How CMO’s get a seat in the boardroom and not get fired - Chris Burggraeve

0:06Welcome back everybody to Uncensored CMO. Now one question I get asked a lot is why there not more marketers on boards of companies. The shocking statistic is it turns out that only around 2.6 % of board positions are filled by marketers, which seems a real shame to me. So I'm joining this episode by somebody who really knows what it's like to be a marketer on a board, Chris Burgrave. He was the global CMO, AB InBev, and then since leaving AB InBev, he now runs lots of boards. He's chairman of many companies. He invests in them himself as well. and he's even written a book about how more CMOs can get onto more boards.

0:43This is a great conversation for anyone who's got a big aspiration to get onto a board. Here it is. Chris Burgrave, welcome to the show. Thanks, Joe. Happy to be here. Good. Good to have you. A lot of CMOs ask me about this is, how do you get onto the boardroom? We're going to come and talk about that in a minute, but before we do, I'd love to find out a bit more about you, some of the career you've had before doing what you're doing now. So just give us a quick summary of your career to date. So break it in two pieces. The first 23 years have been very classic corporate marketing, Procter & Gamble, Coca-Cola internationally.

1:19And then I had the luck to become the first CMO of InBev, then AB InBev. So 23 years of classic corporate marketing. And then the last 13 years, I hang out my own shield, spend a lot of time as an advisor, investor, board member. Now, fascinating to find out a bit more about your experience afterwards in terms of now you're investing in businesses, you're consulting, you're helping CMOs get a seat at the table. But before we get onto that, what do you think makes a great CMO? So if you take your time at AB Embedded as an example, what skills does a CMO need to be successful? It really depends on the company that you're in.

1:56So I think it depends on the stage of the company in its lifecycle. So in my case, when I had a chance to join InBev, the challenge was come and develop a, we're already a sales machine, come and develop a consumer centric, brand centric sales machine. So that was my brief, if you will, from the CEO, Carlos Brito at the time and the board. That's what I set out to do. And then you, so you have your big challenge, break that down into pieces and it goes to first understanding how this machine works, how you influence it. It's a very disciplined, very numbers-driven machine in the case of InBev and AB InBev.

2:38So you need to speak financial language. You need to speak sales language. You need to speak data-driven language because this is the culture of the company. So after understanding how it is, you translate a bigger vision of how I will get to this consumer and brand centricity into a language that they understand. And we set the whole wheel in motion over a number of years and with success. Now, this is something I think people forget really about the CMO role. I mean, I haven't been on a board like you have at the scale. I've been on a small company board, maybe 20 million turnover, something like that.

3:10But what I did notice was you kind of make a switch from doing the work and being involved in the making of it and production of it and so on. So suddenly there's a whole different conversation when you get in the boardroom that's surprising. So I know we were chatting earlier, but I worked out that when I joined my first board, probably less than 10 % of the conversations we ever had in the boardroom were about marketing. We covered kind of operations, finance, HR, legal. It was a lot more about the operational running of the company. That was quite a surprise because when you spent your career, in my case, maybe 20 years before that point, honing my skills in marketing, then I get into the boardroom and suddenly there's a different set of skills required.

3:50Well, you're right. And the thing is, when you become the CMO of a company, you're not a painter anymore. The analogy I would make is you're the manager of the atelier. And I sell the work of others. And I don't sell the... I ensure that they have input and output, but I'm selling outcomes. So ultimately, the board is interested in... We have a 500 or whatever it is now, 300 brand portfolio. And you're responsible to ensure that those brands are healthy, that they have sustainable pricing power. So what they're interested in is show me in whatever form, in whichever way you can tell the story, that these brands are healthy and strong.

4:29So you need to speak the language of the board. Translate the marketing input and output in outcomes. Sell the work of the others. Again, I'm not doing the creative campaigns anymore, etc. I ensure that the impact of the work done by the entire team around the world on all the key brands gets documented, translated, sold, and hopefully then refunded again for the future. So you are constantly selling work on your team, reinvesting for the future, and building over time what is important for the board is a top intangible asset portfolio. portfolio. Yeah. Now, it's interesting you use that point, sell.

5:11I think you're absolutely right, aren't you? Because actually your job is to represent the consumer where decisions get made in the boardroom, but also sell in what you're spending the company's money on. So how do you make a compelling case for investing in marketing in the boardroom? Because that's probably everyone asked this question. Yeah, well, and the big argument I learned myself is you have this big ROI discussion. So wait, what dollar in, how much do I get back? I've learned that there's a very tricky discussion because ROI discussions you can lose very quickly. ROI is about efficiency, whereas what the board and the C-suite in the first case is looking for, does it work?

