Dr. James (Mac) Hulbert retired in June as Professor of International Marketing at the Columbia Graduate School of Business.
While at Columbia, Hulbert served as Vice-Dean of Columbia Business School and Chairman of its Marketing Department. He has also taught in executive development programs in Europe, South America, North America, the Middle East, Africa and Asia.
Hulbert has consulted with many multinational companies around the world, including 3M, IBM, General Electric, Merrill Lynch, Citicorp, Goldman Sachs, Johnson and Johnson, Phillip Morris and Toyota. He recently coauthored Total Integrated Marketing: Breaking the Bounds of the Profession, arguing for the benefits of connecting marketing to all key business functions, and is also the coauthor of the forthcoming Strategic Management, Creating Value in Turbulent Times.
I recently discussed with him how marketing can be most valuable to organizations and the changes marketers will need to succeed in the future.
Young: As a professor of marketing, most recently at Columbia University, you're in the business of training marketing professionals. In general, what are the critical skills that marketers need to be effective today?
Hulbert: To be an effective marketing manager, you have to be able to work across organizational boundaries, and, at a minimum, that requires in most companies a high degree of interpersonal skills. If you had to paint the ideal profile, it's not just interpersonal skills, it also includes understanding of organizations, organizational politics, organizational change. That's where classical or neoclassical marketing has basically failed.
Young: How can marketers learn these skills?
Hulbert: The Total Quality [Management (TQM)] people acquired a lot of those skills when they realized that they couldn't get their message across unless they were good at that. If you pick up a handbook in TQM, it's full of practical tips about how to educate people, how to get them to work in teams, how to change behavior, and how to alter measures. I've yet to see anything in the marketing field that comes close. Today, 70% of [the Malcolm] Baldrige [Quality Award] is based on customer measures, whereas initially quality was defined as conformance to engineering specs, very narrowly and not appropriately. While those guys ended up with a marketing message, they emphasize organizational engineering—how to get the message across. That's an area where marketers have classically failed to do a very good job.
Young: Marketing as a profession certainly is changing. What do you see three years down the road?
Hulbert: Marketers have had the “trust me” attitude. [They say:] “I understand advertising, you don't,” and people deferred to them. Now the finance mentality is [becoming] widespread, and not inappropriately, because we do have to generate returns for shareholders, ultimately.
Young: Are you seeing good work done in marketing metrics?
Hulbert: It's certainly very technical, and the exercise does not have to be so expensive, quite frankly. There are usually easier ways to do these things, but they require thinking differently, getting outside the box. You also have to remember that the tremendous growth in direct mail and the Internet enable quite small companies to measure very precisely, which they couldn't do in the past.
In a very dynamic world, some of those efforts to precisely model the marketing mix and its effect can be completely destroyed when a Michael Dell comes in and says, “Hey, it's not how many stores you have, it's whether or not you can effectively market directly to your customers,” and develops a new business model which transforms the industry. Those kinds of innovations completely destroy the careful, systematic modeling to which a lot of companies and a lot of marketers deploy great efforts.
It's not just about new business models. I remember when Grand Metropolitan bought Häagen-Dazs and introduced it in Europe. [Grand Metropolitan] could have tried to go head to head with Unilever in the gas stations, because [Häagen-Dazs] is a hand-held novelty; [Grand Metropolitan] recognized that was stupid. Instead, [it] positioned upscale and put their ice cream in the video stores and the package stores and just over the few very upscale outlets as brand trial centers, basically, in the middle of London and the middle of Paris. If you're using conventional measurement methods to track sales of ice cream, the sales of Häagen-Dazs wouldn't even show up, because you're not tracking sales through those new channels at all. It's that kind of innovation that can blow apart the careful modeling.
Young: In your book, you don't make a distinction between business-to-business marketing and business-to-consumer marketing, nor do you make a distinction by vertical industries. In other words, your thesis applies across the board.
Hulbert: Basically the principles are the same. People who say, “Our industry is different,” have blinders on. I've got an article on a bank that's benchmarking Wal-Mart in how they do their customer service, with greeters and all the rest of it. Twenty years ago, people said, “Oh, no, not in our industries, we don't do it that way,” and industries like the auto industry or utilities would never go to training programs where they would meet people from other industries. They just believed their industry was different. I don't think that's true. For example, having worked with a lot of packaged goods companies, I know they have a lot to learn from business-to-business marketers about key account management. Then you turn it around and say, “What's happened to B-to-B?” Well, there's Intel Inside, there's IBM in a lot of people's homes. A lot of these business-to-business companies offer major consumer brands. It's a very fuzzy breakdown and, in fact, revolves more around the size and complexity of the customer than anything else.
Young: While I was writing my book, Making Marketing Matter, How to Win Respect for Marketing in Your Organization, some people told me I need to focus on specific industries or at least make a distinction between marketing to consumers and marketing to businesses.
Hulbert: When I was working with BHP, they were the most profitable steel company in the world. We did some conjoint analysis, which showed that Australian consumers and users of their steel were willing to pay 1% more for domestic product. One percent more goes straight to the bottom line. But [consumers] couldn't tell what was domestic and what was imported, and, at the time, BHP was the only domestic producer in Australia. The reason [consumers] couldn't tell was because [BHP] hadn't branded. Then BHP branded its steel using advertising on television. It was called Strengthening Australia, and they co-branded with their manufacturers who were using their steel. This is turning a commodity into a branded product. We can all learn from each other. Anybody who says they can't is narrow-minded.
Young: How do you get a typical CEO to care about marketing?
Hulbert: I think one of the problems, frankly, is back to metrics. If you look at the way most companies measure themselves, they do it looking backwards and inwards: “How did we do versus last year?” And those are not good measures. They're not benchmarked against competitors, and they're not forward-looking. I would probably spend more time talking about the different stakeholders and the non-financial measures of performance, which are often leading indicators of where the company is going to go in the future. If the employees are unhappy and if they're not productive, the company is probably not going to be creating big increases in the share price over the next couple of years.
Young: Can marketers be successful by actually showing the CEO that economic value or shareholder value is directly related to customer value?
Hulbert: Well, do you think they make that argument very well? Marketers are generally the least financially skilled of all executives in an organization. I spent the last hour on the phone with a company that wants to train its product manager. I said that the company needed a finance seminar, not a strategic marketing seminar. We used to have about three or four hours in our marketing management program on finance that was taken out about seven or eight years ago, because more and more of the people have advanced degrees, and have at least a basic understanding of accounting. Whether or not they use it in their jobs is a very different matter.
Young: They can tell you something about ratios, but can they do a presentation to CFO's or the CEO?
Hulbert: It's the language of business, and if you cannot speak that language today, you're going to be in trouble. And, as I said earlier, that's the one prediction I'm pretty confident about. Marketers will have to be financially savvy to keep their jobs in the future.
