WW: At the Swiss Marketing Day, you pointed out how important it is for marketers to finally open their eyes to controlling, to the figures they are making with their products - or not. Why do you have to explicitly point this out?
Dr. Thorsten Truijens: I have the impression that many business administration students here are very proud of the fact that they have successfully avoided dealing with finance. After all, finance is not the sexiest topic in the world, even business administration students squirm around it. This is even more true for marketing and sales people. They often lack the willingness to sit down for an hour and understand what is happening in this spread sheet, in the balance sheet, in the income statement. An accountant can spend eight hours on this, it seems to be a question of personality. Marketers don't have the peace and quiet to do this, and that's the first big hurdle. In marketing, a lot of things are common sense, whereas in finance there are basics that you have to master. You have to take the time to learn what's behind it. If you don't internalize this, you'll never get to grips with your finances and every meeting in which finance is a topic is embarrassing. Because you know that you should actually know this. That's why you can't ask.
Being able to have a say at meetings is a good feeling. But are there even more important arguments why marketers should have financial knowledge?
My professional experience has shaped my image of the marketer who doesn't WANT to have much to do with finance. If they stay at a lower level in the hierarchy, they might not need to. Or if he works in a company that is hugely successful and has a huge margin, maybe it's not that important. I don't think Steve Jobs ever looked at an Excel file, but Apple also has a 30 percent margin. If you're doing marketing for a lower margin company and moving up the hierarchy, it's essential that you can quantify what you're trying to do. Otherwise you won't get your plans through. Because the controller has the power, and as a marketer you have to be able to convince him. The controller has no obligation to deliver, the marketer has an obligation to pay.
You are of the opinion that the marketer must take the first step towards building a "lifelong friendship". Does the controller not have to approach the marketer at all?
That's the way it is. It's a question of personality structure. The controller prefers to sit in his office and do Excel calculations, partly because he has been extremely misled by marketers in the past, who promised great things but failed to deliver. In addition, the marketer often uses very flowery language that cannot be expressed in figures. This does not suit the controller. So the marketer has no choice but to win the controller's trust - like a six-year-old who has to show his parents that he can handle pocket money. And I mean that quite unironically. In many companies, the controller simply has the greater position of power and will not knock on the marketer's door to build a bridge and give up some of his power. The marketer has to approach him and ask for explanations, that's pure psychology.
The controller has the upper hand. But couldn't he also approach the marketer?
Controllers are now realizing that costs are slowly being squeezed out. They realize that, due to market conditions, some kind of measure must be taken to guarantee stable earnings. It's no longer just about short-term profit accumulation, but about what the next three years will look like. If turnover falls, you can reduce your costs. In many companies, however, this is only possible to a limited extent. Anyone who recognizes this limit should try to stabilize turnover. And that only works by retaining customers so that they remain loyal even in the next crisis. Only marketers can do that. And that is precisely the basis for an extremely good connection between controlling and marketing. The days of throwing a product over the fence and generating huge sales are over. Today, we are operating in an extremely uncertain environment with crises and disasters. That's why you have to see the whole thing in a much broader context. Many controllers - especially in small and medium-sized companies - do not have this overview. That's why they need marketers who design business models that go beyond "we produce a nice product". Despite their completely different mentalities, marketers and controllers need to approach each other, otherwise they will not be able to master the future.
When you spoke of the "marketer as the controller's best friend" at the Marketing Day, there was a lot of laughter. What does this reaction tell you?
That the awareness that controllers and marketers need to work together has not really arrived yet. I see really big problems here that we absolutely have to tackle. If the crisis leads us to address this issue, it will have a positive effect. Never waste a good crisis. In America and China, a salesperson is held in much higher esteem than in Europe. We have a different culture: here, the engineer develops the great product, the controller shows the costs - and that's it. "Sales? Do we still need that?" But that only works in niches at best.
Do you know of any companies or entire countries where the interaction between controlling and marketing is exemplary?
Yes, marketers with a great deal of financial know-how work at General Electric. There it is absolutely clear that you need financial knowledge if you want to hold a management position. It is also clear that the marketer gives the budget presentation, not the controller, as is the case in many companies. If the controller calculates everything, the marketer can be degraded to a eunuch manager and becomes a victim of the controller. At Apple, the financiers compile the figures, but the decision is ultimately made by the marketers. Overall, I have the impression that financial knowledge is implemented much more in the marketing departments of American companies than here. People think more about finance. The big consumer goods companies - I dealt with Procter&Gamble - of course have a strong finance department. But it seems to me that marketers and controllers talk to each other on an equal footing there. Marketers do question the controller's calculations critically. Here, nobody challenges the demigod controller. And why does a Chinese person know more about cash than we do?
