Does B2B have a creativity problem?
Cannes Lions

It’s certainly not the first time this question has been asked. In fact, it feels very 2022. That was the year Cannes Lions launched the Creative B2B Lions, heralded as a major milestone at the time. This year, there are 13 awards for Creative B2B at the festival, ranging from brand building to disruption, challenger brands to effectiveness. With these accolades, there’s a willingness to believe the problem has been solved, that B2B has cracked creativity – but has it?

It is well understood that B2B marketers have traditionally concentrated on the bottom end of the funnel: sales activation. They are nearly twice as likely to depend on ‘rational’ product-centric creative compared to their B2C counterparts, while LinkedIn data reveals that B2B marketers allocate a mere 8% of their budgets to long-term brand awareness. Creativity can undoubtedly be used throughout the funnel, but it is arguably at its most effective towards the top: earning trust, becoming memorable and building brand.

For the last few years, weak economic growth, high inflation and rising interest rates have dented confidence and made it harder to found and grow profitable businesses. Now more than ever, marketers are having to think about the immediate, not the long term. Which begs the question, if we weren’t focusing on creativity and brand building when times were good, how can marketers be expected to do it now? We didn’t make brand hay when the sun was shining, and now things are considerably darker.

This brings us back to the perception of creativity within B2B, and whether time, money and effort should be funneled into long-term growth (brand) or short-term activation (product). We know the answer is both. They are not mutually exclusive. I am not telling anyone anything they don’t know. Unfortunately, we also know that the majority of B2B brands still take the short road when the going gets tough. The path of least resistance, sure, but the wrong one.

All too often, the mindset that brand is more useful for B2C than B2B prevails. All the things that good creativity and brand growth bring – long-term loyalty, trust, emotional attachment – are useful in one world, but not another. Surely we have to move beyond this, not just when we celebrate great creativity and brand growth at events like Cannes Lions, but back in the real world, in the day-to-day. 

Most of us are aware of the 95-5 rule, as outlined by Professor John Dawes. “Only 5% of potential B2B customers are in-market at any given time, meaning marketers need to deploy broad upper-funnel campaigns for the other 95%.” Combine this with ever-increasing targeting opportunities – it’s no coincidence that the one new B2B award up for grabs this year at Cannes is for influencer marketing – and it’s obvious that creativity needs to be at the heart of everything we do in B2B marketing. We need to build brand loyalty, and we need to be creative in how we do it. 

We’ve seen great examples in recent years of brands really getting it right in B2B, being useful and memorable without being product-led. The Audiencers and Hubspot spring to mind, and closer to home we’ve seen great initiatives on Raconteur from Salesforce and Mailchimp

While product-centric marketing definitely has its place, it’s not the ‘rational’ choice by default. That would suggest creative, brand-led marketing is ‘irrational’, when everything we know about effectiveness and loyalty suggests otherwise. B2B products change and evolve over time, as do brands, but while it’s easy to forget features, demos and price tiers, it’s a lot harder to forget true creativity when you come across it. 

Marketers need to put customer-centricity back on top
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The following is a write-up of a webinar that Tom hosted and that you can watch here

In recent years, customer experience has been deprioritised in favour of the bottom line. But it’s time for businesses to sit up and take notice of the value of putting your customers front and centre.

In any downturn or economic crises, productivity and profitability inevitably rise to the top of the C-suite agenda – often at the expense of the marketing department. This results in things like customer experience getting kicked down the road to be reviewed when macro conditions get back on track.

An IBM and Oxford Economics survey of 3,000 CEOs last summer showed that customer experience had fallen to third in the list of priorities for business leaders, despite having taken the top spot the year before. It was replaced by productivity and profitability, and tech modernisation. Customer relationships, which were ranked as the fourth highest priority in 2022, didn’t even make the top list in the latest survey.

The result? Customers feel less valued, as departments are pressured to hit numbers, save costs, and improve efficiency – all at the expense of the customer experience.

CX has “definitely taken a hit over the past few years”, according to Benedict Buckland, managing director and chief strategy officer at alan. agency, the full-service B2B marketing agency. “I think there is always that pressure to just invest in activation, where you’ve got to try and get results in the short term,” he says.

One theory behind this recent shift is that CX, rather than being ignored altogether, has instead become a “team sport”. With multiple departments or initiatives all contributing to CX in some way, it’s no longer a standalone strategic objective for business leaders, but a holistic approach that the whole organisation should be driving.

