing in dead-terminate jobs. And when it came to discussions about corporate strategy, marketing wasn't at the table. But as GE's businesses matured, the company realized that it could no longer win merely by launching increasingly sophisticated technologies or taking existing technologies to new markets. To succeed, GE would need a marketing engine that could collaborate directly with customers and lead to new markets—1 with standards every bit rigorous equally those for functions such every bit finance and human resources. CEO Jeff Immelt issued a mandate that marketing should be a vital operating office beyond GE and an engine for organic growth. The marketing team took on the challenge of identifying and codifying from scratch the skills information technology would demand. The result was a marketing framework for the unabridged company along three dimensions: principles (creating a common language and set of standards), people (getting the correct leaders in place), and process (including very specific measures for grading functioning). Marketers took their place aslope technologists and had a voice before in the process, as GE'southward innovation expanded to include ideas grounded in customer needs and market trends.
But ten years ago General Electric had no substantial marketing organization. For decades the company had been so confident in its technologies that information technology seemed to believe the products could market place themselves. People designated as marketers were assigned to sales support (lead generation and merchandise shows, for example) or communications (ad and promotional materials). In discussions about corporate strategy, marketing wasn't at the tabular array. At all-time it was considered a back up office; at worst, overhead. In a few GE businesses, such as appliances and the former plastics unit of measurement, marketing was a feasible contributor; but in most of the others, its bright minds were languishing in dead-cease jobs.
Many internal skeptics did not see how marketing as a role could help GE grow its businesses. Take GE Aviation, the multibillion-dollar sectionalisation that develops and manufactures jet engines for commercial and military aircraft. The commercial aviation industry is relatively simple: a handful of shipping manufacturers, two GE competitors (Rolls-Royce and Pratt & Whitney), and well-nigh 300 airlines. "Yous could put the entire industry in a conference room—information technology's that compact," says Thomas Gentile, the vice president of engine services for GE Aviation and a quondam chief marketing officeholder at GE Capital letter. "Then the challenge was how could marketplace research really help u.s.a.? Considering nosotros could literally pick up the phone and call anybody in the industry who mattered and find out what was on their mind."
But things were changing. The businesses were maturing, and like other companies, GE was learning that information technology could not win simply by launching increasingly sophisticated technologies or by taking existing technologies to new markets. Some of its best-thought-out new offerings were fast condign bolt. Even executives within a business organisation like Aviation were having trouble making sense of a rapidly changing industry. Fuel prices were volatile; demand was slowing; stronger regulatory oversight was around the corner. How could the business concern remain competitive and also prosper? "Nosotros didn't really know how to translate what we knew about customers into the adjacent growth idea," Gentile admits.
GE'due south solution was to focus on growth from within, across all businesses—a shift from the past, in which the acme line was grown primarily by acquisition and the bottom line past seeking out efficiencies. The refocus ushered in a strategy fueled by technology, innovation, global markets, and stronger client ties. To succeed, GE would demand a marketing engine that drove more-direct collaboration with customers and led to new markets—1 with standards as rigorous as those for functions such as finance and human resources. CEO Jeff Immelt issued a mandate that marketing should exist a vital operating function across GE that spurred organic growth.
Recognizing that marketing was vital to all GE units was i affair; acting on that recognition was an entirely unlike thing. The marketing team took on the challenge of identifying and clearly codifying the modern-day skills it needed. Nosotros had to define what success would look like and draw how we would measure results. At the time, GE had no ready or consistent way of calibrating marketing efforts across units, markets, or business concern models, and nosotros couldn't find one in any textbook. Perhaps most challenging, we had to place and develop leadership capabilities in our squad, whose track record was uneven at all-time. In the process of creating what we believed would exist the definitive marketing role, we arrived at new ways of thinking almost marketing skills and about how to compose a first-charge per unit marketing squad.
Perhaps most challenging, nosotros had to identify and develop leadership capabilities in our team, whose rail tape was uneven at best.
The result was a marketing framework for the entire company along three dimensions: principles (creating a common language and standards), people (getting the right leaders in place), and process (including very specific measures for grading functioning). This article focuses on the people aspect, but the three are interdependent and all are disquisitional. Though this is primarily a GE story, its implications are relevant for marketing teams anywhere—and even for people in other functions, because it shows how a team can claiming expectations and perceived limitations.
Not Just a Back up Office
Our framework centered on giving marketing a revenue-generating role in its own right. If GE could no longer rely solely on engineering science breakthroughs for hefty margins, nosotros'd have to find both innovative ways of serving customers based on investments we'd already made and opportunities in new markets, new segments, and new products.
