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
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
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
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
‘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
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
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
‘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
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
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.