There is a lot of dissent within the marketing ranks of Corporate America about quarterly reporting. The common argument is that by basing your marketing strategy on quarterly earnings you aren’t giving your company enough time to let your decisions play out. I’ve often heard people advocate for the Japanese approach to strategy which advocates for a 100 year strategy. Wow 100 years, that’s a long time. What happens if things aren’t working out after 20 years? 80 years is a long time to wait to adjust.
Having worked with and for several fortune 100 companies I’ve come to the conclusion that the real problem is how long it takes companies to come up with and execute a strategy. It typically takes at least one full quarter for you to develop a strategy. Actually it takes about a week or two and then 2 1/2 months to sell it in, get approval and budget. Then it typically takes about a full quarter to execute on that strategy. Half the year is now gone and you don’t even know what the results of your strategy are.
The reason quarterly reporting upsets most strategists is because they never know if what they are doing is working or not. (Personally, I think that’s part of the reason why marketing and measurement are in the shape they are.) The problem isn’t quarterly reporting. The problem is that it takes so long to create, approve and execute on a strategy.
The sick irony is that quarterly reporting has created a crippling fear inside public companies that has lead to so many barriers and hurdles being put in place to ensure you don’t create the wrong strategy that ultimately you’re crippling yourself from ever creating a good strategy. At best most companies end up creating an okay strategy that then has to suffer through it’s own hurdles to survive until execution. (That was a pun in case you missed it.)
There is nothing wrong with quarterly reporting. Yes it makes some companies do some crazy things but money always does. Quarterly reporting is what drives companies to improve. It motivates companies to innovate and create wealth (remember we are all capitalists here and money is still a good thing) I know (hope) I get some flack for this statement in the comments.
What needs to change is you need to tear down the hurdles that are stopping your marketers from creating truly great strategies and executing on them swiftly.
Again it’s not the reporting that’s broken, but the speed of innovation. It’s the fear and the hurdles that cause middle managers to kill real innovation. Of course the other truth is that for every innovation that was unjustly killed, there were thousands that were rightfully euthanized. You need to stop stifling your engineers and innovators from really innovating not iterating.
(And no, I really don’t know why I chose that photo. It was one of the Zemanta recommendations and it somehow seemed fitting.)
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