You may not be familiar with the name Lauren Flaherty, and if you met her in the street or the supermarket, you would probably not be overawed, dumbstruck, or feel you were in the presence of greatness. But despite her unassuming manner, this 40-something woman from Connecticut, USA should be the closest thing business-to-business marketing has to a global superstar.
Why? Very simply; because during a few short years in the mid-1990s, as its head of global advertising, Flaherty played a pivotal role in the complete reinvention of the then ailing computer giant IBM.
This has proven to be one of the most successful brand overhauls in history. Since 1997, the company has become a byword for all that is excellent in B2B marketing, and the subject of cult-like admiration by marketers in a diverse range of industry sectors. If you don’t believe me, take a look at the Q&A pages of B2B Marketing over the last two years. IBM crops up at least every other month as the answer to either or both of the questions: which B2B brand do you most admire? and what is your favourite B2B campaign?.
Flaherty herself may have recently moved on to telecoms specialist Nortel, tasked with delivering a similar marketing-led corporate renaissance, but her reputation was made and will perhaps forever be enshrined in this period of immense achievement and transformation at IBM (sometimes known as ‘big blue’).
Unsurprisingly then, when a relatively innocuous email came through in late August offering B2B Marketing the opportunity to meet Nortel’s new chief marketing officer, who had previously served at IBM, very little persuasion was required. This was a scoop.
Although Flaherty’s CV affords her a lofty status amongst the gurus of business marketing, face-to-face she is anything but aloof. This may in part have been because of the environment: if you are expecting someone to act as a kind of visionary, who thinks on an altogether higher mental plain, it is probably best not to meet them in the bland lobby of an anonymous hotel in London’s West End. In this environment as in most, I would suspect Lauren Flaherty comes across as warm, down-to-earth and engaging, despite the jet lag and a punishing schedule of meetings and presentations which she is in the midst of negotiating.
She speaks slowly and clearly in a relaxed and unhurried, rather than cynical or overly media-trained manner choosing her words carefully, keeping her answers simple and laughing liberally. There is no mystique; the focus is a practical, concise explanation of how things were with IBM, and how they will be in future with Nortel.
Although the interview was organised by Nortel’s PR agency ultimately to promote the changes that are underway at that company the enormous achievements of Flaherty’s time at IBM overshadows the conversation, and I’m relieved that there is no resistance to speaking about it. Indeed, far from shying away, she is willing and happy to talk about her former employer, for whom she remains clearly both profoundly grateful to and extremely proud of.
Flaherty worked for IBM for 25 years, straight from college until May this year when she left for pastures new. But whilst she may have been faithful to a single organisation, she was anything but static within it.
The great thing about IBM is that it is a big company, with lots of roles within it, she enthuses. It can provide many opportunities for personal development, to grow and stretch yourself. In her own words, it enabled her to maintain a ‘hockey stick’ curve of development. You can insert your own appropriate sporting metaphor here, she adds.
Of the many opportunities that IBM presented to her during the two and half decades tenure, Flaherty says one naturally stands out: to become part of the team tasked with bringing the brand back to life; or as she says, to restore the broken global icon. By the early 1990s, IBM was in real trouble and had lost the reputation for excellence it had won in previous decades. IBM famously featured on the cover of Fortune magazine as a Tyrannosaurus Rex, stock value had plummeted and marketing capitalisation disintegrated, Flaherty explains. But perhaps most significant of all was the fact that marketing appeared to be actively contributing to this decline. The brand was actually seen as a detractor. The company was falling apart, and marketing was actively contributing to that process.
What changed was the arrival of Lou Gerstner as chairman in 1993, with a brief to restore and revive the company. Gerstner’s role as the catalyst and leader of IBM’s revival is well-documented, but one of his most important actions was to bring in Abby Kohnstamm from Amex as IBM’s new chief marketing officer. She in turn then hand-picked a relatively small team, who knew the business very well, to restore it and reposition it for growth. As Flaherty puts it simply, this was the opportunity of a lifetime. The achievements of this team and the reversal of fortune for IBM that it managed to engineer are now inherent in its re-emergence as a premier brand.
Given her instrumental role in this success, combined with 25 years’ loyalty to IBM, it may be considered surprising that Flaherty would want to be prized away by Nortel or that IBM would let her go. Reading between the lines it seems likely that Flaherty realised that she had achieved all she could with IBM. The company’s performance throughout the 1990s has been strong, and whilst maintaining a market-leading position clearly has its merits, the challenge of reinvigorating a brand that has fallen from grace could prove more alluring.
But what was it precisely about the role at Nortel that appealed? The answer appears to be twofold, although with both factors very much intertwined. The first was the chance to leverage her expertise in brand reinvigoration for the benefit of a company in a broadly similar situation to IBM in the early 1990s. There were striking similarities between the challenges at IBM and those at Nortel, says Flaherty. Both brands suffered from a lack of stewardship, lack of management, of fact-based decision making and of appreciation of the power of marketing.
