Reed Hastings, the founder of Netflix, set a vision for the company that involves pursuing financial results while also showing concern for environmental issues. To address emissions from its supply chain, Netflix is funding programs that preserve and restore nature's ability to store carbon dioxide. The corporation invests in projects such as worldwide forest protection.¹

Netflix began as a DVD‐by‐mail rental service that didn't impose late fees if customers kept a movie for a long time. Customers only had to pay a subscription fee to rent the DVD. The movies they wanted to see were mailed to them, along with a prepaid return envelope.²

Over time, Netflix added on‐demand streaming services, which proved to be successful. Following Blockbuster's bankruptcy in 2010, Netflix continued to develop rapidly. During the pandemic, Reed capitalized on chances by employing the correct marketing methods and dramatically increasing the number of customers.³ Netflix brought in 37 million new memberships in 2020 and 18.2 million more subscribers in 2021.

From the study of Netflix, we learn that leadership is crucial in entrepreneurial marketing. Reed's example shows how he oversaw the firm's beginning and ongoing innovation efforts. The company continued to grow and expand during the pandemic. Its sustainability investments help solidify its commitment to both consumers and the planet's well‐being.

Moving from this example to the omnihouse model, we can see that leadership is the rightmost element of the CI‐EL elements. We discussed creativity and innovation in previous chapters. We also looked at the shift from professionalism to entrepreneurship. Now we come to the last two elements, namely, leadership, which must be converged with management (see Figure 10.1).

In the following sections, we'll explore the connection between leadership and entrepreneurial marketing. We'll observe the relationship between leadership and management. We'll close by tying in the value components for shareholders and looking at how these can be measured.

Leadership and Entrepreneurial Marketing

Much has been researched and published on the topic of leadership. Literature has discussed in‐depth the types of leaders, leadership styles, and characteristics of great leaders. Several theories and models have been developed from the ongoing and broad study of leadership, as well as how leaders and their subordinates interact.⁴ Various views about leadership are popular among practitioners and academics, including transformational leadership, situational leadership, and authentic leadership.

One factor often associated with leadership is a vision, or dream, of what an organization will achieve in the future. Leadership is often associated with transforming an organization.⁵ This change can encompass monetary and other goals. Daniel Goleman once expressed his opinion that a leader's main task is to achieve results that go beyond the financial aspects.⁶

According to Gallup's 50 years of research, there are five primary roles of great leaders:

• Inspire teams to do exceptional work.
• Set goals and provide resources for teams to excel.
• Influence others to act, pushing through adversity and resistance.
• Build committed and collaborative teams with deep bonds.
• Take an analytical approach to strategy and decision‐making.⁷

Discussions are often separated between leadership and entrepreneurship, and leadership with marketing. It can be challenging to find sources that cover the relationship between leadership and entrepreneurial marketing. When the keywords leadership and entrepreneurial marketing are searched together in scientific journal databases, the results often do not discuss the two together.

Leadership and Entrepreneurship

Ruth Gunther McGrath and Ian MacMillan initially proposed the entrepreneurial leadership concept in 2000. “The world is becoming too volatile and unpredictable to adopt conventional leadership tactics,” MacMillan wrote in the book The Entrepreneurial Mindset.⁸ Examples of how this plays out in business are still being widely discussed.

An individual who applies an entrepreneurial approach in their professional career requires qualified leadership skills. Unfortunately, this leadership ability―from developing a vision, communicating it, setting an example for others, and creating new leaders―is sometimes taken for granted.⁹ According to scientific research, the combined influences of nature and nurture play a significant role in leadership development. Data have revealed that environmental impacts have a more substantial effect on people's leadership paths.¹⁰

Entrepreneurial leadership can have a positive influence on company performance. Strong leadership is defined as the ability to direct the management team in line with company goals and strengthen team morale and confidence, which in turn increases employee engagement and commitment.¹¹ In this sense, strong entrepreneurial leadership is one of the essential factors for establishing a company's competitive advantage.

Entrepreneurial leadership also plays a vital role in the development of the people in an organization. Data collected from the manufacturing industry in a developing country found that entrepreneurial leadership is positively related to employee creativity.¹² Another study in China found that entrepreneurial leadership can reduce employee turnover.¹³ In essence, leadership must be able to build competitive advantage through the development of personnel, including coaching, mentoring, learning‐by‐doing, and other formal courses.