Interesting question. Do you have an answer?
Finance has a lot to do with culture. China, as well as Holland and Israel, are trading nations. And trading nations are geared towards always having tight margins. We are an engineering nation and determine our prices based on our costs. I try to get this out of my students, because demand must determine the price, what the customer is prepared to pay is decisive. I have ETH engineers on my course who can't understand that. Incidentally, engineers normally get on very well with controllers. Both create an accounting sheet and every product and every customer must bear their costs. But it's not that simple. That's why the alliance between controller and engineer is an unholy one - also because the marketer often can't get a foothold between the two.
Are there differences between Germany and Switzerland in this respect?
I have the impression that this engineering mindset from the high horse is more pronounced in Germany than in Switzerland. This also has to do with the training here. The education system in Switzerland is better than in Germany, and great importance is attached to further training. I think the German business education in particular is extremely poor. Swiss training is closer to reality and more practice-oriented. In terms of business education, Switzerland is the most American country in Europe. Take the issue of protection against dismissal. In Switzerland, everyone knows that they have to market themselves because they can't be sure that they won't be fired in three months. That's why everyone has a basic knowledge of cash and marketing. Anyone who has worked at Opel in Germany for ten years shrugs their shoulders and thinks "what can happen to me?". This kind of industrial officialdom doesn't exist in Switzerland.
You have said that exchange rates are the new weapon of mass destruction. That scares rather than encourages ...
Maybe, but it's true. Switzerland's belief that everything will be settled if it stays out of the euro is a misconception. It is not regulated and will become a problem. Switzerland will have to pay a price for the fact that it has a healthy economy that is much more successful than other economies around it. We will get to the point where the exchange rate will be used as a weapon. With every crisis, more people will invest their money in Swiss francs; when the euro collapses, the franc will soar. Congratulations. In addition, a parallel currency will develop. Some German companies that we advise at Controlling Partner St. Gallen are already no longer accepting invoices in Swiss francs. They want a euro invoice at the exchange rate of a year ago. That brings us a considerable drop in margins. And depending on the industry, this can quickly become existential.
Is the realization that publishing houses, media, advertising and marketing are also primarily concerned with sufficient cash flow a child of the recent crisis?
Is there such a realization in this industry? That would be great, of course. I have nothing to do with publishing houses, but in the SME sector I often find that cash is still a long way off - unless the company has been hit by the 2009 crisis. I can also imagine that newspapers are under enough pressure to think about cash. And book publishers are trying extremely hard to sell their books, I can see that. So there seems to be a slow process of reflection. That's good.
Can the battle for sufficient cash diminish the journalistic quality of media or the creativity of advertising? Or is the opposite the case?
I believe that thinking about cash has a positive influence, but it's a question of how you view people. I don't think pressure in a company is fundamentally a bad thing, I'm very influenced by my American education. A bit of a struggle for survival is great if you can take out the despair and turn it into positive energy. As a financier, I would therefore always keep cash in short supply, let people fight for cash, that increases creativity. Saying "there's enough money and we don't need to worry" is not a good way to get things moving.
According to you, cash flow is stagnating primarily because customers are not paying on time. What can the controller do about this? And what can the marketer do about it?
The controller can't do anything about it. That's where the marketer comes in, and the salesperson of course. When selecting customers, they have to see what kind of customer they are: will they pay me? I think you can only pay the salesperson a bonus once the customer has settled their bill. The salesperson's time is not too valuable to chase an invoice. On the contrary: until the invoice is paid, the salesperson has not done their job. That's why I would always hold the salesperson accountable.
Will financial knowledge be part of marketing training in the future?
Yes, that's coming. Figures are playing more and more of a role, and universities of applied sciences are also increasingly incorporating financial topics into their courses. If at least a minimal amount of financial knowledge is integrated into marketing training, the business will become more professional. It is important that marketers learn to interpret financial data, that they do business games to experience first-hand what it means to go bankrupt. This has an enormous learning effect.
Interview: Anne-Friederike Heinrich
In a nutshell
Dr. Thorsten G. Truijens (48) was born in Düsseldorf, studied business administration at the University of Cologne and the University of North Carolina at Chapel Hill and completed his doctorate at the University of St. Gallen. Truijens has held various management positions at Adam Opel AG in Rüsselsheim, General Motors (Europe) in Zurich and the CZSG Controller Center St. Gallen. Today, he is Managing Partner at the consulting firm Controlling Partner St. Gallen AG, where he heads the consulting and training business in the areas of value-oriented management, balanced scorecard and performance measurement. Truijens also teaches at several renowned business schools worldwide. www.cpsg.ch