The second reason was leadership. Again, like IBM before it, Nortel has just taken on a visionary CEO in the form of Mike Zafirovski (formerly of Motorola) with a brief to turn the company around, following a period of disappointing results. Ultimately, it seems it was Zafirovski’s passion, intellect and commitment, as well as his attitude to marketing, which won Flaherty over. He implicitly understood and recognised the fundamentals of the situation. We spoke about his goals for the business, and I realised that what he wanted to do was possible. More importantly, she believed that he was capable of making it happen. Finally, instead of being part (albeit senior) of the team that delivered the reinvention, this time she would be leading it. It would be her team.
Having lived through and participated in the transformation of one global IT brand and having a supportive and progressive CEO will clearly benefit Flaherty in her task, but even they will not guarantee success. Might the lessons learned from IBM not be transferable? Or might the problems within Nortel be so ingrained to render a similar transformation impossible? Flaherty does not think so, and points out that IBM is not the only historical precedent for a technology company seeking to reinvent itself. I can’t think of anyone in the tech industry that hasn’t had to reinvent itself: Apple, HP and Microsoft have all gone through it. No-one is immune. Reinvention is part of the cyclical change to businesses and brands.
This is not, however, to say that she is in any way complacent or blasé about the challenges ahead, for the company, for her and for her marketing team. The future of the marketing function does not hinge on one campaign… but we will have to earn the board’s faith every day. She is certain that marketing will play a critical role in the Nortel’s renaissance. What marketing can do uniquely is to provide a compass and a level of motivation which can accelerate the speed of recovery. Our goal is to make marketing a great asset to Nortel.
Assuming marketing’s role at the forefront of creating the new Nortel is assured, the next obvious question is ‘how?’ What strategy is this immense task going to be based on? A central part of IBM’s successful transformation was its re-emergence as a services company: a decision that has arguably defined the model for the technology sector in the 21st century. IBM broke the link from its heritage as a hardware vendor, and it has never looked back. Will Nortel adopt the same model?
Yes and no, explains Flaherty. Nortel already has a $2 billion services business, although this is not widely known. This is one aspect that will continue to expand. One of Nortel’s key problems, she continues, is that whilst it has a global workforce of 30,000, is active in 150 countries, and is similar in scale to IBM, it is generally not perceived to be. She adds that the company will strive to continue and develop its legacy as an inventor of technology. These are the things that Nortel does well.
The future for Nortel, Flaherty explains, hinges on its ability to promote, express and reinforce its leadership capabilities, either in product or service offerings.These conclusions were reached following a global brand audit, which was carried out by Nortel earlier this year. The results underlined distinct shortcomings in the perception of Nortel by existing customers and prospects. Associations with Nortel were not as sharp as we would like them to be, or as immediate or crisp. Flaherty identifies a number of reasons for this, some related to poor leadership decisions in the past, some a consequence of the dotcom bubble burst.
What it adds up to, she says, is a huge set of missed opportunities. What is interesting about Nortel is that as a company we are on the same scale as IBM, although we are not generally perceived to be. We have some very high-marque customers and work some industry leading brands. But the facts of who we are and what we do aren’t as well know as they should be.
The good news for Nortel is that the brand audit also underlined the fact that massive untapped opportunities still remain. But to exploit these, its brand and the understanding, perception and associations thereof need to be transformed. This is precisely where Flaherty and her experience with IBM come in. Since conclusion of the audit, and analysis of the results, the global marketing team has put together a roadmap for Nortel’s marketing-led transformation. As she says, we’ve called the play.
The task begins this autumn, with a programme to communicate how it will change in order to forward to its global workforce, and more importantly what role each individual will have to play. We have to enlist the support and commitment of everyone who will be required to help execute it. She is optimistic that this will be readily forthcoming. Employees want to know what path the company is on, and they want some skin in turning things around. Once this is concluded, expected early next year, the campaign will begin to focus outside the organisation, to customers and prospects.
So how long is all of this expected to take? We have clarity that recovery and transformation will take a couple of years. At IBM it took between three and five years. This is a realistic view it must be credible.
So it’s exciting, if challenging, times to be in marketing at Nortel, and the next two years look set to be a time of dramatic change. Whether it is reasonable or even possible to expect Flaherty to deliver a marketing turnaround on the scale of that achieved at IBM is uncertain, and perhaps unreasonable. After all, Nortel’s fall from grace has not been anything like as spectacular as IBM’s. There have certainly been no dinosaur comparisons to date.
But if Flaherty can deliver even a fraction of the transformation in marketing thinking and delivery which was seen at IBM 10 years ago, she will have more than proved her worth, and reinforced her iconic status as a B2B and technology marketer. And if she manages to keep her hockey stick straight over a number of years, who knows where it could take both her and Nortel.
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