Erwin van Laethem, CEO of Dutch energy company Essent (an RWE business), explains how marketing helped lead a commercial transformation and what he did to set his CMO up to succeed.
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Highlights from the interview:
Driving transformation through marketing
In 2010, the Netherlands was the most competitive energy market in Europe. It was also totally undifferentiated. We were actually losing customers. The business was only breaking even, and we didn't earn any money with the customers. There was no marketing insight whatsoever. So those were good reasons to really start change with a commercial transformation. We positioned the marketing department as the engine for that commercial transformation. What we did was reorganize the whole commercial department around five business units and set the marketing department up as a cross-functional unit with a new director.
Traits I looked for in a new CMO
We recruited our CMO through an external search and selection process. We wanted somebody with a track record in fact-based marketing with a lot of potential to grow. We were looking for somebody who could clearly co-create with other people, who was very creative. Above all, someone who was also very engaging for the whole organization – what I’d call an “attractor” whom other people would follow.
Setting up the CMO for success
Once we identified the right profile, it was important to us to really prepare a “landing strip,” an environment within which that person could come to the company, a totally different company from the one where he’d been successful before. To help him be successful, we liberated his time from all the ongoing bureaucracy and procedures in the organization that we wanted to get rid of.
We actively supported him so that it was very clear to the whole organization that there was a commitment from me and my board colleagues to make him and the whole marketing department successful. I put marketing on an equal working level with other departments.
What I also did to set the marketing director up for success was get personally engaged in attracting further talent. I did interviews with the marketing director. I showed the people he was recruiting that my commitment was for real and that we really had this ambition. I wanted to show that there would be a personal interest from me and my board colleagues in the careers of these people, who actually made a kind of leap of faith by leaving successful jobs in other companies to step into this challenge.
True collaboration as the key to success
Every success we’ve had can be traced back to effective cross-functional collaboration among marketing, sales, finance, IT, and many other departments.
Every success in the market has been copied by our competitors. What you can't copy is how people work together. I believe that the answer to any question or problem lies in the organization. Everybody holds a piece of the puzzle, and our task is to create an environment within which all these pieces can actually connect. We connect by having a dialogue, making sure that people meet and that they know and understand each other. They need the room and the environment to connect the pieces.
That happened once when the marketing and sales departments tried to make their processes more customer-centric. Processes that we thought were very efficient with 12 or 15 steps were reduced to four to six steps. This made things simpler for the customer as well as for our own staff and our IT systems.
We see a pattern for all our successes in the market. People are motivated by the intangible incentives, such as getting recognition and praise, as well as by the exposure when cross-functional projects succeed.
The CEO-CMO relationship: essential for implementing the vision
The most important aspect of a successful CMO-CEO relationship is mutual respect. They need to have a good working relationship and really understand the needs and the ambition of the company. They have to spend time with each other to co-create that vision and do the programming that leads to the implementation of that vision. After all, vision without implementation is just hallucination. Once you get that vision, in order to get to implementation and real, tangible results, I think it's also important for the CEO to let go and let it happen in the organization. The CEO needs to provide the space for people to get their best creativity and their best knowledge and their best implementation capabilities going.
A new CMO should spend time with the CEO to understand the vision, to understand the way the CEO is actually looking at the market, at the company, and at challenges ahead. That should be the starting point. From there, they should be mutually supporting and influencing each other, which leads to shared ownership. Having both the CEO and CMO able to communicate a shared vision helps to mobilize the whole organization toward a common purpose.
Keeping the customer the focus of innovation
The rationale for the investment in innovation is that we see our traditional earning models are under much more pressure. Heavy competition and lower usage as a result of energy-saving by our customers add to the pressure.
We’re starting to introduce disruptive business models, which will possibly cannibalize our current business but will also be our value pools of the future. Those models can be close to the energy sector, but it’s better to have them far enough away from it to be really innovative and attract talent from other sectors, such as high-tech, Big Data, and electronics.
Any transformation has to start and end with the customer. It will always be about adding value for customers, which will continue to add value to the organization.