Neil McElroy was a manager at Proctor & Gamble (P&G) when he wrote his now-famous memo on May 13, 1931, to justify hiring two additional people. The 800-word memo written on his Royal typewriter created a new wave of brand management at P&G and led to McElroy’s promotion to president of the company. The memo describes how a brand manager would find a trouble spot for a brand, work with the regional sales offices to fine-tune advertising, promotion, and sales functions to improve the selling of the brand, and conduct research to measure the effectiveness of these actions.17 Over the years, P&G and other consumer marketing organizations adopted these functions for effective brand management. This was the beginning of a formalized orchestrated marketing.
My proposal for orchestrated marketing was also inspired by a blog written by Jerry Wind, the Lauder Professor and academic director of the Wharton Fellows Program.18 He has also detailed his vision for network orchestration in a chapter of a book entitled The Network Challenge: Strategy, Profit, and Risk in an Interlinked World.19 Today’s marketing organization is made up of a set of external agents working in conjunction with a marketer. Each organization has its goals, and is working feverishly to establish business rules, which optimize these goals at silicon speed. Collaboration across these entities takes the form of revenue exchanges and contracts that determine their nature of collaboration. However, this very distributed network organization must be orchestrated by a marketing organization to get the best overall value for the marketer.
For a marketer in this distributed and federated marketplace, the big data may come from a variety of sources, both internal and external, some derived from big data created by other industries. The product ideas may get crowdsourced. The data may get organized and mined by a set of entities in a public or private cloud. Endorsement may come from a set of satisfied customers. The marketing strategies may be executed by yet another network, which may use a variety of market mechanisms to influence the customer through a collaborative process. Advertising may be executed by an auction-driven marketing place for real-time bidding of advertising space. Orchestration, as defined by Jerry Wind, has to provide three major trends—a shift in management from control to empowerment, a shift in focus from the firm to the network, and a shift in value creation from specialization to integration.20 The orchestrator needs to be a good conductor—a great mix of dealmaker, technical wizard, and statistician.
Orchestration is provided by an organization’s use of a set of technologies. There are a couple of preconditions that must be present for the orchestration to work. For example, the marketing organization must have a complete and comprehensive understanding of the customer, using data from internal and external sources. As described earlier, the marketing organization uses advanced analytics techniques to build the customer profile and collaborates with external entities as well as the customers themselves to complete the profiles. Also, customer privacy preferences must be known and incorporated into the marketing actions.
Orchestration is executed via a series of real-time workflows, which are governed by a set of policies, predictive models, and business rules. A large number of market experiments are used to test and validate the assumptions and optimize the actions based on anticipated responses from the customers and competitive forces.
In chapter 6 , I will describe the technical components needed for this organization. The foundations for the technical components require a fair amount of statistical and mathematical work. They also necessitate an understanding of unstructured and qualitative analytics. In addition, the experiment design function is becoming mainstream, and is being used for hypothesis and alternative testing. The real-time execution requires adaptive components that may change with market trends.
The chief marketing officer is gaining the spotlight, and is typically the owner of the orchestration function. This is where all the marketing actions come together. Because of the technical nature of the work, marketing analytics straddles marketing and IT organizations. In chapter 7, I will discuss the organizational implications and how these changes are reshaping the marketing organizations.
Mr. McElroy, we now need a network organization to support your original memo.