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Only 50% of CMOs are involved in strategic planning alongside the CEO.
That's a startling statistic.
In a world where I think of the CML as being someone who really does understand the end-to-end customer journey.
And so that lack of alignment really creates issues.
That's McKinsey Senior partner Shelley Stewart III, on the notable disconnect between CEOs and CMOs.
He joins Global Editorial Director Lucia Rahili and McKinsey Senior Partner, Kelsey Robinson, to talk about how to bridge this gap so companies can grow.
This is adapted from our McKinsey Live series and was recorded shortly after Can Lion earlier this year.
So let's get rolling.
Obviously, the current global business climate is rife with uncertainty in a range of ways macroeconomically geopolitically technologically, given the advent of gen AI and now a gentic AI, and amid all this change in volatility.
Growth continues obviously to be imperative, but also risk being elusive for some organizations.
We just released some new research that come on how to reignite growth successfully, in particular by homing in on the relationship between the CM of the CEO and the CFO and harnessing the power of that partnership.
Shelly again, you were on the ground at Cannes and shared that research with a number of CEOs and other executives.
Talk to us a bit about the vibe at Cannes.
And on some of the key takeaways that resonated with the folks whom you spoke to, just high level, if you would.
The energy on the ground at Cannes was incredible.
Leaders, CEOs.
They are navigating a incredibly dynamic and complex set of situations the rapid rise of generative AI, geopolitical uncertainty, shipping supply chains.
Customer behavior is becoming much more fragmented.
So there's a bit of this temptation, in moments like this a disruption to focus on efficiencies and productivity and cost.
And while those things are important, we know they can't come at the expense of also focusing on growth.
Great, okay.
So growth, you're saying it's always vital, but tougher than ever to sustain in this current complex climate?
What did the research tell us about the role of the CMOs, specifically in this growth calculus, this growth equation?
We know that this idea of someone who's looking out for sustainable, profitable growth with a customer at the center is vital.
And when we see marketing leaders embedded in more strategic decision making not just being a brand or a communications officer, but actually taking responsibility for that customer-centric growth strategy we know that companies perform better.
Right.
And what we saw is when companies had marketing execs involved in strategic planning.
You see 14x higher top line.
And when you actually have a single integrated kind of customer centric exec that's on the top team, you see 23x the growth right.
So the growth equation is very clear and the need for that executive is very clear.
I think the challenge we're seeing play out is that, from an organizational point of view, because of what Shelley mentioned on the complexity of journeys, we've seen a big proliferation of roles on C-suite, on exec teams.
So if we look back five years, for example, the size of an executive team has increased 50%.
Right?
And so what that means is we've added all these great roles Chief Digital Officer, Chief Data Officer, Chief Revenue Officer, you know, sometimes a CCO and sometimes all of those roles alongside of a CMO.
But what that means is there really isn't one person who's kind of thinking end to end about that strategic growth for customer acquisition or attention.
And so kind of.
The way we think about it is when everyone is responsible for that, no one really is right.
It's kind of infragmented.
Right, right.
That's super interesting.
Okay, I want to get a little bit more into that point.
So based on our research.
Having this kind of single integrative role in the C suite offers this opportunity for growth that's both realistic and actually sounds like potentially within reach.
So say a little bit more about what's driving the disconnect in the C suite.
This disconnect between CEOs and CMOs.
Shelley, do you want to take that?
Yeah, absolutely, Lucia.
Look, there's no doubt from my conversations there is a real disconnect.
And our data suggests that that disconnect is growing.
So, by one measure and we've been tracking this over time we found that the gap between the CEO and the CMO has grown by 20.
Again, at this time, that is super critical. to really focus on and deliver growth.
And Kelsey alluded to this, but only 50 of CMOs are involved in strategic planning alongside the CEO.
I mean, that's a startling statistic in a world where I think of the CMO as being someone who really does understand the end-to-end customer journey.
And so that lack of alignment really creates issues.
The other evolution talked about is marketing has gotten more complex as the customer fragmentation has increased.
As a performance, marketing has gotten more complicated more, more ways to do it, more different metrics for measurement.
