Building Better CMOs
Building Better CMOs
Rebecca Messina (McKinsey & Company) Transcript, Part 1
Rebecca Messina: If you really focus on value creation, you will get growth. Focus on growth, you could sometimes destroy value. You might not be thinking long term. You may not be thinking about the teams and the way they work together. You can get growth a lot of ways.

Greg Stuart: Welcome to Building Better CMOs, a podcast about how marketers can get stronger and smarter.

I am Greg Stuart, the CEO of the nonprofit trade association, MMA Global. And that voice you heard at the top is Rebecca Messina, a senior advisor at McKinsey & Company. She previously worked for more than 22 years at the Coca-Cola Company during its heyday, before serving as a global CMO at Beam Suntory, and then the first ever global CMO at Uber. And today, she's also on the global board here at the MMA.

Today on Building Better CMOs, Rebecca and I are going to talk about the research that she and the MMA, along with three other professors, have been involved with for the last six years to really validate how marketing an org, when done right, can really drive the sales of the organization. This is probably the most interesting work I will do in my entire marketing career and I'm super excited for you to hear about it.

Now, this podcast is all about the challenges marketers face, and unlocking the true power that marketing can have. Rebecca Messina from McKinsey & Company is going to tell us how to do that, right after this.

GS: Rebecca Messina. Oh my god. I was going to say long time since we've spoken, but I think it was Monday this week.

RM: I think that's right.

GS: I think so. I think so. I'm trying to think of all the board members, do I talk to you more than almost anybody except for my chair? That might be true.

RM: We have some kind of contact pretty regularly, and I'm grateful for it.

GS: No, you're very generous to say that. I wholeheartedly agree. Especially, you have a lot of interesting friends around you we're going to get into a little bit here. Some people who are thinking big about marketing. So that's always the you, them, us. So lots of good stuff. Where are you? Where'd I catch you today?

RM: Today, I'm in Amsterdam.

GS: Oh my god.

RM: I know. I live between actually Atlanta and Amsterdam right now.

GS: What happened to Italy?

RM: Oh, Italy's very in the mix. Italy's in the mix.

GS: Okay. So what's Amsterdam?

RM: Italy's not going anywhere. Amsterdam, my husband's Dutch and for the last 17 years has been living in the US in various cities, because we've lived in Atlanta, Chicago, and San Francisco. But he's really wanted the kids to have a Dutch year. And we were getting towards one of the last opportunities because my daughter's now a sophomore and our son's in eighth grade. So we are doing the Dutch year, but most of my work is still US based. I've also got a sick parent, so I go back and forth to Atlanta and Amsterdam. So I leave Monday for Atlanta. I'll be in New York with you next week. So yeah, my kids are doing a year here, and they're having a great time and it's proving to be the cutest city in the world with the worst weather. So it's what you think it is.

GS: So it's really there to teach them Dutch and culture, I assume, right? Is that it?

RM: Well, their Dutch is perfect. That's really thanks to my husband.

GS: Oh, wow.

RM: Yeah, they're Dutch is amazing. As a matter of fact, they actually tested into the mother tongue Dutch here, which was incredible.

GS: Crazy.

RM: Yeah. And so they're really here for culture, lifestyle. They've got a very independent life. You know what they say about Dutch and bikes is true. They bike everywhere. I bike everywhere. I bike to get the groceries. I've learned you can carry amazing things on a bike.

GS: It's crazy the number of bikes. There are more bikes in Amsterdam than there are people. Right? Got to be true.

RM: Yes, there are. It's actually very true. I know many people with two bikes.

GS: It's everywhere. And I think they have to pull them out of the canals there all the time because they somehow—

RM: They do. And I keep telling myself, how many ways can you die in Amsterdam? And one of them is absolutely getting clunked by a bike. So it's a thing, but it's a really interesting culture.

GS: Were you in Cannes Lions the year that the campaign that won was... what was it? Eight ways to die or 10 ways to die or something like that? Do you remember that campaign?

RM: I do remember the campaign.

GS: Did you see that?

RM: I don't know if I was there that year.

GS: I think it was around trains. I think it was kids were doing silly stuff on trains and getting themselves hurt, and so they did it as a prevention. But I think it won all the major awards. It was a very interesting, innovative campaign.