5:47Do we have impact? Is there an outcome? Measuring effectiveness you can better do via pricing. So what I learned over time and one of the key things that I still instill in boards today and whenever I do advisory work and teach students, etc., is to say you have a better chance as a senior marketer to sell that your brands have achieved sustainable pricing power. This is a hard number. You have it or you don't. That is a way to sell in the outcome of your work as opposed to arguing and nickel and diming with the CFO on efficiency metrics like ROI where he or she can easily defeat you and say, yeah, but these assumptions that you took or these assumptions and ROI discussions are tricky.

6:32Pricing power discussions are factual. You have it or you don't. I mean, if you allow me the analogy, Warren Buffett, one of the best investors in the world, said the very first metric that he uses to invest or not in a company, they do full due diligence, but what matters to him is does this brand have pricing power or not? And how he defines it is pricing power is a dynamic concept. It means that your ability to price at or above inflation, your inflation, not just CPI at or above inflation over time, then you have a brand. If you don't have this, you don't have a brand. So that's his definition.

7:14And he's been applying it for decades in his investment philosophy. And this is what I've adopted in my work and in the work that I share with CMOs and say, learn to think like Warren Buffett. Learn to think Wall Street before you think like a CMO. That's brilliant advice, isn't it? It's interesting. I reckon if I did a poll of which of the four Ps do marketers today think most about, I reckon pricing would come last, right? It wouldn't be. It might not even be there for a minute. I mean, actually, there's probably not many marketers that even have pricing within their remit. Well, John, it's interesting that you say, I see what I've learned again.

7:53I come out of the CPG world, and then you tend to get blinders on. So for 23 years, I was in this race of the typical environment. the Coca-Colas, the Procter & Gamble's first, Great Marketing School, Coca-Cola Internationally, InBev, AB InBev. You're in the 10 % of the companies where marketing is a line job, where you and finance are interchangeable. You're close to the P &L. You influence the P &L. The whole mindset is consumer-centric to begin with. All the stories we see in Cannes, all the examples we see at university, at least when I grew up, were all examples of top CPG companies. What I've learned when I hung out my shield and when I started to talk with the world at large, actually the CPG companies is a small percentage of the real world.

8:43and 45 % there's two more two bigger groups of companies 45 % is marketers have a staff job and they struggle and fight to have a seat at the table and to have meaningful discussions with their CFO, C-suite let alone their board and then there's another 45 % that is out there that is creative support very often referred to as the brochure makers of the coloring thing and again I don't mean that in a judgmental way, it is a different definition in the eyes of that company of what marketing means. And back to your point, the four Ps of marketing are played for fully in the CPG. A subset of the four Ps are under the two tiers of marketers in the staff role, depending on the company, depending on the B2B company.

9:34And then this other group of creative support, they essentially do the P of promotion and a subset of that. So when you realize in which block you play, that determines your seat at the table. I'd love to come on and talk a little bit about how you make the jump or how you make the case for a seat at the table on the board. But maybe before we do that, let's start at what are the statistics on the number of CMOs that have a seat at the board table? Less than 2.6%, according to the best academic studies around it. So bottom line is virtually nobody. boards will talk about we are very customer centric and consumer centric i've seen it in myself in the boards that i'm on since 19 years uh consumer and customer is very hardly talked about in in most of the companies you go through the financial compliance you go to the routines you go to a bunch of other things and then the board time is up before people talk about consumer or customer unless there's a crisis now what if we go to the why why why do you think that's the case it have is it because marketers haven't made the case is it because they've not trained in finance or or is it because actually business is about more fundamental things i mean why do you think that's it's probably a case it's probably both it's uh there's an element of what is the role of the board you have a fiduciary duty to your shareholders and stakeholders and it starts with money it starts with really understanding the financials of the company and tracking and monitoring.

11:04It has to do with policymaking. It has to do with etc. So by the time you really get deeper into the weeds of consumer and customer thinking, boards have finite time together. Number one. Number two is who is on the board. The type of profile is on the board is CEOs, former CEOs, CFOs, maybe some academics around it, etc. They tend to be people for who this is not the first thing they think about. PwC did a study, but the number one thing that people look for to be on a board is financial literacy, financial understanding. The last thing of all the skills that was looked for is marketing understanding.

