Will the CFO and CMO ever form a more perfect union? I recently saw a study produced by Ernst & Young and reported in the Wall Street Journal that claims collaboration between CFOs and CMOs is increasing. The survey also acknowledges that there is still a long way to go to establish a real partnership between their responsibilities, particularly as it pertains to "common practices and cultural differences." In my opinion a perfect union is unlikely but a better working relationship is not only necessary but critical to the success of a business. Let's explore.
Keeping in mind that there are important differences in how each of the executives is judged and rewarded, there will always be disparity. The Chief Financial Officer is a staff job usually reporting into Corporate. That requires financial oversight of all business units as well as administrative functions and profitability. Responsibility usually focuses on the bottom line. The Chief Marketing Officer, on the other hand, is primarily judged and rewarded on brand growth and sales increases. While marketing efficiency is certainly important, the revenue side is where the primary CMO accomplishment is fulfilled. The thread that binds them is measurement, arriving at agreed upon metrics of success and corporate goals. So the real responsibility rests with the CEO. Here's why.
A company's long term success depends on increases in sales, revenue and profit. The corporate vision is usually established by the CEO. The rules of enactment are also approved by the CEO. The interaction among functions comes together with top management oversight of policy and procedure. In a well run organization the CEO has knowledge, if not frequent engagement with all senior management, on a regular basis (at least quarterly) of how results are being achieved. How collaborative is the organization and how is that collaboration judged and rewarded?
The survey primarily asked the opinion of CFOs about their relationship and involvement with the CMO. And, while they would like to contribute to market segmentation and consumer insight, most CFOs are not equipped to evaluate consumer marketing and the sophisticated methods used to pour through the funnel. Needless to say, they probably also don't have the time to do it. That doesn't mean that finance and marketing are at opposite ends of the tunnel. They aren't, nor should they be. But uniting their perspective is another story. The report identifies them as "distant allies". That's probably the best description and most likely will continue to be. So what needs to be done to improve and enhance corporate prosperity? In my opinion it comes from clearly defined, and agreed upon, objectives and proper governance of the methods and processes used to accomplish the tasks. In other words bottom line profitability and top line revenue growth must be balanced.
CFOs will not become direct marketing participants with regard to customer insight, data management and strategic endeavors or tactical marketing applications. It's not their job. But what they will have to do is expand their thinking about the need for investment as much, if not more than, short term savings and immediate profitability. The key objective is value. Building value that leads to brand equity. Because brand equity is the most efficient way to deliver customer satisfaction and build lifetime value. And yes, proper measurement and financial flexibility in this fast changing digital world is essential.
The CMO and CFO can work as a team providing they bring the right attitude and a common goal to the table. That might also be outside their designated responsibilities and comfort level but it can happen if the CEO encourages and supports it.
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