Leadership and Marketing

Without strong leadership, marketing will only run normatively or by procedure and will not cope with the fast changes triggered by the increasing role of digital technology. We cannot implement marketing based merely on a “professional” approach. More than 55% of the business impact achieved by marketing executives is due to leadership factors, and about 15% is due to the contribution of technical marketing skills. Here, we can see that leadership in marketing plays a crucial role in providing value in the form of solutions for customers. It also uses company resources productively to ensure optimal results.¹⁴

The implementation of marketing strategies also requires strong leadership. Marketing will not function without leadership. The marketing leader's position is growing in importance. This has become increasingly evident during times of uncertainty such as the COVID‐19 pandemic. Strong leadership is needed to direct all potential teams within a company to realize a robust customer‐centric approach, which will determine the company's market share.¹⁵ By staying focused on these dynamic customers, the leader will direct his team to always be adaptive.¹⁶

As the responsibilities of marketing leaders expand across a more extensive range of activities, CEOs and CFOs are increasingly inviting them to the executive table. Nearly a third (31.5%) of senior marketers say they participate in earnings calls all or most of the time. More than half (53.5%) say they attend board meetings all or most of the time.¹⁷

Determining excellent leadership is vital for marketing success, especially in uniting, directing, and motivating the marketing team to move according to the predetermined strategies and tactics. Leadership also has a significant role to play in planning and executing a marketing strategy, which will show financial results and also nonfinancial ones, such as customer loyalty, product leadership, and solid brand equity.¹⁸ Here, we can see the importance of a leader understanding the role of marketing in achieving goals and using the marketing function to ensure growth.¹⁹

When marketing leaders embrace data and intelligence in the digital era, they become growth leaders. According to a Deloitte survey, 56% of marketers believe that data and intelligence can help them progress their growth plans. By contrast, only 18% perceive that a profound grasp of the product range can help them advance to the next growth stage.²⁰

Leadership and Management

Leadership capabilities in management are crucial, due to rising competition and the increasingly dynamic business environment. The company cannot merely rely on its success on a normative management approach. Management requires a qualified leader, which means having strong leadership. Therefore, companies must devote their attention to ensuring that the leadership capabilities in the company remain relevant for now and in the future.²¹

According to Warren Bennis, leadership is the capacity to translate a vision into reality. We then should translate this vision into several concrete goals. And to achieve these goals, a strategy is needed. We then cascade this strategy into various operational or tactical plans that are more implementable. According to David Garvin, a Harvard Business School professor, properly implementing and executing strategy entails “delivering what's planned or promised on time, on budget, at quality, and with minimal variability―even in the face of unforeseen events and contingencies.”²²

In this new entrepreneurial marketing model, marketing strategy and tactics refer to nine elements held together by positioning, differentiation, and the brand―or the PDB triangle―as their anchors. The nine elements―segmentation, targeting, positioning, differentiation, marketing mix, selling, brand, service, and process―can be grouped into three main marketing management capabilities: customer management, product management, and brand management (see Figure 10.2). The ability to maintain company values in such a way and be able to manifest them in the nine core marketing elements reflects the implementation of leadership.

Management of customers, products, and brands that refer to values is expected for cash flow generation in the short term. It must increase the market value of a brand or company in the future. These are the results that a company should achieve through managing customers, products, and brands.

Customer management, which is part of the marketing strategy, is related to identifying the target market, selecting it, and providing a good customer experience in line with the established positioning. This in turn can lead to customer engagement, the formation of a lock‐in mechanism, and strong loyalty. KPMG once surveyed 18,520 customers from more than 20 countries on issues related to customer loyalty. The survey looked at how brands and retailers can attract and retain customer loyalty by improving customer loyalty programs. Per the study, 56% of consumers believe that how companies manage their relationships with clients through customer service determines their loyalty.²³

Product management focuses on managing the product portfolio from development to commercialization for the provision of solutions for the targeted market segment. Included in this is how a level of differentiation will translate into elements of marketing mix tactics followed by sales efforts. When it comes to the importance of a product, in a 2018 Deloitte's holiday shopping habits report, most respondents stated that they look for high‐quality items (71%) and product variety (68%).²⁴

Brand management ensures the strengthening of brand equity supported by services and processes to enhance customer value. In carrying out effective brand management, we can learn from Apple. Through a branding strategy adept at prioritizing the emotional aspect, Apple has built fanaticism among its customers. Premium services provided through the Apple Store network add customer brand loyalty to its products. In 2021, Apple was considered the most valuable brand worldwide.²⁵

Leadership and Market Value

As a capability, we can often see that leadership attached to top management in a company is a qualitative nontechnical skill. Yet the results of top management's work are often assessed quantitatively. The company's profit growth, share price value, employee productivity, and other measures have generally become key performance indicators of a leader.

