How Big Data Brings Marketing and Finance Together – Wes Nichols – Harvard Business Review

How Big Data Brings Marketing and Finance Together – Wes Nichols – Harvard Business Review.

When Raja Rajamannar became CMO of MasterCard Worldwide in 2013, he moved quickly to transform how the credit card giant measures marketing. His artillery: Advanced Big Data analytics. MasterCard had always been a data-driven organization. But the real power and full potential of data was not being fully realized by marketing.

Rajamannar involved finance early. To spearhead analytic efforts, he assigned a finance person – who was already embedded in marketing – to create an ROI evaluation framework and integrated her deeper into the marketing function. With a better understanding of the marketing context, she has brought a new level of financial discipline and rigor to the marketing team. This has reframed the conversation to balance the interests of both sides.

For example, in the credit card business, understanding the importance of deals with issuing banks is critical. While marketing might focus on maximizing card transactions, or swipes, finance understands that not all swipes are equal (depending on the deal with a given bank). Likewise, marketing wants to clearly quantify the impact of its long-term branding efforts while finance is more focused on macro-economic drivers of marketing performance, such as interest rates, employment levels, inflation and retail sales.

At many companies we work with, analytics becomes the connective tissue between the different visions of what drives results emerging from marketing and finance. Combining data from both marketing and finance, analytics reveals the true picture of what drives marketing performance, and connects marketing to revenue.

Inside Intel

Consider Intel, which began eyeing Big Data’s potential to quantify marketing’s contribution to revenue in about 2010. As an ingredient brand, Intel often struggled to link marketing to P&L impact. But David Ginsberg, VP, Corporate Insights, Brand and Strategy, saw the potential for analytics to create a bridge between marketing and finance by illuminating marketing’s impact on sales – the focal point of where marketing and finance meet.

Intel formed a special Marketing ROI (MROI) team – a first-of-its-kind collaboration between marketing and finance. The result has been transformational. Intel’s research team, for example, has been rebuilt as an analytics and strategic insights team that identifies, collects and harnesses unprecedented amounts of the company’s data. This now provides its marketing teams globally with predictive decision-making capabilities they never had before. Financial accountability for marketing performance has become front and center. Marketing and finance share a fully transparent analytics platform that all parties can access to run what-if scenarios, optimize marketing-dollar allocations across products and markets, and get course-correcting feedback on the performance of those allocations.

In one instance, we worked with both Intel and Facebook to quantify how the chip maker’s social media marketing on Facebook affected consumer PC sales. This targeted effort showed that paid Facebook ads and the company’s own unpaid (organic) Facebook postings increased Intel brand and product search volume by 1.9%-2.3% – which in turn led to increased PC sales.

Organizational Anachronisms Exposed

Similar reform in the relationship between marketing, finance and analytics is taking place across many sectors – from manufacturing and retail, to financial services, travel and entertainment, pharmaceuticals and toys. Analytics has exposed organizational anachronisms such as adversarial marketing-finance relationships and a focus on traditional year-long planning (instead of constant optimization) in marketing groups little changed for decades. This has spurred re-thinks that include changes to key executive relationships.

At Mattel, another company we work with, a cross-functional group of executives from insights, brand, marketing, media, digital and finance now meets regularly to adjust spending allocation plans based on modeling and analytic results, says Ed Gawronski, Global SVP. This has brought agreement on a common set of ROI metrics and helped facilitate decision making about investing in short-term sales versus brand equity.

In effect, analytics creates a common language between marketing and finance for the first time by allowing the two functions to clearly see marketing’s impact on financial performance. Consider how USAA – the nation’s 6th largest consumer P&C insurer – has reinvented how marketing, finance and data analytics work together, starting with a first-ever partnership between the CMO, CFO and Chief Data Analytics officer.

Roger Adams, CMO says: “As USAA developed into a data-driven organization, we were able to accurately predict the impact of different marketing investment decisions. It’s completely reframed the conversation.” Forrester Research recently published a case study describing how USAA’s new partnership between marketing, finance and analytics has helped deliver better business insights.

At MarketShare, we’ve seen these partnerships play out in a change in who’s sitting at the table during discussions with major brands about advanced marketing analytics technology. Once mostly marketing, it’s now equal parts marketing, finance and analytics. In some cases, finance even leads a vendor selection process once dominated by marketing.

