Over the past few weeks, we’ve explored many facets of marketing agility, including cross-functional alignment, process strength to prevent organizational knowledge from walking out the door when key employees leave, and the value of a marketing and customer intelligence practice at the core of Marketing Operations. This week, we’ll look at another key aspect of agility — the ability to develop capabilities that bridge the gap between the value the marketing organization currently provides and the impact it will need to have in the future.
To tackle this important topic, we’ve asked Doug Milliken, Vice President, Global Brand Development at Clorox, to share his experience. Doug oversees the companies brand-building capability, including strategic marketing best practices in the areas of brand strategy, brand architecture, communications and insights, and marketing training and people development programs globally. Doug describes the work they do as developing the capability to develop capability. Following is a synopsis of a recent interview we conducted with him on the Marketing Operations Leaders Talkshow.
What is capability and how do you define it?
Capability is knowledge or skills put into practice to get a result. You don’t have capability until you can show that it gets the results in your organization in the direction you want it to go. It’s an articulated strategy put into practice that produces a (desirable) different result.
What does capability to develop capability mean?
Great companies compete on the basis of their capabilities. That’s what really defines their success over time. For example, take GE. They are really all about leadership development and effective allocation of capital to businesses. That’s what they are amazingly good at. The way we at Clorox have been thinking about developing the capability to develop capability is that it is our ability to improve, our ability to identify the capabilities we need to improve and to consciously build them, measure them, deploy them. We see the development of these capabilities as a critical source of our competitive advantage, so we’ve developed a program to improve them. Over the past 10 years or so, we’ve articulated a philosophy, approach and methodology for figuring out the capabilities we need and how we go about developing them.
Why is capability as a competitive advantage so important when it comes to an organization or team?
Whether the focus is on an individual, team or entire organization, you’re usually aspiring to get to a different place, and there’s a delta between where you are now and where you want to be. What’s usually preventing you from achieving what you want to achieve is that you’re at that moment lacking the capability to get where you want to go. If we want to grow faster, how do you actually grow faster? You need to create a strategy. Do we have the capability to do that? If we need higher loyalty or greater share of wallet, do we have the capability to understand how to do that? The way our team thinks about it is that the greatest gift you can give to a person, team or organization is to enable them to develop the skills and ability to essentially realize their ambition.
What was happening at Clorox that caused you to focus on an articulated understanding of capability?
At the time we had a new CEO who had the insight that companies compete on the basis of their capability. He decided that the capabilities that Clorox had and would win in the market with were essentially consumer insight and brand building. He also recognized the importance of having strong business processes, in addition to strong functions. He challenged marketing to develop a world-class consumer insight capability and create a comprehensive brand building process – the capability to develop what we call “brands consumers love.” That capability is what he decided we would compete on relative to our competitors. So we had to figure out how to do that. What is a brand-building model we can articulate for people? What are the pieces of it? How do we build that? How do we train that? How do we get to this place where we can say we’ve got a constantly improving capability to build brands?
How did you go about implementing it internally within Clorox?
We discovered a three-part method for doing this over time:
- Define our beliefs in the area we want to get good at, the capabilities required, what success looks like
- Translate those beliefs into concrete frameworks, methods, approaches, processes
- Put the organizational structure in place to allow those beliefs and practices to live and perpetuate over time
For example, in the past couple of years we have been driving a capability around what is known design thinking. We’ve re-branded that idea and call it “connected thinking”. This came about because we realized that we really needed our marketing organization to be able to develop big ideas, strategic ideas, executional ideas. Yet no one in marketing had actually been taught them how to build out creating a big idea. It was important for us to develop a capability to enable people to develop big ideas on a consistent basis.
We started by all aligning on a set of beliefs about developing big ideas. We took a look externally at how this type of innovation actually happens, what people know about it. In the process we discovered that this field called design thinking had done the best job of actually articulating how to develop big ideas. The field had developed a pretty consistent view on the elements you need to have in place to help people generate big ideas. We all got alignment around design thinking as a resource we’d draw from. We looked at all of the different models and created our own model with seven types of activities that you do to generate big ideas, including defining the problem, connecting things in novel ways, prototyping, reframing, keeping an open mind, and so on. Then we developed a toolkit on how to go about each activity. We took a belief system, put it into articulated practice by creating a model and set of tools, and a training program to make knowledge accessible to people. Then we put organizational structure in place, which included defining roles and responsibilities, making sure we’re structured properly, making sure we have the right rewards in place to get the desired result. We incorporated this skill set into our evaluation process. We looked at the role of a brand manager in leading teams to do this sort of work, the kind of activities we wanted to focus this work on. We determined who within the organization is going to own this kind of intellectual capital. It was important to have an owner of “connected thinking” and innovate it over time. From there, we launched it and have been driving and training it over a couple of years.
We took a different approach. What companies usually do is decide they need to develop a capability and then just train the skill. They really start with the third step. We found that you really have to go all the way to that first step. You need to create the intellectual capital around the beliefs we’ve all aligned to.
How kind of results or impact has connected thinking had on your marketing?
