Last month Marketing discussed all things agency business model with Dan Gregory, creative chairman of New Republique, The Gruen Transfer regular and CEO at The Impossible Institute. In the second part of our chat, we discuss the impact of changing marketers’ ambition through leadership and culture, as well as the new marketing.

“It’s all competing on price, which is a downward spiral, so your margin has to come from something, other than, ‘Well, it does what it says on the tin,’ and I think that’s a real opportunity, but it takes marketers who have a capacity to think like leaders rather than as employees, because if all you’re doing is protecting your job or protecting your next sideways move to your next employer, you’re never going to do anything that’s extraordinary. You’re never going to do anything that revolutionises a business.” Dan Gregory isn’t overwhelmed by what he’s seeing in Australian marketing personalities, its strategic and long-term thought or its talent promotion:

Marketing: Speaking to domestic and international marketing thought leaders, a common lament is the devaluing of brand building with a greater focus on quarter-to-quarter tactics. Now, you posit that a marketer is going to need to be able to create content that could potentially be a saleable asset, but plays to the identity of their customer. Surely they need to know what the identity of that brand is, and what we’ve seen is the loss of a lot of that equity across the board.

Dan Gregory: I think that’s absolutely true. The iTunes store is exactly the kind of thing that I’m talking about. It’s content, it’s communications, but it’s also got utility and it drives sales, and it helps people make those purchases. But I think, in some ways, it works the opposite way. The iPod is actually a really good ad for iTunes: it’s a functional piece, and I think that what you’ll see is innovation coming from a position of utility, rather than what utility that also provides, that intangible value of identity.

I mean Nike shoes – forget the whole third world industry thing. It probably costs what? I don’t know, 10 or 15 bucks to make a pair of trainers; they sell for $200. So, all of the value is intangible; there’s nothing intrinsic in it, depending on who you believe, that means that they’re particularly better than Brooks or Asics for instance. That ability to create value beyond just the functional is incredibly important, and you see it all the time. The first iPhone couldn’t send MMSs. Right?

Take Kodak [former Eastman Kodak chief marketing officer, Jeffrey Hayzlett was speaking with Dan Gregory at Schmart Marketing, where Marketing caught up with him]: my issue with a lot of clients is they get so wrapped up in what they do, that they forget who they are. If you think back to who Kodak was in the 1970s… Kodak was all about preserving memories: “They maybe just be snapshots to you Mr Swanson, but to me they’re irreplaceable memories.” Now that need still exists, but they focused on what they did rather than who they were, [which] was people that preserve memories. What they did was, they made film, and they made film, they made film, they made film, and then all of a sudden there was a new format that replaced film, and all of a sudden because they were so focused on what they did, they were like, ‘I don’t know what to do now’, and the need to preserve memories, whether it be through data drives, whether it be through national archives, whether it be through protecting and encrypting information in financial services, or preserving the photography and the art of the nation for posterity, that need is still there and there’s heaps of money in it.

Kodak should be the name that means, you know, ‘when you keep something in a Kodak digital vault, it’s safe forever’. That’s what it should have meant, but because they were more focused on what they did, the utility, it actually cost them the opportunity to evolve into what they should have been in the future… When you say that people have lost focus on brands, that’s what’s missing, it’s that they’ve lost who they are, and they focus so much on what they do, but what they do is changing every day. We’ve got retail… media. Book stores disappeared overnight, and they had record stores to [predict that]; they had to know it was coming, but they weren’t quick enough to change. Barnes and Noble online, Amazon, a few of them moved along quite quickly, but we’re kind of left with the fallout of that, rather than it being really thought through. What else could they have evolved into that would have changed their business? I think every retailer should be thinking about that.

I had a really interesting conversation [at an optometry conference]… Working as a speaker now, I speak to lots of the industry groups – my perception is that most people don’t know the real business they’re in, and I’ll link that back to identity. They don’t know who they are, [they know] what they do.