Companies that fail to update their marketing organizations and continue using antiquated measurement solutions are at risk of being left behind. New marketing-finance relationships combined with advanced analytics technology are increasing efficiency and delivering “found” dollars to the bottom line. Short of creating a killer new product or service, there are few ways a big company can move the needle quite so dramatically.

Stop Talking About Social and Do It – Nilofer Merchant – Harvard Business Review

Stop Talking About Social and Do It – Nilofer Merchant – Harvard Business Review.

This five-part series has shared case studies and examples of how the social era affects all areas of the business model: how we create, deliver, and capture value. (See part onepart twopart three, and part four.)

Here’s a quick visual summary of what we’ve covered so far:

Nilofer-Merchant-Social-Era-in-Business.jpg

These changes are not transitory or reversible, but fundamental and irrevocable. The social-era models are inherently more fast, fluid, and flexible than the models that preceded them. The big question is: how are we actually going to do this thing?

And it is a huge question: it is a life’s work-sized-question that can’t possibly be answered in a blog post, or even a series of posts. But I can offer three actionable, thought-provoking exercises that you can start with, today:

From paid to purpose-driven. In the social era, purpose precedes scale. And as we discussed in part two of the series, shared purpose allows many communities to engage with you — without you having to invest resources in controlling their actions. When TED unleashed TEDx, they created a force multiplier. Shared purpose aligns people without coordination costs.

Purpose is also a better motivator than money. Money, while necessary, motivates neither the best people, nor the best in people. Purpose does.

Actionable exercise: Have the people you work with write down the purpose of your work, then compare answers. Then ask, are any of these purposes something that would create a multiplier effect? Engage hearts and minds?

From isolated organizations to communities. The social era will reward those organizations that understand they can create more value with communities than they can on their own. Communities of proximity, where participants share a geographic location (Craigslist is an example but co-working locations are another) will allow people to organize work differently. Communities of passion who share a common interest (photography, or food, or books) can inform new product lines. Communities of purpose will willingly share a common task to build something (like Wikipedia) that will carry your brand and its offer to another level. Communities of practice, where they share a common career or field of business, will extend your offer because it extends their expertise (likeMcAfee mavens). Communities of providence that allow people to discover connections with others (as in Facebook) and thus enable the sharing of information, products and ideas.

Actionable exercise: Imagine that if you asked, you could get communities to co-create with you. What could you do together? What would be one way to try it out?

From centralized to distributed. While management often espouses the notion that good ideas can come from everywhere, in practice there are “thinkers” who create strategies and designated “doers” who execute those strategies. But that only leaves an air sandwich in the organization, where debates, tradeoffs, and necessary discussions are skipped. This air sandwich is the source of all strategic failure. Instead of centralized decisions, we need distributed input and distributed decisions.

Actionable exercise: Rather than making command and control a “bad” thing, discuss what areas needs which controls. Then examine how more, if not most, areas and decisions can distributed (and thus made radically more flexible). For the purpose of the exercise, say that you want 50% or 70% all decisions to be free of permission-seeking and check-ins. What would it take to get there?

When we emphasize purpose, engage communities, and distribute decision-making, we begin to stop talking about being fast, fluid, and flexible, and actually begin to make our organizationsbecome fast, fluid, and flexible. This can change how we organize every single part of these organizations — from what we make, to how we product and distribute, to how we market and sell. Everything.

Disrupting How We Work
Many of you know of Clay Christensen’s iconic work the Innovators Dilemma. Small newcomers eat off bits of an established leader’s business through lower cost structure and a willingness to accept lower margins. This phenomenon has been seen in industry after industry, and usually focused on the cost of delivering goods and services. In other words, “Look how the steel mini-mills making rebar disrupt the established integrated steel mills making sheet steel.” At each point in the disruption, it makes economic sense for the big company to surrender that bit of the market to the disruptor, and so big companies logically put themselves out of business.

I think there is an analogous process going on with the organizational structure of businesses themselves; that aside from market-specific competition from below, there is also competition from disruptive organizations that are finding new ways to get work done. This change is just as threatening to established businesses as the process competitors Christensen identified, and just as difficult to respond to.

Where once you could reexamine the organization’s model (the how) every few years to support the rest of the business (the what), reinventing the how becomes its own muscle to develop.