And let's bring in that sort of third leg in the triad we've been talking about in the research the CFO Kelsey, talk to us.
A little bit more explicitly about where and how the CFO fits into this axis and why alignment among all three of these rules is both so vital and again, so challenging.
Yeah, so this year we talked to executives at over 100 of like, the largest global companies.
We increasingly added the CFO to that discussion.
Right right to your question Lucia, because it is really that kind of trio that we think is important to unlock the growth potential we're talking about, right.
And the CEO CMO relationship is something we've studied for the last few years.
The CFO is also critical in that room, talking about OK well, how do we think about resource allocation?
How do we think about investment, right?
And that's critical as we think about the job and the kind of the steward as a CMO from a customer consumer perspective.
And I think the real question for that group is you know, what is marketing driving for the business?
Like what, what is the outcome that we see from all the marketing activity that we do?
And I, you know, spend many of my days with the CMOs and the other roles, but a lot of CMOs in my role.
And I think in many cases, there isn't complete trust and alignment in answering that question.
And one interesting stat is we asked the CEOs and the CMOs did they think that marketing was underfunded as a discipline?
80% of CEOs and almost 80% about 77% of CMO said yes.
Marketing for my company is underfunded.
But then if you look over the last year, the actual dollars going to marketing decreased from 91 to 77 of sales on average.
And so clearly there is this kind of disconnect between the aspiration for how we want to fund the discipline and the growth we want to see, but then the dollars that are really going towards it, and to us that underscores the need for the involvement of the CFO.
And then you know, the stats you see on this page were also really, really telling.
We think from the research this year, 70 of CEOs told us that part of how they assess marketing's impact is year-on-year revenue or margin growth.
They might not be the only thing they use to gauge marketing's impact, but that is part of how they viewed it.
But only 35 of CMOs have that on their list, right?
When we ask, have you kind of view how you communicate?
And so that disconnect right there.
And I think a lot of CMOs would say, well, we'd own the whole P&L.
We can get into that in some of the Q&A maybe.
But that lack of alignment, I think, really shows. the challenge that a lot of companies are having.
It's a really big problem.
That makes sense.
I mean, that's a pretty clear misalignment.
So tell us what needs to happen, practically speaking, for business leaders to begin to address this misalignment and bridge this C-suite gap.
Shelley, do you want to take that?
Absolutely.
And Kelsey and I are on a singular mission to bring the CMOs back.
Great ones know what drives growth.
But they're often stuck in this gap between insight and execution.
Sometimes the role is too tactical, but we think there's a clear opportunity.
And so there's three things that we've highlighted.
One is... give marketing custody of the customer.
So let marketing really own the customer journey and be that single point that feeds to the rest of the organization, feeds to product development feeds, feeds to the sales organization.
This is really about having one part of the organization that really owns, and then the customer journey really has that deep level of insight of who are our customers today, who are our potential customers, what do they care about?
What do they need?
Where do they buy?
How do we touch and engage them? to adopt that general manager mindset.
You may not have a PL in your organization as a marketer, but what are the interlocks you have with the people who do have PLs?
And how do you ensure that the way that you are judging yourself and being judged by the organization is based on those financial returns of the business?
And then three tied to that.
We are working through the C-suite, with the CEO, with the CFO, to come up with a measurement system that really aligns the activity to the kinds of outcomes that the business cares about, which is ultimately growth.
One of the other things which is a bit of a trend and Kelsey also alluded a bit to this is slashing the marketing budget.
May save you dollars in the near term, but it will cost you growth, assuming that you have a marketable organization that's high performing, because when done well, it of course drives revenue.
It helps you attract new customers.
You know, keep customers, increase the customer lifetime value.
So I think I'm hearing then that there needs to be education, maybe also a mindset shift. if CMOs are to become that single of, or at least the foremost leader advocating on behalf of an organization. customers taking custody for the customers as you've described.
Kelsey, can I get your thoughts here?
You know a CEO and the CFOs are having, have typically been general managers, have typically been P and L owners or accountable for tracking all of that in the case of the CFO and really enabling that right.
We saw in our research like nine out of 10 CEOs don't have a marketing background.