So, I had this really interesting conversation with a group of optometrists. And I said to them, “What business are you in?” and they all go, “Well, we’re a medical profession,” and I go, “Really?” And I said, “Where’s your margin? Where do you make your money? Do you make it on the consultancies?” and they go, “Well no, that covers costs.” And I said, “Well, where do you make the margin?” and they said, “Well, actually we make mark-up when we sell glasses.” And I said, “Interesting. And how many pairs of glasses can you sell to one person?” and they said, “Well, usually one, but we could sell two or three.” I said, “Yeah, you’re right.” I said, “How much money did you invest training yourselves to do the examination part?” They go, “Well lots,” and I said, “How much time and money do you spend investing in training your front of office sales staff, so that they can up-sell clients while you’re in with the next patient?” and of course the answer’s, “Well, nothing.” Right? And they’re set up like pharmacies.

I said to them, “Guys, you’re in retail fashion. All your money is in the stuff that you sell, and you don’t even arrange your store in a way that makes it easier for me. [With] all of your communications, you could collect a digital database that goes, ‘Here’s the new look for spring.’ You could actually get consumers used to the idea of cycling through, getting new glasses on a more regular basis, on having more than one pair. ‘Here’s your work pair, here’s your casual pair, here’s your night pair,’ you know. I mean it sounds like a big expense, but women spend it on handbags, on shoes. Men spend it on wallets, on watches. I’m wearing a $6000 watch today and I’ve got more than one. Now again, it’s not something I need, it’s something I want, and if you think about it, if you’re someone who wears glasses, ‘what’s the most notable fashion accessory you wear?’ – that’s where people’s eyes go, to meet other people’s eyes. So, I think that there are a lot of organisations who don’t really know what business they’re in, and I think it’s partly because we’re so locked in to process, and so disconnected from the people we actually are serving.

The number of times I sit in meetings and play the role of consumer, they say, “We’ve got this product with this feature and it’s got this and it’s got this,” and I say, “I don’t give a shit. What’s in it for me?” I think if every marketing brief just started with – ‘What’s in it for me?’ ‘What’s in it for the consumer?’ ‘How can we phrase that in the simplest possible language?’ – you would actually get your marketing materials and advertising materials, and engagement systems designed in a much more effective way.

Who are the leaders in marketing in Australia?

I think New Zealand probably does a better job, because there’s also this sense that ‘we’re five million people and no one’s looking’. I think Australia is actually a really conservative culture. I actually think it’s a cultural thing. Australians think of themselves as laidback and gregarious; they’re not, they’re really not. It’s actually really conservative in a lot of ways.

I’ve lived in Italy, I’ve lived in the UK, I’ve lived in the United States; we tend to think of the US as puritans with guns, and there’s certainly this horrible religious film that sits over the American culture.

They’re actually not that conservative, they’re actually bold in what they do, and they’re prepared to go back and forth, and the British have a bit of that too… One of the interesting things is, and I hate to say this, but some of the most extraordinary marketers that I’ve worked with, the bravest people, the people who’ve done the most successful work – forget the most creative work, but the most successful – the ones that made the biggest difference to an organisation, they’ve either been foreigners or they’ve been someone who’s come from a different category, or they’ve been both. And what that means is, they haven’t got a sense of ‘well, this is the way we do things around here’.

They don’t know how to toe the line, so they don’t. What they do is, they actually approach the problem from the position of a consumer, which I think is really, really valuable. Having said that, I have worked with some great marketers. At the time we launched Aussie Home Loans, John Symond was a CEO making decisions, and a different level of decision.

John knew he was picking a fight with the most powerful financial organisations in the country, but he had the position and the stones to back himself and, again, he was someone with a bigger mission than just making a few bucks… People like Lucie Austin at Coke… And, before Lucie, there was Karen Wong, who was an amazing leader, an inspiring marketer. Karen was rare in that she created a marketing department that was able to stamp its authority on what it did. And look at things like the Coke Zero launch, which was unbelievably successful, and it’s a result of the leadership. I think it does start at the top and if not the CEO then the marketing directors. Both Lucie and Karen were marketing directors, who for the most part created a culture that didn’t have brand managers going, “I don’t want to present anything that I’ll get into trouble for.” It allowed their people to have an honest conversation and go, “Listen, I think this is really good. I mean it’s challenging, and there will be political issues, but I think it will transform the business.” You’ve got to remember, for brands like Coke, New Zealand and Australia are the first markets in the world to wake up. Which means if we screw up here when the US stock exchange wakes up in a few hours’ time, they take a hit, so we can actually do something amazing that makes money in this market, and it costs them in points, if [the US market] doesn’t like it.

