The Role of The Board of Directors in Marketing

Article by Kelly O’Brien and Herb Rubenstein

Introduction

In June 2004, Business Week reported that a member of the Board of Directors of Coca-Cola squashed a major advertising campaign that the company was considering. The magazine then reported that the Coca-Cola Board of Directors lacked the marketing expertise that the company needed. In a separate meeting, also in June, 2004, a Chairman of the Board of a $100m a year organization, looked out at the Board and remarked, "We don't have anyone on the Board with any marketing expertise."

Five years later the new General Motors Board of Directors often met several times a week to take hands-on control of the marketing activities and product development activities of the struggling automaker.

These three separate incidents, within years of each other, represent a set of soft signals beginning to permeate the business and nonprofit landscape. Boards of Directors are now beginning to look beyond being the financial cops required by Sarbanes-Oxley and starting to focus on what has always been an essential role of Board of Directors - helping make the business or nonprofit grow. This article is designed for businesses and nonprofit organizations that are looking for new ways for their Boards of Directors to play a pivotal role in assisting with the great marketing challenges faced today in our highly competitive environment.

The Board’s Role in Marketing

As one of the authors of this article has written in a separate article, there are very few published standards for boards of directors. A search in 2004 on GoogleTM revealed only 50 hits using the phrase "Board of Directors Marketing Committee." In 2009 there were only 83 such hits.

Despite these small numbers, it is becoming clearer and clearer that for many smaller as well as larger companies and nonprofits, there must either be a Board Committee or an individual on the Board who has marketing expertise and who is willing to take responsibility for leading the Board in a new effort to help promote the marketing efforts of the business or nonprofit.

We believe the Board's role in marketing is three-fold. First, the Board must insure that the organization has a strong marketing plan and budget to meet its growth goals. Second, the Board should be active in recommending new customer segments, introduce the organization to potential customers and give the organization a hand in promoting the organization with speeches, articles and other PR and marketing activities. Third, the Board must ensure that the organization has either internal resources or outsourced assistance necessary to implement a solid marketing plan.

Formalizing this role on the Board of Directors may be adding something to the Board's plate that it is not currently capable of handling. Having marketing expertise on the Board is an essential component of being able for a Board to make good on its commitment to be an important part of the marketing success of the organization. At meetings, in addition to having the CEO, CFO, CIO and other key officers report to the Board, the person in the organization responsible for marketing should also report regularly to the Board of Directors.

Transforming The Organization

We recently completed a business plan for a nonprofit that has annual revenues in the $3m range. There is no one on staff whose job description includes sales or marketing. There is no one on the Board of Directors with expertise in marketing. At a recent Board meeting, also in June 2004, one Board member suggested going after a new target group and offered his assistance in helping forge the strategic alliances and making the contacts necessary for this new marketing foray to become a great success.

Although this Board member was not on the Marketing Committee of the Board (since it did not exist) and although he did not have any marketing expertise, (he is a lawyer), his suggestions at the meeting were a perfect example of how a Board of Directors should play an essential role in helping the organization go about marketing its products and services.

In this situation, the Board member was so far ahead of the organization in his thinking, the organization will need either to create a new position in the organization for "marketing" or allocate "marketing" duties formally to a person who is currently doing another job in the organization. The Board member's marketing suggestions and leadership on this marketing idea will transform the organization. It will lead to a new emphasis on marketing in the organization, will direct the organization to begin to spend more resources on marketing and will lead to the creation of marketing capacity that the organization has never had during its ten years of existence.

The Five Steps

There are five steps to getting your Board of Directors or Board of Advisors involved in helping shape and participate in the marketing of your organization. First, if you do not have an active Board of Directors or Board of Advisors, you must recruit one and call a meeting. Be sure that someone on the Board has sufficient expertise in the field of marketing. At this meeting, marketing should be one of the first orders of business.

The second step is to form a Marketing Committee at the Board level or at least obtain an agreement from one person to serve in the capacity of Board member responsible for marketing.

The third step is to begin or accelerate the process of creating a marketing plan for your business or nonprofit, regardless of how small or large it is. The Board should have input into the marketing plan and should approve it. Then the Board will understand what the organization needs to do in the marketing arena and will assist in making those activities take place successfully.

The fourth step is to keep track of your marketing successes and failures. Whether your organization will buy ad space, write articles, give speeches, sponsor events, expand its website, create and distribute a paper brochure, give seminars, attend conferences and trade shows, hire marketing consultants, enter into marketing strategic alliances or partnerships, join networking groups, hire sales and marketing personnel, buy lists of potential customers and contact them, distribute electronic or paper newsletters, or undertake other marketing activities, a "scorecard" approach should be developed and all marketing activities, successes and failures should be reported to the Board at each Board meeting.

The fifth step is to plan for how to keep Marketing on the agenda in your organization for the long haul. Will you hire a dedicated marketing professional? Will the CEO continue to also be the Chief Marketing Officer, realistically with support from strong implementers? Hand-in-hand with institutionalizing your approach to marketing is keeping an eye on the quality of your results. A true measure of your success isn’t necessarily that you get more business, but better business. You’ll need to regularly monitor the quality of the new work your efforts bring in, and make decisions about what new work to accept (as well as which clients or products to “retire”). The key is to maintain a high-quality portfolio that furthers your organization’s objectives.For

Expected Results From Increasing the Board Role in Marketing

The first result we expect will occur when an organization adds marketing as an official part of a Board of Directors or Board of Advisors' plate is that there will be an immediate increase in the amount of advice the organization will receive on how to market. Everyone loves to give marketing advice. Second, we expect that if these suggestions by Board members are not followed up in the very near term, the Board will not continue to play this role since they will not see that their input has been valued. Third, we expect that whatever marketing plan your organization now has in place, by adding Board involvement, this plan will be improved quickly and the organization's entire approach to marketing will be transformed.

For Organizations Without Boards

The reality is that most small companies and nonprofits do not have functioning Boards of Directors or Boards of Advisors. This article strongly suggests that if your organization does $100,000 or more in annual revenues, your organization should have either a Board of Directors or Board of Advisors.

Using the marketing subject as one of the first areas where you would be asking help from a newly constituted (or reconstituted) Board of Directors or Board of Advisors is a great opening project. It has little risk for a Board and can lead to quick and sustaining marketing leads and marketing plans for the organization. Board members could be compensated, either as a group or individually, for marketing leads and for suggestions that lead to expanding the revenues of the organization (although this might be prohibited in some nonprofits and must be carefully orchestrated to avoid conflict of interest pitfalls).

Conclusion

In Board meeting after Board meeting over the past several years, marketing aspects came to the forefront of a Board's attention. We think this is no accident. Boards of directors can no longer ignore marketing as it has become central to both for-profit and non-profit organizations. Boards of Directors and Boards of Advisors can and should make a huge difference in the marketing success of organizations.