“Rather than previously being quite siloed, [CX] is now something that marketing really gets involved in, and that sales get involved in as well,” says Anna Tankel, freelance growth expert and former senior growth manager at Onsi, the employee benefits platform. “For us, events were things we only used to do for prospects, but they’re now something that it’s quite easy to invite customers to as well.”

Marketing’s evolving role

From an agency perspective, Buckland identifies a recent “correction” in how companies are now viewing the importance of CX. “Over the past six months, there’s been a big increase in clients wanting to evaluate how they are doing things and realising that there’s actually more of a fundamental problem because they don’t have the necessary market orientation. They don’t understand the customer.”

These days, Buckland says that his agency is now doing more work than ever to help brands better understand or re-learn “who their clients and customers are, what their particular drivers are, and using that to actually reshape the proposition”.

But marketing isn’t just responsible for onboarding new customers or building brand awareness. It plays a crucial role at every stage of the customer journey, from initial calls to upsells, aftersales and improving loyalty.

According to Maisie Richardson, UK marketing director at spend management software provider Payhawk, customer obsession is all about mapping out all your customer touchpoints from start to finish, “and then allowing the business as a whole to identify areas for improvement and ensuring we’re all focusing on the same thing across all those different business areas”.

Reframing marketing’s role can be helpful for companies to realise how vital CX is, says Buckland, who calls for marketing to be reconceptualised as “the voice of the customer”. He says: “Brand is every touchpoint, every point of interaction with your customer, your prospect, your client. Whether that’s pre-sale, during the sales process, post-sale or as part of just service more generally. I think marketing does need to have a much wider jurisdiction to cover all of that CX dimension.”

In a similar vein, Richardson makes it her mission to listen to every point of contact with customers – everything from the first call with a business development representative to final closing calls. “The reason we listened to those types of recordings is purely to hear from the customer directly what they want from us. […] It’s our job as marketers to translate that to the rest of the organisation. And if we don’t do a good enough job of that, we’re going to fail as a business.”

Knowing your customers better

At the end of the day, don’t take your customers for granted, says Tankel. “Budgets are being cut left, right and centre. And the ROI of rolling out the red carpet for customers is always going to be stronger than for prospects. So don’t forget to invest in them,” she says.

For companies out there with a disconnect between how they’re selling and what their audience really wants, Buckland recommends thinking beyond simply what customers’ “rational needs” are.

“If you go beyond the rational, you understand the emotional drivers. But don’t just stop there […] Something that we’ve explored is this extra dimension of understanding on a philosophical level – what motivates and drives our customers and clients and how they see the world.”

He explains: “There’s an additional layer to understand what they see on a philosophical level, their role within an organisation and how they see their organisation’s role in a wider market. If you can start to tap into that, it’s really insightful for developing a brand proposition and wider storytelling.”

Creativity in the AI age

When it comes to speaking to your audience and making yourself heard, the rise of AI and machine-learning tools has helped companies create more content than ever before. But with so much noise in the marketplace, being heard is getting harder than ever.

Tankel highlights the risk of getting a “middle-of-the-road, boring, templated response” if you’re not using the tools in an innovative way. “You can challenge many of the tools you’re using to spin up something a bit more contrarian. […] But they’re never going to give you enough to cut through unless you really push them and add in your own spin,” she says.

Buckland calls these tools both an “inhibitor and enabler, simultaneously”, but a reality that the marketing world must lean into. “For us, it’s a real accelerator of initial ideas,” he says. “In terms of how we use [AI] within the creative process, it’s to accelerate that research and discovery phase. And it’s quite useful just being able to uncover a couple of blind spots that you have as a human being […] But certainly once you have those baseline ideas, it’s the requirement of a human being to synthesise that out.”

Within thought leadership, for example, generative AI tools are already being used to write Linkedin posts, tweets and even speeches. But we risk homogenising written content through the over-use of these tools, says Buckland.

“It is incumbent on marketers to think, ‘Okay, what are the other formats that I can use? What are the other ways in which I can communicate this idea or lead a conversation within my industry?’,” he says. “Yes, [AI] is going to be super disruptive for copywriters. But does it sort of sound the death knell for marketers? Absolutely not. I think that it will create that necessity, which causes innovation in different formats, different ways.”

