This article first appeared in VAB News, the newsletter of the Virtual Advisory Board, Issue No. 7 | 2020
In case you haven’t noticed, the global pandemic is disrupting business models across all industries. Also, there is a renewed push for more diversity in the wake of aggressive social and political movements. These and other pressures on businesses to remain relevant through modernization and digitalization have created an opportune time to challenge the status quo and composition of boards of directors.
So, using my best Jerry Seinfeld impersonation, I ask you: “What’s the deal with so few marketing folks on boards?”
Full disclosure, if you haven’t figured it out already, I have a decidedly partisan perspective on this subject. To be clear, I have encountered some outstanding directors. But from my perch as head of a marketing agency, I also routinely bear witness to companies’ missteps in managing brand communications, feckless or tone-deaf advertising campaigns, failures in communications when navigating crises, an unfathomable lack of innovation and a reluctance to embrace their digital destinies (my present clients excluded, of course). So, I can’t help but feel that much would be improved with at least one marketer in the room.
It just seems to make common sense to invite marketing professionals to the party – if only to have more people to blame when the brand spokesperson gets caught on Instagram with his pants around his ankles.
Yet, even though research has indicated that boards with members who have significant marketing backgrounds have better total shareholder return, a 2015 report by the Marketing Science Institute (which reviewed publicly available information on 64,086 board members for S&P 1500 firms) determined that just 2.6% of board members have managerial-level marketing experience. And according to the American Marketing Association, only 4% of directors believe that marketing is an important experience to have. My own anecdotal experience with boards outside the US has revealed a similar make-up and disposition.
Despite the elevation of marketing to the “C” suite, the enormous value attributed to a company’s brand(s) and the significant investment that is made each year to maintain and grow this value, why is marketing so rarely cherished or represented at the board level? What gives?
How We Got Here.
It’s no accident that marketers don’t hold more board positions. It turns out that there are several converging forces at work that have resulted in the framework of the modern corporate boardroom.
For one thing, financial reforms (like the Sarbanes-Oxley Act in the US) in the early 2000s required boards to fill at least one seat with a financial expert. And as board member accountability became more acute and minority shareholder pressure mounted, the number of finance experts on the boards of S&P 500 companies quickly expanded. At the same time, the average board size decreased – making finance a disproportionately more common skillset among directors. Even the influx of independent outside directors has not led to more mention of the “M” word when filling board positions.
But apart from regulation and structure, it is also easy to see how a group bias might be formed by boards who recruit new directors from their own social and business networks (which is common practice). After all, it’s easier to make decisions and work with like-minded colleagues from similar backgrounds. This homogenous mind-set, however, may be what has led directors to believe that marketing people would be a disruptive influence on boards. We can be an unruly bunch of creative free-thinkers, after all.
The average age of board members has also risen. A report from PwC reveals that 90% of corporate directors say age is an even bigger factor than race or gender in achieving diversity of thought in the boardroom. Yet, the average age of an S&P 500 independent director is now 63, up from 61 in 2007. And there are more board members (558 of them) who are over 75. This contributes to a resistance to risk or change and a reluctance to innovate or adopt new technologies. I’m certainly not ageist, but I think it’s fair to say that if a director hasn’t updated his hairstyle since the Thatcher administration, he may be similarly averse to embracing the Internet of Things.
Together, this bias and “age gap” likely contribute to a lack of understanding about the role marketing now inhabits in nearly every aspect of modern business. Instead there appears to be a persistent opinion held by some directors that marketing plays no part in the strategic direction of a company, nor does it lead innovation, add meaningful value or drive growth in the way that those with experience in finance and operations can. Therefore, marketing is perceived to be only a tactical, versus strategic, element and therefore the purview of management, not the board.
The Case for Marketing Professionals in the Boardroom
Of course, boards must be the way they are because they (directors, investors, lenders) feel that the current modus operandi is reliable. Otherwise, there would be more marketers on boards, right?
I’m not so sure. For the reasons previous stated, some boards have become monolithic. I think it’s more likely that, absent an outside force, they may remain reluctant to seize upon change or allow more marketers to penetrate their ranks.
I believe this problem is further exacerbated by a general misunderstanding of marketing and its role in modern business.
Let’s start with the brand. The brand has become one of a company’s most valuable assets. So why shouldn’t there be the same level of governance to maintain the health of the brand as there is for other aspects of the business? In fact, a good case can be made that all decision-making should first be judged as consistent with the company’s brand or brands before adoption. Board members and advisors must use their birds-eye vantage to advise management how to leverage the company’s brands, identify competitors (not always obvious as technology disrupts moribund businesses) and justify marketing spending. All this would require at least one director with marketing expertise.
Adding a sensible director with a high-level marketing background would also shift a board’s sometimes myopic viewpoint by providing it with a new outlook based on insight into the customer and marketplace.
On the flip side, it is also up to us marketers to help remove the stigma that we are ‘specialists’, who may know a lot about marketing-related topics, but little about how businesses work. Some of us, who have managed businesses and/or risen to the ranks of CMO, have considerable experience with broader issues facing boards, including globalization, market expansion, finance, manufacturing, managing shareholder expectations and executive compensation, as well as setting strategy, leading product development and commercialization and administering budgets. If we want to be recruited to boards, it’s up to us to demonstrate we know our P&L as well as we know our CPC or GRP.
All that being said, companies have a lot to gain by bringing marketing into the boardroom, including:
- Broader Perspective. Finance and operations are inward-facing disciplines. Marketers by nature are outward-facing and can bring valuable insight into the boardroom from the marketplace by sharing a customer-centric outlook and acting as surrogate for the consumer. This will lead to fewer disconnects between product development and purchase, for example.
- Non-Linear Thinking. Marketers think differently. While linear thinking is vital to finance, it is anathema to the creative process. Non-linear thinkers take the sort of mental leaps that most often lead to product and business innovation. That’s a good thing.
- Digital Prowess. Marketers bring real world experience and understanding of user experience (UX) and user interface (UI) design, digital communications, e-commerce, search marketing, social media and all the dynamics of our connected marketplaces into the boardroom so that directors can properly oversee management and make informed decisions. How can a board help steer a company into the digital future without an understanding of these vital technologies and consumer touchpoints?
- Brand Stewardship. Marketers ensure that everyone on the board has a clear and consistent understanding of the key aspects of the brand, how it is defined and the relationship it has with consumers. We also can confirm the company’s position versus competitors in a rapidly shifting marketplace. In addition, we are there to make sure that management protects the brand and all its related intellectual property and has plans in place to defend the brand in a crisis. This is no small task.
- Preservation of Corporate Purpose. The marketer on board is also in the best position to ensure that companies uphold and consistently expound their stated brand purpose or social mission, i.e. its role to unite customers and culture in the pursuit of changing the world for the better through a shared belief, hope or pursuit. Marketers are storytellers, skilled at shaping these messages and communicating them to constituents.
- Marketing Governance. Marketing expenditure is often a significant percentage of the overall budget. Therefore, it is incumbent upon the board to properly oversee messaging and spending on the behalf of investors. Only a seasoned marketer has the experience to hold management accountable and ensure that there is a clear objective and calculated return on investment – especially from big marketing bets.
And if all that isn’t reason enough to give marketers a seat at the big table, consider this. While other companies may be slow to catch up to the new business reality — that marketing permeates every pore of a modern corporation — companies who invite marketers at the board will have a distinct competitive advantage.