James Latham is the CMO of OpenText

James Latham is CMO at OpenText, a global leader in enterprise and web content management and collaboration software. His responsibilities include all Corporate Marketing, Product Marketing, Marketing Strategy, Customer Communications, Industry Marketing, Customer Experience, and Global Alliances and Partners.

What is driving need for greater collaboration between marketing and IT?

It’s absolutely essential that there is close collaboration for marketing and IT, and just generally, technology. And that’s across the board but particularly important in the software industry.

So first and foremost, the globalization of marketing is driving higher costs unless you can find efficiencies. And efficiencies come primarily from automation of tasks and those perspectives. Marketing is really the last bastion of business process that doesn’t have a lot of automation inherent to it.

So things like digital asset management for your marketing assets, marketing automation for analytics, web content management – all of those things are important to help drive efficiencies into the marketing process. That’s the core and the key. And, of course, those automations are driven true systems, and systems are implemented in most organizations by IT.

What role do digital marketing channels play in OpenText’s overall marketing mix?

We view digital marketing with a large, capital D, capital M, meaning it’s an essential part of our marketing mix. Even on that we drive for more physical face-to-face business, like events or working with our partners, we still wrap that in a layer of digital marketing. But more importantly is our evolution to using digital marketing channels as a fundamental element for our relationship marketing. Rather than just spam people with e-mail, we can develop a relationship and give them information that they need, when they need it and how they need it. So our digital marketing at OpenText is first and foremost among our strategic objectives and endeavors.

How has marketing’s relationship with the IT team at OpenText evolved, and how has that changed your interactions with the rest of the company? Have those growing relationships impacted your ability to ultimately deliver that end customer experience?

One of the things that we’ve done is recognize the value and the necessity of close coordination between not only sales and marketing, which is more obvious from today’s standpoint, but also sales and marketing’s connection to finance. Because once you recognize that connection and you start to take a process-oriented analysis to these different departments, you find is there is a systems’ level interdependence that’s required.

In other words, if our marketing systems deliver leads, those leads need to be integrated with the sales management systems and marketing automation management. Our leads then go to sales opportunities and salesforce.com. When we actually close a sale, then we have to integrate the salesforce.com records with our finance systems to actually place and fulfill an order. So you start to recognize the synergy, the necessities for everything from the lead all the way through to the order end fulfillment. And that gives a special recognition to the integration of those systems.

What recommendations would you give to your peers who are looking to build a bridge between marketing and IT and the rest of the organization?

Marketers need to take the initiative and reach out to the IT department and provide them information, communication, perspective on what the needs are. But more importantly, it becomes a communication – a two-way communication – and it becomes a negotiation.

You’re not going to get everything you need today from an IT department. They have all the other competing priorities. But to chose and help them understand your marketing priorities and be able to articulate those clearly helps the IT department understand what’s going to be most effective for you initially, short-term, medium-term, and longer-term. And that communication and understanding – again, two-way communication – forms the basis of a better relationship between IT and the marketing department.

CMO Empowerment: Does it Matter and How to Enable it?

By Pravin Nath and Vijay Mahajan

Do Chief Marketing Officers (CMOs) “have the power to get done what needs to be done”? – was a question put to Donovan Neale-May, executive director of the CMO Council, in an interview in 2008. This has been an important question since as early as 2004, when researchers at Harvard identified empowerment as playing a critical role in the success and longevity of the CMO.

We had begun doing research on CMOs around that time, with our first paper on the topic appearing in the Journal of Marketing in 2008. While this paper explored both the drivers and outcomes of CMO presence in the top management team (TMT) – since not all firm TMTs have CMOs – a surprising and worrying finding was that firms with CMOs did not perform better than firms without one. Undaunted, we decided to explore if CMO power could provide some explanation for this finding – possibly CMOs without the power or authority to “get done what needs to be done,” were the weak performers pulling down the average performance of firms with CMOs. At the same time, we also wanted to provide CMOs with an understanding of what is required to achieve a position of power in the C-suite so as to be able to give marketing a voice at the strategy table.

