Branding Insights,Career Advice

Irrational Optimism and CMOs

18 Aug , 2014  

The Chief Marketing Officer Council is out today with the results of its annual survey of marketing leaders.

I was struck by two figures:

– 81% of marketing leaders believe that share growth is likely and attainable this year.

– 10% of CMOs are worried about their jobs.

These figures suggest that marketing executives are an optimistic bunch.

On the market share front, CMOs are clearly being too confident. Share is a zero sum game; if one company goes up, another company goes down. I am quite certain that 81% of companies won’t build share this year.

CMOs are also too optimistic on the career front. Average CMO tenure is increasing but it is the rare CMO that lasts for a decade.

One could say this all doesn’t really matter. Optimism is a good thing, isn’t it? Who wants to work with a pessimist?

The problem is that irrational optimism can lead to bad decisions.

A confident company might cut back marketing support, aggressively reduce costs or delay product improvements in order to boost profits. Why invest in the business when it is doing well?

Optimistic planning can also lead to bad strategic moves. When a company falls behind a plan, the management team will almost always take action to try to get to the target. Business leaders are rewarded for achieving goals, not missing them. Often this involves funding programs that have a big short-term impact, such as price discounts or sales force incentives, and cutting programs that are less effective in the short run, such as advertising, brand building or product improvements. This combination ultimately weakens the business.

Realistic planning is important.

The CMO study also noted that only two-thirds of CMOs are trusted members of the executive team. Irrational optimism won’t increase this figure.


One Response

  1. Uday says:

    Reminds me of a study where 93% of Americans rated themselves as being better than the median driver.

Leave a Reply

Archives

Conversation Across the Site

  • Thom Disch { Great observations! I wonder what will be the new rising brand stories for 2018? What will be the driving force that enables them to rise... } – Brands to Watch in 2018
  • timcalkins { Dave---Well said. It certainly feels like a return to the core for the BMW brand. } – BMW Embraces its German Roots
  • davetuchler { I suspect part of this is due to BMW losing traction (sorry) in the US; positioned as the Ultimate Driving Machine, steering and suspensions on... } – BMW Embraces its German Roots
  • lfisher { Funny -- we just went through the same exercise and ended up the same place. Brand was huge in our choice. First, we looked at... } – Buying a New Car and the Power of Brands
  • Thom Disch { This is an interesting discussion. I think there maybe a difference between big brands, like auto companies and small brands, like say, pasta manufacturers. The... } – Buying a New Car and the Power of Brands
  • timcalkins { I wouldn't rule out a new one! The new small cars are remarkably inexpensive, and you can play one dealer off the next to get... } – Buying a New Car and the Power of Brands
  • Read more Comments »

Collaborate with Tim

Tim helps companies around the world build great brands. To schedule a program or event click here. To learn more about Tim’s books, click here.