Berens: Do you think that alignment is something that people might embrace more readily?
Schultz: I think alignment is so much easier inside an organization, where you can start to say, "How do I create?" And, a big problem is the vertical systems we have in place-- everything is vertical. The problem in a vertical system is the customer is never mentioned.
Berens: Well, the customer is merely the target…
Schultz: Well, we have a marketing department. The marketing department reports up to the CEO. The financial department reports up to the CEO. The operations department reports up to the CEO. Where are customers in any of this? And the answer is: nowhere.
Berens: Except now, they are all online, and they are all talking.
Schultz: Now, if you think about marketing, the way we have always taught it, we have taught the four Ps: product, price, place and promotion, the assumption being that if you get those right, customers will magically appear. That is not necessarily true. So, part of the problem here is: How do you start thinking about customers, or how do you start thinking about people, because people are what created all of these things? And, what we are seeing is the people are saying, "What the marketing people are doing does not fit my needs, so I will create my own social networks. I will create my own activities; I will create my own blogs; I will create my own websites; I will create my own everything, because I cannot get satisfaction, or I cannot get the kind of service, or the kind of things I want from the marketing organization the way it exists today.
Berens: It is not really disheartening, but is just occasionally overwhelming… the fact that, it is so much harder on everybody now. We have had this extraordinary growth and explosion of different kinds of media. We have a lot more competitors for a lot more different kinds of products, with some obvious exceptions-- there has been a great deal of consolidation in automotive, and in certain movie studios. But, there are now more options for more things; and, more media within which you can learn about more things; and, more people trying to insert ads into those media than there were at any other time in the history of the species. And, to my mind, that simply means that what we have got is a situation in which more and more people are going to be sharing the pie; but, the pie is not growing as quickly as the media are growing.
And so, it is always a bit overwhelming to think about all of the different kinds of communication that are happening. And, it seems like, at the moment where the marketing departments are -- as you are describing them -- becoming more and more challenged, and less and less relevant to the communication and the conversation that is happening out in the world. That is the moment where the pressure and stress on them is increasing, and their accountability for how the product is being perceived is only going up. So, it seems to be quite a paradox.
Schultz: I think that is absolutely true. Let me give you an example-- Ford is probably a poster child for the issues of big marketing organizations. Ford is getting better at what they have historically done, and marketing and communication is not going to solve their problem. They are going to have to do things differently.
Berens: On the product side, you mean?
Schultz: No, I am talking about the marketing, just the marketing activities. Granted, they have big product problems. But, one can argue, "Well, marketing somehow failed Ford, because marketing was unable to help the Ford engineers and designers understand what kind of products people wanted." There is a failure of marketing. Ford, being able to throw more money at the marketplace, and having bigger discounts, does not solve their problem. So, getting and doing better, doing the same things better than they are doing now, is not going to solve their problem. They are going to have to do things differently-- and, that is the big challenge. Organizations do not want to do things differently. What organizations want to do is that they want to do the things they are doing now... only better. Part of that comes from the management systems that we put in place. Six Sigma essentially said, "How do we get better at doing what we do?" Not, "How do we do things differently?"
Berens: The Alcoholics Anonymous definition of insanity is doing the same thing over and over again, and expecting a different result…
Schultz: Exactly, and that is part of the issue. Now, marketing as an organizational function has said, "What we need to do is spend more money. We will put more pressure, we will send out more ads, we will send out more commercials." Yet on the front cover of AdAge this week: audiences are down by 50 percent on television, but the spending is up by 40 percent…
Berens: It is mind-boggling.
Schultz: Yeah, it is a perfect example of what you said. It is the idea of, "Well, it is not working, so let's throw more money at it." It is not a case of doing the same thing better, it is a case of doing things differently. And, the push/pull is a whole different approach to thinking about how the marketplace operates; and, people simply cannot get their head around it.
Berens: To wrap things up: Sticking with your Ford example, for a moment, is there a concrete suggestion that we could make on getting them from push to pull, or even some hybrid?
Schultz: The first thing they need to do is find out what kind of automobiles people want. And clearly, they want Toyotas, and they do not want Fords. So, the first place you start is, "What the hell is Toyota doing better than Ford is doing?" And, part of it has to do with product. Part of it probably has to do with their distribution system. Part of it probably has to do with their pricing policies. Part of it has to do with their customer service. All of those kinds of things. You have to start with customers, because the customers are the only people who have any money. And, the problem is, a lot of marketing is focused on the channels. Ford focuses most of their activities against their dealers. And, the dealers have a different desire than the Ford Motor Company does, so that is where you get out of alignment. Those are the kinds of issues big organizations have to address. Those are mind-boggling things for senior managers, whose primary goal in many cases is to serve out their three or four years, cash in their options, and get out of there. You need pullers; you do not need maintainers.
Berens: You deftly answered my question with an extraordinary, concrete suggestion for Ford, but, that is a concrete suggestion that would require nothing less than the entire reinvention of the Ford culture, which…
Schultz: Absolutely true-- and culture is what drives most of these systems; and, culture is what drives most of these organizations. If you think about the organizations that have really good customer service, who are really customer-centric…
Berens: Who might those be?
Schultz: Nordstrom -- it is in their culture -- being nice to people, to try to help them, to try to take care of them, to the extent that, "If we do not have it, gee maybe, you know, we can send you down the street, because we think so and so has got it." You have got a culture at Starbucks, which essentially is the culture of serving people-- pleasant atmospheres, high-priced products… and people love it. It is the culture of the organization, which is focused on customer service. Look at the airlines. Southwest has a culture of serving people and making them feel comfortable and happy and enjoyable.
Berens: They have that culture even while they do less for customers than other airlines. There is no reserve seating. There is no food…
Schultz: But, the people are pleasant, the people are happy. The people seem to like to work there. Go get on any of the major airlines today, and all you will find is a flight crew in their late 40s and 50s who are just serving their time in, hoping to God they can get out of there.
We have to keep those in perspective. And, the problem is that service organizations, in many cases, have fallen into the same trap that the big consumer products companies have-- they have read all of the marketing books, and they are trying to emulate the big marketing organizations, and that is what has created problems with the service organizations.
You know, the companies that are growing in the banking business are those like Wachovia. And Wachovia is growing because you get a really good experience. People like to go there. They like the people that are in the banks.
What we are talking about is a radically different culture when you start talking about customer service and customer orientation. Putting customers at the center of the organization really is a very difficult task. But, that is where we have to get to. If that is failing, then you have to start talking about alignment, and that is: how do you align the organization so at least the things that you are talking about, and the things that you are doing, have some relationship to what customers want, and not simply something that is efficient for you.
Brad Berens is executive editor, iMedia Communications. Read full bio.
