Driving Media Value Within A Decentralized Company Structure
The pros and cons of reducing central control are not always simple to work out. Claus Schiko explains how Pandora has loosened the ties that bind while still delivering value.
Every organization ultimately faces the same question: should we centralize or decentralize?
The answer may not be a straightforward black or white choice. In media and marketing, for example, it can be even trickier as the purchase of media varies greatly from market to market. Equally, in a startup company, the need for the pioneer spirit may be greater than in more mature companies where hierarchy plays a greater role.
The real issue can be how much independence do the markets and groups within the business really have when it comes to taking key decisions?
De-centralization comes with both benefits and disadvantages:
- It gives each market a stronger ability to respond to local circumstances but also makes it harder to ensure consistent practices and policies.
- It puts decision making closer to the customer, which should lead to better service but this can also lead to decision-making that is responsive rather than “strategic”.
- It should improve staff motivation but the cost can be duplication of roles.
- It’s consistent with the need for a flatter structure but also raises questions about where strong leadership will come from in a crisis.
- It allows companies to develop junior management but at the risk of cost-overruns when such inexperience is revealed.
The ultimate goal behind the decision one way or the other must be to optimize value-driven decisions within each market. So every organization needs to decide which benefits they are willing to lose.
At Pandora, we are driven by a great entrepreneurial sprit, which leads us to a decentralized structure and challenges us to ensure we deliver value in media within that framework.
Benchmarking media expenditure is key. It is all very good if you have a good relationship with your media agency, but if you don’t know the value of your media spends, how will you know if you are getting the right deal?
Once you have benchmarked the data, procurement needs to re-assure all stakeholders across the marketing team that the intention is not to play the blame game and point fingers, but to improve and drive value. The key is openness and transparency.
Some simple steps that will secure transparency are:
- Establish a key category council with each market and set up clear goals for looking at media and marketing spends.
- Empower the markets to make real data-driven decisions.
- Commit to good quality two-way communication between Procurement and Marketing, so all local stakeholders feel they have been listened to and understood. Procurement has to be a strategic partner to the marketing department.
- Listen and understand the emotions that are in play. Understanding the emotional position of suppliers will help drive value, for example, are they a small player that wants to grow or are they a bigger operator trying to consolidate their position in the market?
- Understand what your markets are paying for:
- Service – how much is pure service worth?
- Data – is it the right data?
- Expertise – could markets handle certain tasks internally?
- Measure and evaluate. It is the only way to make real data-driven decisions.
Be genuine with your stakeholders and vendors
The full value of vendor relationships goes beyond price and includes facets such as innovation and service. If you can connect on an emotional level with your local markets, stakeholders and indeed vendors, you can also explain your role in driving value for your products and the value of both marketing and procurement.
It’s important to empower and challenge people to develop their own local solutions to problems, don’t just dictate the answer. As procurement experts you shouldn’t focus only on savings – you also need to manage other values including quality, risk-mitigation and innovation.
In a decentralized set-up you can take into the account aspects such as the fact having the best performing suppliers in the industry can mean something different in say France than Germany.
A German supplier would be more likely to be focused on hard KPI’s such as footfall to the clients stores / sites, where as the French suppliers would be more likely to focus on personal relationships and the value that being personal with the client and getting to know them personally brings. The German suppliers would be more inclined to know about your business KPIs.
Understanding such differences both in culture and behavior will ensure success in driving real value.
The bottom line is that treating everyone in the media and marketing value chain with respect will also secure value through the use of emotional intelligence.
ABOUT Claus Schiko
Claus Schiko is Category Manager, Global Media and Marketing Procurement, for Pandora Jewellery. He has over 20 years Media Agency and Media Supplier experience from UK, Ireland, Denmark and working with global and local clients.
PANDORA designs, manufactures and markets hand-finished and contemporary jewellery made from high-quality materials at affordable prices. PANDORA jewellery is sold in more than 90 countries on six continents through approximately 9,500 points of sale, including more than 1,600 concept stores.
Founded in 1982 and headquartered in Copenhagen, Denmark, PANDORA employs more than 15,000 people worldwide of whom approximately 10,400 are located in Gemopolis, Thailand, where the company manufactures its jewellery. PANDORA is publicly listed on the NASDAQ Copenhagen stock exchange in Denmark. In 2014, PANDORA’s total revenue was DKK 11.9 billion (approximately EUR 1.6 billion). For more information, please visit www.pandoragroup.com.