MARKETING FOCUS: Life after downsizing

Marketers need not worry about losing their jobs as a result of downsizing, but as Ben Abrahams reports, they will need to make some major changes in the way they work

Marketers need not worry about losing their jobs as a result of

downsizing, but as Ben Abrahams reports, they will need to make some

major changes in the way they work



You’ve got to be big to admit to your mistakes. And the bigger your

mistakes, the bigger you have to be to own up to them. By that token,

Stephen S Roach, chief economist of US investment bank Morgan Stanley,

must be a giant of a man, a Colossus among penitents.



In the late 70s and into the 80s, Roach was one of the main architects

of the theory of downsizing, the idea that by ‘cutting costs’, which in

reality meant sacking people, you can increase productivity and make

companies more profitable without actually selling more products.



It is a theory that led to millions of jobs in the western world being

wiped out as corporation after corporation sought the competitive edge

that comes from being mean and lean.



Last week, Roach came out publicly and said ‘oops, sorry, I got it all

wrong’. He declared: ‘If you compete by building you have a future, if

you compete by cutting you don’t. Tactics of open-ended downsizing are

ultimately recipes for extinction.’ He made clear that it isn’t only

individual companies he was referring to, but the competitiveness of

entire national economies that is at stake.



To grow we need to invest, take people on and improve the quality of our

output, runs his revised theory. ‘In the end there is only one way out:

upgrading the quality of the workforce and rebuilding through hiring and

the expansion of new production facilities,’ Roach wrote in a report to

his clients.



So what are the implications for marketers of his ‘mistake’? Do

marketers still have to worry about downsizing and, if so, what

precisely should they worry about?



Anyone who lost their job in the past four years will find it hard to

swallow, but it seems that for the moment marketers needn’t be too

concerned about downsizing, at least on a personal level. The marketing

community may have had a hard time of it during the early 90s, but all

the evidence is that the demand for marketers has never been so strong.



According to a survey of marketing personnel carried out by Data

Management Services, there are now a total of 12,852 directors,

marketing managers and brand managers employed in the top 3000 marketing

companies, compared with 11,542 in 1995 - an increase of 11% in one

year.



And according to a survey of 10,000 job seekers by recruitment

consultant Michael Page, only 3% of marketing people are currently out

of work. This is markedly down from around 5% last year and drastically

below the 30% of the early 90s. ‘Prospects for good candidates are more

buoyant now than at any time since 1986,’ observes managing director

Steve Ingham.



In fact, it is almost impossible to find any concrete statistical

evidence of the supposed ravages of downsizing on marketing departments.

So does this mean that downsizing and its corollary, outsourcing, are

illusions?



‘No,’ says Professor Peter Doyle of Warwick Business School.

‘Admittedly, the evidence is largely tangential, but it is most

certainly there.’ He points to corporations such as IBM, which has

drastically slashed its headquarters staff, and Nintendo, which last

year filleted its entire UK operation from 150 down to three - a

chairman and two managing directors.



He agrees that the true effects of downsizing, which reflect structural

change, are hard to identify. But this is because they have been masked

by a cyclical increase in the demand for marketers. Like a booby trap,

the future is going to be very painful for marketers who assume that

everything is as it appears to be.



For starters, the way that marketing departments are structured is going

to change. Instead of a single large department, marketing will be

carried out, in the words of Professor Charles Handy, by ‘a shamrock

organisation’ with three leaves.



The first leaf will be the professional nucleus of a few managers

running the business, the second will consist of those with fixed

contracts to provide services, such as public relations, database

management or advertising, and the third will be those on ad-hoc

contracts, like market research or new product development agencies.



The real significance of downsizing for marketers does not lie in the

immediate impact on their own jobs. Much more significant is the way

that it has affected their customers. ‘People generally have lower

security of employment, so they are less willing to accept price

increases and want more than trivial modifications to existing

products,’ says Doyle.



Perhaps out of fear that their department may be cut back, Doyle says

marketers have tended towards a short-term emphasis on profits and

adopted the easy option every time.



He singles out FMCG companies as particular culprits. ‘They have served

up a diet of line extensions and minor tweaks rather than tangibly

adding value with products that work better and cheaper.’ He cites the

relaunch of Pepsi in blue livery as a vaunted initiative that adds no

real value.



It is a gloomy view of the way that marketing has responded to the

challenge of downsizing. But it means that, like Stephen S Roach, Doyle

believes the key questions for marketing are no longer centred on

cutting costs and achieving greater efficiency. The real challenge is to

do with how it can improve quality and add value.



‘Otherwise marketing management will be marginalised and other functions

will spearhead the changes that are needed. If this happens, firms will

become technical or cost-driven and reduced to the status of commodity

subcontractors.’



So how can marketing adapt to meet the needs of companies that want to

retain the cost benefits of downsizing, but realise that further

efficiency gains will, in the long run, be unproductive?



The most important thing is for marketers to accept that the marketing

department is probably a thing of the past. It is no coincidence that

some of the most successful modern companies, such as Virgin, Marks &

Spencer and The Body Shop, don’t have marketing departments at all. ‘The

message is clearly that marketing has to come out of its departmental

silo,’ comments Steve Cuthbert, director general of the Chartered

Institute of Marketing.



The upshot is that marketers will have to become less macho and

competitive. The emphasis will be on co-operation, both internal and

external.



‘Functional boundaries will be seen as increasingly irrelevant and

general management and process skills will become much more prized as

marketers learn to work in cross-functional teams,’ predicts Doyle.



However, the future may be already upon us. According to Ingham,

employers are already looking for the new-style marketer. ‘They have to

be flexible types with broad business backgrounds who are financially

astute and profit-oriented. In fact, much more like general business

managers.’



Perhaps even more difficult than abandoning the ‘functional silo’ will

be the idea that marketers will have to learn to co-operate and form

alliances outside the company.



Says Doyle: ‘In the past, marketing has been about exploiting

opportunities generated from the firm’s own abilities. Tomorrow’s

marketers will be scanning more broadly and looking at any other

organisation with resources that can be exploited in the market. The way

drugs company Zeneca licenses new products from competitors to fill gaps

in its portfolio is an example.



The primary task of the new marketers will be to champion the cause of

marketing within the company. ‘Marketers will become educators and get

non-marketing specialists to appreciate the primacy of being market-

driven,’ says Doyle.



Beyond that, the core department, the first leaf of Handy’s shamrock,

will retain strategic responsibility. ‘It will choose which markets and

which segments firms will compete in. And it will determine the firm’s

core strategy, which defines precisely where it can create a

competitive advantage.’



But the majority of marketers will no longer be in the core department.

Most will be in leaves two and three of the shamrock. In other words,

the delineation between marketing and marketing services, the contrast

between client and agencies will increasingly become redundant.



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