Musing on Chief Revenue Officers - do we need them at all?

Profile picture for user Neil Raden By Neil Raden March 19, 2021
Summary:
As a job title, Chief Revenue Officers are trending. But is CRO a needed role? And if so, how is it defined? Are there other ways to oversee revenue growth and accountability?

man-asking-question

Recently, a client asked me if I had any thoughts about a particular candidate for a new position as Chief Revenue Officer. I responded: that's an important conversation that could affect someone's career, and would they mind if I slept on it for a few days?

The next thing I did was to find what the heck a CRO did! I'd never given it much thought, because I always thought it was sort of ridiculous, and yet another case of the C-people explosion. Wasn't everyone in a company responsible for revenue? I realized after researching that it was much more nuanced than that.

A few years ago, I was a judge of an annual award for organizations that made significant improvements in their data and analytics use. There were several categories, but I was in the "for good" group, which excelled in applying this technology for humanitarian efforts. One submission was from Monsanto. I didn't even read it, and it went straight in the cylindrical file. Another seemed intriguing. It was one of the premier medical research and hospital organizations. They claimed that they were "applying emerging technologies to save lives." I pondered that for a minute and thought, "Isn't that what they're supposed to do? Why would I give them an award for that?"

What does this story have to do with Chief Revenue Officers and Revenue Operations? I always thought that Sales, Marketing, Customer Service, even executives - were all responsible for revenue. After researching, I learned that sales organizations and marketing organizations frequently operate under different assumptions and processes. I guess the COO or CEO is not involved in getting them on the same track.

Is CRO just a new title for an executive in charge of Sales and Marketing, or is it a role to rationalize and drive every aspect of revenue? My understanding of the concept of the Chief Revenue Officer, or CRO, is a single corporate executive officer responsible for marketing and sales. The CRO does not just oversee two separate departments, but is responsible for managing them as one seamless organization. Or is there more? It seems to imply the integration and alignment between all revenue-related functions, including marketing and sales and customer support, pricing, product development, and revenue management. That seems like a lot for one person, so presumably, the CRO has a staff as well. An org chart might look like this:

CRO - org chart
(CRO org chart example by Neil Raden)

My first thought is, isn't there already a COO (or even CFO) to do this? That looks to me like a Span of Control of six, of widely different roles and skills. But if the CRO is expected to integrate these roles rather than just manage them in the traditional sense, that seems like a tremendous job. The conventional wisdom on this is that the CRO is responsible for articulating its revenue strategy, go-to-market strategy, and execution. It raises a question in my mind. Whatever happened to agile, matrix management? Why is this role so hierarchical? Is it possible to unify the vision and execution across six or ten or twelve distinct functions in a top-down arrangement? 

If companies with CRO excel and those without don't, the implication would be clear. But it seems to me there is some ineffable force that guides some companies one way or another, and it doesn't seem to be a CRO. In most organizations, revenue generation is a shared responsibility between the CMO and VP of Sales. 

But are there indisputable advantages?  

  • One would expect a CRO to have a longer-term perspective and frown on quick-wins that can dilute the strategy or offend a segment of the customers. Sales groups are typically razor-focused on the quarter and rely on a solid pipeline for the next one. That's a conflict. 
  • An organization-wide strategy and execution of revenue generation would appear to be, in principle, superior to each department doing its best and creating a gestalt effect (where the whole is greater than the sum of the parts). Each group is not just pursuing its objectives. They are all operating in the same strategy, and alignment of both purpose and strategy produces the best revenue results (presumably).
  • These groups, customer success, customer acquisition/retention, sales, and marketing, have operated independently and traditionally operate in their silos. If the CRO is enabled with visibility into every part of the organization, they can ensure that they work in harmony. 

Are they indisputable? That's the theory. But a little counterfactual reusing is useful. What if there wasn't a CRO? Is it a given that all of the departments would run their prerogatives? Perhaps each group's tactics may vary, but aren't everyone incented for the organization to do well? It reminds me of a story long ago. I was designing a data warehouse for an F20 multinational company. At one point, I was speaking with the CFO and talking about KPI's. I said to him: the KPI's he kept mentioning were all financial. We'd like to capture information for some non-financial KPI's as well. His response was, "What the hell in a profit-making company is a non-financial KPI?" Organizations with "siloed" Sales and Marketing generally will not change their modus operandi overnight, and slide easily into a new collaborative environment with a newcomer with a new "Chief" title. 

My take

Whether a CRO makes sense or not, the more significant problem is not finding the right person and enabling them to do the revenue operations jobs. It's getting everyone else on board. Wouldn't a revenue strategy drive from a high-level strategy that presumably is the role of the CEO, CFO, and COO? Since all of the revenue departments report to the COO or CFO or both in a matrix arrangement, wouldn't the GESTALT occur through management and governance of those groups, rather than an intermediate level of a revenue czar? I just don't see it.