However, being creative requires fostering a culture of creativity within marketing teams, according to Richardson. That comes, she says, by allowing time for free thinking “without that immediate pressure to ship campaigns as quickly as possible”.

She continues: “One of the things about being creative is actually taking risks that sometimes don’t always pay off. That’s one of the key areas where I think we’ll always need that sort of freedom of thought.

“We try very, very hard to not be the type of marketing team that is focused on bottom-line results in every campaign. We focus on creativity. We might not get it right 100% of the time, but actually that’s what’s important to us.”

Watch the full webinar here, check out how we helped Klear boost their brand, or reach out to discuss how Raconteur can support your brand building efforts here.

Why brand-building is non-negotiable
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The following is a write-up of a webinar that Tom hosted and that you can watch here

Standing out in your marketplace has never been harder, and getting your name to stick in your customers’ minds requires long-term investments in building your brand.

Brand-building has taken a back seat in the B2B space over the past couple of years, as boards were forced to tighten purse strings and pile the pressure on marketers to deliver more tangible and immediate ROI.

But as economic headwinds begin to recede and businesses start to enjoy some sense of stability, the importance of brand is now being recognised once again, with companies looking to make more investments into longer-term market positioning and brand awareness.

For smaller, newer brands in particular, awareness is essential if you have any chance of standing out in a crowded marketplace – it’s the thing that will push you “across the line”, according to David Keene, the chief marketing officer for Europe at IT services group Wipro.

“Brand-building moves you from awareness, or even just casually coming across a company, into consideration. And the better your brand-building is, the stronger that conversion […] to consideration will be – whether you’re Google, Wipro, or some tiny, small SaaS startup,” Keene says.

According to Sophie Wooller, UK chief operating officer at digital agency Croud, brand-building should be a “non-negotiable” for all companies. “When we think about B2B, we think about facts. But you’re still selling to people who have opinions. And even to get on the shortlist […] there needs to be a level of brand awareness. That might be through word of mouth or through much broader, bigger media campaigns. But you have to start somewhere.”

She continues: “As depressing as it is, it’s not just the product – there has to be some brand awareness as well.”

It’s easier said than done, of course. Building your brand in your customers’ minds needs to encapsulate a number of different approaches and methods. That’s according to Nick Whitfield, communications manager at Future Biogas, a UK-based provider of clean and renewable energy. B2B marketing is all about “giving your customers the tools and information they need, in a format that feels familiar to them, in a language and vocabulary they understand and also use”, Whitfield says.

But building that up takes time. And oftentimes marketing isn’t given the adequate time required to deliver results. Things, however, might be starting to change.

According to a recent joint study by the ​​Institute of Practitioners in Advertising and Brand Finance, the strength of a brand and its marketing were named as the most important things that investment analysts look for when appraising companies – more so than leadership, technological innovation or even profits. What’s more, 37% of analysts said they regarded advertising as an investment compared with just 24% who viewed it as a cost, showing that even the investment community is valuing a longer-term mentality when it comes to marketing.

What makes a good brand-building campaign?

So how do you do it right? When it comes to successful brand-building, whitepapers alone won’t cut it – especially at a time when decision-makers are so time-poor. Instead, it’s all about empathy, storytelling and differentiating yourself from your competitors. But above all else, the key is consistency.

“I think consistency is really important in any sort of brand campaign you’re putting out there. Don’t claim to be something that you don’t actually practise in reality, or can’t be demonstrated in the experience a customer then goes on to have with your business,” Whitfield says.

To deliver a great B2B brand campaign, you need to be super clear on the objective, according to Wooller, since having multiple targets for a singular campaign can work against you.

“Are you trying to get your brand in front of as many eyeballs as possible? Are you trying to drive brand awareness? Are you trying to use it […] to drive consideration and start to drive outcomes? It’s really hard to do all of those really well, because they will have nuanced different audiences, and therefore slightly different ways, volumes and channels in which you want to get in front of people,” Wooller says.

“So if you can be super, super clear on the objective with your brand campaign that will then help guide planning around who, how often, which channels and where – and all the component parts that make up your marketing mix.”

How AI is changing the marketing industry

These days, when it comes to staying at the top of your game, marketing heads might be feeling the pressure from their boards to lean heavily on AI tools, and generate content at speed in a bid to stand out. But, as tools like ChatGPT rapidly reshape how people both interact with and create online content, can marketers still grab attention and deliver the unexpected?

