It is traditional in most companies that the operating division is the lead dog on the sled and that other divisions function in supporting roles. Yet in most companies it is not the operating division that is charged with growth and success. It is the marketing folks.

No CEO tells the chief operating officer, "We need same-store (or same-product) growth of 12 percent next year. What are your plans to achieve it?" Or, "I want to expand into six new markets next year. What will you do to make those markets successful?"

Granted, the COO will have to deliver the goods and/or services to support such growth plans.

It is the chief marketing officer, though, who will be responsible for creating that 12 percent increase in demand. The CMO must devise strategies to deliver sufficient customers in those new markets.

The more successful the company, the more likely marketing, not operations, is the lead dog. Why?

Because marketing, not operations, drives demand, and demand drives growth.

Thus, operations should answer to marketing because marketing does not begin where operations end. Marketing begins with operations.

Marketing begins with the critical decision of which products a manufacturer should make, which to drop, which to add.

Marketing, not manufacturing people, should determine the product-benefit and price-point objectives of manufacturing. Marketing departments should determine retailers' merchandise mix and pricing.

The CMO should determine a service company's services and what's on the menu in restaurants.

Of all the tools available to marketing officers, none is more important than products, services, pricing, menus and quality.

If operating people don't answer to the CMO, she can't be held responsible for success. Her other tools, such as advertising and sales promotion, are compromised if operations are flawed.  "Chief marketing officers have ideas, and they try to sell them to the guys with line authority. Most of their work is not done against competitors; it's done internally trying to get . . . people to let them do things," according to <PERSONNAME />Gary</PERSONNAME /> Loveman, Harrah's CEO. "That's a losing battle."

When Steak 'n Egg Kitchen restaurants hired its best marketing director, he visited all 430 restaurants. He found all were dirty and ordered 430 new brooms. The operations chief blew up and told the CMO where he could put the brooms.

When the CEO sided with operations, the marketing guy told him, "I can't achieve your revenue objectives if I can't assure that the restaurants are clean."

Then he quit.

Steak 'n Egg no longer exists.

Business Commentary By John Malmo
<DATE year="2003" day="5" month="5" />May 5, 2003</DATE />

John Malmo is president of Koenig Inc.