Peter Drucker (author, speaker and management consultant extraordinaire) once said,
“Business has just two functions: Marketing and Innovation”.
I always liked that quote. In fact I like all quotes that are short and get straight to the point. Since “innovation” is simply doing something that already exists a little bit better than everyone else, I guess today’s take on that quote might be “marketing & disruption”. (Disruption goes one step further than innovation, by creating something new that makes the old thing obsolete). But that’s by the by…
It was Drucker’s quote that sparked a debate a couple of years ago when I was chairman of The Drum’s Social Buzz Awards. As we were looking over all the entries, many of which did a really fun job of entertaining audiences globally, generating “reach” or increasing “awareness”, we just kept coming back to the same two questions. We thought that where all commercial marketing was concerned, these were the only two questions that mattered.
That’s it. That, we argued, was all marketing was ever supposed to do. We measure if something made money by ROI, and we measure if it saved anything through operational costs savings. It’s not sexy, but commercially it’s pretty much the only way most marketing campaigns get the respect they deserve. Especially in the boardroom or with among non-marketers.
It is of course a nuanced argument and we could argue, “did it make people happy?” and throw around metrics like NPS as a measure of how happy said marketing campaign made it’s audience. I’ve been working with a multi-national company who has a vision to “improve the lives of billions of people”. It’s a wonderful goal and part of a deep rooted vision that they believe in, but how to you measure that? I’ve seen consultancies try, and charge millions to create a “Moneyball number” that measures such a thing, but I’ve also seen those teams cut and those analysts re-assigned when it didn’t quite work out.
Marketing has always struggled to measure stuff.
I’m a big fan of NPS scores that measure customer satisfaction, but as a metric it is not a million miles away from the Nielsen ratings figures that we have tried to measure TV and radio campaigns with since 1947. Nielsen ratings are the best way to measure the impact of TV campaigns not because it is the best way to measure TV campaigns, but it’s because it’s pretty much all we’ve got. Samples sizes are small, not everyone believes the results…
In 2016 there are supposed to be 425 different marketing KPI’s! Here’s just a few of the B2B metrics that were collected in 2014 >>
It raises that old argument,
“Just because you can measure everything doesn’t mean that you should”.
So why Peter Drucker? And why is there a photo of the Al Jazeera newsroom leading this post?
Firstly, for 2016 I want to suggest an amendment to Drucker’s marketing mantra that I have been championing over the last few years.
“Business has only two functions: Marketing and DISRUPTION”.
Secondly, as much as I believe that (the majority of) marketing exists to do only two things [make money / save money], I believe that in 2016 we should add a third.
It’s a line I heard from the then Director General of the Al Jazeera news network, Wadah Khanfar. As a news network, Al Jazeera needs to make money and save much as much as the next news organisation, but they have made their biggest impact from trying to predict the next crisis. Something we all know that the business world does not do very well. (Enron, Kodak, Blackberry, Blockbuster, Phones 4U, SAAB, RadioShack, Banking 2008, VW…)
The line was this…
“CEO’s used to be judged by how well they acted in a crisis. Today they are judged by how well they anticipate one”.
Given that marketing is the first line of defence whenever there is a crisis (how do we communicate our message or response accurately and respectfully); and the amount of data and intelligence in the world is now so vast that we should be able to predict a crisis, I think where marketing and big data is concerned – beyond making money and saving money – AND in a world where TRUST is everything ~ predicting a crisis is the new battleground.
So, back to Peter Drucker ~ “Business has only two functions, marketing and innovation“. Perhaps it was when he said it back in the 90’s, but does that still stand today?
Well, if innovation is just doing something new better than everyone else, that might mean having a social media command center that allows your brand to respond in real-time. Brands have been building these for years with varying degrees of success.
But if you really want to get ahead by disrupting your industry (by doing something new that makes the old way of thinking obsolete), then build a command center that predicts a crisis, not just allows you to manage one.
You heard it here first.
So if like me you work in marketing and are wondering where all this leaves us, maybe a short summary and a new set of priorities is in order?
Fred Reichheld (the guy who actually invented the NPS score) wrote one of the best academic books I’ve ever read on marketing and service ~ Ultimate Question 2.0. How exactly do you make money and save money. He explains it all in detail and gives you real numbers from real case studies, something that most marketing books hardly ever do. Well worth a read.