Marketing became the torchbearer for what was internally called "commercial innovation." GE already had a long and rich history as a technology innovator. Now its innovation expanded to include ideas grounded in customer needs and market trends. Marketers took their place alongside technologists and had a voice before in the process, to ensure that GE'due south offerings were differentiated and aimed at the correct customer segments. As Immelt saw it, marketing would have a "line" part instead of its historical "staff" function at GE, and would be held responsible for critical operating mechanisms such as pricing and quantifying value for customers. He has pushed GE's global growth with a mantra of "more than products at more than price points," meaning that GE must non only target high-terminate users just also apply "just what's needed" applied science to better run across customer needs. (See "How GE Is Disrupting Itself,"HBR October 2009.)
To get their colleagues to take them seriously, GE's marketers designed an exhibit to communicate the value of their work. It demonstrated, for case, the diverseness of customer types and the "bounding main of sameness" among GE and its competitors.
Customer Persona
Ocean of Sameness
The proof of marketing's expanded role lay in a serial of new cross-company initiatives—among them Imagination Breakthroughs, a portfolio of growth projects created in 2004 and designed to engage marketing and engineering in ways that would create new value. These projects get attention, funding, and time to develop, which has been peculiarly of import in an economical slowdown, when future-oriented projects are often an easy target for cuts. GE's development of sodium batteries, which was born of the need for new technology to power hybrid locomotives and grew into a stand up-alone business that serves telecom and other industries new to GE, was an Imagination Breakthrough. A GE Healthcare offering that combined existing technologies for a new purpose—namely, assuasive emergency responders to amend distinguish between ischemic and hemorrhagic strokes and and so direct patients to the right hospital for care—was some other. The Imagination Breakthroughs collectively generate $2 billion in new acquirement annually.
Ecomagination, GE's clean-technology initiative, was launched in 2005. It directs investment in R&D and product evolution in the green and sustainability arena. Now a multitiered business program, a point of view for the brand, and a purpose for GE'south people, Ecomagination has delivered more than 90 new products and $70 billion in revenue in its first five years. In all these initiatives marketing gets into the game at the start, sizing "white space" opportunities, meshing unmet needs with new technologies, and moving our brand in new directions.
"Marketer's Deoxyribonucleic acid"
The marketing leadership at GE had fix an aggressive calendar, but no corporeality of ambition tin make upward for a famine of talent. And then the team doubled its ranks, from 2,500 in 2003 to 5,000 today. CMO positions were created for all GE's businesses and at the corporate level. These leaders were both tapped from within GE and hired from a number of consumer- and business concern-oriented companies. More than one-half of the internal ones lacked formal marketing training. They had started with the company every bit engineers, salespeople, or Six Sigma leaders and had been promoted because they were potent performers who spoke the same language and grew up in the same industries as their customers. They learned marketing on the job as best they could, given our limited experience. The outside hires were more classically trained; many had MBAs and most had years of proven success at more-sophisticated marketing organizations. We had templates for the roles and responsibilities of these marketers. We expected that the external people would elevate our capabilities, and the internally grown ones would connect the dots culturally. We fix grooming programs to make sure that over fourth dimension, all of them could main our core principles. The marketers were only as well happy to align themselves with GE'southward healthy growth during this menstruation.
When the downturn came, in early 2008, we asked ourselves if marketing could perform in a world of slow to no growth. Did we take the skills necessary to create value in tough times? Furthermore, subsequently five years of investment and evolution, were we any skilful at marketing? How could nosotros know we were delivering results?
To reply those questions, nosotros conducted an assessment of the marketing squad'south skills and an inspect of its contributions. (See the sidebar "The Maturity Evaluation.") Despite the squad'south combined knowledge and capability, its touch and results were inconsistent. Why?
How we measure ourselves
In the spring of 2010 every CMO at Full general Electric convened all his or her marketing teams (each has virtually 10) for what will become an annual self-evaluation. Information technology measures performance in viii major capability areas, each requiring specific skills with detailed definitions. For each capability we offering a clarification of what success looks like and how we measure it. The level of granularity and precision—we have a full of 35 skills and 140 definitions—makes information technology impossible to fake your way through.
