Commentary

More On Mauled by Models

In my last post, I described the challenge faced by a VP marketing who had successfully used an elaborate mix model for seven years to justify increased marketing spend, only to have his world turned completely upside down by a new CFO who asked, "How does your model account for the substantial changes in consumer attitudes and behaviors in the current economic environment?"

My question was, how would you handle the situation? We got lots of comments and ideas on the Metrics Insider site, many of them actually good.

Here's what actually happened:

  • The VP marketing got resentful of the CFO's questions and adopted a strategy of ignoring the question while trying to build support by going around the CFO to others in the executive committee, including the CEO. His argument was that the CFO didn't really understand the contribution of marketing and that it was a much more strategic question than just the predictions of one model.
  • Meantime, he had his analytics consultant scramble to retest the model validity using just a sample of transactions that came in post-economic meltdown. The results were inconsistent with previous model outcomes, leading to confusion as to the legitimacy of the pre- model, the post-model, both, or neither. In short, confidence and credibility were lost.
  • The CEO, feeling pinched by the cash crunch, ordered a reduction in marketing spend of about 15%. The VP marketing, without a leg to stand on, gave in and made the cuts.
  • He then immediately began floating his resume to select recruiters, which is exactly what most of our commenters recommended.

    In hindsight, how could our VP have prevented this situation from becoming career-derailing? Here are my suggestions:

    1. He should never have placed so much emphasis on one single model, but instead assembled evidence from a variety of sources and tracked multiple metrics to assemble and analyze marketing payback more objectively.

    2. He should have been advised by his analytics consultants of the model's inherent weaknesses, given the discontinuity of the macro-economy. This is a cardinal sin among technical model developers and business people who don't ever actually comprehend the limits of the tools.

    3. He should have recognized that when new people are first exposed to "predictive" numbers, they challenge them instinctively based on their own experience, regardless of the relevance of that experience.

    4. He should have taken the step of walking the new CFO through the LOGIC of the model and the relationships between the assumptions and the facts BEFORE he ever showed the numbers -- admitting what was known and what was unknown, as well as how the unknowns were being estimated. It would have been even better to do this in the presence of the outgoing CFO if possible, for continuity of support and to reduce any perceptions of bias.

    5. He should have offered the new CFO the chance to throw the entire model out and start over IF they could agree on a reasonable standard for measuring marketing payback that reflected the realities of the business. This gesture of independence and objectivity might very well have saved the model and transformed the relationship into a collaborative one.

    Some may think me naïve for believing that such an approach would be effective in the face of divergent world views between a CFO and VP marketing. However, these seemingly insurmountable differences are almost always simple misperceptions exacerbated by some political posturing. Ninety-nine percent of the time they are overcome by separating fact from opinion, and then finding objective ways to interpret evidence and transform it into workable hypotheses.

    So, when you feel the heat of the battle building, think STOP, DROP and ALIGN.

    STOP the argument and focus on the points the other person is making. Worst case, you'll better understand the limits of his/her expertise and be able to better communicate your points. Best case, she may actually make good points.

    DROP your pretense of "knowing" things and admit the limits of your facts. If you doubt whether something is fact or opinion, it's opinion. Calling it such will increase your credibility.

    ALIGN on a process for making the decision collaboratively. It may be inefficient in the short run, and you may have to give up some budget or headcount for a while, but in the long run it's the only viable approach.

    Surprised that it's not about the model? Don't be. In times of great fluctuation, complexity rises exponentially. The models need to serve the people making the decisions. Fix the models, yes. But fix the people dynamics first.

  • 3 comments about "More On Mauled by Models ".
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    1. Guy Powell from ProRelevant Marketing Solutions, April 21, 2009 at 1:54 p.m.

      Very interesting and telling article. This is where I think marketers forget that they have two customers: the external customer we all know and love and the internal customer that may believe they understand marketing but really don't. Just as marketers have to educate their own consumers about the value of their brands and products, so too, must they educate their internal customers on the value that their actions bring to the company. If they can't do this, then they've forgotten the other half of the marketing equation.

    2. Martin Edic from WTSsocial, April 21, 2009 at 2:04 p.m.

      Your VP should take his or her head out of the sand and look around- there's no excuse for getting blind-sided by change in this information-rich environment. I would have let them go immediately.
      Same goes for agencies who cannot immediately answer this question in an informed and creative manner.

    3. Paula Lynn from Who Else Unlimited, April 21, 2009 at 3:03 p.m.

      There was a question asked, not an accusation. And the question seems pretty logical that should have been able to be answered. I'll get back to you to show you would have even been better. It seems that the VP not only took it too personal, but got too caught up in the numbers and his ego and own expectations. We are all fallible.

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