The well-used metaphor that generative AI is akin to having ‘infinite interns’ is a useful thing to remember, says Wooller. “If you’re doing some research, or you want to have a load of ideas or a first pass of translation, you’ve now got infinite interns who you can ask the question of, and they will return some probably pretty good stuff. But you’re not going to send your most important clients what your interns return, hopefully,” Wooller explains.

“You still need a layer between what they’ve ideated, what they’ve come up with, and what you’re sending,” she says.

Of course, marketers should deploy AI where their main savings are going to be, Whitfield says, like automating repeatable processes that will reduce time and money. For example, companies who currently pay a fortune for stock photography will be able to save money by using generative AI for very similar end-results, he says.

“But in its current state, I’m much more convinced by using AI as a suggestive tool, rather than a full-blown content generator,” Whitfield says.

Standing out through storytelling

Ironically, with the relative ease of creating content and the ever-expanding avenues or channels to deliver it to audiences, it’s never been harder to convert prospects into actual leads. So great storytelling is what will set businesses apart in building long-term engagement and generating demand.

“Think carefully about who you want to talk to. Who’s your target customer? How does the customer feel? And how do you tell a story that allows them to feel?” Keene says.

“Don’t tell a story that your product team wants to hear […] Your product team is not buying your product, nor your CEO. You’ve got to understand your customer, and really put yourself in their shoes as a marketing person. That’s your role to understand and empathise with the customer, and to tell a story that they bought.”

And to do this well, your brand needs to own its own “story”, Keene adds. “At the heart of your brand, you need a brand book that everything is built on; it’s the foundations of your house. You need that fundamental, clear and compelling message that gets repeated across all of your channels and your campaigns.

“Sure, you can do different things and be creative in different ways. But if it’s too diverse, you’ll break the simplicity of that core message.”

Watch the full webinar here, check out how we helped Klear boost their brand, or reach out to discuss how Raconteur can support your brand building efforts here.

2024 starts now: how B2B marketers are preparing for success next year

CMOs are learning that potential clients want actionable insights rather than the hard sell. But these solutions-based sales tactics require longer lead times, meaning marketers will need to start now if they want to win new business in the new year

When IT firm Antavo, a provider of technology for corporate loyalty programmes, polled potential clients earlier this year and asked them if they were planning to upgrade their schemes, 90% said that they were. 

That was 21 percentage points up on the equivalent figure from Antavo’s 2022 survey. Yet, despite their apparent keenness to buy new IT, they’ve generally been slow to make such purchases, reports the firm’s marketing director, Eva Bacsi. 

“The decision-making process has gotten longer and customers are more cautious about investing in technology that needs planning and resources, because of the expected downturn,” she says. 

Why new marketing campaigns need to start now

B2B marketing teams can’t afford to get complacent, then, especially as the economy continues to falter. The International Monetary Fund’s latest World Economic Outlook report forecasts that global GDP growth will decline from an already disappointing 3% this year to 2.9% in 2024, for instance. 

“It’s never been more important for B2B marketers to be talking to customers – and as soon as possible,” stresses Richard Cook, founder and MD of Champion Communications, a B2B marketing agency. “Your buyers are in a state of ongoing chaos. They’re looking to make decisions that are potentially quite risky and they can’t afford to get them wrong, because their rivals will probably get them right.” 

If we don’t keep moving and talking to customers, we won’t be in the right place to succeed when demand returns

The consensus among marketing chiefs is that now – not two or three months hence – is the time to talk to B2B buyers, who often look to vendors to help them optimise their spending, mitigate risk and seek out a precious competitive advantage. 

This isn’t just good news for marketing teams. Research evidence indicates that buyers benefit too. A study by McKinsey & Co suggests that firms seeking an edge over their competition are more likely to achieve that by continuing to invest in certain functions during a downturn. 

For its part, Antavo remains committed to investing in marketing and product development despite the deceleration in sales. 

“We’ve seen before that downturns happen and new business slows,” Bacsi says. “But then things recover and, if we don’t keep moving and talking to customers, we won’t be in the right place to succeed when demand returns.” 