So that's kind of where you're starting, right?
And likewise from a CMO perspective.
The CMOs have not grown up in that general mind, manager mindset.
And so this second what we mean by the second action is, As the CMO, there is an onus on you to actually go and kind of hook into the chassis of the kind of financial goals and the strategic goals and the business unit goals in a much more integrated way, right?
So if you're a CMO and you're waking up with more of a general manager mindset, you are thinking about What are the near and medium term goals for every one of the businesses I support or products I support?
How to, kind of the day-to-day activities and my team enable those right?
How do I then communicate to the other parts of the organization when I'm doing them at half of those goals?
And while I might not own the whole PL, how can I communicate the component that I am really driving right?
And where I might need help on other pieces of it.
And so it's really about this more holistic, business centric mindset and also making sure that their teams are showing up that way, collaborating with their cross functional teams as well.
You know, speak in a way and act in a way that's going to enable that CEO CFO bridge.
Okay, let's take this third step.
Suppose I'm a CMO.
I'm listening to this.
I'm in violent agreement.
But we all know that measuring the impact of marketing initiatives is like notoriously difficult.
How do I get started on communicating to my CXO colleagues how I'm performing in delivering these strategic outcomes?
Yeah, and Lucia, you're right.
It's really hard, right?
So when we say, you know, third step is a measurement system, we say that, acknowledging that creating that is actually really difficult.
You know, I think our observation is, over the last 10 to 15 years you've had, you know, a huge growth in very measurable, very kind of direct response marketing.
And what that means is you know the CFO.
I think it's excited and comfortable around.
Okay, I can put this many dollars in and quickly see the outcome.
But that doesn't keep kind of a healthy cross funnel, cross customer business.
And so I think a lot of the challenges that these companies and our clients have run into is how do I kind of prove an align on what I'm trying to drive?
And that's not just direct sales right now, but it's also cultivating kind of the short, medium and long term health of the business.
And this is something you have to do in that trio we talked about.
Like you have to have all three of those exacts really aligned on what do we mean by this?
I think the best way to bring it to life is actually talking to one of the features we had in the research itself.
So we asked the CMO of GM Norm to grab.
We asked a couple other execs there to talk to us about, as he came in, kind of, what did it look like for marketing to kind of reestablish itself?
And you can read it more in the research, but I'll give the highlights.
I think there were really three things that he did as he came in.
One.
He actually developed that measurement framework and said hey, there's going to be everything from top to bottom of the funnel metrics.
We're going to have what he called fast Twitch metrics.
And then we're going to have customer lifetime value metrics.
Let's all align on how we define these, which ones are most important, how we make trade-offs across them, and also the fact that we care about all of them.
We don't just care about the fast-twitch money now.
That's an important piece.
Second thing he did was they support a holistic portfolio of brands and aligned on, how do we think about an allocation approach across this portfolio?
How do we really think about how we're smart about trading dollars between one sub-brand and the next?
And then lastly, he established a cadence with his CFO and the broader leadership team.
So kind of the ongoing dialogue, the ability to live in to making decisions based on points one and two and not really reset it.
And I think you've seen a strong year in your growth there and real success on some of their primary objectives on EVs too.
So I think that's one great example in real life.
What is one piece of practical advice you would give to a CMO and a CEO? just to get started.
Anything you've seen particularly well in helping to accelerate bridging that device, the divide that we've been discussing.
And I'll throw that out either one of you can take it.
I can start.
I think step one would be sit down and if it's a one on one or I don't know who else, depends on the teams who you want in the room have the discussion on what is the goal of marketing and what metrics do I think?
You know, I as a CMO and I as a CEO or CFO, things should be held accountable.
The first draft is not going to be right, but actually just sit down and start to have that conversation.
What are we measuring?
What are my goals?
How does that tie to the P&L?
And if as a CMO, you actually proactively ask for that.
You've already changed the dynamic of those companies around.
You know how am I coming to the table and how am I trying to make sure that my function is accountable.
So that would be my first step.
I think that's absolutely right.
I think another flavor of that is everyone cares about the customer.
