The Hindu Business Line : Why marketing equals business strategy

The consensus is, therefore, that the central component and the driving force behind industry evolution is innovation. By definition, innovation can never be entirely subjected to rational planning or forecasting. Nor can we estimate the likely future of one form of technology over another.

Though the i-Pod (shown above) is not the result of cogitation or following a formula, it has gone on to deliver unprecedented value for the makers.

S. Ramachander

This might seem a tall and, to some, even an absurd claim. The reason is that we have been indoctrinated by business school syllabi to think of and see marketing and corporate strategy as two very separate subjects. In my view, this is not only wrong, but very misleading. We shall see why.

First, it is now commonplace to say that the very goal of strategy-making is to try and build competitive advantage. Advantage can flow from any part of the value spiral: the discovery of a new value, its design and development into a product or service and the delivery through packaging, customer relations, distribution and so on. Therefore, strategic marketing should start with re-examining the entire value cycle from a competitive standpoint. The product itself, starting from its design and functionality, is but one aspect of it.

Secondly, in the Indian context, competition from the world over has made managers more aware of the central role of marketing. Managers of R&D, accounts and manufacturing and materials functions acknowledge nowadays that companies have been inward looking all these years. There is some recognition that any marketing plan exercise for longer than one fiscal year must be more of a company-wide strategic activity.

Thirdly, in recent years, the study of competitive strategy has been encroached upon by the smarter academics in the business policy area. Thanks to people like C. K. Prahalad and Kenichi Ohmae, the importance of going beyond considering the ‘fitness’ of the strategy based on the strengths and weaknesses of the company with the environment has been well documented. Business policy scholars have drawn particular attention to the need for a strategic intent and a single-minded focus towards achieving the chosen intention, which is, in turn, effectively disseminated throughout the organisation. Even leading thinkers like Wayne Brockbank of Michigan Business School, in the apparently separate field of HR, calls this a shared mindset and a critical prerequisite for any high-performance corporation.

A fourth reason is that the questions, “Why do some brands fail” or “Why do some companies succeed while others apparently similarly endowed, fail” continue to stump and fascinate the minds of the best academicians and thinking businessmen all over the world. Many votaries of the complexity and chaos theories would have us withhold making any attempt at a final judgement on this issue. As Paul Ormerod of The Economist says, indeed we should remind ourselves that in the end most things fail. Some hold off the evil day longer, that is all — and this is often due to a combination of circumstances rather than design.

Meanwhile, the gales of creative destruction so powerfully argued long ago by the maverick Austrian Joseph Schumpeter have played themselves out time and again. The lives of the world’s most famous companies are indeed very short, averaging perhaps only 40 years in the last century. The only commonly identified reason why the longer lasting ones do appear different is what Schumpeter identified as the need to “reshape the industry” through discontinuities. The consensus is, therefore, that the central component and the driving force behind industry evolution is innovation. By definition, innovation can never be entirely subjected to rational planning or forecasting. Nor can we estimate the likely future of one form of technology over another. Thus the ‘grand design’ school of strategy building, by a group of wise men sitting atop the company, is an unlikely metaphor to explain how and why breakthroughs happen. As textbooks have never tired of telling us, neither the i-Pod nor the Walkman nor, indeed, the successful business design of a Nike or Southwest Airlines came out of cogitation and following a formula. Yet, all of these delivered a value that was hitherto undreamt of, unheard of and certainly unpredicted.

Innovation and strategy

In an earlier book, Ascending the Value Spiral: From Insight to Innovation (Sage Response, New Delhi, 2002), I had emphasised the close link not just between innovation and strategy, but also between sensing things differently and b eing aware of unarticulated customer needs and wants. Companies therefore need to get away from confronting or directly comparing themselves with the market leader. Instead, they should look for a deep insight that helps one re-define the task and lead on to innovation — in any aspect of the value spiral. In Competing for the Future (HBS Press, 1995) Prahalad and Gary Hamel extolled the virtues of having the industry foresight to alter the shape and definition of the industry & #8211; thus echoing the words of Schumpeter quoted earlier.

In other words, changing the rules of the game and therefore playing a different game has become one of the significant ways of competing.

In this relentless search for key success factors, the emphasis has further shifted to the sources of corporate capabilities which, not surprisingly, turn out to be those that are embedded deep and wide within the organisation. These are durable, not easily inimitable or tradable, and also called competencies. In industries which are increasingly converging and much of the technology is simple, organisations have begun to realise that long term advantage is a shifting mirage. At best, it has to be encouraged and nurtured within the organisation through strategic innovation and continuous learning. Thus, management seems to have gone a long way round to come back to the origin, to people as the ultimate sustainable source of competitive advantage and reputation; and brands, as it were, are the output. In other words, this is consistent with the view that organisations are not great machines, but more akin to organic, interdependent and self-generating, biological systems.

The role of the marketing department

So if corporate and marketing strategies converge, where does this leave a distinctive role for the marketing department? Today, the pace of technological change and innovation has changed the way everything is manufactured, packaged, stored, transported and sold. Thanks to the dramatic developments in underlying disciplines of electronics, computer-based manufacturing and design applications, biotechnology, environmental concerns and other worldwide mega trends, business reality has undergone a subtle change. If the conventional brand manager were to have all the right training to encompass all the elements of the business, he would have to be something of an expert, say, in metallurgy, marketing research techniques, consumer behaviour as well as design to be able to contribute operationally in the managing of the brand. His role would thus have to be, more realistically, that of a co-ordinator.

The interesting aspect of this is that he can be made redundant in an organisation with greater connectivity and information technology. One must then revert to the P&G ideal that a Category Manager is the only true brand manager, a mini President, whereas all those below him — and there are several levels — are merely advertising, sales promotion and market research specialists or co-coordinators.

The truly long term solution to this is may well be revolutionary. We have to acknowledge that in a fiercely competitive world, no one person has the right answer. And the innovative, learning-oriented companies will treat the strategic dimension of marketing as a permanent and separate task force activity — while everyday, operational marketing may remain a function!

(This article is based on ideas developed further in Manager at Work (Penguin Portfolio). Comments can be sent to srchander23@netscape.net)