What buyers want from B2B vendors

In Q1 2024, Antavo will publish its annual Global Customer Loyalty Report, which is based on data insights derived from the 300 million transactions completed on the firm’s platform and interviews with 600 business leaders. Such research helps the company to build relationships with existing and potential clients, while also giving it useful information about the problems they’re facing. 

“It’s vital for us to maintain an educational tone to the content we put out, rather than sending a hard sales message,” Bacsi says. “This work helps us to understand where the gaps are in the market and then develop messages and features that meet those needs.” 

IT services firm Equal Experts is refining and targeting its marketing messages in a similar way, as its head of global marketing, Samantha Dixon, explains. 

“We do see budget constraints, but we also see nervousness about not being able to keep pace with progress, especially in things such as data, sustainability and AI,” she says. “We’re looking to maximise the return on our marketing investment by focusing on channels such as digital, but also on technologies that we know address those pain points.” 

Why marketing requires longer lead times than before

Early planning also helps firms to make the most of their marketing expenditure, says Dixon, who adds: “Obviously, budgets are constrained from a marketing perspective, so now we’re taking time to plan digital investment and how we shift our messaging for those platforms.” 

Even if the customer isn’t ready to do business, having the conversation means that you’re able to learn and build a relationship

Kunal Mehta is global head of marketing, communications and brand at dsm-firmenich, a health and nutrition firm. He explains that his company is focused on “solutions-based marketing”, which is based on understanding customers’ problems and providing bespoke solutions, rather than leading with a particular product or feature. By its nature, this sort of marketing takes longer, so the work needs to start earlier. 

“This is about focusing on how we can help, leading the way and helping customers to stay ahead of the curve. Then we follow this up with messaging from the sales team,” Mehta says. 

Longer sales cycles necessitate a fundamentally different kind of marketing engagement, according to Cook. 

“If you put yourself into your buyer’s shoes, they’re working remotely and the person in the vendor’s business development team is also working remotely. There are fewer opportunities for face-to-face meetings,” he says. “The buyer is increasingly reliant on information from B2B vendors. But, at the same time, there’s so much more of it to sift through. Marketing leaders need to show empathy and understanding – those relationships have never been more important.” 

Modern marketing is based on relationships

Not all this engagement will translate into sales, of course, but the work is still valuable, Cook stresses. 

“Even if the customer isn’t ready to do business, having the conversation means that you’re able to learn and build a relationship,” he says. “That helps to refine your thinking and planning.” 

At dsm firmenich, the company’s goal in engaging with customers through early marketing is to serve as a trusted guide to them in uncertain times. 

“We need to stay ahead of the curve to show customers what’s coming next and how it can help to address their challenges,” Mehta says. “Whether you’re talking about sustainability or how AI might be used in our industry, customers are looking to us as a beacon to lead them – and that’s exciting.”

How B2B marketers can make the most of AI

Generative artificial intelligence and other fast-developing technologies have much to offer the profession, but there are cultural hurdles to surmount in the race to find uses for these powerful tools 

While leaps in generative artificial intelligence have wowed much of the business world over the past 12 months or so, specialists in B2B marketing have been profiting from the power of AI and advanced data analytics for years. 

Nonetheless, GenAI represents huge potential value to a profession that’s keen to exploit this fast-moving tech. The possibilities are verging on bewildering, according to Eric Gregoire, senior vice-president and global head of digital at pharma giant Bayer’s Consumer Health division.

“There’s never been a better time to be a marketer, because there is so much you can do with this emerging technology,” he says. “But you may also get frozen by where to start.”

AI reveals customer insights

Kevin Iaquinto, CMO at etail software developer CommerceHub, believes that the use of AI and data-driven solutions have already improved B2B marketing significantly in three areas, enabling “hyper-personalisation at scale, better targeting and better creative”.

His view aligns with the conclusions of research published by McKinsey in May. This found a significant increase in the use of GenAI for lead identification, leading to better targeting and personalised outreach. 

Steve Reis, a senior partner at McKinsey and co-author of the research report, says that AI is helping to answer one of marketing’s fundamental questions: who’s the customer? This is particularly hard to answer in the B2B space, because each key purchasing decision in a business is typically made by several stakeholders, few of whom will have exactly the same priorities. 

The growing capacity of data-gathering and advances in real-time analysis promise B2B marketers a much better idea of who the main decision-makers are likely to be and what matters most to them. This should in turn enable them to personalise their marketing communications.

