Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad streets in New York city, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism right here, right now at the NYSE and at ICE's 12 exchanges and six clearing houses around the world. And now welcome Inside the ICE House, here's your host, Josh King of Intercontinental Exchange.
Josh King:
As this podcast approaches its 100th episode, we've been joined by a diverse group of guests from the co-founder of a new professional sports league to authors whose works tackle seismic events of today, yesterday and tomorrow. Also, CEO of public companies that range from minutes old, right after their IPOs to track records that span centuries. The content of the episodes may vary, but one theme has come up regularly, the need to disrupt the status quo.
Josh King:
The idea that companies must constantly innovate and disrupt their own business before someone else does is a pervasive topic because it's both a trope and also a reality. Here at Intercontinental Exchange, we are evidence of both the disruptor and the surviving disrupted. ICE founded just two decades ago has transformed the trading, clearing and data space on its way to become a major player in the world of finance. And part of its family of companies include the New York Stock Exchange, which has evolved to remain competitive in the evolving capital markets for over two and a quarter centuries.
Josh King:
We are living through a technological revolution that will change how we interact, work and live. Recently on this podcast, a CEO guest of our cited a study that estimated that half of the S&P 500, a group of the largest and most successful companies in the current economy will be turned over in the next 10 years in the fourth Industrial Revolution or what our guest today, Chris Burggraeve terms, the Galactic Age. Business leaders must be prepared to take their work literally beyond the bounds of earth or be left behind.
Josh King:
What does it take for a company's C-suite to create, preserve and grow iconic brands in today's economy? And is the future of business among the stars? Our conversation with Chris Burggraeve right after this.
Speaker 3:
Progress is elusive, which means sometimes its opportunities are elusive too. So sometimes you need a company with an entirely different perspective, a company that understands their client's operations, that thinks with design, that dives deep into data and dreams in digital. A company with the experience to connect every dot, reimagine every process and rethink business as usual. At Genpact, digital transformation isn't a series of buzzwords, it's why we're here.
Speaker 3:
We're driven by an end curiosity, obsessed with finding the fastest path to real world results, putting people first and outcomes at the center. We're not just thought leaders, we're doers rolling up our sleeves, staying agile, because there is no one-size-fits-all to what we do. We transform businesses and deliver bold, lasting progress. Genpact, transformation happens here.
Josh King:
Our guest today, Chris Burggraeve started his career with stints at several iconic U.S. brands, including Procter & Gamble, NYSE ticker symbol PG, Coca-Cola, ticker symbol KO and spent five years as the chief marketing officer of Anheuser-Busch InBev, that's NYSE BUD. He founded Vicomte, a marketing consultancy in 2012 and is the capstone director for the TRIUM Global EBA at the NYU Stern Business School. Chris is also an active investor and chairman of the Prince Albert Fund, which is part of Belgium's largest foundation.
Josh King:
He joins us today to discuss his recently released book, MARKETING is FINANCE is BUSINESS: How CMO, CFO and CEO cocreate iconic brands with sustainable pricing power in the new Galactic Age. Welcome to the library and welcome back to the New York Stock Exchange, Chris.
Chris Burggraeve:
Thanks, Josh. Glad to be here.
Josh King:
We'll get to why you want to become the first CMO in space, but let's start earthbound. I'm a brand guy and for all the strides we've made in marketing, when I hear Coca-Cola I still think of this ad.
Speaker 5:
Mr. Greene.
Mr. Greene:
Yeah.
Speaker 5:
You need any help?
Mr. Greene:
Mm-mm (negative).
Speaker 5:
I just want you to know, I think you're the best ever.
Mr. Greene:
Yeah, sure.
Speaker 5:
Want my Coke? It's okay, you can have it.
Mr. Greene:
No, no.
Speaker 5:
Really, you can have it.
Mr. Greene:
Okay. Thanks. (singing)
Speaker 5:
See you around.
Speaker 5:
(singing)
Mr. Greene:
Hey kid? Catch.
Mr. Greene:
(singing).
Speaker 5:
Wow. Thanks, Mean Joe.
Josh King:
I'm sure our friends currently at Coca-Cola will appreciate us bringing back one of their legacy ads, an extra ad Inside the ICE House today. But, Chris, I'm not sure Mean Joe Greene ads played when you grew up in Europe, but Coca-Cola has reached certainly extended globally. What were some of the early brands that stuck with you?
Chris Burggraeve:
Well, actually I am from Belgium originally, so in 1929, Coca-Cola started in Belgium. It's the iconic soft drink of Belgium, has been part of my youth ever since I grew up.
Josh King:
And what others rang a bell when you were just a kid in Belgium?
Chris Burggraeve:
Fanta, which was invented in Germany next door after the second World War. Sprite was a big brand in terms of soft drinks. And then later on new brands like Minute Maid became part and a staple of the morning breakfast.
Josh King:
Were you always drawn to beverages?