How does this lead to disruption? To answer this question, let’s look at Singularity University, which I mentioned earlier in this series. You might recall that they deliver an education curriculum of 300 hours with seven full-time staff. Their organizational model lets them then fluidly reinvent what they create next, thus baking innovation in with their disruptive design. In particular some 80% of their business resources are fluid. Their purpose doesn’t change, but their “what” does. Their business model allows them to persistently review “what’s the next big thing” and adjust. Using Christensen’s metaphor, educational institutions are the sheet steel with its ever-increasing tuitions to support their tenured staff, while Singular University is the rebar. But their flexible design gives them the chance to keep being the “rebar.”

What Happens Now
Rather than try to power through with size, we’ll have to find power through shared purpose.

Rather than hiring and directing inside the walls of an organization, we’ll tear down those walls altogether and allow everyone to own a part of the big picture.

Rather than taking long stretches of time to perfect something, we’ll build fast, fluid and flexible organizations.

What we create in the end will be a different type of organization, one that embodies a culture of innovation.

Since I began writing this series, many of you have written publicly and privately asking, doesn’t this just mean the “800-pound gorilla” dies? Entrepreneurs and the startup ecosystem who embody fast / fluid / flexible attributes certainly believe that the established players are fated to die. Many think of these big organizations as the dinosaurs of our time. But one can look at the history of dinosaurs and see that dinosaurs didn’t really die. Paleontologists have suggested that dinosaurs are all around us today actually, as birds.

Applied to today’s business giants, the analogy probably holds. The “species” that adapt to the changes in the environment faster will do better. That is for sure. What is less clear is what they will become as they adapt. Perhaps the new model for a successful business should be “Nimble.” Or “Flux.” Or “Humanized.” Or “Networked.” Frankly, I find the search for naming less-than-fruitful. We have plenty of names already; will another name really help you act?

Over time, there will be a lot more dots filling out this picture. But the fundamental principles of the social era are already clear enough to form a new set of organizing principles for business. The world has changed; how we create value has changed. Organizationally we have not. It’s time to pay attention to these emerging business models now, to benefit our organizations, our economies, and ourselves.

Two Common Mistakes of Millennials at Work – Andrew McAfee – Harvard Business Review

Two Common Mistakes of Millennials at Work – Andrew McAfee – Harvard Business Review

via Two Common Mistakes of Millennials at Work – Andrew McAfee – Harvard Business Review.

extracts:

The first is simple oversharing. I wrote before how narrating your work is a very smart strategy because it lets you be helpful to others, and also increases the chances that they can help you. But narrating your every opinion, emotion, lunch, happy hour, hangover, etc. on your company’semergent social software platforms is just narcissistic clutter.

One of the knocks against Generation Y is that they’ve been encouraged to believe that everything they say and think is interesting, and should be aired and shared. This is simply not true for anyone, no matter what reality TV producers would have us believe. Periodically sharing bits of personal information is valuable because it humanizes you, lets others know what kind of person you are, and facilitates socialization and trust-building. But oversharing in the workplace just makes you annoying and immature.

The second not-so-smart practice of a digital native is to act as if all employees are equals, and equally interested in airing the truth.

Most if not all of the digital communities where Gen Y has spent time are highly egalitarian. They’re indifferent to pre-existing hierarchies and credentials, and sometimes even hostile to them. And these communities seem to Millennials to work really well; Wikipedia gives them good information on any topic under the sun, Intrade prediction markets tell them who’s going to win elections, Twitter lets them know what’s going on in the world better and faster than any other source, their Facebook friends answer their questions for them, and so on.

All this can make a strong case to Gen Yers that hierarchy and credentialism are passé as concepts, or should be. So when they show up after graduation at their first employer, some of them start acting this way.

They assume that their contributions and opinions will be as sought after and valued as anyone else’s. They feel free to voice their thoughts on topics both related and unrelated to their job descriptions. In short, they implicitly follow the explicit philosophy of most Web 2.0 communities, which is “we’re all equals here.”

This is a really bad idea, for two main reasons. First, it ignores the fact that the newest workers might not be the most knowledgeable on the company’s core topics, and that they’d be better served at the start of their careers by listening and learning, rather than broadcasting what they already (think they) know.

Second, many people in the organization’s existing hierarchy are kind of fond of it. They’re fond, in fact, of the entire notion of hierarchy, and of the related idea that employees should respect their places within it. These people don’t really desire more egalitarianism.”