You can learn a lot from what didn’t work

AI and data analytics can be applied at various stages of the sales funnel, the popular marketing model that charts the progress of each potential customer from awareness (learning of a product’s existence) all the way down to action (buying it). As an example of a lower funnel application – that is, the point at which someone is about to make a purchase – Bayer partnered with Google to analyse navigation data supplied by visitors to its own website. The aim was to identify high-value customers based on behavioural traits, such as the time they stayed on each page, to learn who among them were seriously considering a purchase. Such insights enabled Bayer’s marketing team to target those individuals with personalised messages, leading to a double-digit percentage growth in its sales conversion rate.

“The way we do things has changed dramatically,” says Gregoire, who notes that it wasn’t long ago that marketers would base their campaigns on intuition or “what you think is best for the customer. Now you actually know what’s happening in real time. You can make smarter decisions, test, learn and transform.”

But he warns that making the best use of advanced tech solutions is no easy undertaking.

Preparing the marketing team to adopt AI solutions

The challenge here for many marketing teams lies in moving from recognising the value of AI and data-driven solutions to implementing them, according to Gregoire. In the first two years of its AI adoption, Bayer focused on building effective partnerships with tech companies and adding new skills to the team, incorporating AI gradually into the mix. 

Iaquinto believes that marketing teams must first develop the right skills to fill the growing need for “prompt engineers, data analysts and marketing automations”.

Many CMOs have found it hard to persuade every member of their marketing and sales teams of the benefits of AI – and Iaquinto reckons it’s almost impossible to realise its full potential without your department’s total support. No matter what great leads you provide, “you won’t see the growth in the pipeline if sales teams aren’t committed to using it”, he stresses.

Every step in adopting these solutions must be clearly communicated across the entire function. It’s a matter of building a common understanding and then setting clear objectives and measurable key performance indicators.

One of the main barriers to adopting AI is the underlying feeling of replacement anxiety among the sales force, according to Reis. It’s an understandable sentiment, given that 20% of sales tasks could be automated, although these are largely administrative in nature. In fact, rather than causing redundancies in sales, AI could instead help the function to become more strategic and creative. 

It seems that the sensational emergence of ChatGPT over the past year has gone some way to softening such resistance. The advanced chatbot has made AI accessible to people who aren’t technologically minded and its sheer usability has been winning many sceptics over – even those in sales.

The need to smash silos and experiment without fear of failure

For the sales and marketing function to make the most of AI’s power, it must work more closely with IT and data specialists in the organisation, according to Gregoire. This should help marketing managers to adopt a “test and learn” approach when trying out new applications for the technology, he adds. 

This means accepting the inevitable risk that any given experiment will fail. 

“You can learn a lot from what didn’t work,” says Gregoire, who reports that unsuccessful experiments are actually celebrated at Bayer. 

This is not about getting jubilant when things don’t go as expected, of course. Rather, it’s about seeking insights from failures instead of brushing them under the carpet; explicitly acknowledging that testing new tech is not without its downsides; and actively encouraging people to engage in the sort of calculated risk-taking that fuels successful innovation.

Iaquinto notes that many of the most exciting use cases for AI have yet to enter the mainstream. “We’re in the 10th minute of a 90-minute match,” he says. 

Marketing chiefs who’ve been slow to grasp the benefits of AI’s recent advances therefore still have time to try to catch up with the early adopters. But, while they’re focusing on the technology and all its potential uses, they would be wise not to ignore the cultural considerations of applying it. 

Purchasing power: who gets to make the final decision?

The responsibility for signing off purchasing decisions typically rests with the most senior person in the department concerned, but that authority could – and should – be delegated downwards in many cases

All too often, the responsibility for approving a purchase travels upwards through an organisation and doesn’t stop until it reaches a CXO. But, if a company is to be run at optimum efficiency, not all such decisions need to go that far to get the green light.

Determining which decisions require C-suite sign-off and which can be made further down the chain of command isn’t always clear. Companies seem divided on who should be making the final call. 

For instance, Raconteur’s new survey of 1,100 business leaders has found that chief information officers signed off purchasing decisions concerning enterprise resource planning systems in 40% of cases. In the remaining companies, that responsibility was evenly split between IT managers and IT directors.