11:45That's the perception. It is not important in the mind of the people who run the boards today. And it shouldn't be to their detriment. And so that's one of the things that I'd like to change. I'd like to influence differently and say, ladies and gentlemen of the board, board chairman, chairs of the NOM and GOF committee in more public companies, you would be well advised to increase the cognitive diversity of your boards and it will materially impact the performance of your board over time. Now, marketers are ideally equipped to add that type of diversity to the board, but so could a top CIO person or CHRO person, etc.

12:29I'm making the case for the marketers as a former marketer because I think we're ideally placed to do so and we can come back why that is. But that's the key thing. We already have academic research that shows that boards with a marketeer are performing better on financial output than boards without. So there is the initial body of knowledge starts to be there. But that doesn't mean that overnight boards are going to shift and all of a sudden say, oh, my next board member is a marketer. Never happens. We've seen that in the case of gender. We've seen it in the case of race. We've seen it in the case of age.

13:06but all of those diversity extensions have proven one thing is you do not extend the board because of gender race or age you don't hire it because it's a marketer it's because it's a marketer that A fits all what a good board member should be and on top brings functional expertise that matters for the stage the company is in then it makes sense I give you the same analogy for However, women would love to believe that a board with a woman does better than a board without. And some studies in the beginning show that that was the case. Actually, the body of knowledge argues that in more cases than not, it's not the case.

13:52It's not because you hire a woman that your board performance is better. If she is an expert on China and China matters for your business, then it adds value. If you just hire a woman because she's a woman, it actually may play against you in terms of how investors look at your company. So same thing. Don't put a marketer for the show of having a marketer on board. Put a marketer because as a board, you generally believe that brands matter for your future. Innovation matters. Digital transformation matters. AI transformation matters. all the skill set that the marketer can bring to the table matters to the future of your company on board level down.

14:35Then it makes sense. Let's get into that a little bit more because I think that's so important. So make the pitch to me for why every board should have a marketer on it. So what value will a marketer add on a board? What's their USP? Well, in most cases I asked, I actually did interviews in the book with six top marketers that are on boards, and I asked them all the same question, is why were you hired? And there's different reasons, but there's a couple of commonalities. One has to do with the desire of that board to spend more time on consumer or customer, B2C, B2B, doesn't matter, or B2B2C.

15:13So a deep desire by the board to really elevate the dogma that they say, customer is the boss or consumer is the boss, to really elevate that to board level, to be closer. Second, what I found is that marketers tend to be naturally inquisitive and have an antenna for stakeholder understanding. Sorry, for stakeholder understanding. Not just shareholder, stakeholder understanding. And as boards need to be more open in this dynamic open environment for different stakeholders, sensing this, what's going on, is a natural ability because that outward centricity from a marketer, you can bring that outward thinking into a more insular board that tends to look at numbers, looks from inside out, marketers will look outside in.

16:00So that's the second big piece. And then there's functional understanding like digital transformation, artificial intelligence, innovation, etc. Things that come natural to senior experienced CMOs, They can bring that and elevate that to the board. Discussions on pricing power, for example, which tend never to be talked about in the board. So bring that Warren Buffett thinking and visualize it and storytell it in a board, in a way that the board can and wants to understand, financial language. That's what I heard from top CMOs in boards. They can bring to the party. There is room there. In a nutshell, what we would say is CMOs are...

16:45great at understanding intangibles. And the world is moving from a tangible to an intangible economy. In fact, of the S &P, more than 85 % of the value creation is driven by intangibles, by not anymore what you own, tangible capital, the factories, this and that, but by your intellectual capital and by your relationship capital. CMOs are excellently placed to understand the ambiguity of intellectual and relationship capital and visualize and translate it on a board level. I mean, actually, it links to another Warren Buffett quote about brand being a moat, didn't he? He said the most important thing when it looks at business is the impression of the brand in the mind of its audience, because actually that will give you competitive advantage over a long time.

17:36Because, you know, technology and the fundamentals can be copied. I mean, in fact, more rapidly now than in the past, you know. So supply chain or technology is less of a competitive advantage. But how your brand is in the mind of the consumer is something that takes years to build, doesn't it? It takes years to build and is also not always exact to quantify. I mean, again, the financial analyst thinks in betas and alphas and like to have exact kind of measures. The fluidity of that mode is what you need to learn to appreciate. Yeah. But I think Wall Street, and particularly what we've seen in the inflationary times we are in, Buffett has a famous quote that says, if you haven't invested in your brand over the last years, then when the tide goes out, we will see who has been swimming naked.