Chris Burggraeve:
Beverage marketing has always been appealing. I then lived in the United States back in '89, and this is when really my love for marketing, my love for brands developed.
Josh King:
Were your parents in the marketing space or were you icon of class even in the Burggraeve household?
Chris Burggraeve:
Well, the Burggraeve Jr. was born in Africa, so if anything, I got African rhythm in my blood. But my dad was a telecom engineer, so I was growing up with bits and bites in connections.
Josh King:
ITT was based in Belgium at the time.
Chris Burggraeve:
He actually worked for Bell Telephone manufacturing company, the ITT. So I grew up with some American multinationals, but where he more interested in the technology of it, I was interested in how the technology helps brands connect with people.
Josh King:
And your mom?
Chris Burggraeve:
My mother was a teacher and a creative person, so I think I got the yin and yang from both.
Josh King:
So what inspired you to pursue marketing and how did you get your start at Procter & Gamble?
Chris Burggraeve:
Well, I discovered marketing, believe it or not in Charlotte, North Carolina, back in '89, when I was doing myself a traineeship, a fellowship for a small Belgian company that was setting up shop in Charlotte, North Carolina. This is a very different Charlotte of what we know today. I think NationsBank was the biggest bank of First Union Bank at the time. Later becoming Bank of America.
Josh King:
Bank of America.
Chris Burggraeve:
What I discovered there, people at some point in time were selling stress-free dough. Now, it's April 1 today. This was not April's Fools day joke at that time, they were very serious, selling stress-free dough. And said, "How the hell can you do that?" And I discovered the broader sense of marketing, I was flabbergasted and really impressed by how Americans were able to market fridges to Eskimos.
Josh King:
So you write in your book that your time with P&G taught you that the marketing person could not just focus on promoting a brand, but had to be reactive to the financial side when tasked with growing, for instance, a product like Punica, a fruit drink brand in the European markets. What happened to Punica? And is that where the nascent idea that would become my Marketing is Finance was born?
Chris Burggraeve:
Well, yes. As a young brand manager, what you're taught is you are the general manager of the brand, which means you take the brand as a business. That was the philosophy. Now, Punica was an entry in the software or in the healthy soft drink categories, so P&G started to fight with Coke at that time in Europe. And you don't take on those behemoths like Coke and Pepsi just like that. P&G or Coke realized that if Procter & Gamble would be given a free rein, they would have another serious competitor on their hands. So they started to compete in a serious way.
Chris Burggraeve:
Bottom line of Punica, Punica was a brand that was launched with big farm fire in the same way a huge detergent would be launched. But when I inherited the brand, it was already a turnaround case. I did 75 finance scenarios at the time to see, could I ever make money on this brand? And I couldn't. This is when I went back to my GM at the time and said, "I don't see a future for this brand. Can we use the scarce resources somewhere else?"
Chris Burggraeve:
And then he said, "You are not in the business of killing brands. You should be nurturing them." I said, "I thought we were managing the brands for profit. Brands as a means to an end to drive shareholder value and sustainable growth over time." So it was a wake up call for me, and the very first kernel of writing this book one day was there.
Josh King:
So what was the end result for Punica? The option was to kill a brand or figure out how to sell it.
Chris Burggraeve:
Well, this brand in the end didn't find a viable option, at least not in Belgium and a number of countries. So a few years later as predicted it was taken off the market and the money was reinvested elsewhere. In the meantime [inaudible 00:10:17] by Coca-Cola to come and built the business in the then opening central Europe. So we were going to bring Coke in post Berlin Wall, Eastern Europe. But I heard from my colleagues then that later on the say, clinical heads prevailed and said, "Let's concentrate our money on where we were very good at, which is in detergents paper, laundry, cleaning, and cosmetics and all those other categories." And P&G has done a fantastic job since.
Josh King:
So P&G was such a opportunity for you to learn, to grow, to see some of these strategies unfold. But then as you mentioned, Coca-Cola comes calling. What kind of decision was that for you to make the leap from P&G to Coke?
Chris Burggraeve:
Well, I'm a soccer fan, so this is like you graduate from... You're in the youth leagues and then all of a sudden, a national club or a European club at least comes calling and says, "Do you want to come and play for us?" Coke, I grew up with, as you heard was part of my youth, was part of discovering America. This was American values in a bottle, and the chance to bring that to at that time central Europe was too good to pass. Also from a business philosophy perspective, we were given a lot of free rein.
Chris Burggraeve:
This was a real entrepreneurial group of Coke that was asked and tasked to build the business from scratch in a piece of the world where nobody knew about it. Actually fighting Pepsi, bringing the cola wars, the good old fashion American cola wars, bring them to central Europe was a massive opportunity to learn. And you were given a great opportunity by Atlanta at that time to say, "Just go and conquer."
Josh King:
So what were some of the secrets to conquering that battle?
