My Blinders
I got in on the ground floor of the positioning concept when in 1963 I became the second Doctoral Fellow at the Marketing Science Institute in Philadelphia. Shortly after my arrival at MSI Paul Green began work with Joe Kruskal at Bell Labs to translate his multidimensional scaling method into what would become one of the most powerful marketing technologies in the world. As a point of reference see “Nonmetric Multidimensional Scaling: A Numerical Method,” Joseph B. Kruskal, Psychometrika, 29:2 (June 1964), pp. 115-129.
THE BATTLE FOR YOU MIND
Since MSI was then a small organization I often found myself in a conference room with Paul and his colleagues as they hammered out their first applications of this new psychological scaling technology to marketing. What began as break-through scientific paper in Psychometrika took the marketing world by storm with the publication in 1982 of Positioning: The Battle for your Mind by Al Ries and Jack Trout.
SURROUND IBM
Beginning in 1982 I spent ten years working as a change agent hired by the board of a European computer manufacturer. Our mission was to get marketing and sales to work together. I put nearly 2,000 middle and senior managers around the world through my two-and-one-half day programs, including four with the entire board of directors. You can get a sense of what we were up against if you view the narrated Breeze presentation on Chapter 5 of my book The Rule of Maximum Earnings. That engagement was at once a huge corporate success and a personal disappointment. It was a huge corporate success because we changed the way marketing and sales worked together. This change was in some degree responsible for turning the company around. It was a personal disappointment because the Finance Director really never believed our numbers. Why? We weren’t able to link the profits (and losses) in market segments to the company's financial statements and stock price.
MAXIMIZING PROFITS ISN’T ENOUGH
My argument was this. If we maximize profits at the segment level (there were hundreds of market segments in about eighty countries around the world), then we maximize the company's earnings. Maybe so. But the question remained, how did that affect stock price? In 1986 I resolved to find an answer to this question. At the time the only thing I knew for sure was this: I had to understand stock valuation models and the financial accounting data on which they relied. The problem was I was trained in traditional marketing and microeconomics. I didn't really understand finance or accounting. These were my blinders. If you're a CMO these may be your blinders too.
PENETRATING THE MIST
You don't need an accounting degree. In fact, it’s probably an advantage not to be an accountant. All it takes is an open mind, dedication and hard work. And it's critical that you penetrate the mist of financial accounting because for the first time you have a doorway into a financial system of measurements that allows you to start demonstrating the value-creating capability of marketing in terms that any CEO or CFO could appreciate. Stay tuned. The price of value is just around the corner.
FULL DISCLOSURE
I neither own positions in nor trade on any of the stocks and bonds mentioned in this web log. Findings and opinions expressed in my articles must not be taken as either a recommendation to buy, sell or hold a stock, or a reliable forecast of a company's future performance.
~V