In order to explore these issues, we collected secondary data on a range of relevant measures using a sample of public U.S. firms with a CMO, for at least two out of the five years between 2001 and 2005. The key variable – CMO power – was a measure based on the position of this executive in the TMT’s hierarchy; the measure accounted for differences in sizes, and in levels in the hierarchy, of TMTs. The resulting research study, called “Marketing in the C-Suite: A Study of Chief Marketing Officer Power in Firms’ Top Management Teams,” appeared in the January 2011 issue of the Journal of Marketing and sheds light on both the aforementioned issues. First, CMO power does matter to firm performance, but it is conditional on the structure of the TMT and the firm’s diversification strategy. Second, positions of power for the CMO were more likely when they were also responsible for the sales function, when TMTs lacked marketing experience, and when firms with such TMTs that lacked marketing experience increased their spend on innovation or R&D.

These results, while not completely intuitive, make sense when we view the rationales behind each of them (i.e., the theoretical arguments for the related hypotheses in our paper). When firms create the CMO position in the TMT, certain tasks get allocated to this executive; with these tasks come control over the resources associated with them. These resources, which are in the marketing domain, can be informational, human, relational and organizational, and include among others, insights on customers, the experience of the firm’s marketing employees, relationships with channel members, and market sensing capabilities. Broadly, the rationales for the sources of CMO power view the CMO as being a provider of these resources to the TMT; the more that the TMT comes to depend on the CMO for them, the greater is the power of the CMO. TMT dependence on the CMO in turn increases as the CMO acquires greater control over these resources, as they become more critical and central to the TMT, as they become non-substitutable, and as the CMO becomes more effective in their provision.

So the additional responsibility of sales gives the CMO greater power because with it comes more control over marketing-related resources, greater centrality within the TMT, and superior effectiveness in resource provision given the benefits from integrating marketing and sales. Similarly, CMO power increases as the proportion of executives with marketing experience in the TMT decreases, since the CMO’s experience now becomes increasingly non-substitutable. Likewise, in firms with such TMTs that have relatively less marketing experience, the pursuit of innovation makes CMOs relatively more powerful because the CMO’s resources become critical for reducing consumer-related uncertainty in the TMT’s R&D investment choices.

On performance outcomes, the results of our study are explained by our expectation that CMOs with greater power are able to better align the firm’s divisional marketing plans and personnel with the firm’s corporate agenda. That such an alignment is going to be more beneficial in firms that are more divisionally structured is reflected in our result of CMO power resulting in superior sales growth only for firms with a higher proportion of divisional heads in the TMT. Conversely, that it is going to be less beneficial in firms that are diversified into unrelated businesses with deliberately separate agendas is reflected in our result of CMO power resulting in reduced profitability only for such unrelated diversifiers. Thus CMO power does matter and can explain why some CMOs do better than others. Another reason for differences across CMOs has to do with how effective they are, which in our research is linked to the additional responsibility of the sales function that some CMOs have: We find that such CMOs deliver superior sales growth. Perhaps balancing the long- and short- term orientations of marketing and sales, respectively, gives these CMOs an edge over those without this dual responsibility.

To CMOs then, our recommendation is to look for ways in which to increase control over marketing-related resources that are critical to the TMT, to make themselves and these resources central and non-substitutable, and to be continually effective in providing these resources to the TMT. In our study, we only capture some dimensions or manifestations of these sources of power. We hope that CMOs will be able to use these recommendations to identify others that may possibly be unique to their contexts, so as to empower themselves in order to “get done what needs to be done.” We also provide CEOs justification for having CMOs in their TMTs: The position improves performance when given power in a TMT with a relatively high proportion of divisional heads and when it has some control over the sales function. Finally, our results seem to suggest to both CMOs and CEOs, albeit only in firms pursuing unrelated diversification, that too much power for this position can be a bad thing.

Pravin Nath is Assistant Professor of Marketing in Drexel University’s LeBow College of Business. Vijay Mahajan, former dean of the Indian School of Business, holds the John P. Harbin Centennial Chair in Business in the McCombs School of Business at the University of Texas at Austin.