Chris Burggraeve:
The secret is going in the minds of the consumer, because what were we really bringing to Eastern Europe? We were bringing freedom in a can. After years and years of being under communist regime, all those 40, 50 years, what we brought was liberty, was freedom in a can. Literally, we wrote that on the can and this is how we built businesses and turned what previously was blue. Pepsi Cola was actually the communist cola of choice dating back to the Chrichof Nixon years.
Chris Burggraeve:
Pepsi was already there, but was not the preferred choice of the Eastern Europeans and Russians. We brought the real thing and in a few years, everything that was blue became red.
Josh King:
You joined InBev in 2007 and heavily involved with the 2008 merger of InBev and Anheuser-Busch, which created the largest brewer in the world, but it also garnered a fair amount of negative press in the United States. Looking back at the coverage reminded me of this 2009 ad. Let's hear it.
Speaker 7:
A story starts with my a great-grandfather. It's a story of strength, triumph and oaths. He left his hard working folks and set out in search of his destiny in America. It wasn't always easy. He tried his hoof for the number of jobs. Ouch. Oh my. Didn't always go so well. But in time, great grandpa found his true calling. I know because three generations later are running in his footsteps. My name is Jake and I am a Budweiser Clydesdale. Thank you great-grandpa, I love this country.
Josh King:
Jake, the Clydesdale, it's a classic immigrant story. From the outside, the ad seems like a direct response to the brand vulnerability that AB InBev might have felt, but take us inside the marketing war room on how the company wanted to market the newly created beverage giant, this conglomeration.
Chris Burggraeve:
This was a fantastic time. I joined InBev back, end of 2007, and 2008, we made the approach to combine with Anheuser-Busch. And I think it's a question of vision of the Belgo Brazilian combination to say there is a time and an opportunity here to create a global equivalent of the Coca-Colas of the world. Why Anheuser-Busch itself didn't do that before beats me, but that's you have to ask the-
Josh King:
The business school case is written about it.
Chris Burggraeve:
You have to ask them. So I think it was a bold move that is reflective of the capitalism that America stands for. And it turned out to be phenomenal integration. We combined two fantastic brand portfolios into one mega portfolio, brought best practices from both companies together and then never looked back.
Josh King:
You had to win over a lot of hearts and minds. How did you do that?
Chris Burggraeve:
It wasn't easy. You can imagine, and I won't go back to all the war stories at the time, but I see myself in Jake. I became an immigrant in the United States. I've actually become American, so I've come full circle since '89 to 2019, 30 years later, I am American. And I understand what that means to come here. America is the home of capitalism. Now, when the American company takes over another one somewhere else in the world, it seems like normal. When the opposite happens, then it's a bit of a shock to the system. But that doesn't mean something bad.
Chris Burggraeve:
If you look back what happened over all these years, Budweiser has become, the Budweiser as the icon brand has become the defining global brand in beer. If you look at statistics like the BrandZ rankings, you will see that systematically with great care, this fantastic American icon has become a true global icon. So the brand building qualities that very often are not put to the fore by AB InBev, people think of the financial muscle and power of the company, less look at the marketing side of it.
Chris Burggraeve:
But if you look at the numbers, the combination has created now for seven of the top 10 global peer brands in the world. That is testament to a systematic marketing approach supported by a very well tuned machine. That of course goes to ups and downs by and large, as a shareholder, those who have joined it from the beginning all the way until now, they were happy.
Josh King:
Now you have controlled this iconic U.S. brand, Budweiser that in some ways brings the same message as Coca-Cola did all those years before. What were the measures by which you saw BUD extending through Europe, Africa, Asia?
Chris Burggraeve:
Well, BUD is really... What we realized, Budweiser is not American in a bottle, it's American values in the bottle. It's a big difference. I've worked my life around the world. The United States, people around the world make a difference between what America stands for in terms of its deepest values and its politicians. These are two different things. People aspire to the American dream. The American dream is a global dream, is actually universal dream. That universal dream in a bottle is what Budweiser represents.
Chris Burggraeve:
That's what has been expressed in different nationalities, in different sports for example. Budweiser will connect with soccer in the UK and with hockey in Canada, and with cricket in India as just a form of, in a relevant way, expressing that sentiment. For the rest, systematically, Budweiser has become that symbol of the American dream everywhere.
Josh King:
In 2012, Chris, you launched your own consultancy and joined the NYU Stern School of Business Faculty as the executive and residents for the Trium Global EMBA. What is an EMBA, and how did your experience receiving one and now advising EMBA candidates help you shape the theories that underscore your book, MARKETING is FINANCE is BUSINESS.
Chris Burggraeve:
Well, an EMBA is an Executive MBA, so people, they get an MBA, but they do it while they work. So I've done this myself 15 years ago while I was at Coca-Cola. I followed six modules and delivered a big capstone project at the end, over an 18 month period. Then you get a diploma in this case from three schools at the same time. It is the New York Business School, Stern, then London School of Economics, and I should say, which is the leading business school in France. All three plus a collective... So you actually get four diplomas for the price of one.
