In numerous conversations with CMOs, a common question I’m asked is: “Why aren’t more marketers invited to join boards?” In research I’ve been working on with a professor from TCU (Ryan Krause) and Columbia (Don Lehmann), we studied S&P1500 boards over a six-year period (that’s over 65,000 board member biographies) to try and understand whether marketers at the board level mattered. The results we found indicated that boards with marketing-experienced members tended to have better total shareholder return (3 percentage point increase); the results were even stronger when the firm was in the midst of a market share decline. As somebody who studies marketing and marketers, this makes sense. Marketers are uniquely trained to understand the consumer, competitor, and external environment and translate this insight into demand generating growth (e.g., innovation, customer experience enhancement, customer loyalty improvement, etc.).
Despite our findings which suggest that marketing experience could be valuable at the board level (see highlights here), only 2.6% of the over 65,000 board members in our database have managerial-level marketing experience. And in a separate study among board members, only 4% believe that marketing is an important experience to have (versus 47% who believe that finance is). In reality, marketing experience is neither valued nor represented at the board. To address the question of “why,” I turned to John Hoffmire, PhD, Associate Fellow at Saïd Business School, Oxford University. He has served on 15 boards across his career and helped start/grow 35 different companies.
Prior to reading the following, I want to put the conversation into context. I asked him to be brutally honest in helping address this question and to not pull any punches. While I disagree with much of what Hoffmire says, my beliefs don’t matter. He is representative of the people on boards and if marketers are interested in ascending to the top echelon, we need to understand the barriers. I am grateful for Hoffmire’s candor.
Kimberly Whitler: Marketing experienced directors are almost non-existent on boards. Why do you think this is?
John Hoffmire: This may not be what you want to hear, but I don’t think that most boards need marketers on them. There are really three reasons why and these are primarily driven by my experience in the private equity world.
- Boards should be focused on strategic issues and not tactical issues. And because marketing follows firm strategy, it is a tactical activity rather than a strategic one. As soon as the board starts delving into tactical issues, such as marketing, they have gone beyond their dictate and are no longer fulfilling their role. Bringing a tactically-experienced individual on the board could do more harm than good.
- Many people in the leveraged buyout and venture capital world believe that marketing is luck. If it works, it was good luck and if it doesn’t work, it was bad luck. This is why private equity tends to shy away from industries that are heavily marketing and advertising oriented.
- Marketers often don’t add meaningful value to the firm. Innovation—and the creation of real value—is often managed by operations. Marketers often create—and don’t take this the wrong way—“less than real” value. It isn’t meaningful or sustained value.
Whitler: I’d like to dive a little deeper into what you are suggesting. What do you think the definition of “marketing” is?
Hoffmire: I’m going to answer your question a different way. Marketers often aren’t involved in the strategic direction of the firm. They don’t lead development of the innovation pipeline, or determine pricing, or frankly own many brands. It’s an exaggerated position for marketers to take to suggest that they own development of the brand because operations and other functions have as much or more to do with the building and delivery of the brand. So I will suggest that what marketers do is the indication of what marketing is. Most often, this means advertising, communication, and promotion development. And as you can imagine, these don’t usually involve pure strategic problems that the board has to grapple with.
Whitler: You also mentioned that you believe that marketers don’t play a strategic role. Is this across all firms and all industries?
Hoffmire: In my experience, marketers are often not involved in firm strategy. Operations and the strategy department typically drives firm strategy. As a result, marketers don’t have exposure to—or training in—strategic decision making. This lack of experience makes them somewhat unqualified to be invited to join boards.
Whitler: You mentioned that you don’t believe that marketers create much real value. Could you expand on that?
Hoffmire: Operations drives development of product and the firm develops the brand. What marketing does is largely oriented toward image development. They essentially create “less than real” value rather than real value, that is, meaningful value. Understand, this is their role. But because they are responsible for advertising and promotion, their job is to put a spin on the meaningful value being created by the rest of the firm. This is a charitable view. An uncharitable view is that marketers manipulate consumers. This is not real value creation.
In the end, what we need to have is a conversation, throughout the corporate community, about what is value? Value is not about creating feelings on the part of people that they will not be whole without buying a product. Value is not about convincing people that their bodies are not ok and that they need to buy a product to be good and attractive individuals.
Whitler: What if I indicated that in CPG and other leading companies (e.g., General Mills, Johnson and Johnson, Procter and Gamble, E&J Gallo) marketers (i.e., brand managers) are responsible for setting the strategy, leading development of the product pipeline, and then commercializing products? And, that they are held accountable for the P&L of the business? Do you think that these marketers might have skills that could be beneficial at the board level?
Hoffmire: You mentioned a very small list of firms. Most marketers, across most firms and industries do not play this role. In my experience, I have not often seen such a role for marketers.
Whitler: Is there anything else you’d like to add?
Hoffmire: I recognize that I have had a pointed perspective throughout this discussion, but given your desire to understand why marketers aren’t invited to boards, the answer is simple: they aren’t needed because they often don’t contribute the same types of value that others, from finance, strategy and operations contribute. In almost all situations, I would prefer people experienced in strategy, operations and finance to be on boards where I serve. Those with human resources, marketing and other backgrounds can add value. But, for the most part, the types of contributions they make to board meetings can be obtained without having to add extra people to boards.
The real point is…