So far we’ve seen had a huge result. With regard to the three metrics we are evaluated on – market share, return on marketing spending and brand health – are results are currently the best in our industry. In terms of aggregate market share, we are up 2.1 points. In our industry 3/10ths of a point is considered monumental. All of our brand competitors are down almost three share points by comparison. Clorox is the only branded manufacturer in the industry that has grown in aggregate share during the recession. We’ve outpaced private label by double and everyone else by five percentage points. In terms of return on marketing spend, over the past four years we’ve seen a nine percent increase in our compound annual growth rate, which increased to 13 percent last fiscal year and is up to 17 percent so far about halfway through this fiscal year. Our brand health scores have also been spectacular.
The reason the results have been so phenomenal is, first of all, that we’ve been very clear as a company that brand-building has got to be the capability that we’re better than anybody else at. We then got very clear about the elements that are going to make that happen – consumer insight, brand and branding strategy, integrated marketing communications and how to do that, and then this underlying skill of connected thinking. We really focused on large but specific areas, but then we built this over time. Now throughout our 400-person global marketing organization, everybody essentially understands all the components of these capabilities and basically uses them in a consistent way. I think that’s the biggest thing that’s leading to these results. You can go from one brand group to the next, one country to the next, and there is basically the “Clorox way”. Everybody understands how we do these things and then we are just out there training it all the time and we’re out there working with teams in kind of a consulting way hands-on to help people get the experience in doing the work. It’s just built this momentum on how we do things. We’re really seeing the payoff. We started seeing it a couple of years ago and it’s just been accelerating.
So what would you say are some lessons or key needs or things that you need to do on a journey like this?
Two keys to be successful in this journey:
1. Commitment: Capabilities are an asset and realization that your capabilities are a thing that you can and should manage. Actually have to commit to doing that. Not a small commitment. You don’t need a lot of people but you need some people who are really dedicated to doing this in an organization. Got to decide you’re going to do it and need to have a sort of 5-year time horizon at least to build it. Doesn’t take that long to see results but you need to have the commitment behind it.
2. When developing a tool, process or capability, it has to have a designated owner: Developing capability needs to be in someone’s job description. A designated person needs to operate effectively like a brand manager of that capability. Their job is to develop it, deploy it, train it, constantly innovate it over time. If you don’t have that, in my opinion this type of approach will never work because what happens is you come up with something interesting, you come up with a new approach, tool, whatever, you launch it out to your organization, you walk away, and in six months it’s completely dead. You need a brand manager of that capability whose job is to drive that capability every single day and never ever let the foot off the gas. Our biggest learning is if an organization isn’t willing to put the people behind it, you shouldn’t start because you’ll waste a lot of time developing things, launching them and then they’ll die in six months and it’ll be just a draining experience. If you don’t have the commitment, the people will never stick because we’re in such an incredibly constrained resource environment and there’s just a constant pull for people. We’re not adding a lot of headcount so if the commitment and the belief isn’t there that you can really gain advantage by doing this sort of thing, as soon as the going gets tough and somebody says “I need a person over here!" then you’ll yank people. So it all starts with the commitment and belief in managing your capability as a strategic asset and one of the keys ways that you’ll win.
What did you learn about metrics along this journey? How do they fit in big picture?
Metrics are really hard. The challenge is that it is very difficult to draw straight line between development of a capability and the metric, such as market share going up. It’s comparable challenge to measurably demonstrating the value of leadership development. What we’re done to try to deal with that is try to separate metrics in two pieces: Outcome metrics and In-process metrics. We track these on an ongoing basis and have process reviews at the end of every year where go through the outcome and in process metrics to assess how we’re doing overall and where we think we have the biggest opportunity to improve. We put together an annual fiscal year improvement plan that says, for example, this year we really need to work on the efficiency with which we do integrated marketing communications. We maintain a portfolio of process improvement initiatives that we then manage throughout the year. We run it just like a business runs, using all the same types of management discipline to manage these capabilities.
What additional advice would you have for others that want to achieve similar results?
Finding the right people to do this type of work is the key. About 25% of the people in our marketing organization love doing this kind of work – people that are highly curious, very good at conceptual thinking, can take conceptual thinking down to actual practice, people who love to enable others and build success in others. If you find people like that and put them against something like this, they will be so fired up that they’ll figure out how to do it
How would you summarize your key points?
Organizations compete on basis of their capabilities; what separates where they are now vs. where they want to be in future. That gap is the capability to do what they need to do to get to where they want to be. The development of capability is the gift that keeps on giving
Having a plan and approach to systematically develop capabilities as a management discipline can and should be done though organizations don’t often think about operating this way, so it can be a huge source of competitive advantage
You need an approach for doing this systematically &=8212; aligning to a set of principles and beliefs about what success looks like; defining methods, tools, intellectual property to articulate that; putting organization structure around it; securing commitment; and finding the right dedicated people to make it happen.
Share your experience with us. How is your marketing organization doing in developing the capability to develop the capability? What barriers do you still need to overcome and how will you go about hurdling them?