RM: Here, I said there are moments like getting out of an Uber requires special skills. You open that door you will, nine times out of 10, be opening into bike traffic.

GS: Oh my god.

RM: So you really have to be, yeah, you have to be very careful.

GS: Oh my goodness. Okay. Got it, got it, got it. Where does Italy fit into the path, though? Because you own a place in Italy, I think, right?

RM: We do, yeah. Italy is the forever place. We built it a long time ago. Gosh, we built it in 2013, '14, '15. Took a couple years. And so it's our happy place. It's our summer place. It's just lovely. Simple, but it's really nice.

GS: Now when you go there, do you actually work from there or you just go there and you shut—

RM: I do.

GS: Oh, okay.

RM: Yeah. And it's actually a good work story for anyone listening. It was well before COVID, and I remember going to Joe Tripodi at the time, and I said, "Joe, I'm going to start working from Sicily in the summer." And to Joe's credit, he said, "We'll give it a try." And he said, "Listen, if you can single-handedly take this company down by working in Sicily for a summer, then we've got bigger issues." And I think I just—

GS: That sounds like something Joe would say. I love it.

RM: Yeah, it was great. My husband was doing it, too. He was working at Coke. And we just made it work. We really wanted it to work. So if it meant sometimes you're waking up at crazy hours, we woke up at crazy hours. And then now it's much easier to do and here I am working from Amsterdam, and so it can happen. It can work. I'm grateful we did it. It was a bit of a stretch, but we did it and it's a forever place.

GS: Oh, that's great. Just for the listeners, so just so everybody knows, Rebecca here was referring to Joe Tripodi. How do I say his last name?

RM: Tripodi.

GS: Tripodi.

RM: Tripodi.

GS: Joe Tripodi, who was one of the famous CMOs. In fact, he led a team of which you were a part of that became... When Coke was marketer of the year. Very big deal. Jonathan Mildenhall was there, Wendy Clark was there. Tom Daly, who I knew a little bit—

RM: Myself, Ivan Pollard. Yeah.

GS: Yeah. I mean some of the greatest marketers of all time were there at this very unique period in Coke. And then after that you were Beam Suntory, correct?

RM: Yeah. My last job at Coke, I was the CMO of the incubator, which was ventures and emerging brands. And then I went to Beam Suntory, which is a spirits company. I was the global CMO there. And then I was Uber's first CMO as it was pre and post the IPO.

GS: That must've been a crazy experience to be there, too. Because you were the first CMO after some of the disruption in management, too, I think. Is that correct?

RM: Right. I was handpicked, so it was... Exactly. The founder had left, and Dara had come in and he was standing up his leadership team for the first time. And it was a company that, if you think about it, for 10 years—at that point about nine years—become everything it was without a marketing leader.

GS: They did do a lot of marketing. They did a lot of marketing, though, right? Because Kellyn was there at that time.

RM: They did, but they did everything in pocket. So I think Kellyn was doing US marketing. Somebody else had a smaller brand role for a while. They had never had a big concerted effort of organized approach to the discipline of marketing, but it was consistent with how a company goes really, really fast.

GS: Totally.

RM: They parse it out and give everybody a lot of autonomy. And as they grew up, that became more difficult to sustain and they had amassed a lot of marketers. And so it was a really interesting remit and a really interesting time to be there.

GS: I think I remember the 2,500 marketers or something like that, right? At Uber? Something like that?

RM: Not quite.

GS: Not that big? Oh, okay.

RM: But a lot. About 12. Maybe about—

GS: 12. Okay.

RM: 1,000 to 1,200. Yeah.

GS: I doubled it over time. So sorry about that.

RM: That's okay.

GS: Okay, got it. Yeah. But no, it was a big, big marketing organization and they spent a lot of money. I can remember numbers in the million-dollar a week kind of discussions at some point.

RM: Oh yeah.

GS: Yeah, it was crazy. A million and a half. Yeah. They were actually the ones who discovered a lot of that fraud stuff that was such a big deal that we talked about a lot at the board levels and stuff. Okay.

