Tom H. C. Anderson - More Than Market Research

In this weeks Advertising Age magazine Jack Trout published an article we had spoken about a few weeks ago. The article compares statistics from Business Week on the average tenure of C-Level Executives with statistics from this years Anderson Analytics - MENG ‘Marketing Trends’ study showing a ranking of important issues of marketing executives. CMO’s have the shortest tenure at 2.16 years:

While I agree with Jack, that one of the CMO’s most important tasks is to make sure their product or service is clearly differentiated from that of the competition, the article makes me wonder about strategy and time in a greater perspective. After all, if CEO’s are only around for 3.6 years, and often one of their first tasks is to select or bring in a CMO who they like (in some cases a buddy from a previous company), it only makes sense that CMO tenure would be shorter than CEO tenure.

Thus, it got me thinking about this globally. It used to be that European executives had a longer tenure than North Americans. Apparently this is no longer the case according to several studies, including one by Booz Allen, which shows that at least in terms of CEO’s the Europeans have caught up with, and perhaps are even surpassing the US, in terms of a lack of patience.

For those of us who have studied international management, you will probably well recall the work of Geert Hofstede, who has done some truly interesting work on cultural dimensions. The particular dimension that comes to mind here of course is the LTO (Long-Term Orientation) dimension.

Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one’s ‘face’. Both the positively and the negatively rated values of this dimension are found in the teachings of Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the dimension also applies to countries without a Confucian heritage.

Looking at the US ratings on the various dimensions you can clearly see that the US is one of the lowest in terms of LTO:

In fact, of all the other dimensions, the LTO is the lowest Dimension for the US at 29 (the world average for this dimension is 45).

While it may be tempting to group all European countries together when making comparisons, having studied in and worked with various parts of Europe I believe this is usually a mistake. There are some huge differences between various countries in Europe. While much has been said about the US being a melting pot, we are still most closely related to the Germanic cultures of Europe, which also happen to be countries for which LTO ratings are easily available. So I checked LTO rankings for a few of these countries:

UK (21)
Germany (29)
Sweden (30)

Obviously these European countries are very similar to the US in terms of LTO, at least in an absolute sense. So how about Asian countries?

Japan (78)
China (118)
Asian Countries (85)

OK, so Asia has the long term outlook, the West does not.

Obviously good strategy quite often requires short term sacrifices for long term gain. Short term sacrifice seems to be impossible in the West. If a US CEO departs in less than four years, how strategic can we expect them to be?

In terms of globalization, we’ll eventually see how the higher Asian LTO and the resulting strategy it allows for competes with our short term more tactical approach. By the time we find out it will be too late to do anything of course…

If we expect our executives to be more strategic, perhaps a first step would be to change their compensation and tie it to earnings of the company 10-20 years out? That would be something… Of course I doubt our CEO’s and CMO’s would have any more patience for their incentives being delayed than our shareholders and boards have for theirs.

Curious to hear your thoughts?

-Tom