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#6 Interview with Malcolm McDonald
July 10, 2019
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Professor Malcolm McDonald is the UK’s pre-eminent academic authority on marketing strategy and a key influencer in the development of marketing education. He has written more than 40 best selling marketing books that are still sold and read today. McDonald is also an Emeritus Professor at Cranfield University School of Management and an Honorary Professor at Warwick Business School. If you don’t have the time and budget to study with him at Cranfield or Warwick you can still benefit from his years of experience. Discover The Malcolm McDonald Academy, a fast track to affordable, powerful insight.

We are honored to share with you the interview that Malcolm McDonald has given us in recent days. Thanks to Adele Savarese, General Manager of Ninja Academy, who interviewed McDonald on behalf of Viral Octopus. 

Enjoy our Podcast!

Transcription: 

You’ve built a brilliant academic career in marketing. Can you remember your first professional epiphany? What drove you to choose this career?

When I left Oxford University many years ago with my lovely shiny new degree in English Language Literature, I couldn’t afford to go into teaching so I joined industry. After a year as a management trainee, I became a salesman in London. I was appalled at the waste. We all sold the products we found easiest to sell to the customers who treated us nicest. And then that went into a database and some half-wit extrapolated a plan.  All we were doing was extrapolating our own inefficiencies and stupidity. That wasn’t all of it of course. I didn’t realize at the time it was called “marketing,” but I just knew there had to be a better way of running a company. And that’s what got me interested in marketing.

Do you think new Malcolm McDonalds and Phillip Kotler are being born today? Who will continue the legacy of marketing in the coming future? 

Yes, we’ve still got the same problems today. If you just take our professional marketing body,  all 60 or 70 years ago someone with half a brain decided to separate sales from marketing, even though expenditures on sales are five times what it is on marketing. Consequently, what we mainly see in the world out there is the sales tail wagging the marketing dog with the mix of what is sold and to whom. However, the mix of the customers should be decided as part of the marketing strategy and implemented by the sales force. But it’s not done that way today – it’s the other way around. 

Who are the new Phillip Kotler? Well, I’ve got strong views about marketing in relation to this. They’re not likely to come from the business force the way they have from the past, because I think business schools have lost the plot. I think they’ll come from the likes of Mckinsey and IBM from their fantastic research centers. People like me are still working very hard to get marketing back in the board room. I will say more about that later on.

In terms of teaching, what do you think will be expected of marketing professors tomorrow? 

Exactly what excellent marketing teachers have always done for the past 50 years. And that.s underpinning scholarly research with the sound knowledge of the practice. Alas, most of today’s youngsters do their B.A or B.SC. Then, they go on to do their Masters of Arts, MSC, or an MBA. Then go on to do a Ph.D. and become lecturers whose career depend entirely on publications, not on teaching. These people can’t teach and in any case, they don’t get rewarded or promoted for teaching. So most business schools, apart from very top ones like Harvard, Insead and the like, become largely irrelevant to the world of practice. I’m afraid that’s the world we live in.

Which shifts have you witnessed in terms of marketing cultures? 

That’s an interesting one. I’ve seen massive changes during my career. The biggest change happened in the ’80s and ’90s with the advent of what the Nordics call, “relationship marketing.” They say that customers don’t belong to the marketing people. They belong to everyone in the company. Everyone in the company said oh yes that makes a lot of sense. Consequently, marketers got pushed away from what was called “strategy” in those days and they became promotional people. Then about 50 years ago or so, digital and social media came along. Everyone said, “that’s also marketing” and the idea of marketing gets pushed further and further away from boardrooms. I came across a McKinsey report that confirmed that a massive survey that there are very very few marketers in boardrooms today. That is a problem that we’ve got. Now we’ve got another problem coming along, not only do we have digital, but we’ve got people like cheap digital officers, chief information officers, chief data officers, and so on. They are beginning to take even that away from the marketing community. My mission in life is to get marketing back into the ballroom where it belongs.