It doesn't matter what business you're in, but I think, forcing the discussion around Where does custody of the customer sit today?
And actually getting the top team aligned around where the different places where it sits, and putting that in front of everyone's head, how can we have an integrated view if it sits across all these places?
And you, as a CMO, you don't have to make that conversation about you, but you make it about the customer and making clear that right now.
Well, hey, we need a more integrated view of the customer if we're going in this market.
Many CMOs don't have a PML background, as the two of you mentioned, and lots of CEOs may think or say that they understand modern marketing but don't necessarily have a marketing background.
That's part of the divide we've been discussing.
So how to think about talent and that particular elements. of the CMO CEO divide.
You know, I think it starts at the top.
So the CMO and the clean question one is how do you bridge the gap at the educational level at the very top?
We've talked a little bit about that.
The metrics conversation is helpful.
Frankly, I think ideally there is trust in that relationship.
I know many of my clients.
There is trust and those exacts the CEO CFO, CMO are there to all deliver a great performance for the company.
And so I think I would say even just an honest conversation around hey, there's a lot changing in marketing.
Right?
You could even use us as an excuse.
I love to talk a little bit about how it's evolving and the pieces that I think are most important for our business.
Would you, you know, would you be up for that for 45 minutes?
That already kind of starts to, I think, bridge the gap there.
And then I think you know the CE or the CFO could actually say hey, we should sit down and really have a deep dive session on kind of the objectives by business unit overall, what we want the shape of the PL to look like and welcoming that kind of in the reverse direction too.
Now any of those folks can instigate those too.
And then I think there's a question on talent below the C-suite right, which is how do you cultivate and make sure that you know?
I would say it's very important that marketers who show up every morning actually are thinking what did I do to drive the business forward today?
And I don't think marketers and execution marketers or marketing managers or creative directors are often asked that question.
And what's the tangible example or the quantitative example or even last week?
So I think there's some of the kind of talent below and really pushing them on their mindset.
That's important too.
Any themes you heard emerging particularly around the topic of gen AI and now even a Gentic AI, which has particular ramifications for creative work such as marketing.
This whole idea of navigating through disruption as the new norm was obviously like the macro theme and a recognition that You don't have the luxury to wait and see right.
So you see you have to be moving proactively to turn disruption into opportunity.
And folks are talking about how it's going to reshape in marketing organizations in terms of what the makeup and then the skill sets are that are required recognition in marketing, but really across all functions.
The organizations that win are going to be organizations where people plus Asians are working hand in hand right.
And by the way, the scary thing, which I heard is that's not just. humans asking agents to do tasks.
It will be agents also asking humans to do tasks.
But my point is a recognition that you have to embrace this technology and it's not about agents for placing people.
It's going to be the organizations that where humans master Agenic AI and are therefore then able to kind of leap from their peers.
Yeah, I mean I think we know that there's of the disciplines where AI is going to have the most impact.
Marketing is one of the top three, right.
So you think technology, you think customer service, you think marketing typically, right?
We did an MGI report on this.
And so there's huge potential about the kind of costs and kind of speed components of examples where it has started to really change the game for some companies.
There was a big shift from pilot to reimagining domain.
So from hey, we did a pilot, we proved we could do this campaign a lot quicker to how do we take the entire creative process and rewire it front to end?
And that's not just about a tool.
That's about reassessing every process step or every workflow.
There's a ton of change management and that is not just about you go.
You've got you know what pick your favorite creative AI tool, like the world is going to fundamentally change.
How are we going to maintain the creativity and the inspiration and the role of all of that?
And it is what Shelley described, which is it has to be a human and answer, right?
And how do we embrace a gentic as a way to help us, you know, find time, efficiencies or reallocate that time, versus fearing that the marketing ecosystem is going to dissolve which, like?
There are some articles out there that are very pointed around what that future looks like.
And I think most of the folks that can felt like that isn't necessarily the outcome, but we've got to work to make sure that that's not the outcome.
Shelley and Kelsey, thanks again for being together with all of us today.
Thank you.
Thanks so much for listening to the McKinsey podcast.
I'm Lucia Raheli.
And I'm Roberta Fissarro.
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