A 360‐degree assessment found that leadership quantitatively makes a significant difference in company financial performance. The leaders were divided into three groups in the study: the top 10% were the best in terms of performance, the lowest 10% were the worst, and the middle 80% were the rest. Consequently, poorest performing leaders lost money. The middle leaders gained money. The top 10% more than doubled the company's profits compared to the other 90%!²⁶

The application of leadership in a company must adequately oversee a value‐creation process to meet the demands of stakeholders. This includes employees, customers, society, and shareholders or investors. The Business Reality Check, commissioned by American Express and developed by The Economist Intelligence Unit, contrasts the perspectives of business leaders with market data gathered from national, international, and specialist data sources. According to the study, 34% of executives believe that shareholder pressure to generate short‐term results is a substantial barrier to strategy execution. Moreover, 29% believe that the pressure to be accountable to a larger group of stakeholders is a significant obstacle.²⁷

Ulrich and Freed explained that we could no longer determine the value of a company based solely on the traditional approach by exclusively using the financial aspect, which covers only 50% of the company's market value according to their predictions. Investors also consider the intangible value that might be realized because of the vital leadership factor in the company. Therefore, investors need to seriously consider this leadership factor in their decision‐making process.²⁸

Leadership affects the company's performance by directing, mobilizing, and motivating the management team based on a solid corporate culture. Ouslis's research shows that leadership can contribute to up to 14% of company performance, and CEOs can contribute almost 30% to various efforts that can cause differences in company performance. Due to leadership factors, the increase in intangible value has also led to a more significant gap between book value and market value. In recent decades, the gap has become more prominent, and the market value can even reach six times the book value.²⁹

According to a research paper published by Deloitte, leadership is an aspect that is still often neglected. Although developing this leadership capability can increase shareholder value and also guarantee long‐term sustainability, the percentage of executives who agree that leadership development is very effective is still low. The importance of leadership is in line with Deloitte's findings that analysts consider the senior leadership team effectiveness aspect necessary as a judgment of company success and of more importance than merely looking at the forecast of earnings and ratio analysis. Effective leadership will increase the valuation of a company, but we should note that the effect varies from one industry to another.³⁰

Given this description, we can summarize that leadership is essential in executing marketing strategies and tactics through a management process that includes customer, product, and brand management. These are three aspects on the right side of the roof in the omnihouse model. Strong leadership can ensure that all three aspects fully embrace the values―such as honesty, sense of responsibility, commitment to quality, care for the environment, and more―that everyone in a company shares.

Strong leadership is also needed for directing and encouraging the management team to focus on the nine marketing elements included in customer management, product management, and brand management. Strong leadership and support from good management processes for these three aspects will increase the company's market value in the future. This is in line with the increasing intangible value contributed by the leadership (see Figure 10.3).

Good customer management will increase the company's intangible value in terms of stronger customer loyalty. Product management can also expand the company's intangible value through innovative solutions embedded in the products provided to customers. Brand management can strengthen the company's intangible value through higher brand equity.

Management, in the end, must show actual tangible results, both financially and non financially, while maintaining the company's values and culture as well as its social impact. Examples of its application include making an honest profit, ethically increasing the number of customers, expanding the market while paying attention to environmental aspects, and so on.

Leadership means that a person can manifest the company's values in positioning, differentiation, and branding, and then ensure the alignment of those elements with segmentation and targeting, marketing mix and selling, and service and process. Leadership is also related to leading, directing, and motivating the management team as the executor. Therefore, attention to the human aspect is one of the most critical foundations in applying leadership.

A leader must ensure that each member of a team is strongly motivated and mobilizes all their energy and competence to achieve a predetermined goal. Strong leadership will create a positive sentiment that will increase the company's market value in the eyes of investors. We can measure this market value using the price‐to‐earnings ratio (P/E ratio) and price‐to‐book ratio (P/B ratio) (see Table 10.1).

