Monday, March 15, 2010

Market Sense-Ability

Below is my recent interview with the CMO Council. It was conducted as part of the Councils Market Sense-Ability Center. Please visit the following link if you would like to see the entire newsletter.

An Interview with Charles Lawrence

A brand is only as good as the people, processes and products that define it. That's one reason the CMO Council believes the role of today's senior marketers must expand to embrace greater responsibility for business growth, measurability, customer engagement and alignment of marketing goals and strategies across the enterprise.

Charles Lawrence, who now heads the U.S. consumer products business for global kitchen products and systems leader Franke, became CMO of the company in 2006. His ability to define the company's problems through an employee-based audit, helped him drive dramatic changes, in concert with the new global President of Franke's Kitchen Systems Division. Lawrence's effective use of an organizational audit, working with the consulting firm MarketCulture Strategies, offers lessons for CMOs seeking to become market-driven change agents within their companies. What follows is an interview with Charles Lawrence.

Give us an overview of Franke's business and global operations.

Franke is a $3.5 billion privately held organization based in Aarburg, Switzerland. We have manufacturing operations in 40 countries around the world and sales and marketing offices in over 80 countries.

The company has two main divisions. One division is our Commercial Products Division, where we are the world leader in kitchen systems for quick service restaurants and the largest beer keg producer in the world. We are also the number three commercial coffee equipment maker and serve McDonald's and Starbucks among others.

The other business is our consumer-based Kitchen Systems Division, where we are the world's market share leader in kitchen sinks. Based on our success we have been able to expand our brand to other materials and other product categories that support some of our core businesses.

What were the factors facing Franke when you decided to undertake an analysis of your market culture?

A lot of the issues facing Franke were not unique to us. The economy is driving some very significant structural changes.

In the U.S., Franke is positioned as a luxury brand. From the mid-90s through the mid part of the 2000s there was phenomenal growth in the luxury segment of most consumer goods categories. Our best estimates say the luxury segment ballooned to about ten percent of the total market. We're finding now that the luxury segment is settling back to its historical five percent of the market.

During that period there were also some internal issues of organizational change and confusion, the poor integration of some acquisitions and senior management turnover that also caused challenges.

What is Franke doing now to create a more customer-driven, market-minded and agile business, and how did your measurement of the culture help drive that?

After working through the measurement process, we got back some pretty alarming information. The feedback came directly from every single employee in the organization, it was not just another management idea or something one of us picked out of the latest book on the market.

We began a complete restructuring that launched in November 2009, a complete global restructuring of the kitchen systems division into what we're describing as the three-layer model. In the three-layer model, the first layer is the market layer, which includes all the commercial teams around the globe in sales and marketing. The second is the technology, innovation and product development layer. The third is the operations layer, which is manufacturing, sourcing and the supply chain.

The MRI also became a powerful tool to help communicate not only at the local level, but at a much broader strategic level for the entire organization. I'm very pleased with the progress we've made in eight months.

How did the MRI inform the changes you're making internally?

First and foremost it became a tool to share with the organization how they felt, and it just so happened that I felt the same way. It provided a tangible starting point to begin making important changes throughout the organization, and also to change the overall cultural mindset.

In our warehouse, we had also cut back and weren't shipping orders as quickly as our competition, and sometimes the quality of the shipments weren't what they should have been. It would have been harder for me to get the organization to embrace the need to fix these areas if I didn't have the tool to communicate the need and remind them that they also felt that way.

Is it too early to talk about how these changes are impacting business performance?

The economy hasn't changed much since we started all this. But in the beginning of the fourth quarter, after we started to make changes, I noticed about a ten percent lift in business beginning in October, and we have been able to maintain that pattern. The economy certainly isn't driving that. So we're encouraged that the marketplace is responding favorably.

Do you think the need for companies to become more market and customer focused is increasing because of the economic and business changes we've seen over the last couple of years?

Absolutely. A lot of companies are chasing volume and forgetting about what made them successful. That focus creates tremendous turmoil and a great deal of pressure on the CMO position.

And when CMOs are replaced after a short tenure, it whipsaws the organization, because the new CMO has a slightly different spin. So the organization gets whipped around and the marketing budget is the first to get cut, because it's so hard to quantify its impact on the top and bottom line in many organizations. The CEO and the CFO are under such pressure financially that the organization often just loses its way.

CMOs have to be courageous and find ways to be able to support what they're doing, and that's a never-ending challenge for marketing people.

How can CMOs who are looking to build a more market-driven organization become better change agents?

I think marketers have to step up as a group and accept responsibility for culture within an organization and be a cheerleader, be that thought leader within the organization and be relentless about it. Secondly, we have to be proactive and outspoken about the importance of market knowledge, and how that can be a differentiator in an environment where your competitors are doing what I just described, cutting marketing, cutting their focus on the marketplace, cutting their investment in their brands. If you can find a way to carve out some investments and some focus in those areas, you can stand out from the crowd.

Thirdly, I can't over-emphasize the importance of the tool that you have to help communicate the need to the rest of the organization. I think the MRI and the output of that analysis was absolutely invaluable.

Please let me know what you think.

1 comment:

  1. Hi Charlie, it was really interesting to hear your thoughts on the value of the Market Responsiveness Index (MRI) tool and how you have leveraged it to great success inside Franke. I am looking forward to following your progress!