How has a digital change the ways marketers approach both planning and segmentation? 

The truth is, we don’t do planning or segmentation properly. We don’t do segmentation anymore. A Harvard Review article says that with new products that launch in America, 90% of them fail because of a lack of market segmentation. I have a very strong view that the greatest threat to marketing is not being out of touch with technological developments, but it’s failing to understand our markets, the basic needs of customers, and the fundamental business drivers that have always caused long term success. But for our best marketing leaders today,  the world is changed forever for the good. We’ve got fabulous data to know our markets and customers even better. So we’re very lucky today, providing we take advantage of the new wave of technology.

Exactly how have digital technologies and tools to help CMOs and CFOs build out strategies and operations? 

We’re very lucky to have – just to name a few – thinks like block-chain, virtual reality, artificial intelligence, predictive analytics, voice biometrics, big data and the like. What the best companies are doing is embracing them and understanding them, but much more importantly they are using this technology to help create value for customers. These are the people that have not lost sight of markets and customers. They never ever lose sight of that. We live in a happy world of technology that is helping us create value for customers.

In the past, companies competed on price, quality, availability. What do you think companies compete for more on in the future? 

I am a lucky man. Last week, for instance, I was a keynoted speaker at a few conferences in London. With events like this that hosts thousands of people, frequently you have an audience response system. I asked the audience silly questions like, “How many of you have got excellent products?” Guess what? A hundred percent of them said “yes.” Then I asked, “How many of have gotten products that aren’t excellent?” Guess what? Nobody. 

The point I am trying to make is that today in 2019, all products are excellent. You’re not going to get any differential advantages from products because technology enables us to catch up very quickly. So the difference is in the way we relate to our customers. It’s called all sorts of things – certainly, in Britain and America it’s called “Customer Experience.” I call it, “Organization Value Co-creation.” That’s how you are going to be different, by relating more personally to your customers. There is a sad statistic: that is that less than 2% of companies in Britain have got financially quantified value propositions. That’s why so many of them trade on price. So the race is on aided by technology to create advantages for our customers and we’ve got fantastic opportunities today.

How can a company market itself in a hyper-competitive landscape where competition shifts every day? 

I’m sorry to witter on about this, but again, going back to basics: we need to understand our markets and our customers. Nobody asked Apple to invent iPods, iPads, iPhones, and easy music downloads but they are set up to make out lives better and more enjoyable. Nobody asked Uber to do what they did – or Airbnb. Nobody asked Amazon to do what they did.  It’s just that companies, big companies in particular with their legacy systems and bureaucracies, they’ve gotten lazy and they’re not here to deal with these existential challenges that come along. If you’re doing today what you did yesterday, you’re not going to be in business. It’s all about change and you’ve got to be aware of what’s going on. That’s the only problem that we’ve got -companies that are lazy and bureaucratic.

In the past, you’ve underlined how resource system ability and wealth distribution are key components that governments need to tackle and evolve in the next 50 years. What role should companies assume in this regard? 

I don’t care whether you call it 

corporate social responsibility or some other name. The circular economy is certainly with us now. It has been for some years. The best companies in the world don’t add to corporate search responsibility; it’s an afterthought or an integral part of everything they do. We got so many studies that show embracing corporate social responsibility and sustainability pays dividends.

For example, Paul Polman of Unilever, he got rid of quarterly reporting, he got rid of silly budgeting, and he set tough sustainability targets. And thThat tripled the value of Unilever over the past ten years. So we know it works. Think about it. Sustainable resources, land and forests, water and minerals, by 2050 we are going to consume three planets worth. So the take/make/waste model is finished. Economic development and resource scarcity are on a collision course. And governments are going to have to deal with it. Just take personal weath. The top 50 earners own more wealth than 50% of the world’s population. It can’t go on like that. We are going to have to rely on governments and proper decent people and people in organizations to sort this mess out because we can’t go on the way we are.

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