The teams score their units' 35 skills from i (minimal) to 4 (recognized by industry peers equally all-time in grade) and review their assessments with business leaders to make sure they're realistic and relevant to unit goals. Nosotros so whorl upwardly the scores to the 8 adequacy areas. When the scores are aligned across the system, the consequence is a summary map that clearly shows where nosotros are falling short—and where nosotros take pockets of forcefulness. A business might detect, for instance, that its marketers are good at pricing but the weakest in the company on branding and communications. The value of a common linguistic communication, rigor, and process across a previously highly subjective part cannot be overstated. Aviation, for instance, can compare notes with Healthcare. This is proving to be very engaging within and across business units.
Nosotros at present have hundreds of completed self-audits, giving CMOs and CEOs a benchmark confronting which to measure comeback.
When we looked specifically at marketing leaders, whose skills had to be a priority if we were to make the role a truthful source of sustainable competitive advantage, we were all the more perplexed. The trouble was that the traditional frameworks nosotros had studied didn't provide plenty guidance for identifying those skills. The frameworks practice an excellent job of outlining marketing principles but not of translating them into action. It became evident that disquisitional behaviors were (a) omitted from classical marketing training, and (b) often underappreciated by GE'southward operating leaders, in large part because those behaviors were sometimes at odds with the behaviors of other functions.
We would accept to place the requisite skills ourselves, by studying the people on the team who were excelling. We learned that four fundamental roles are needed to transform marketing into a strategic function: instigator, innovator, integrator, and implementer. We call them "marketer'south DNA." Each part has go absolutely crucial at GE.
The Instigator
Marketing leaders demand to call up strategically and challenge the status quo, using their unique external vantage point to see what may not exist apparent to others in the business concern. Sometimes this entails moving across preaching most marketing's merits to imagining scenarios that business heads might face—perhaps marketing's most important role. Leaders must be willing to push change. But the hard truth is that any affection for modify agents dissolves when people don't like what'south being proposed. Perhaps that explains why, according to several surveys, CMOs concluding simply 23 months, on average—simply over one-half the tenure of other C-level positions.
Co-ordinate to Jean-Michel Cossery, the vice president and CMO of GE Healthcare, his division had traditionally acted every bit a "engineering science pusher." "We had a tendency to develop products considering we could do it and not because they were wanted in the market place," he says. That approach was unsustainable. After Congress enacted the Deficit Reduction Human action of 2005, wiping $13 billion out of medical-imaging reimbursements most overnight, GE Healthcare had to explore new markets and offerings.
Cossery started an internal incubator fund that enlisted and sponsored a small skunkworks to scan the entire business landscape, as opposed to thinking only about a product or a P&L silo, and come up with marketing ideas that were either not on the business leaders' radar or considered elusive. For example, Cossery believed that the health care system existing in 2005 would not be able to run into the demands of an aging population that wanted to be independent and stay out of hospitals. In combination with a growing number of chronic-care patients, this represented a potential $10 billion market with huge commercial opportunity. Simply GE didn't have an offering for that market. Cossery'southward team connected with scientists from GE'southward informatics lab, which had been experimenting with sensing technology to track human activity—for example, that of patients in their homes. They created a "home of the future" at GE'southward R&D center in Niskayuna, New York. The team built algorithms tied to patients' movements and fifty-fifty conducted tests in the homes of researchers' elderly parents.
Cossery's squad ran into internal resistance because some viewed the project as as well small for GE'due south target of hospitals and large physician practices. But ultimately, armed with research findings and product prototypes, marketing joined with product evolution to launch the QuietCare home sensing organization. Home wellness is at present a stand-solitary business organisation and a priority for GE Healthcare. Information technology's yet nascent, and enthusiasm for it isn't unanimous, but infirmary clients have begun asking for home solutions to prevent readmittance. This past August, GE announced a joint venture with Intel to speed the progress of dwelling wellness-monitoring innovations.
The Innovator
While it was relegated to a support part at much of GE, marketing had been limited to passing information along to those centrally responsible for innovation—typically R&D or engineering. The marketers might, for instance, recognize a customer trend and communicate it to the product R&D department. Or they might be called on to develop a creative advertisement campaign for a new product. Other than that, marketing groups and CMOs had no consistently proficient grasp of how to shape the company'southward innovation agenda. We had to expand our thinking beyond product features and functionality to include pricing, commitment, customer engagement, complicated risk-reward sharing, and new business models—all part of commercial innovation.
This was familiar territory for Lorraine Bolsinger, the president of systems of GE Aviation, who was its CMO when she led the business into the very light jet space—retrieve "air taxis" that conduct four to half-dozen passengers to small regional airports—in 2004. The idea of air taxis seemed crazy to nigh people at GE Aviation. Why did the business need to be in that market when it was doing well in the large commercial and military space? Keep in mind that engine evolution cycles can last a decade or more. Commitment to a new space is a big delivery to the future.
