Optimism

Branding Insights,Managing Your Career

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

Your email address will not be published. Required fields are marked *

Archives

Recent Comments

  • priyavanjeri { I absolutely agree with you. Governments are constantly criticizing pharma companies for shooting up prices but instead should divery their energy and resources towards developing... } – Pharmaceutical Pricing, Markets and Ebola
  • Fabio { How Pharmaceutical companies can help? Check it here http://online.wsj.com/articles/johnson-johnson-to-begin-testing-ebola-vaccine-in-january-1413957003 If we didn't need those companies, why government agencies and Universities didn't work on a solution... } – Pharmaceutical Pricing, Markets and Ebola
  • manishaaithal1 { PM Mr. Modi has made a impact in his tenure of state chief minister of Gujarat, has taken state leadership scope to a newer level.... } – Rebranding India
  • manishaaithal1 { Ebola outbreak is best example to re-state that healthcare can not be treated with mere wealth generation / business creation motive. Healthcare needs to be... } – Pharmaceutical Pricing, Markets and Ebola
  • Andrei Mitran { National rebranding - I admire the brave move. However, I do not think there are any quick rebranding alternatives for Prime Minister Modi. Investors wil... } – Rebranding India
  • David { I understand the rational but I am not sure it is completely built on facts ... The fact that on one hand many pharmaceuticals companies... } – Pharmaceutical Pricing, Markets and Ebola
  • 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.