Deciding who makes the final call

One of the first tasks in any decision-making process is to determine the person who will make the final call. Randall Peterson, professor of organisational behaviour at London Business School says: “You have to declare who that is. Otherwise, people don’t know who to try to influence and persuade, making the process totally inefficient.”

In many businesses, this responsibility falls to the most senior person in the room. Raconteur’s research shows that CXOs make the ultimate buying decision on eight out of the 14 products and services covered by the survey, while directors do so in six of the categories. 

Although this seems a natural and logical way of determining who gets the final say, it’s not always necessary. Peterson suggests that, rather than looking at seniority alone, organisations should pick the person with the most appropriate attributes. That’s likely to be someone with the best interests of the business at heart, who’s considered fair by all involved and who’s happy to consider different ideas and listen to the arguments for and against them. 

It stands to reason that any good CEO should have these qualities, but that’s not to say that others further down the hierarchy can’t also possess them. 

“Someone junior can absolutely be making some very senior decisions,” says Erika Eliasson-Norris, a leadership adviser and founder-CEO of the Beyond Governance consultancy. “But it depends on the organisation and the personalities of the people involved.”

When to give more junior people responsibility

There are obvious contexts in which giving someone more junior such responsibility would be inappropriate. Take construction and pharmaceuticals, for example. These are two industries in which the ramifications of a poor decision can be particularly severe. 

“Making the wrong call in areas concerning health and safety could land someone in prison, so you probably wouldn’t want to be delegating that responsibility,” Eliasson-Norris notes.

You have to learn to delegate. Otherwise, your business will grind to a halt

Understanding the possible consequences of making a poor choice can therefore be the easiest way of determining who should be signing off a given purchase. But, equally, expecting a senior manager to approve every such transaction is unrealistic, especially in larger organisations. 

“You cannot be the sole budget-holder for procurement when you have a team of 250 and a £10m budget,” Eliasson-Norris says. “Even if you’re the founder and don’t trust other people, it would be impossible for you to sign off everything. You have to learn to delegate. Otherwise, your business will grind to a halt.”

If an organisation is incapable of effective delegation, it risks bestowing too much power to one person. Without proper governance, this can reduce accountability. Eliasson-Norris believes that there should be some form of documentation giving senior members of the organisation powers of veto over certain decisions and, in certain scenarios, the ability to dismiss the person responsible for a particularly bad decision. 

This aspect of governance is “the key to ensuring that money is not misused”, she says. “We often hear from MDs who say a hiring manager has brought someone in on a six-figure salary but when they try to hold the individual accountable, there is no documentation saying they shouldn’t have done it. Without those rules in place, no one knows what they should or shouldn’t be doing and, no matter how misguided the decision might seem, they will have thought they were acting in the best interests of the business.”

Strategies to democratise decision-making

One company that has found a novel way around this challenge is office management platform Kitt. As the business grew, co-founder Steve Coulson decided to adopt a mini-CEO structure, which gave people decision-making powers further down the hierarchy.

He recalls a “painful transition moment” when the startup grew from 10 to 50 people and the old ways of working were no longer effective. 

“As a co-founder, it’s possible to run your business in the early stages as a benevolent dictatorship, making decisions and executing against a single clear vision,” Coulson says. “But, once you hit a certain size, you can’t work that way because you no longer have all the answers and there will be many people in the business who are much better than you at certain tasks.”

Coulson created a system that allowed people to take ownership of their own decisions and their outcomes. Under the mini-CEO structure, high performers are given the chance to run their area of the company as if it were a separate business. 

Although this shifts all decision-making powers on to the mini-CEOs, each one has to reconvene with the co-founders once a quarter to bring forward a document of all the changes they want to make in the short term. This enables Coulson to assess the impact it would have on the bottom line and the necessary budgets.

One of the difficult elements of this format is allowing people to make their own mistakes. Coulson says. “The hardest thing is standing back and watching the car crash happen. But that’s the only way a mini-CEO develops. The more bad decisions you make and learn from, the better you eventually become.”

It may be easier to look at a bad decision as a learning opportunity when the financials involved are smaller. But there is still something for leaders to learn from Coulson’s willingness to delegate. Balancing the distribution of power and accountability is the key to ensuring that decisions cross the finishing line

This article is part of a report analysing the state of business decision-making. Based on exclusive research of more than 1,000 senior leaders by Raconteur, you can explore the full report here.