The thought of air taxis seemed crazy to most people at GE Aviation. Marketing showed why it wasn't.
Bolsinger and her team nonetheless believed that this market was important to GE. The commercial airline industry had been steadily moving abroad from a hub-and-spoke arrangement to a point-to-indicate organisation, led by the boom in regional jets. Why not go even smaller? Information technology was tough to get people to listen at kickoff, but Bolsinger brought in entrepreneurial air taxi operators who were smart and sophisticated and could explicate how their concern model differed from the traditional jet model. GE's engine-design expertise, greater than its competitors', could add significant value by lowering operating costs (through burning less fuel) and increasing asset utilization (through improve reliability and longer cycles), making the economics work for air taxi operators.
More than recently the Aviation marketers realized that their business was selling engines on the footing of thrust and other quantitative metrics, whereas it could be selling on the basis of operational efficiency and resource productivity. That research-fed insight led, for example, to myEngines, which provides customers with real-time service updates for their aircraft engines: what repairs are required, how long they will have, how much they will cost, and and so on. The information tin can be conveniently delivered to customers' smartphones or tablets.
The inspiration for myEngines came from Tim Swords, a marketing executive at GE Aviation, who thought of information technology as a Facebook for engines. He and his team introduced a pilot program to test applications with a modest group of customers. The response was overwhelmingly positive, strengthening a business organisation instance that led to funding for full development. The application was commercially launched at the 2010 Farnborough International Airshow, with an announcement that its get-go customer, LAN Airlines of Chile, had selected myEngines for its entire fleet of some 100 aircraft.
Innovative marketers utilise unique marketplace insights to come up with products, services, or solutions based on untested ideas. P&1000 and other consumer-facing companies take that wide view of innovation, but it has been ho-hum to develop at traditionally business-focused companies like GE. The more an idea deviates from the status quo, the greater the market opportunity—and, of course, the larger the personal risk to whoever is pushing the idea. Marketing leaders demand not only the backbone to pursue bold initiatives but too the persistence and political skills to overcome naysayers. Before the business model and payback for myEngines were articulate, Thomas Gentile recalls, "nosotros had to fight tooth and blast to get the resources nosotros needed."
The Integrator
An integrator builds bridges across multiple organizational silos and functions to unite them on a unmarried path. Sometimes he or she must act every bit a "translator," making outside customer insights relevant and meaningful to those within the organization. Marketing is uniquely positioned to practice this, but when nosotros began, the team was nowhere near beingness capable of that office. We realized that we would have to speak product language to R&D and customer language to the sales force—to unite customer-facing functions with the back of the organization and enable the company to cross-sell arranged products.
In other cases integration may simply hateful bringing disparate groups in the organization together to collectively assess market dynamics. Consider GE Capital. Possibly no other GE business organization has gone through as much upheaval in the past two years. Previously, GE Capital had been by and large a deal shop. "We had abundant liquidity and would attempt to find every bargain that was out there," recalls Lee Cooper, the vice president and CMO of GE Capital letter, Americas. Simply the global recession racked the industry in 2008. "We were looking at our business shrinking from about $650 billion in assets down to near $450 billion," Cooper says.
So Cooper and Dan Henson, the CEO of GE Capital, Americas (and a former corporate CMO), gear up a weekly "state of war room" in which the division'southward senior leaders would look at key metrics—margins, pricing, client pipelines, and so on—of its different businesses and take quick action to address whatever issues that surfaced. Before the crunch, the partition had reviewed many portfolios in aggregate, checking on business organization and industry health indicators monthly or fifty-fifty quarterly. Speeding up the process allowed GE Capital to quickly reallocate resources when necessary. For instance, as losses mounted, it terminated sales efforts in certain industry sectors and redeployed the sales teams to healthier ones, netting billions of dollars' worth of new avails.
More than 20 GE Capital executives participate weekly in the war room, including the heads of the business concern units, the CEO, the CMO, the CFO, the CIO, the full general counsel, the head of operations, chief run a risk officers, the head of concern development, and the head of HR. Things get done—they don't get stuck in committees or mired in assay paralysis. In fact, the war room concept has been so successful that the private concern units now have their own miniversions.