Chris Burggraeve:
But this being said with a cohort of about 65 people, you go around the world, you put in a pressure cooker. You learn all what classic MBAs are learning, but you learn from each other, because all the people that join on the MBA have battle scars, 15 years at least of battle scars that you learn from. So you learn from the faculty, you learn from each other, and then you learn from the frameworks and the academics and everything around it.
Josh King:
So would you advise that better to spend the first part of your career getting those battle scars before you go back to school and get together with fellow veterans of the industry for an executive MBA?
Chris Burggraeve:
I first wanted to get some battle scars, be deep in the trenches, work around the globe. And then what you learn is that it's time for a learning bath, and I wanted to do that in combination with continuing to work. Trium, this alliance was the inventor of the global EMBA. Meantime, that formal has been copied by many others. Still, Trium has been for 20 years or since its existence in the top of the rankings for the Financial Times, so that's important. You constantly are able to reinvent yourself and meet the needs of the new generations coming, the new executives.
Chris Burggraeve:
These new generations of executives, when you're around 40, people start to question and say, "Okay, I've now achieved something. What else can I do in my life?" That midlife crisis moment is a great moment to find what the Japanese call your Ikigai. Your Ikigai is your personal purpose in life. That is what people come. They come in search of themselves and in search of it's next, the next chapter. Can I become an entrepreneur myself when I worked for a big company?
Chris Burggraeve:
If I'm an entrepreneur already, what can I do to get a little bit more academic rigor around what I've been doing intuitively? So these people meet, are put in a pressure cooker, and based on my personal experience of having done it and teaching it for eight years now, it's a phenomenal life-changing experience.
Josh King:
MARKETING is FINANCE is BUSINESS is organized as a how-to book more than a lesson learned style memoir. What audience are you looking to engage, the people with battle scars, the people ready to get their Ikigai or that 27-year-old who's just been in business for a couple years?
Chris Burggraeve:
The key focus is the C-suites, as senior leadership of companies, particularly the boards, CEOs, CFO, CMO. The senior leadership should discover that as we've learned in the press, we've seen a number... I get questions as a teacher all the time, which is our brands, what's the future of brands? Is marketing still relevant? Let me give you two facts here. Less than 20% of the CEOs of Fortune 500 companies have a marketing background. Less than 2.6% of the board members have a marketing background. That's two facts.
Chris Burggraeve:
The successful CMO of the future, the successful CEO of the future understands that the definition of successful marketing is not winning Super Bowl advertising. It is building brands or brand portfolio, and with each brand having sustainable pricing power. That's the key tenet of this book, understand that the fundamentals that drive sustainable pricing power, not winning Super Bowl ads.
Josh King:
So in many of these companies that you reference with fact number one, you've got the CEO and the CFO at one side of the table and they've got the board of directors in their ear. And the CMO is down at the other end of the table and their voice has not been quite as well heard.
Chris Burggraeve:
And they should look at themselves first. The book is constructed in four elements. Essentially, the first pitch is a mindset change. This is where I'm saying, "Ladies and gentlemen, we've been thinking and acting in that global local paradigm for the last 40 years. Let's change it." The one thing that is unifying everybody is space, let's go and think more universal and more galactic. And there's a whole argument in the book as to why you should do that.
Chris Burggraeve:
The number two is that marketers need to understand finance better. They need to speak by Wall Street. I've challenged many marketeers and asked them a simple question, "Do you know what alpha stands for?" They look at me or the dancer I'm getting is a Greek fraternity. Then you know that there's a lot of work to do. So on the opposite side of the spectrum, I ask finance people if they know what insights are and how you build a brand. And you get or the equation of marketing equals Super Bowl ads.
Chris Burggraeve:
So my advice to everybody's, starting at university, the curricula should ensure that finance people understand marketing and marketing people understand finance. Better CEOs will be created, better board members will be created, and sustainable business models will be created that we can invest in as shareholders
Josh King:
Off the top of your head, are there people who are classically trained marketers who have shown that the model of a CMO can eventually become a very successful CEO?
Chris Burggraeve:
As I said, there's a few people that from the CMO bench have gone on to become CEOs of successful companies, but not man, not many. And I think that's where marketers have to look at themself first and say, "Do I speak Wall Street enough?" Because what is being spoken in the boardroom? What do people talk about? Strategy and finance. If the marketeer is not there, what does that say about the perception of who should be and who should not be in the board? So I think marketers need to earn the right and the respect to be there. So they should read that book.
Chris Burggraeve:
So as I said, part one, the mindset change part two is the understanding the last 50 years of marketing and finance. In a few chapters, you will get those. And then I would advise everybody, discover or rediscover eight fundamentals of great marketing. As I've learned it over the last three decades, this is my idiosyncratic take on what matters following having worked for the P&Gs and the Cokes of the world and the AB InBevs, combined with startups and scale ups, all merged in a very simple matrix of why, what, who, and how, eight fundamentals that you can discover.