By managing three main aspects―namely, customer, product, and brand, which consist of nine core marketing elements―management can ensure that the company's fundamentals are solid. This, in turn, can increase the company's market value, which is very important for acquisition, investment, and even going‐public purposes.³³ Market value is also an essential reference for equity investors―private equity, mutual/hedge fund managers, portfolio managers, and venture capitalists―who tend to view the company's value more comprehensively.³⁴

	Price‐to‐Earnings Ratio (P/E Ratio)31	Price‐to‐Book Ratio (P/B Ratio)32
Definition	Relationship between a company's share or stock price and earnings per share. It calculates (in terms of a ratio) its share or stock price to its earnings per share. The share or stock price is based on the market value.	Relationship between a company's market capitalization (or market value) and the value of its assets. It calculates (in terms of ratio) how the market values a company relative to its book value. The share or stock price is based on the market value.
Formula
Uses	To provide a good sense of whether a company's stock or share price is overvalued or undervalued (compared to its earnings) To provide a basis for comparison or benchmark in a similar industry or a more extensive market (such as S&P Index) To understand the current market or investors' willingness to pay for shares or stocks by referring to past or future earnings	To provide a basis for consideration for investors in assessing the potential of an investment To gauge whether a company is undervalued or overvalued and use it to decide whether an investment in a company can meet the investor's objective or not To show the market perception of the value of a particular share or stock price or a fair market price for a company

Based on the company's current market value or stock price, investors will be able to calculate various ratios as a basis for making investment decisions, such as the price‐to‐earnings ratio (P/E). This ratio is one of the most used by investors and analysts for determining the stock's relative value. We can use the P/E ratio as a tool to determine if a stock is overvalued or undervalued.³⁵

We should note that a leader in a company can consist of more than one person. At every level of the organization there are leaders who are focused on a specific scope of responsibility. They must be able to move the people they lead to achieve a goal that is under their care.

One of the challenges we will face in carrying out a more comprehensive approach to entrepreneurial marketing is how to converge leadership and management. We do not want an over‐led but undermanaged condition in a company. This situation is often found in many small‐ to medium‐sized enterprises. We also want to avoid an overmanaged but under‐led condition, which can occur in large corporations.

For nearly two decades, Harvard's National Preparedness Leadership Initiative directors Eric J. McNulty and Leonard Marcus have studied and observed public and private sector CEOs in high‐stakes and high‐pressure scenarios. They've discovered that crises are frequently overmanaged and under‐led. Executives must lead and manage effectively in times of crises, which are characterized by both complexity and change. Management's job is to respond to the immediate needs of the moment. Managers must make quick decisions and distribute resources. However, leading entails guiding people to the best potential conclusion across this time horizon.³⁶

The relationship between leadership and management is in line with flexibility and rigidity, which has been previously discussed. Leadership often deals with changes or transformations from incremental to radical ones. Management maintains stability and oversees systematic activities.³⁷

This idea is also supported by Rita Gunther McGrath, a professor at Columbia Business School. She chose ten corporations from a pool of more than 2,300 significant US companies that improved their net income by at least 5% annually in the ten years leading up to 2009. These high‐performing organizations were incredibly stable, with specific organizational traits that remained consistent for long periods. They were also swift innovators, able to quickly transform and readjust their resources.³⁸

From our discussion, we can see that leadership cannot stand alone. It must be packaged with qualified management to create a balance that moves the organization through its daily activities and into the future. In addition, entrepreneurial marketing needs to be strengthened with entrepreneurial leadership, as this will strengthen the company's performance. A good combination of leadership and management will positively affect the company's market value in terms of the increasing intangibles, including creating positive sentiment in the eyes of investors. This market value can be seen in various forms, perhaps most notably by calculating the price‐to‐earnings ratio and price‐to‐book ratio, which are important indicators for investors.

Key Takeaways

• Leadership is often associated with inspiring and influencing others, having a vision, and guiding a transformation.
• Entrepreneurial leadership can improve a company's performance and drive the development of its people.
• Strong leadership is needed to manage customers, products, and brands.
• Management realizes tangible results in the form of increasing the company's market value through the management of customers, products, and brands.
• Investors will look at aspects related to leadership when evaluating a company; a strong team can help drive market value.