on 29 October 2005
This is one of those rare books that is simultaneously revolutionary and yet is can be applied in the real world.
Anyone who is concerned with the effectiveness of marketing at a senior level will know that it is, frankly, slippery. Those of us who sit on the board are, I think rightly, sceptical of our marketing colleagues. We would like a practical but well-founded way of holding them to account.
This book seems to be it. Unsurprisingly, it's written not just by marketers (McDonald and Smith are two well known names in this field) but also by a finance guy, Keith Ward. Together, they've come up with a very robust process for testing whether a strategy will destroy or create shareholder value BEFORE we go to the expense of implementing it.
In short, they've looked at what makes plans fail to create value and come up with a comprehensive set of tests to evaluate the "market risk", "share risk" and "profit risk" inherent in any plan. From there it's a short step to calculating the shareholder value creation (or more often in my experience, destruction).
After reading it (it's refreshingly succinct and well written), my first thought was "of course, why didn't we think of that before". I think the answer is that these ideas needed a blend of marketing and finance thinking that is rare in this silo'd world.
What I like best about this is the fact that the process can be applied without expensive new market data and research. The raw material for the process is the business plan we write anyway.
What I like least is the title. I suspect a lot of us will pass it over because we mistake it for a marketing book. I only got it because a friend bought it for me. In fact, this book will be far more useful to CEOs and CFOs, I think many marketers will be scared of it as it will reveal the weaknesses of their strategies.
I've no hesitation to recommend this book 100% to anyone at board level in any medium or larger company. If, however, you're a marketer then I suggest you buy every copy you can and burn them, to stop your boss asking you very difficult questions.
Further, I predict it is only a matter of time before this Marketing Due Diligence process becomes as widespread and popular as balanced scorecard and other ideas that are now "de rigeur" in the boardroom.