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Authors’ Comments |
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In the early spring of 2002 we got together for lunch at a local watering hole. Ron had recently founded Brandzone, his brand consulting firm and Bill was entering his twenty-ninth year at SDR Consulting. After addressing the immediate business of a planned Alaska fishing trip, we turned to the state of marketing. We were both facing what was shaping up to be another gloomy year in the marketing consulting business. We lamented the ongoing cuts in marketing and advertising budgets that were spreading across the country after the boom of the late nineties, followed by burst stock market bubble and the trauma of 9/11.
As we discussed the recent spate of marketing cuts and layoffs, we both expressed our frustration with how corporate America just didn’t understand that well-planned marketing expenditures are an investment in the future and not simply an annual expense. We intimately understood that investments not made now in smart marketing were investment opportunities lost forever – why couldn’t senior corporate managers understand it?
Over several more lunch meetings we continued to explore the theme of just why marketing investments seemed to always get the short end of the stick in most corporate suites and boardrooms, especially in a down economy? We were well aware of the movement toward finding better measures for assessing the return on marketing investments, but to us those discussions seemed very tactically oriented, not well thought out, and dominated by measurement issues. As we continued to dig into the issues it dawned on us that a key problem in the C-suite and the boardroom was that marketing had no numbers that were as precise and reliable as the sales and financial numbers. In fact, in most firms marketing just didn’t have many numbers at all, and those they did have were often viewed as soft and unreliable by the corporate leadership.
Sales volume, profits, operating ratios, cash flows, and stock price were the dependable, strategic numbers that most corporate leaders depended upon to manage and grow their businesses. These were the numbers that led directly to the gate of corporate asset value and return on stockholder investment. Marketing, the art and science of building demand, was only represented vicariously by the sales numbers. And, of course the sales staff took all the credit when those were on the upswing.
Thus, the idea behind this book was formed. Our initial vision was to develop a framework for directly linking corporate marketing expenditures to corporate asset value. To do that, we would need to concentrate on brands, because in both the short term and in the long term, all marketing expenditures either build the brand’s value or depreciate it. The centerpiece of this framework would be a measurement system that was both reliable and valid - one that could measure and summarize both the tangible and intangible values of a company’s brand assets.
The task proved much more difficult than either of us anticipated.
We spent the next three years exploring various aspects of this vision. In each meeting we developed a better understanding of the need for this framework. More importantly, we began to understand the implications of such a framework. It didn’t just touch the marketing department, but indeed, our vision is that it impacts the entire enterprise, from R&D, to production, to distribution, to service delivery, to human resources, to finance, and especially to leadership.
What we discovered is that by orienting corporate leadership to focus on building the asset value of their brands, they establish a new framework for allocating resources in the most efficient manner possible for building corporate asset value and stockholder returns. We called it Values Driven Management.
Today, we believe that Values Driven Management is a concept critical to successful value creation, enabling leaders and managers who embrace it to compete and succeed in the emerging knowledge-based environment of the 21st century. |