Chris Burggraeve:
And then the last and I think the innovative part of the book that everybody told me about is, how can I translate those eight fundamentals in one number that Wall Street understands? People have said, "You've invented the Moodys for marketers or the Fitch or the standard imposer of marketers, but one number." Everybody knows what the AAA or AA or a B or a number is. What I've done is created Alpha M, Alpha to the power of marketing. And Alpha to the power of marketing created a nomenclature six levels using the letter M to rate companies.
Chris Burggraeve:
So by putting in eight numbers, you can get your own marketing rating. My guess would be, if a major data-driven company would now test the Fortune 500 companies, put it through this rating model, you'd be very surprised to see who would really be the marketing leaders in the Fortune 500 and who wouldn't. Who would really pass the test of creating sustainable pricing power as opposed to winning the perception game of being good marketeers.
Josh King:
So we're going to get more into the Alpha M after the break, but for our listeners, when you refer to Chris, the Galactic Age, how much are you describing a need to actually take brands into space versus strategy to understand how companies need to constantly innovate to survive the technologies that will be pushing the human frontier?
Chris Burggraeve:
No, it starts from the first part or from the part of saying, "Change the mindset, think bigger." Space 1.0 is the period from putting a man on the moon all the way till about now. Space 2.0 has really started. If you look at Space 1.0, it has created a ton of products that have changed how we live today, from the internet, which came out of DARPA. DARPA is the lesser known agency, besides NASA that created ultimately the internet. All the satellites GPS came from space research. Nike Air Shoes came out of space research.
Chris Burggraeve:
Lots of products that we use in our daily life today have come inspired from space, investment and research over the last 50 years. On top of a renewed commitment by government, you have all these tech billionaires that are putting their private capital in it. It creates a turbo on what will happen in space investment and research, and I'm anticipating that all of that will seep through into consumer markets, so space will meet main street. Brands should look at that and see what's going on and how can I leverage that?
Chris Burggraeve:
Budweiser, to come back to our beloved brand is already testing fermentation in space. There's people buying advertising space on the moon. Now, some people say that's good or that's bad, but the point is that mankind has started the conquest of the universe and brands need to be part of it and use the inspiring stories to connect people on earth, and then bring them to a higher level. That's I think the inspiration of the Galactic Age.
Chris Burggraeve:
The second component of it in and by itself, tons of money is flowing into space and space will create new brands. These are very techy brands. For them to be successful, they need to connect them with main street. And that means that they need to discover that MARKETING is FINANCE is BUSINESS. Don't just build it and they will come, they will not come. Let's make space brands that are inspiring the next generations.
Josh King:
You think about three of the commercial space brands that are top of mind right now, those that are run by Elon Musk, Richard Branson, and Jeff Bezos. Any coincidence that these are three master marketers as well.
Chris Burggraeve:
I think they are able, they're evangelists. They put their money where their mouth is. They're hugely charismatic, all three in their own way. They have the guts to dream big and to act big and the capital to do it.
Josh King:
After the break, Chris and I look at some of the theories in MARKETING is FINANCE is BUSINESS. We'll be back more inside the ICE House right after this.
Josh King:
The reception to our sofa launch has been very, very strong. We've seen $70 billion worth of national trade so far. We've seen strong open interest and we are achieving sufficient liquidity to attract a new set of customers to the sofa market. It's our goal at ICE to create more modern approach to product design, and we're creating more granular price points for our customers to achieve better for execution and better liquidity.
Josh King:
Welcome back to inside the ICE House. Before the break, Chris Burggraeve author of MARKETING is FINANCE is BUSINESS. We were discussing how his career developed his business philosophy, and it was moving toward this idea, Chris, that you call the first CMO in space.
Chris Burggraeve:
Well, if I learned anything from AB InBev as well as the concept of ownership and having skin in the game, always. I applied it in all my investments, in the advice I give clients through Vicomte and the same with space. I just didn't write a book about space. I'm actually in it or at least an aspiring astronaut. I bought my ticket for Virgin Galactic back in 2011, so I bet on an idea didn't exist. And luckily since-
Josh King:
Where are you on the standby list?
Chris Burggraeve:
Somewhere numbers, around the 100 flight.
Josh King:
Okay.
Chris Burggraeve:
We had the good news in the last months that the rocket motor of Virgin Galactic is strong enough to now achieve space. So a few more people have been added the only 570 that have made it to space. And I think I'll be the first CMO in space. I think Richard Branson is the first marketeer in space. He's one of the... I consider him a fantastic marketer, so I'll give him the honor and the pleasure to be the first marketeer in space and I'll be the first classic CMO in space if and when I have the pleasure to go up.
Josh King:
Why? What draws you to the heavens?
Chris Burggraeve:
I think it is changing your boundaries and it's part of dreaming bigger as humankind, is trying to find what unites us and not what divides us. There has to be a bigger thing out there and it helps you to think about how big the universe is. It helps you to think bigger about brands and finding inspiring stories and just challenge your own paradigms. Every astronaut that sees the earth become one as you go in the sky, reflects on that we are one people and the concept of boundaries, the concept of borders disappears.