"At first the state of war room was a process, but it's since get more of a mentality for making commercial decisions and for instilling accountability," Cooper explains. "It'southward become role of our culture." Indeed, GE Capital plans to proceed the exercise even after the economic system rebounds. "The danger is that when we become out of this recession, nosotros don't manage our business with the discipline and rigor that is needed," he says. "Just that would only put us in the position of not beingness able to reply to the adjacent recession until it's also late."
The Implementer
All leaders must be able to execute, but marketing executives take to be particularly skillful in this expanse considering they ofttimes don't have much organizational clout. At GE, if you don't run a P&50 business, it's assumed that you lot probably don't have the influence to drive change. Then marketing leaders take to build coalitions and persuade others, using functional expertise, insights, and teamwork rather than authorization. They have to mobilize people and, quite but, get things done. Marketers are too often painted equally ideas people who don't stick effectually to run across their ideas implemented or as wonks who prescribe heavy doses of theory. Then if they want credibility, they have to evangelize results.
Marketers are also frequently painted as wonks who prescribe heavy doses of theory.
Marketing leaders at GE Energy, the multibillion-dollar division that sells generators, gas and wind turbines, transformers, and other free energy-related products and services, realized that its different P&Fifty groups had no common methodology for assessing competitors from a big-picture perspective. "Everyone was taking a parochial view, from a particular business organisation unit or product standpoint," recalls Mark Dudzinski, the CMO at GE Energy. They relied on internal perspectives and anecdotal input; competitive intelligence consisted largely of passing along articles containing data nigh rivals.
So marketing spearheaded the institution of a Center of Excellence (COE) that would gather and disseminate key competitor information. The intent was to offer insightful analysis as well as original inquiry. The center started by publishing a quarterly overview of each major competitor that included basics such as the competitor'southward versus GE's fiscal results, what analysts were proverb, what the competitor's executives were saying, and the competitor's big wins. But the COE's biggest contribution is its delineation of potential scenarios, which conceptualize, for example, price moves, growth into new markets, production innovation, and acquisitions.
The Center of Excellence's biggest contribution is its delineation of potential scenarios.
The COE did indeed analyze and predict as well as written report. In i case it foresaw which companies would enter a sure segment of the power generation market and which wouldn't, which helped GE craft its own strategy for that business. (For example, ane analysis indicated that GE should not respond to a competitor's low bids because its prices appeared unsustainable given its business model, which would not change because information technology was the competitor'southward cash moo-cow.) It besides foresaw which companies would build new, larger gas turbines and which would not, affecting GE's investment in new products. In another case the COE teamed with HR to clarify what kinds of talent competitors were hiring globally so predict what products they were most probable developing. "We went from offering tactical advice—how to compete against a particular company, for instance—to providing more strategic industry data," Dudzinski says.
As discussion of its early successes spread, the Center of Excellence was asked to consult on various projects. Its data and insights are now part of GE Energy'southward weekly operational meetings, making marketing an integral component of the business's decision making process.
A Path Forward
Nosotros've discussed the iv components of marketer'due south Deoxyribonucleic acid as separate behaviors and actions, merely any ambitious marketing effort requires that they be in concert. All four are essential, but a marketing leader who has them all is rare. Fortunately, the office doesn't crave such a person. One GE business organization has two CMOs with complementary areas of expertise: The first is exceptionally good at integrating with other functions, particularly technology and sales, and at getting things washed. The second peers around corners to decipher and clarify cardinal trends and industry expectations.
That said, GE is quick to recognize and reward marketing leaders with the right Deoxyribonucleic acid. We identify our top 50 up-and-coming marketers as "rock stars" and make their development a company priority. They receive boosted coaching and career counseling, and GE includes them in planning the marketing part'south future.
For the first time, GE is treating marketing as a critical function—one for all seasons. This energizes our marketing community and prompts effective dialogue with executive teams. Nosotros're edifice an extensive organization to circulate all-time practices and embed them in every business unit. We started an internal social network called MarkNet—a real silo buster. More than than two-thirds of our global squad members at present blog and communicate beyond businesses, levels, and geographies. Our quarterly Marketing Council sets the stage for cantankerous-business and intrabusiness projects and gives GE marketers around the earth an easily understood language and framework.
GE's marketing transformation is a piece of work in progress. We continue to test new value propositions, to develop new customer-oriented metrics, and to explore opportunities for making digital connections with the marketplace. We accept gained momentum through pregnant wins, but we have yet to achieve our true goal: "gold standard" marketing throughout the arrangement. The journey continues.
A version of this article appeared in the October 2010 issue of Harvard Business Review.
Source: https://hbr.org/2010/10/unleashing-the-power-of-marketing
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