It’s an interesting point that marketers are leaders. It seems obvious, but if you spoke to the majority of marketing graduates or even professionals, I don’t think that they would use the word leadership too quickly in a description of what they do.

No, and I agree, and I think it’s a real mistake. If you think about – what is a leader supposed to do? A leader isn’t supposed to balance the books; that’s what you’ve got a financial department for. A leader isn’t supposed to set the process in terms of production; you’ve got a production manager for that. What they are supposed to be is determining ‘what does the organisation mean?’ They’re supposed to be the voice in the marketplace, they’re supposed to be the face in the marketplace, and they’re supposed to set the course for the organisation to follow and, basically, create something that employees buy into, and the consumers buy and, if you think about that, that’s pretty much a description of what marketing is supposed to do.

Obviously, there are checks and balances that sit on top of that, but alignment is a marketing function as well. Making sure people are on the same page, people are all buying in to the same objective. We’re all selling, and I think that’s what’s been missing, is marketers really seeing what they do as a responsibility of leadership.

So, how do you inspire that, or how do you incentivise that?

Good question. I think part of the problem in Australia is that it’s such a small industry, which means that if you screw up, you have to leave the country to get a job. So I think we’ve incentivised people to not think that way, and I think that’s a bit of an issue. Often times, you actually find better marketing decisions coming from a CEO, when you’re dealing with them directly. It’s not that the marketing people don’t know their jobs or wouldn’t have made the same decision; I just don’t think they feel confident enough or secure enough to make that kind of decision. I think that’s a bit of an issue. But, to answer your question, how do we encourage it? I think that’s a really good question, actually. I don’t necessarily believe that leaders are born. I think certain skills, you have a natural predilection for it.

At some point it does have to come from the individual though. I’ve changed my mind! It’s not necessarily a talent, but it does have to come from you, and I think it’s the present leadership’s responsibility to encourage that. I surround myself with as many dissenting voices as I can, and I encourage those people around me to argue ferociously with me. Often, you’ll see me having heated debates with people I work with, and it’s not about me being right and them being wrong. It’s… the better able they are to challenge me, the better my thinking is, so that if it goes public it’s actually been tested and tempered. I think it’s up to leaders to employ people who’ll challenge them, people who they think can be better than them, which requires a level of courage in itself, because some people don’t like hiring better than them for fear that they’ll get shafted, but I actually think that’s what a leader has to do. It’s the role of a leader to inspire their people, to create a vision that actually their organisation buys in to.

The best leaders do that, they buy in to a sense of something bigger than themselves. People don’t work late without a sense of begrudging it, unless they’re inspired by the work that they do. Marketing people [have to] see themselves as leaders, and I think that will happen, because it’s easy to outsource or offshore your financial functions, your legal functions and to some extent your customer service functions and even some of your productivity, but the inspiration depicting the, ‘What do we stand for? What’s our voice in the marketplace?’ that’s got to be local. You can’t buy that off a rack, you can’t get a really intelligent grad from India to do that. I think that’s the opportunity, and I see really smart people in marketing who should be in leadership positions, and half the time I just think, ‘Step up a little bit.’ Look, I think at the moment, it’s seen as a job rather than an entrepreneurial leadership opportunity, and so I think that attracts a certain kind of person to marketing as well – not that there aren’t really entrepreneurial people in marketing, but I think overwhelmingly your career path, in your head, is probably aiming at being a marketing director not CEO, and I think that filter changes the way you approach what you do. If you think about the most famous leaders in the world, they’re actually really good at marketing. They’re charismatic, they can speak in a way that engages people, attracts people to them, and that’s what we’re really doing, we’re actually attracting people to us voluntarily. The push model’s dead.

Care to weigh in on an idea that’s been kicked around for a while: that the consumer owns the brand now?

Look, I think that’s partly true in terms of they share in the brand, and they can help shape it. I don’t think they own it any more than brands own them. I don’t think Steve Jobs gave a damn about what consumers thought. I think he did what he believed was right, and I think people responded to that.

People are attracted to people who clearly believe what they say, and are committed to it. I mean you may not even agree with them necessarily… So, in terms of consumers, I think rather than owning the brand, they buy into the brand. I think rather than your organisation’s identity being brand defined, if it’s clear enough, consumers use that identity to help them find their own, or aspects of their own. Clearly I don’t jog, but I wear Nikes because I buy into their vision of the world, they sell the heroism and participation; I buy that.