Well listen, Rebecca, why don't we jump right in. Because I think there's a lot of other chit-chat. You and I know each other for a long time, so we could have fun with that, but I think there's a bigger topic obviously. And it really fits into Building Better CMOs and the whole thesis of the show, which is in your experience, exposure, perspective, what do you think we don't get right as marketers? What do we miss? What do you think the industry would be better off? Because that's the thesis of the MMA. The MMA is to find problems and go fix them. To make marketers and CMOs better. Whole title of the show, get the whole idea. But in your experience—and you're interesting because you've had a number of somewhat radically different experiences, some of those—what do you think it is? Just put a statement out there and let's riff on that for a while.

RM: I think we believe that once a CMO, always a CMO anywhere. And I think that's where we get it wrong. If you're at the Coca-Cola Company, marketing's the center of the universe. It's clear how marketing creates value. People understand the role it plays. You're going to amass great marketing talent across all aspects of marketing. And it's a well understood discipline. My middle experience at Beam, there's a certain way things are done, but they're maybe not using all of the tools at their disposal. So part of what I was there to help do was maybe modernize a bit, bring out some of the better brand building fundamentals. And Uber may be one of the most modern companies, but yet had never really put any of the fundamentals in place. Hadn't really organized or understood that they'd really amassed a coalition of marketers. The opportunity was to really integrate it. And I think what sometimes we don't do enough of is understand how unique each moment in time is. Not just how each CMO is, but how the moment in time, what that company needs at that time and the way to add the greatest value is to point the vectors in that direction of value creation and line up the teams, the skills, the people behind it to go and chase that.

GS: So that could sound a little bit like, oh, every situation's a unique snowflake, which is hard to communicate to the rest of the C-suite. You're not just being open-ended like, hey, we just make this shit up as we go. That's not where you're going.

RM: Oh no. I actually think while everything is unique, it isn't. There are some fundamentals that get skipped. And then what I'm advocating is stop skipping the fundamentals. It's almost like one of the fundamentals, I'll be honest, is mindset. We talk about skill set, we talk about datasets, and we come in and we say, "If we only added these skills, that if only we had access to these datasets." The truth is a lot of this is a mindset. And I find, and I'm fortunate. I have a McKinsey side of my life, I've got a MarCaps side, I've got a lot of private advising. I'm inside a lot of companies of all different shapes and sizes. And I think it's this mindset of value creation. And I'm choosing that word over growth because I think if you really focus on value creation, you will get growth. Focus on growth, you could sometimes destroy value.

GS: Oh.

RM: You might not be thinking long term. You may not be thinking about the teams and the way they work together. You can get growth a lot of ways. And so I always like to parse out the difference and articulate the role of marketing in terms of how it creates value long and short term. And there will be a component of growth in that. And so will that be a snowflake? No, I think everybody's going to be asking that question of the marketing team.

GS: So talk about... Are there a series of different mindsets? Is that how you would approach it? Keep riffing on mindset and what that means.

RM: I think there's three mindsets... Well, three pieces that I think are critical. So this is where we're not unique. I think marketers still have the old-fashioned job of inspire, and I don't know who else in the organization is going to do it. Inspiring consumers, inspiring behavior, inspiring action.

GS: Somebody's got to lead the charge. I guess you're suggesting in some regards the CEO is not always the person doing that.

RM: No. Marketing is ultimately in charge of behavior change. That's what we're trying to get. And that requires inspiration at many levels. The other one that I think is really uniquely marketing's job is innovate. So we have to inspire, we have to innovate. And look, one of the things you and I could talk about all day is bringing in every new capability that ever comes around. That's part of marketing's innovation model, right? Marketing is constantly like an R&D department.

GS: What function is changing more dramatically than marketing or the connection to consumers? I mean, oh my god, it's not even... Rebecca, it's not the same thing today it was in the 20 years ago when you and I would've been practicing.

RM: Agreed.

GS: Completely different.

RM: Completely different.

GS: Completely different. Okay.

RM: And then the third one is the one, I beat the drum on this all the time, is integrate. This is a dispersed, fragmented, distributed... I don't even know if I want to call it a function anymore. I really do use the word either a network or a coalition because I think the activities that need to happen to create that value that we just talked about are often very dispersed and they sit across many areas of responsibility. And I think sometimes we get in and we fight for the teams directly into us. And I think that fight is almost futile. I think the better opportunity is to integrate the pieces. And research shows that when CMOs can integrate the pieces, play a unifying role, the results really improved for them and for the experience of everyone around and, ultimately, for the consumer. I'd say the three things I said are innovate, inspire, and integrate. And they're mindsets. I'm here to move people. I'm here to help us work through new things and create new value, and I'm here to put the pieces together.