Chris Burggraeve:
Astronauts like Chuck Yeager or Neil Armstrong began as military aviators or engineers, so I want to go back into your own career. And when you launched your firm in 2012, you previously worked in marketing for consumer package goods, we call it CPG. When did you start looking at the overall marketing discipline, particularly technology and the changing landscape of media?
Josh King:
Technology for me was a wake up call. Again, I came out of a family of technologists. I didn't become one, I was interested always in how technology can foster the relation between a brand and the person it serves, not the consumer, but the person it serves. And so since the internet and the advent of digitalization, the laws of marketing have been challenged in all of its dimensions. Some have held up, some have been changed. The toolbox has been changed dramatically.
Josh King:
The fundamentals of marketing so far have remained the same. So the fundamental why of marketing, the creating sustainable pricing, the purposeful thinking remains intact. The ideas to build brand health and strong value propositions remain intact. The skillset of the marketeer, the galactic marketeer of tomorrow has changed dramatically. Why? Because technology has forced to person has given tools and the toolbox changes are so dramatic that people needed to constantly refresh themselves.
Josh King:
And if you take these eight fundaments together, you have a winning system that is a better playbook than not having a system. So like the architect, building a big house or an astronaut trying to find, or test pilots trying to break the next sound barrier, you need to master all components. The mastery of marketing capability is what always has intrigued me. And what I've done by putting these eight fundamentals together is saying, "This is my playbook. You take it for what is worth. But I think by doing that playbook, you'll win more than not using any playbook."
Chris Burggraeve:
The United States and Soviet union, now Russia were the major players in space. They were at various times attempted to be disrupted by new players, China, India, Japan. Many CPG companies are struggling against small disruptive competitors like that in their space, from the craft brewers that are looking to displace Budweiser to locally source companies in tech like Warby Parker in glasses or Casper in mattresses. What's happening and how can a CMO reestablish the brands against this kind of an attack?
Josh King:
That's a very good question, and so part of the answer is in portfolio thinking, and you never think out of one brand, but you think in servicing consumer needs. Everything starts from consumer needs, and you need to be close to those consumer needs. You ignore them at your peril. This is again where MARKETING is FINANCE is BUSINESS and not Finance is Business. If you lose touch with the changing needs and particularly of new generations, and you start to believe and eat your own dog food, you believe that that's the only dog food that matters, this is the fallacy of brands that will be in decline.
Josh King:
At the same time, you have to attack yourself and say, "If there's somebody out there," this is where Andy Grove was saying, "Only the paranoid survive." You have to assume that someone is out there to kill your business model. The more attractive your business model is, the more money it makes, the more you are by design ripe for disruption. Because somebody looks at your value stream and says, "I can do better." That healthy paranoia, and then institutionalizing it in your organization that some people attack you. You can do it internally or externally, or a combination of both, but constantly challenging and not saying, "We are done for the next 20 years."
Chris Burggraeve:
I want to dive into one of the fundamentals of the system, the purpose. You highlight several of Anheuser-Busch's ventures, and here on the ICE House, we had Budweiser's Derek Mauk on to talk about Freedom Reserve Red Lager, which supports veterans. I want to listen to CBS this morning talking about a certain Super Bowl ad.
Speaker 8:
Eric, give a Stella Artois.
Speaker 9:
Excuse me. Good choice.
Speaker 10:
Well, changing could do a little good.
Jeff Bridges:
So, Jessica Parker and Jeff Bridges. Why did that ad resonate?
Jessica Parker:
Because they're two iconic characters that we all know, they're known for their signature drinks, and they're basically giving them up for a good cause. If you buy Stella Artois, they're going to donate clean drinking water for a month. So it was using familiar characters to talk about a good deed that the company is doing and people just love seeing them together.
Josh King:
Jeff bridge is talking about Stella Artois. That can't really resonate well for a Belgian like you.
Chris Burggraeve:
The right correct name is Stella Artois. And Stella is really sophistication in a bottle. That's what it is. When Budweiser is this American values in a bottle, that can do spirit, Stella is really sophistication in the bottle.
Josh King:
You wrote that like pricing, this is one of the hardest parts of the MC Rocket to get right and keep consistent. How can a company avoid having efforts like this seen as a marketing trick and support not distract from the brand's health?
Chris Burggraeve:
It's a good question, but let me distinguish between the word purpose and CSR, Corporate Social Responsibility.
Josh King:
Sure.
Chris Burggraeve:
Purpose is the higher level order question that says, "Why do I exist as a company?" The short answer for a beer company like Anheuser-Busch InBev is, the answer we gave at the time and still today is the original social network. Why do you exist in the life of consumers or in the people you serve? It's that social bonding. That's why you exist. That's the purpose of the company. Each brand and ABI has well over three, 400 brands, each brand can then find its own purpose over its corporate social responsibility component that makes sense for itself.
