Growth Leadership And Transformation Go Hand In Hand
It will take a new generation of growth leaders to captain the 21st Century Commercial Model.
By Stephen Diorio
The pandemic induced recession has created a dramatic shift to digital selling channels and tighter controls over sales and marketing spending. This has accelerated the mainstream adoption of a 21st Century Commercial Model that is digital, dynamic, data-driven, distributed and directly accountable for driving firm value.
But like other modern machines that take a leap forward in speed, complexity, and performance – such as the Titanic or Boeing Flying Fortress – it’s going to take a new set of leadership skills and structures to captain this ship.
A new type of executive growth leader is needed to lead the modern selling model. This means business owners and CEOs need to define their leadership structures, incentives, and roles as carefully as they craft their transformation strategies. The success of either one very much depends on the other.
“With all the focus on digital transformation and AI, it’s important not to lose sight of leadership.” reports Chris Hummel, a Managing Director at the Revenue Enablement Institute. “At a fundamental level sales and marketing transformation is much more a change management and leadership challenge, than it is a technical one.”
Brad McLane, who leads the Chief Marketing Officers practice at ZRG Partners reinforces this sentiment. “Your organizations approach to talent will have as large or even larger impact on the future competitiveness and growth of your firm as digital transformation, AI and go-to-market process redesign initiatives aimed at improving sales performance,” reports McLane. This is leading to a fundamental, even existential change in the structure, remit, and talent requirements for growth leaders in the C suite. The most visible of these changes has been the rapid evolution of the CMO role in recent years. But these changes are impacting all traditional growth executive functions – sales, service, innovation, and business unit management.
“The CMO role is evolving into a broader “CXO” role – a Chief Growth Officer or Chief Commercial Officer – that has higher scope of authority, a greater understanding of the customer, and a higher degree of accountability for all the organizational levers that impact firm value – revenue growth, customer experience and customer lifetime value,” echoes Giovanni Lamarca who leads ZRGs Consumer Goods and Services Practice.
McLane and Lamarca recently published a 2021 Market Landscape Analysis which advises boards and CEOs to challenge their traditional notions of growth leadership, organization, and talent if they want to adapt their approach to drive growth in the new market reality.
“The CMO as a function is a 35-year-old organizational manifestation that is constantly evolving,” warns McLane, who has 25 years of experience placing Chief Marketing Officers. “The CMO role first emerged as a C-suite function because of the growing value and importance of brands and the consumerization of almost every industry including technology and health care. Over time the role has evolved from demand generation to revenue generation as marketing and sales budgets tighten and pressure to demonstrate their financial contribution to the business grows. Today, we are seeing the CMO function morph into a hybrid role that has control over more aspects of the growth formula including sales, marketing, customer service and the channels and systems that engage customers.”
Brad’s historical perspective is appropriate for framing the evolution of growth leadership in the C suite. While sales is among the world’s oldest professions – marketing is not. For example, the notion of a brand as a business asset is relatively new. While brands were used to mark cattle for centuries, their formal use in business started only 150 years ago, when the first Budweiser bottles were produced in 1876. Brand management as a business discipline has only been around for 70 years. Digital marketing and media has been around for less than 25 years. And artificial Intelligence has emerged in sales and marketing applications in only the past decade.
The Market Landscape Analysis brings these trends to life by showing how major consumer brands, including: AB InBev, Conagra, Kraft Heinz, Kimberly Clark, Hershey’s, Heineken, Constellation Brands, and Mondalez have all moved away from a corporate CMO role to an Enterprise Chief Growth Officer with an expanded remit for both demand and revenue generation. Others like Campbells, Danone, General Mills and Reckitt Benckiser are pushing growth leadership into the business units where the growth is the responsibility of the P&L owner.
All this activity is not random. Rather it’s a sign of fundamental changes to the commercial model that have been happening for decades.
The pandemic induced recession has accelerated this evolution of the commercial model. This has business leaders experimenting with new organizational forms that are intended to transform sales, marketing, and service in ways that accelerate growth and address the needs of digitally enabled customers. One thing firms are doing is to place the key functions that drive growth – marketing, sales, pricing, and service – under a single executive.
“A stronger growth leader – or CXO – can improve your firms ability to do the 18 things that create value – which include sharing information across the organization, better leveraging the digital channel infrastructure, building perceptions of innovation, and enabling customer facing employees at the front lines,” reports Chris Hummel, who is leading a research initiative – entitled the CXO100 – to help define and fete the next generation of growth leaders who will define the 21stCentury Commercial Model.