GS: So let's talk a little bit about those pieces then. Granted, you're here to move, but it's not just a "Hey, whip them up into a frenzy and turn them loose." The project that you've been involved with for 20-plus years—that MMA has been involved in with our friend Dr. Omar Rodríguez-Vilá for the last seven years—is around trying to create structure around capabilities. So talk a little bit about that work. Because I think that's the foundation of the integrate and putting the pieces together. Is that right?

RM: It is. And the genesis of the work... And again, it's really all Omar's credit. Omar was on my team at Coke a long time ago, and he was leading the work on my team to help us really continue to transform and keep marketing on its edge. And he had this brilliant idea that if you operate in as many countries as a company like Coke operates, you have a research project in the making. So let's study the capabilities that are present in our winning-most countries. And so he stood up a research project called Winning Marketing Organizations, and it helped us identify the capabilities present in our winning-most teams around the world.

GS: So the teams in countries that are having the best financial performance? Is it somewhat that simple?

RM: Yes. Had the strongest brand power, all of those things. Yep.

GS: Few more than just financial.

RM: Many measures. Yeah. Classically Omar, many measures. And one of the capabilities was their ability to integrate across what was critical at Coke, which was called franchise and commercial leadership. And a marketer that could put the pieces together, a marketing team that did that well, they were consistently outperforming our others. Omar went on to get his PhD. Omar went on to become a professor at Emory and at Georgia Tech.

And that work, he's given it a whole new life. Because together with other marketing academics who are leading in the world of marketing capability, he's taken that work and turned it into industry-wide work. Because he's taken and looked at companies around the world that are outperforming others and been able to identify some things that are present in those. And there are three things present in the winning-most companies. One of them is clarity of operating principles. How we work, how we work together, how decisions are made, who's in charge of what, all of that. The other one is what we call clarity of mission. How we create value, we know why we're here. And then the third one is having the right capabilities. You have the presence of the right capabilities that are aligned to what the business needs to create that value. And every company's going to have a different capability fit. Not every company needs the same 10. It all depends on which direction you're pointed. So those three things—clarity of mission, clarity of operating principles, and clarity of capabilities—are the three things present in the winning-most companies today. And I continue to see it play out over and over again.

GS: And just to be clear, Rebecca, just for the listeners' sake here. I obviously know a little bit about this since a lot of this work has been interwoven with the global board of the MMA and the support of the CMOs there. This is not an idol like we think this is best. We got Dr. Sundar Bharadwaj who has come in and done a massive statistical and mathematical analysis around this work and tying what really matters to growth. What do high performance companies really do, not this sort of retrofit. I believe, to the best of his knowledge, it'd be a causality relationship. I think is where he's going on that. And then we should have mentioned just because Neil will yell at us if we don't bring his name up, but Neil Morgan, Dr. Neil Morgan also involved. Just by the way. We'll just put that in.

RM: Absolutely. But they're three of the world's best.

GS: Oh, they really are.

RM: And they're excellent at what they do and they have... We've been able to tie the presence of these activities, particularly the fit on capability, to financial performance. What I love about this, and even this conversation right here, this is available to everyone. And I don't just mean the work. I mean these are variables at our disposal. We could fight all day for more money for tech or more money for better datasets, even paying more for talent. This is available to all of us. To take the opportunity to define the value creation for marketing, to be clear on how we operate, and to ensure we've got the right capabilities. That's at everyone's disposal.

GS: And I love where this came from because I was in that very first meeting. I think this was before... I don't remember if you were at that—

RM: I wasn't at the meeting, but I was on the MMA then. Yeah.

GS: Okay. Yeah. Okay. Yeah. What happened is Dr. Omar and I had a meeting, it was a private closed-door session with some of the world's biggest CMOs. It wasn't Deb Wahl. It was before that. It was Tim Mahoney. But the CMO of General Motors was there. The CMO of T-Mobile was there at the time. CMO of Chobani, Duncan Brands. There were big CMOs in the room. I remember this. And Omar threw out an open-ended question. It was just meant to be a warmup. We were just going to spend 10 minutes and move on to something else. And the question was, what is the role of marketing? What is the role of CMO? Assuming those are intertwined.

