Recession accelerates change management within marketing departments

LONDON - Companies need to be nimble and brave if they are to survive the recession. For many marketers this means completely overhauling the way they work and instituting a fresh corporate structure.

As corporations get bigger, inevitably they grow more cumber-some and bureau-cratic. Decisions must be signed off by different layers of manage-ment, meaning product launches and marketing campaigns can become painfully slow and be outdated by the time they finally launch.Established brand owners are looking for new ways to sharpen their marketingin the recession and make their businesses more responsive to consumer trends. In short, they have identified a need for change.

Structural shifts

Many companies are shifting power into the hands of global brand managers and away from country-based fiefdoms. Such restructures have taken a heavy toll on marketers. However, cutting jobs and streamlining management are not the only ways to create a leaner structure and unleash the creativity of the workforce.

British Airways has set up a marketing unit under the moniker 'Revenue Labs', which is working across the company to create short- and long-term brand-building plans. Marks & Spencer, meanwhile, has embar-ked on a change management programme to improve its online offer, increase sales in emerging markets, update its distribution systems and better commu-nicate its ethical values.

Both companies have been criticised as slow-moving dinosaurs compared with nimbler rivals such as easyJet and Next. BA's cumbersome management structures and poor communications were blamed for the chaos at the opening of Terminal 5 at Heathrow last year, while M&S has long been characterised as a tardy and unwieldy organisation. The downturn is forcing both to rethink their structures and react faster to changing markets.

BA's Revenue Labs, comprising a task force of manag-ers from different parts of the airline, aims to make the best use of market-ing resources by devising ways of responding quickly to market changes and boosting demand.

'We want to be at the forefront of getting Britain travelling, whether this is helping business travellers or consumers taking a leisure break,' says Abi Comber, BA's managing director of brand and insight.

One scheme it has developed has been to donate air tickets to small and medium-sized companies to enable their executives to travel abroad and take advantage of business opportunities.

For its part, M&S has revealed an initiative with broadly similar aims of driving business; in May, chief executive Stuart Rose announ-ced a '2020: Doing the right thing' plan. Rose says the programme will focus on change, moving into multiple channels, boosting business in emerging markets and highlighting the company's sustainability objectives.

The latter goal aims to emphasise M&S' 'Plan A' environmental commit-ment. 'Doing the right thing' will also serve as a marketing tagline along with 'Quality worth every penny'.

The retailer has put Ian Dyson, finance and operations director, and several senior executives, including director of clothing Kate Bostock, in charge of implementing the plan.

A spokeswoman says M&S will also place teams of managers beneath them to help identify areas for improvement.'We need to ensure the logistics are working efficiently so we can be leaner and meaner, and operate better,' she adds.

The drive to improve the retailer's 'multi-channel' approach could include the development of a system where custo-mers can order goods online and collect them in-store. 'There are opportuni-ties we could take to accelerate out of the downturn when it ends,' says the spokeswoman.

However, some see the announcement as a sop to investors after M&S announced a poor set of financial results for 2008. The news came only weeks after City ana-lyst Tony Shiret, of Credit Suisse, published a damning note about Rose's leadership of M&S. Shiret claims that there has been little progress at the chain under Rose and that deep structural problems need to be addressed. He argues that its distribution systems must be improved and that the chain overrelies on older customers and has failed to attract younger shoppers.

Nick Bubb, retail analyst at Pali Interna-tional, spies another potential motive behind M&S' plan. 'Perhaps it is a big test for Dyson to show he can replace Rose and step up to become the next chief executive,' he says. The company is to give an update on the change programme at its annual general meeting this month.

Better, faster, stronger

Reinventing companies to become as agile and efficient as smaller competitors is the ultimate aim for many corporate chief executives. However, it often means cutting through the bureaucracy in place and infus-ing the business with a sense of urgency.

Unilever, for instance, has spent the past three years streamlining its operations in an attempt to get relevant products to market faster. Its 'One Unilever' programme, introduced in 2005, shifted power away from country managers toward global brand marketers and is credited with helping the company's marketing to become more effective.

The aim has been to reduce duplicated roles in the business, which has led to tens of thousands of job cuts, and allow ideas to be heard and implemented much quicker.

Unilever's campaign ideas and agency relation-ships are now run centrally by brand teams, which offer its chair-men in each territory a menu of campaigns, prod-ucts and pack-aging from which to choose. Analysts believe the changes brought about by the One Unilever programme have boosted efficiency and saved costs.

A problem for any big brand owner is the tendency for certain functions to become  too powerful. Hugh Wilson, professor of strategic marketing at the Cranfield School of Management, says: 'Anything other than organising the busi-ness around the custo-mer will give you problems.'

He adds that customers interact with a company through different chan-nels, brands and geographical areas.'If you try to squeeze a multi-dimension-al world into a hierarchical structure, some dimensions will be better represented. The art is to get a process that goes across the business so one reporting line cannot dominate,' he argues.

This means there is a constant fight to keep an organisation focused on the needs of the customer, rather than allowing the power of any single department to take centre stage.

Multinational brand owners have tried various methods of instilling an entrepre-neurial culture in their operations. One common solution is to buy a stake in a smaller brand and hope some of its nimble-ness and enthusiasm rubs off. Coca-Cola has recently acquired a stake in Innocent Drinks, and most big-brand owners have taken over start-up companies, recognising that their smaller rivals are often better at creating successful new products.

Another route is to create venture capital funds to identify the next big winners; an option tried by NestlŽ, Unilever and Tate & Lyle. Procter & Gamble, meanwhile, attemp-ted to reinvent the way it did business at the end of the 90s, moving to a brand-led structure later mim-icked by Unilever and Nestle, among many others.

P&G's restructure was unsettling for a company famed for its conservative approach, although many believe that it has paid off. It is now likely to undergo further changes under its new chief executive, Robert McDonald. The company has already announced a change in the role of its marketing chiefs, who are taking on responsibility for PR and customer insight, becoming 'brand builders', rather than simply marketers.

Roisin Donnelly, P&G's corporate marketing director for the UK and Ireland, explains: 'External relations, such as public relations and corporate communications, as well as consumer market knowledge, will report into chief marketing officers. These departments previously reported into the chief executive AG Lafley, but will now report into global marketing officer Marc Pritchard.'

Donnelly describes this as an 'evolution', rather than a dramatic change, designed to ensure that everyone is aligned with the same aim of brand-building. Big companies are engaged in an unending fight to avoid slipping into complacency, and to ensure they stay connected to their customers. In a tough economic climate, failure to achieve this could be costly.

 

 

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