What you miss when you hyper-focus on optimization

Lately, I fear some marketing leaders may be losing sight of the forest for the trees. They are veering too far toward the sole goal of cost-optimization and moving further away from the business goal of driving demand and increasing revenue.

For all of the right reasons we got closer to our CFO's and learned how to justify our budgets through achieving ever-lower CPL's (cost per lead) and CPA's (cost per acquisition). We fell in love with A/B testing our copy, creative and landing pages in order to squeeze another point or two out of a conversion rate. We hired analysts and learned how to manipulate pivot tables with the best of them.

And as fun as data analytics can be (and I am one big geek...), it is dangerous when the value of marketing is seen to be in the act of optimization...not in driving demand. Adam Needles from Annuitas recently wrote a blog, "Is the CMO the problem?" and characterizes the problem as, "CMOs obsess about their marketing ROI; however they focus on activities and their costs, not on demand and revenue."

Don't get me wrong because optimization is my middle name (see geek reference above). Closely watching acquisition and retention metrics and managing costs is a necessary part of marketing program execution. However, it is necessary, but not sufficient.

Optimization is a tactic, not the strategy.

Given pressure to justify marketing budgets and departments, some marketing leaders have over-corrected and lost sight of their role to provide the customer insight driven strategy needed to create and sustain long term growth.

To combat this, I second the suggestion from the McKinsey & Co blog "Why can't we be friends" that the CMO and CFO collaborate to identify marketing's success metrics to ensure the set addresses both the short term and the long term health of the business. Short term metrics will be primarily financial: new sales, reduced churn, and customer acquisition costs to name just a few. While long term metrics may include: brand awareness & consideration and Net Promoter Scores.

I didn't say it would be easy.

The conversation with your CFO to get agreement on short and long term marketing success metrics may not be easy. We all know that many CEOs and CFOs can be biased to be focused on the short term financial metrics. It is marketing's job to continually bring the long term view into the conversations. Getting consensus will solidify the wider value the marketing team provides and will facilitate the necessary conversations around the investment needed to sustain revenue growth, not just short term cost optimizations. 

If one of your 2014 New Year resolutions is to build a better relationship with your CFO, getting to a common set of both short term and long term metrics is a great way to start.

Good Leaders Get Out of Their Own Heads

A recent Harvard Business Review blog about team members who derail meetings, reminded me of Whitman's famous quote, "Be curious, not judgmental." Over the past few months I have shared this quote quite a bit. 

My current role has me working closely with a team in Copenhagen. Since I live near San Francisco, that's not very "close". In fact, it's over 5,000 miles, an 11 hour plane ride and a nine hour time difference. So in a typical workweek there are only about 10 hours of overlap "working" time - and that's only because I start my days with meetings at 6:30 or 7 am.

Yes, we use video conferencing and of course we use social business collaboration tools for managing team workflows and communications. Technology is how we can make it work. But it's absolutely not easy.

This experience has brought home for me just how easy it is for people to be influenced by 'group think' and subtle biases. In psychology it's called ultimate attribution error and it can be summed up as "when members of our group make a mistake, its an accident or an anomaly, but when members of another group do so, it's typical of them." 

Ultimate attribution error is apparent among people who interact every day, and it gets exponentially amplified when distance limits personal interactions and communications are primarily written and asynchronous.

In my situation, the two groups in question could not be more different. One group is the acquired start-up: a less than 20-person team, mostly co-located in one office in Copenhagen. And the other group is the acquiring multi-billion dollar company with thousands of team members in a division spanning multiple locations in California and around the world.

Even for seasoned leaders like myself who have gone through required hours of "diversity training" and have earned some self-awareness through the school-of-hard-knocks -- in the moment, I can and do get frustrated. It is difficult to always assume positive intent and to be authentically curious about the other team member's actions and point of view all day long, every day.

So multiple times each week I remind myself - and my team members in both locations - to stay mindful of this reality. I find it is especially important to take a moment in those emotionally charged times when you perceive the other person as "derailing a meeting” or “going too slow” or “doing something stupid”.   The HBR blog post says it best: you must “suspend your assumption that you understand the situation and others don’t.”

It takes strong leaders in both “groups” to be mindful of the potentially dysfunctional tendencies and biases that exist between geographically dispersed teams. Leaders must actively self-regulate their own attitudes and behaviors while also proactively address developing these important ‘soft’ skills in all team members.

I think I will post that Walt Whitman quote on my monitor to help me keep out of my own head.  What will you do?