And I'll never forget, one hour later, we realized nobody in that room agreed what the role of the CMO or the role of marketing was. And that to me, that's probably one of the most eye-opening moments in my entire career in marketing to go, "Oh my god, if we don't know what the hell we do, how in god's name do we explain it to the CFO, the CEO, or the board? How are they, non-marketers, supposed to understand if we can't be clear?" And I suspect that it was that that led then Omar and team to come up with that there's really three primary marketing strategies. There's only three. There could be combinations of it, but there's only three. What are those?

RM: There's only three. They all begin with an E for the listeners' sake, so get your pens out. But one is what's called exchange value. That's a company that creates its value through personalization, transactions, one-to-one interactions. Think Amazon. Probably the best example.

GS: Yeah. Classic. The DTC that came all the rage, which is a very different capability set. Okay, keep going. Okay. What else? So that's one.

RM: Yep. Brand plays a very different role there. All of it.

GS: Exchange. Yep.

RM: Okay. Exchange value. The second one is experience value. I'm going on a flight on Monday to the US. I'm already getting my text messages from Delta Air Lines. I'm going to check in on Sunday, and then from Sunday all the way through to landing, I can track my bags. I can do all of these things, right?

GS: Yep.

RM: Experience. They are deriving their value and creating value with customers through experience. That is their differentiator.

GS: Delta, I think was always the example we used as probably the best in the performers of these. And you think about it, even companies like travel, they don't really do brand advertising, at least that I see much anymore. The don't. They basically have their loyalty programs and they've been really fixated on experience because we all hated flying. And they've done everything they can for now to make it better. So yes, it's all about that. Yep, go ahead.

RM: Absolutely. And then the third one is maybe what you'd call the classic one, what's called engagement. And a good example would be like the Coca-Cola Company. A company that creates its value with consumers through an engagement model. Being relevant, being meaningful, being a brand you want to have in your life. A lot of your luxury goods companies operate a little bit in there, and sometimes they bleed into experience as well. So those three things of exchange, of experience, and of engagement are really important conversations because as an example, if you've brought in an engagement-heavy CMO to an exchange company, you have done that intentionally because you believe the role of brand is fundamentally more important.

GS: Right. Because you're maybe moving the strategy of the company here, people. It's not just like, hey, we've come up with a new idea looking at the world. Right. Exactly.

RM: No, it's a business model shift.

GS: Yes.

RM: Money flows differently in that company.

GS: Everybody's got to agree. But what's the complexity, though? So if you go from exchange to engagement or whatever, what's the complexity for those marketing departments?

RM: Yeah, that's just it. And so the complexity is choosing what we're going to call your capability stack almost. But again, I think you nailed it. Often we think that marketing is disconnected from the business model.

GS: Better not be.

RM: Right. It's so embedded. Everything that I just explained to you is literally a business model and the way money will flow, the way value will flow. In the engagement model, you're going to need some patience, right? The demand cycle is going to be longer. You believe in building brands for the long term. It's very different.

GS: Listen, this is such a big deal. And the issue, just to be really clear for everybody, it's like you don't necessarily need data scientists as a part of a brand model. I'm not saying there isn't maybe some value creation there, but it's not the important... But if you're doing transactions, if you're DTC oriented, then the data scientist people are the most important people in the business. They probably also relate into customer experience. So Omar and team have come up with 72 capabilities required across the three marketing stacks.

RM: Just for the listeners' sake, there are other ways to create value. They're not all customer facing. The three other ways to create value are operational value, knowledge value, and strategic value. Really quickly, strategic value would be a marketing organization that's enabling someone else through strategy. We come up with and help you decide the next areas of growth and somebody else goes and chases it. That can happen. Sometimes that is even in B2B companies. Another one is operational value. We tie the pieces together behind the scene. We give the sales team all the materials they need, but we are really more operational value behind the scenes. And then the third one is knowledge value. And this one pops up a lot as a second area together with one of the three Es for many companies.