18:22And his metaphor there was to say, guys, if you haven't invested in the brand, don't expect it to overnight being able to rescue. You will not be able to raise the price and protect the increase in costs that you have and pressures, the compression of your margin will not be overnight be protected by increases in prices if you haven't invested in the equity that justifies the price increase. So price is ultimately what you need to look at first and understand in marketing. As, by the way, the four Ps were invented to be. So again, we're back to the future of Kotler. Marketers ignore pricing and the dynamic concept of pricing power at their peril.

19:06The flip side is, if they understand it and they can infuse pricing power thinking in the C-suite and in the board, it will help them to get a seat at the table. I mean, old boss of mine used to have the lovely phrase, green numbers, buy you freedom. And of course, if you can sustain price increases, that gives you more room in the P &L to actually invest back in your brand. So it's a virtuous circle. It's a virtuous circle. And so Wall Street has recognized in the inflationary times of the last three years, the boys have been separated from the men, the girls from the women. So Wall Street, very quickly, once inflation came, separates companies in two kinds, those with pricing power, those without.

19:49And so the question for every board is, do I have it or don't I have it? And that's a question that is now becoming acute because inflation is not going away. People hoped that it would go away quickly, but it's not going away. The pressure is actually intensifying. All the marketers are screaming at the moment because budgets, what do people do? They cut budgets to shortcuts. This is called marketing myopia. This is essentially an analyst will say, if I see that a budget are being cut to make the quarter for a public company, a good analyst will check if you're not what they call over-earning.

20:25And over-earning mean you're declaring a profit. But essentially it comes at the cost of having cut the marketing budget and therefore jeopardizing next quarter earnings. Maybe by that time the CEO and the CFO are gone and it's a problem for somebody else. But the over-earning issue, marketing myopia issue, is one of the biggest things we need to look at now. And again, it goes back to marketers, whether you're in that first block, the 10 % group that is P &L, the second block that is staff, the third block is creative. it's the second and the third block particularly that needs to more than ever understand pricing and dynamics of pricing if you want to preserve your budgets because otherwise management c-suites and boards that don't come with the natural pro brand mindset will do the first thing they can do which is cut the budgets and they cut into their own food i remember actually working for a fairly big plc in the uk and i remember the ceo saying on stage marketing budget is the single biggest discretionary budgets that we we spend every single year and no one has a right to spend it sort of thing basically you have to earn the right to spend it and and that's dangerous isn't it because effectively as a marketer you're sat there potentially if as you say if you're going to miss the earnings call uh you know that gets cut first doesn't it i mean you know whereas actually if you're doing about if you're positioning marketing as you know future earnings i mean this comes back to our positioning marketing as finance.

21:52If your job is to create future earnings for the business, increase pricing power, increase future demands, that kind of thing, then actually marketing should be the last place you want to cut in one sense. Of course, it's not as, I mean, again, when you talk to the people in the, if you work for a private equity firm and you're the CMO who works in the private equity environment, the horizon of that private equity, what is important is the horizon of your owners, the horizon of your board. If your board has a horizon of two years, then any argument you make of building the long-term falls flat.

22:25Don't come with building pricing power over the long-term because your board is not interested by definition. So you need to then, that means you will optimize for the short-term. That's the role as a CMO you have in that construct. There's no point coming with highbrow concepts and long-term if your owner says, I have two years to get rid of this or to sell this. okay so you decide to work if you decide to work in that two year constraint optimize in the two year constraint and that's it save yourself the headache of building for the long term if you want to build long term go to a company where the ownership is thinking long term so the whole point is as a marketer instead go back to understanding your ownership how long term they look are they building an intangible asset here and with what type of horizon?

23:17Once you understand that, come back to the principles of pricing power, etc. and tell the story of pricing power to then determine what budgets you fight for. Pricing power is an outcome. A budget is an input that buys you GRPs or buys you media mix or buys you campaigns or buys you this. The CFO is not interested in those tools. They are interested in the outcome on the P &L and on the balance sheet. and that's the story you need to be able to tell in the context of the company and that's again where lots of the stories are confusing between a CPG company that is naturally thinking about the next 10, 20, 100 years Procter & Gamble things for the next 100 years Coke things the next 100 years but a private equity driven company may think over the next 2 to 5 years different story I think what was interesting about the way you asked my question earlier is you went straight to price and everyone in the board can understand price, right?