Chris Burggraeve:
Stella Artois has decided to connect with water and as a leading brand, and that's also because water is a very important ingredient for anything to do with beer and one that is relevant for consumers. They know that water is a key part of the beverage, and they know that if a beer company will take care of water, it will be good for consumers, it will be good for the planet and it will be good for the company. Stella could also have chosen for example, to save the whales, but saving the whales has no relevance. No real relevance for a beer company as such.
Chris Burggraeve:
There's a very noble cause to save the whales, but the consumers might rightfully ask themselves, "Why are you saving the whales as a beer company? Maybe leave that to somebody who has a closer connection with whales." So water is a very critical component. If ABI can save the amount of water in the production, the cleaning of beer bottles, et cetera, et cetera, it's meaningful for the company, for shareholders and it's doing good for the planet and it's doing good for consumers. So that's a triple bottom line thinking that comes in.
Chris Burggraeve:
So CSR, you need to look and take it through the lens of triple bottom line thinking. Whereas, the purpose of the company goes back to why does this company exist to begin with? I give you an example in Ikea. If I ask students, why does Ikea exist? It exists to provide you freedom and confidence to start out in your life with your first room that you decorate or your first house that you decorate as a young couple. This is what they give you, freedom and confidence. That's why Ikea exists since all those years.
Josh King:
The Stella Artois Super Bowl commercial also speaks to where you and many marketers see increased marketing spends in the coming years, live sports. I'm talking about baseball, American football, football that the rest of the world watches, cricket, golf, tennis, one few remaining venues for appointment viewing. Will we see increasingly lucrative broadcast contracts for major sports in the years ahead?
Chris Burggraeve:
I think that's a fantastic question to ask Anheuser-Busch themselves, but I think from a touchpoint perspective, it makes sense for beer manufacturers to connect their brands with anything that is live, anything that will not be skipped. If you look at TV and you have an ability to skip pretty much everything, people will tend to skip less, but they still can. Anything that is advertised during live broadcast, you tend to be more glued to television and you have a higher chance to break through and be relevant.
Josh King:
As is product placement on the football pitch and the cricket pitch itself.
Chris Burggraeve:
So all that experiential marketing around it, et cetera, is part and parcel of experiential... Again, I think the buzzword here is experiential marketing, becoming part and parcel of people's lives. And this is again serving the need of the consumer in a way that is relevant for modern times.
Josh King:
Chris, the last section of your book provides the methodology to allow CEOs to analytically determine how the company's marketing should be rated. We talked about it a little bit before the break, but tell us how the Alpha M rating system goes just beyond clicks and views to show true value of the effort.
Chris Burggraeve:
So what Alpha M does, it takes the eight components that I highlight in the book, the eight fundamentals, and it looks for evidence on a set of eight simple questions. You can actually test it out for free on my website, www.vicomte.com. You can try it out and on a perception level already, fill in eight numbers on any company that you would like to rate. Try to fill in these eight answers and you will get a rating back. That's perception. Now, we know perception matters. People make decisions on perceptions and emotions. That's the number one rule that marketers learn.
Chris Burggraeve:
However, you can then go deeper and look for the facts and look for evidence. So the questions are very clearly defined. You can find evidence, given a example, for pricing, you can look whether indeed brand X has been able to raise its price over the last three years over and above inflation on a net basis. Do you find evidence of that or don't you? This question has a certain weighing in the rating and all questions do and compounded into rating. This rating is a, call it a provocation to Wall Street and a provocation to marketers themself to start having a fact-driven discussion on how good a marketer they really are.
Chris Burggraeve:
And it's a gap-opening exercise as well internally for companies. If the CEO were to fill this in, and the CMO were to fill this in, the CFO were to fill this in and they all have different numbers, they can see where are we different and where can we converge.
Josh King:
Chris, it's impossible to discuss the future of anything without considering the impact of machine learning and artificial intelligence. But as we will hear both are heavily involved in marketing already, let's hear a spot from that.
Speaker 13:
This is the ES, has all sorts of technology in which interact with the driver to aid the driver.
Speaker 14:
And that started the process of thinking, "How could we make an advert that mirrored the mirrored a man and machine element of the car itself?"
Speaker 13:
Wouldn't it be great if we actually continued that notion and had an ad written by a computer? And I thought it'll never work in a million years. What nonsense?
Speaker 15:
We used a number of tools to extract every single bit of information from the last 15 years worth of award-winning adverts.
Speaker 16:
With an intuitive car, let's make an intuitive advert. So we did the Mind X experiment in order to understand what intuition was.
Speaker 17:
I think we all like to flatter ourselves, we have a unique way of understanding the world that no machine could ever replicate.
Speaker 19:
The truth is the machines are coming.
Josh King:
This will perhaps disrupt up our own profession, Chris, but has the time arrived where advertisements will not only be machine-assisted, but advertising will be written by a computer and aimed at marketing to other machines.
Chris Burggraeve:
Well, I think it'll be potentially worse or different than that. Sergio Zyman was the Aya Cola, was the previous.