This was a big one for me at Uber actually. This is where you're bringing unique perspective. You're bringing knowledge. Knowledge about consumers, knowledge about the marketplace, knowledge about where the world's going. You're bringing knowledge, insight into building new products, into reaching consumers in new ways. It's a really important one, but we call it firm facing. More internally it's creating value and then that value will get delivered, if you would, through one of the externally facing ones.

GS: Yeah, I misstated earlier. You're right. Let me correct for everybody there, which you did. Appreciate that. Which is that there's 72 capabilities across all six.

RM: You got it.

GS: Yeah, yeah, yeah. It's not just against the three. Yeah.

RM: So those six get divided into 18 and then 18 of those, they fall. Yeah, exactly. And so you nailed it, though, Greg. That's why the 72 is an incredible tapestry of more capabilities than you'd ever have, but it really represents all of the aspects, all the activities of marketing. The really important job for a CMO—and where I think we undervalue sometimes when we don't put enough time in—is designing that capability strategy to ensure that fit is tight. Do I have the capabilities I need to create the value in the way we've agreed?

And by the way, I've got one client right now who you know well, who they're really thinking about it in a really stair stepped way. Year one, they're picking a handful of those and they're going after them. But they know that once they get those laid, they know the next round and the next round. And it's really helping them set their agenda and articulate that agenda. And it's also helping manage expectations inside the company. And as they get asked to deliver certain things they can articulate, "We don't have those capabilities yet. We can go outsource them, though." That's a route, right? There's many ways to get access to the capabilities.

GS: Yeah. Again, just to make sure everybody's really clear, this is not also endemic to the category. I used the example earlier, Delta and all airlines. They're all pursuing a customer experience strategy, it feels like to me, at least from the limited exposure I have to every airline that other than United, I fly all the time. But where this matters is that you could be in the same product and have a totally different marketing strategy. So razors is the best. Gillette has typically—although they've changed a little bit—has typically been a brand strategy sold to retail. They don't even know who the customer is. Harry's knows every customer, is focused on transaction. They've done an interesting job, I think, in defining what that brand is so I don't want to take anything away from that, but it's really been a transaction-oriented product, at least to date. Although they're still in retail, too. They sort of cross over. But that's the issue. If you're going to cross over from being DTC, if you're going to be crossed over from transaction to brand, then you have to recognize I need a new set of capabilities to bring in-house to make that transition, but that's a constant decision the business is making.

RM: That's exactly right. And the word there is conscious. And I think so often the capabilities are by default. And it's really versus by design. And I've found there's just so much value in giving this the time it requires. It's a no regret move. It really is the no regret move that's often overlooked and we jump straight into... I get asked a lot of times in a lot of my advising work, "Share the org chart of another company with me." I'm like, "We could, but it will matter nothing."

GS: Yes. So let's go one back, though, just to give props to this because I think it's important for, again, the listeners to totally understand. So once you've mapped out those set of capabilities, this is not an idle conversation of like, "Hey, we've created a nifty new framework. So what?" What Sundar did is he stepped in and as a result... I know now the work has expanded, but the original thesis, the original proof... Proof, I should say. Not thesis. Thesis that then proved was that alignment of capabilities drove financial performance of the company. That when companies got that right, when they did more of what mattered and less of what didn't, financials improved. I mean, that's a blow your mind kind of conclusion.

RM: It is. And these guys, Sundar and Omar, took it to two levels. And Neil, of course. The three of them. Sundar could tell you the upside. So a 1 percent improvement in capability fit was a two and a half time improvement in growth.

GS: Yes, in growth. Yep.

RM: And then Omar went on to look at... You said it very well. There was a nuance on what you said. When you're working on things that don't matter as much, that's called unproductive. That's wasteful. Omar's gone on to demonstrate when you're wasting, when you don't have that operating clarity, it's expensive.

GS: Yes.

RM: We don't talk about that enough.

GS: And marketing... I mean, listen, let me be clear here. I love marketing. It's all I've ever done for many decades. It's all I ever wanted to do since I was a child. I watched Bewitched too much. I don't know where it came from. It's all I ever wanted to do. However—

RM: I forgot Darrin. Was he a marketer?

GS: Yeah, he was. He worked at an agency. Right.
GS: Let’s take a quick break. We’ll be back after this with Rebecca Messina.

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