“We were just writing a lot of checks to agencies, but digital marketing is now in our brand DNA.”
Blake Cahill – Philips Global Head of Digital
When we talk about disruptions in marketing, one of the elephants in the room is the increasing demand to bring marketing in house. Companies like Phillips are bringing more and more marketing functions in-house. As an ex-agency guy, this will sound either blasphemous or disingenuous, but I suspect that it might be the right way to go. I’ll tell you why. It has a lot to do with the evolution of strategy.
In the past, we did two things when we planned strategy. We planned in relatively straight lines and we planned over long time frames – a minimum of 5 years was not unusual.
Here’s how it would play out. Executives would go through their strategic planning exercise, which may or may not include getting input from the internal and external marketers. Strategic plans would be formed and this would then be broken down into departmental directives. Department heads – including marketing – would then execute against the plan, with periodic progress reviews scheduled. The entire loop, from input to executional plans, could easily span several months or even a year or more.
The extended timeline is just one of the issues with this approach to strategy. The other problem is that this assumes that strategic planning is only something executives can do. The strategic frame is only set at the highest levels of the organization. And it’s the executive’s prerogative to either consider or completely ignore any input from their direct reports. Even if they do consider it, this feedback is likely several steps removed from the source – namely – the market.
I’ve written before about the concept of Bayesian Strategy. There are three basic foundations to this approach:
- Strategic planning is a continuous and iterative process
- Strategic plans are nothing more than hypotheses that are then subject to validation through empirical data
- The span of the loop between the setting of the strategic frame and the data that validates it should be kept as short as possible.
With Bayesian strategy, the corporation needs to maintain a number of acutely aware “sensing” interfaces that provide constant data about the corporation’s current “reality”:
- The internal “reality” – especially in more qualitative areas that might fall outside typical KPI’s – like moral, satisfaction, communication effectiveness, etc.
- The external “reality” – What’s happening in the market? What are customer’s perceptions? What is the competition doing?
These “sensing” interfaces create the frame for the organization. As such, they’re integral to the setting and updating of strategy. Just as our brain depends on our senses to define our sense of what’s real, the organization depends on these interfaces. And when it comes to the “external” reality, no department is in a better position to make sense of the world than marketing. The span of distance between marketing and the management of the company should be as short as possible. This is very difficult to achieve when you rely on external partners for that marketing.
When a company like Phillips brings marketing in-house, it’s more than just a cost-saving or consolidation effort. It’s bringing the function of marketing as close as possible to the core brand. It’s not only giving it a seat at the strategic table but making it one of the key contributors to that strategy. Like I said, it’s a move that makes a lot of sense.
But there is another side to this story, and that has to do with perspective. I’ll look at the flip side of this argument next Tuesday.