The V Curve of Risk Taking in Brand Management

When I was just starting off at P&G as an Assistant Brand Manager, I had a chance to have lunch with John Pepper. Pepper is the former CEO/Chairman of the Board at P&G and is currently Chairman of the Board at Walt Disney Company. Needless to say, the guy knows management and marketing. V Curve of Risk TakingOne of the things I have never forgotten from that lunch was what Pepper said about risk in our careers. He said that marketers inherently act on a V curve of risk taking with time/seniority on the X Axis and comfort with risk on the Y Axis. When you are junior, you can take risks because you have nothing to lose, there is nothing but upside if the risk pays off. Likewise when you are very senior, you can make strong statements about risk taking because your career is set and all you face is a golden parachute if the bet fails. Where we run into problems is middle management, those people around the Director level that are at a critical point in their career. They’ve put in enough time that their career is a good place and they are on the right track. They probably are now married with young kids, a mortgage and all the other responsibilities in life. In other words, in their eyes there is a little upside with risk, but a lot of downside. They are comfortable with how things are and they aren’t going to place many bets or experiment.

I really believe this explains the issue facing marketing today. On one side you hear senior marketers like Jim Stengel say “It’s Not About Selling and Telling” but then P&G is still spending billions on traditional TV and Print mass media that is all about telling. You hear senior execs at Nike say they are not “in the business of keeping the media companies alive” but that hasn’t stopped them from flooding the airwaves of CBS during March Madness. The problem is that the most senior marketers at a company are not accountable for those day to day decisions. These decisions fall with the Marketing Directors and Brand Managers who sit at the bottom of the V Curve of Risk….the ones with the most to lose if they place the wrong bets. This is exactly the problem right now.  Marketing needs to change and needs to change fast. Today’s connected youth wont engage with brands in the traditional way. We need marketers today that are willing to experiment, willing to take smart risk, willing to act like a gambler and go all in.  We need “revolutionaries who are participating in the conversations.”  We need companies that encourage this risk in order to reward innovation.  What we really need are more people AND companies willing to break the V Curve and follow the advice of Steve Jobs:

Let’s make a dent in the universe.” Steve Jobs, Apple CEO/Founder

9 Responses to The V Curve of Risk Taking in Brand Management

  1. Vincent Chan says:

    Great Post! Do you think Brand Management is possible on the internet? Given that most people don’t pay attention to banner ads…

    Also, if you have a chance, can you please write something about the day to day works of a brand manager? It would be great if you can talk about the whole process of a brand management project, from beginning to the end.

    Thanks for your good works.
    Vincent

  2. Dave Knox says:

    Hey Vincent
    I really do think Brand Management is possible on the Internet because it isnt just about banner ads. It my eyes, a banner ad is nothing more than a real world billboard. End of the day they serve the same purpose since click through rates are so low. In fact, I think the Internet makes Brand Management even easier because you can interact with your consumers. I’ll write a more in-depth post on that and the day to day life of a Brand Manager in the coming weeks

  3. BobG says:

    Great and gutsy post, Dave. As a former Brand Manager at P&G, I saw this trend again and again.

    One thing I would challenge, though, is the high risk profile of ABMs. In my experience many are also very risk averse. It is their first job and they want to learn to do the right thing, the P&G way. And those risk averse managers (not just BMs, but those in Legal, ER, Regulatory, etc.) you mention can reject their new ideas.

    I was very fortunate to work for some of the company’s best brand managers. They acknowledged my passion for the new and gave me some freedom and budget to experiment. Then they gave me the credit when it worked, and backed me up when it didn’t.

    Overall, you are hitting on a key issue that all companies are facing around the shift in advertising. Making the move on a brand or corporate level is less about the strategy and ROI, but really starts with organizational behavior.

    Thanks for such an open and honest perspective!

    Bob

  4. Dave Knox says:

    Bob,
    Thanks for the reply. All great points, especially since you have personaly seen the V curve play out, both as a Brand Manager and as a key P&G agency. You hit on a key point when it comes to how the best managers act. They give you enough rope to experiment and come up with great ideas…but not enough rope to hang yourself. As for ABM’s, you are right. The great ones (and even the good ones) are the ones that can manage up and get management to buy into risks. The ones that shouldnt be promoted are the risk averse ones. Unfortunately that isnt always the case

  5. El Gaffney says:

    So glad to have been passed this link. Great post and reminder…especially to us, ad guys and gals. I was trying to figure out what the corresponding chart for your agency partners would be. Not sure there is one – I think it would be something like talk about risk (“the biggest risk is not taking one”) and delivery on ground-breaking ideas or willingness to push the creative envelope.

    Regardless, think your site fills a unique need in this space, I look fwd to reading more.

  6. Vincent Chan says:

    Thanks Dave. I would love to know more about how the Internet makes Brand Management even easier in your future posts. From what I heard in the past, not much marketing budget is spending on the internet… I know this is improving but most people just paid attention to PPC ads which is not good for branding purposes. Do you think P&G will spend more marketing money online than offline in the future?

  7. paul says:

    Another great post my friend….. good observation and too many this truth must hurt. But you have to remember the larger the organization the more the power goes to ones head… which is why those directors in the middle are caught up in the fear trap – which you touched upon in another way. The small % of risk takers are those who leave companies like P&G and succeed elsewhere.

    Years ago I used to call P&G the hive collective, where only one or two voices spoke for the company. Only within recent years are they allowing others within the company (BMs / MDs) to be recognized in the press. Someone finally stepped up and realized they needed a different carrot to keep others in the fold.

    Keep up the exceptional posts…..

  8. […] as if being made up of people, there are varying degrees of risk tolerance, brilliantly outlined by Dave Knox. An assistant brand manager has relatively little to loose, and much to gain, from taking risks. […]

  9. […] this post through another great link from Dave Knox on the same […]

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