24:14If we can charge more per unit, we cover our costs quicker, we make a bigger margin, we can reinvest in the future. It's really simple. Do you think that marketers have a language problem? Because I wonder whether we don't help ourselves with the way we talk about what we do in the boardroom. Do you think that's fair? Very fair. And very often we use the analogy to say marketers are from Venus and finance is from Mars. And you know the man, Mars versus Venus, actually they're both from both. so the conclusion is finance is much more emotional than people think if you look at an mna document and under buried in tons of charts with expensive excel sheets essentially is a bunch of assumptions around the yesterday today and the future but it's a carpet deal ultimately when you do an mna value the value of a company is oscar wild type is whatever a fool will pay for So the language of finance, however, if a marketer wants to win and have a seat at this, we come back to the base premise.

25:17If a marketer wants to be in the C-suite or wants to be heard in the board or wants to be in the board, financial literacy is table stakes. So most marketing people pride themselves in being experts in the P of promotion. what I'm arguing is be a generalistic one so build your T skill if you take your T shaped skill set become the best functional expert you can be across the four Ps not just one P build your base of your T then to get into the C suite to get influence and not on a baby seat but in a serious seat we'll come back to Tom Fishburne in a second but if you want to sit in a decent seat at this at the c-suite you need to understand you need to speak the language of money you need to understand the language and the jargon of the hr person the cio person the cfo person the procurement person etc they need to understand that you are broad so you build your general management cross-collaboration skills that's the minimum to get into the board.

26:28And then there's some other skills that get you to board level. T is needed to get into C-suite. And then C-suite plus, there's some other skills that we can talk about to get into the board. I mean, we'll come back to that, actually, because I'd quite like to find out what makes a successful board position. But coming back to the language point as well, I found it very interesting because System 1, where I have my day job, whenever we have our investor calls, the kind of questions I get back are different to what I expect. So, you know, I assume I'm going to talk about the number of people that have listened to an episode or the reports we've written about advertising or the subscribers we have on the database.

27:05And often it's like, what's your cost per acquisition? How long does, you know, does a new customer typically last for? You know, how many repeat by? How many of them are there in a year's time? You know, so it is very much the, you know, the kind of, it's very SaaS actually, isn't it? It's like, you know, the last 10 years of kind of direct to consumer business where it's understanding lifetime value of customers, your ability to retain customers, I was going to say acquire as well, and the cost of doing so. And you're right. And so actually there's been a fusion from the B2B side, from the B2B marketers and finance has infused the classic marketing language.

27:46Again, there's jargon that confuses the hell out of everybody. Zmod, Smod, FMod, there's been new jargon has been created in the post-digital times to express how consumers interact with the new customer journey in a digital sphere. Again, these jargons and all these buzzwords, every function has their buzzwords. So it's good to know what they are. But the storyteller in a marketer, if you're a good storyteller, you tell the story in the language of the person you tell the story to. So if that is the CFO, you need to express it in language they can understand. What the great thing that B2B, SaaS business, et cetera, has given us is language like cost of acquisition and lifetime value and all of that, and has become part and parcel of the general language.

28:35So use that, use that appropriately, but add things like pricing power and everything else from that base, fantastic marketing knowledge and train people in it. So top CMOs have an education challenge. They need to understand what does my CFO, my C-suite understand about marketing? What is their definition of marketing? What is their definition of successful marketing? What language do they know and don't they know? And as I've done in my own career, for example, if I go back to InBev and AB InBev, we spend a lot of time training the C-suite and all the business unit leaders and the board. And we brought them back to school.

29:16We brought them back to school in top universities. We took them to Kellogg, to Stanford, to Harvard, all in marketing modules to create what we call one InBev and then one AB InBev way of marketing. So everybody knew what the InBev way of marketing or the InBev way of marketing was consisting of. Every word was determined in there. So when we were in meetings, whether it was on a board level, C-suite level, or business unit level, zone level, everybody knew the idioms used. Everybody knew what KPIs we would look at and what they meant and how you could compare them. So you don't get lost in translation.

29:56So the point you're making is an excellent one, which is get to one language. So fuse Mars and Venus in a way that they understand each other. Another really interesting point you made actually there about, and should be a natural skill set of a marketer is kind of consumer insight, but also applying that internally. I had Jess Myers, who's the CMO of Vary, which is a big retailer in the UK. And when she started her role at Vary, she interviewed a vast number of stakeholders across the business and said, what do you think the biggest job of marketing needs to be? What do you think about what we currently do?