Josh King:
BrandZ.
Chris Burggraeve:
Yeah. He was the CMO of Coke when I was doing. And he wrote a book later on and said, The End of Marketing As We Know it. I think at this stage we have not achieved yet the end of marketing as we know it. That's why I wrote a book and I think this playbook is still valid. However, at the moment, the phone that we all use, if I am able to bring this iPhone inside and augment my brain and we all become cyborgs with an incredible ability to choose, the question will be what will happen to free will? What will happen to emotion? And how will people choose?
Chris Burggraeve:
Back to the core of the marketer that they need to look for is insights. What will happen if humans and robots merge and we all become cyborg? This book is called MARKETING is FINANCE is BUSINESS and doing business in Galactic Age. Once we enter the Cyborg Age, I think this is the first time that the fundamental laws of marketing will change.
Josh King:
And that's why your book closes with the chapter marketing in the Cyborg Age. So what will we see in the Cyborg age in terms of marketing?
Chris Burggraeve:
Well, I asked this question to smarter minds than I am next door here in Princeton. There is next to Princeton, you have the Institute of Advanced Studies, this is where Einstein was teaching. And I asked a bunch of the very smart people that walk around there, "What will happen to free will if we all become cyborgs?" And the people split in two camps, essentially. So those who believe that mankind will always prevail and free will will always prevail. And those who say, "Already we are cyborgs. Whether the phone is outside of you or inside is the same. We are predetermined already."
Chris Burggraeve:
The conclusion at the end of that academic fight between two schools was best summarized by Freeman Dyson, a 90-plus-year-old professor there, who was saying, "Well, I know one thing, this is the place where the supercomputer was invented after the second World War. And at that time, people in charge estimated that the United States would need only 18 supercomputers for the rest of its future, see how wrong we were. They couldn't even fathom the idea of a mobile phone."
Chris Burggraeve:
He said, "We will continue to be surprised and that's the only thing that matters." And I think that's what I wish for all of us that even in the Cyborg Age, there will be plenty of surprises because only with surprise and with un-planability, will there be a need for marketing.
Josh King:
Chris, as we wrap up, an outgrowth of your marketing career, you are also an active investor. In 2017, you have two notable exits with a sale of condiment manufacturers. Sir Kensington's, one of my favorite brands to Unilever, that's NYSE ticker symbol UN and Flashstock to Shutterstock, which is NYSE ticker symbol SSTK. Tell me a little bit about your engagement with Sir Kensington's because I'm so fascinated with the way that took simple, old ketch up and mustard and made it sexy in a way. And what ventures are you currently working on and what are you looking for?
Chris Burggraeve:
Well, the credit goes to the founders, Mark Ramadan and Scott of Sir Kensington. I became part of the board during a Series A capital raise together with Val-Invest, the Belgian family company. And we built that brand, we built Sir Kensington with the playbook pretty much and that is in the book. We prepared it for a grand exit at some point in time. You can't plan for this, but the result of being bought by Unilever was actually the indirect result of Kraft Heinz trying to buy Unilever.
Chris Burggraeve:
It was a happy byproduct of Unilever reorganizing itself as a result of the earlier invitation by Kraft Heinz to combine. So that was an interesting learning. Flashstock and Shutterstock, Flashstock started completely from scratch. I was part and parcel of the company from the very beginning, where from scratch, we created a solution for a problem that marketeers had. Social media had exploded the need for content, but people needed massive content at cheap prices and legal in a legally free and clear way.
Chris Burggraeve:
That's the problem that Flashstock solved and very quickly became more than $10 million and was picked up by existing players. So again, there we followed the idea, pricing was a critical part of that equation. How to price a new proposition. There was a moment where we probably raised the price 7, 8, 9 times in less than a year until we found the right resistance from the buyer, and that has been a critical part of success of Flashstock. Finding a value proposition, iterating until we found the right price level and price resistance which was a price level at which phenomenal profit could be made.
Josh King:
Chris, MARKETING is FINANCE is BUSINESS is available at your nearest online retailer, but where else should our listeners go to keep up with you and all things galactic?
Chris Burggraeve:
Well, everything is on my website is www.vicomte.com. That's V-I-C-O-M-T-E.com. For one, you can try your free marketing rating, any company you dream of, just plugin at numbers and see what rating you would get.
Josh King:
Well, thank you so much for introducing us to it, MARKETING is FINANCE is BUSINESS, Chris Burggraeve. Thank you so much for joining us inside the ICE House.
Chris Burggraeve:
Thanks, Josh. It's a pleasure.
Josh King:
That's our conversation for this week. Our guest was Chris Burggraeve, author of MARKETING is FINANCE is BUSINESS. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet on us @ICEHousePodcast. Our show is produced by Pete Asch and Theresa DeLuca, with production assistance from Ken Abel and Ian Wolff. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content here in. All of which is presented solely for informational and educational purposes. Nothing here in constitution offered to sell a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of length or clarity.
