Last week, during the visit of Sir Martin Sorrell, CEO of WPP Plc to India, IMPACT, in association with Zee TV, organized an exclusive closed-door interactive session for five bright Under-30 professionals from the Indian advertising industry and the legendary Sir Martin. It was a poignant time indeed, as the 70-year-old Sir Martin took his young audience through the triumphs, trials and tribulations of his youth, shared his own life lessons and advised them to find something they enjoy doing, and then build a reputation around it. The youngsters, on the other hand, candidly asked questions to which Sir Martin gave earnest answers that they are bound to treasure for years to come
When I was 40, I said to my Dad: “I’d like to go out and do something on my own.” So I borrowed some money - I had a significant shareholding in Saatchi’s which was worth a couple of million pounds at that time - I think I borrowed £250,000 and pretty around my 40th birthday, invested in Wire and Plastics Products, and the rest is history.
Sir Martin Sorrell, CEO of the WPP empire, is now 70, but still follows his father’s advice – “Find something you enjoy, build a reputation and then if you want to do something of your own, do it”. “Now, that’s the conventional wisdom,” he says, “but not the wisdom of today... Today, you do the grasshopper stuff, you flit from opportunity to opportunity, you get better experiences... I am not sure I agree with that, partly as I am biased because I am trying to build a business over a long period of time. We don’t like people going off and starting businesses and if they are going to start businesses, they can start them with us rather than going off and doing it. So, I am a bit old-fashioned in that way and counter the conventional wisdom.”
Here are excerpts from his conversation with Neha Bansal, Associate Director, Digital Strategy, PHD India; Aniruddha Atul Bhagwat, Co-founder and Director, Ideosphere Consulting; Mihir Karkare, Co-founder & VP, Social Wavelength; Abhishek Chandran, Social Media - West Head, Maxus and Garima Bijlani, Group Manager, Digital Media - Strategy & Planning, FCB Ulka Advertising.
Neha Bansal: In the communications industry, we harbour the best talent, best thinkers, best creative minds in the world, but it seems our validation comes from the client and our identities are created because of the client. How and what can we give back to society beyond our regular CSR initiatives?
Sir Martin: I don’t think we are particularly good at developing talent. So 20 years ago, we started the WPP Fellowship Scheme, which is harder to get into than Harvard Business School! On the 20th anniversary, we produced a book, which I am very proud of because it clearly demonstrates the success we have had in finding young talent. Basically it is a three year programme, you do each year in a different continent in a different function. So, you can start with J Walter Thompson, advertising in the UK , go to New York to work at Ogilvy One and then go to Shanghai to work for Group M or Millward Brown and then you get a permanent job with a WPP company. We do that at an undergraduate and postgraduate level. My biggest fear was that it would be copied. But nobody in our industry has copied it at all. That is an indictment of the industry, which does not invest in talent or training; it doesn’t develop people. You are a good case in point. I need a Unilever planner, so I steal the talent from another agency... we are cutting our own throats and by the way that also introduces escalation in compensation which I am not against, but it causes unnecessary pressures inside the industry. If you look at the great professional services companies, I would say McKinsey and Goldman Sachs are the two gold standards, that’s why I think WPP should try to emulate them in a lot of things that we do. Have we managed to emulate them? No, but are we thinking about what we need to do for that? Yes, that is where we want to get to. They are not multi-branded, like Omnicom or ourselves or IPG, they are uni-branded which is an easier model. They have tended not to grow by acquisitions which is also an easier model, because you don’t have multi-cultures that you have to deal with from a company point of view, but they have consistently over long periods of time during boom and recession recruited the best and the brightest and they have an upper cut; they are much better at evaluating talent, franking culling if they need to cull, but we don’t do that. And that is the worst thing. So, what can we do? One is to educate. So we have the WPP school here in Mumbai, with university qualifications, but primarily with a technology emphasis. In China we have 150 students doing four-year courses to kindle self-interest, and at the end of the course, we pick up the best people. Then we are also doing the CSR initiative, with companies getting together to help underprivileged and challenged kids go to school. We do pro-bono work through our agencies and purpose work for clients, which is phenomenal. At the WPP school, we develop the curriculum and provide the teachers, not permanent faculty but we have got 50 volunteers who are teaching there for the next three years. It is an intangible way of developing more loyalty to the company; people will have greater interest so those are some of the things... It is primarily about talent and talent development, which as an industry we are not good at.
Mihir Karkare (MK): For a lot of us in the industry, you come across as superhuman, nothing gets past Sir Martin...
Sir Martin: Oh there are plenty that does, plenty of goals that get scored!
MK: For you, whom we perceive as superhuman, what were some of the personal limitations that you have made an effort to overcome and how did you do that?
Sir Martin: There were none that I would admit to! I will put it the other way - I don’t think what we do is brain surgery, you overcame the lack of an MBA, you may be being nice but I don’t think you are limited by that. You are only limited by your own ambition. When you get knighted you go to the college of heraldry in London which is an amazing place because it was destroyed by the Great Fire in 1666. They have these hand-painted shields and books where they have collated by hand, beautifully scripted descriptions of crests which you have to put together and motto, and you design your crest with features important to you. My motto is persistence and speed, not particularly fancy qualities... So I wouldn’t necessarily talk about the limitations because both of the things you have said have sort of implied inferiority complex, I don’t have an MBA , limitations.... I would put it the other way - you know it is true and I have said this that faced with two candidates with equal capability, one with an MBA and one without, I would choose the MBA because I think when you do particularly good in schools, like the Indian School of Business (ISB) which I am involved with, you sought of self-select, but that is a bias because I am biased towards MBAs... You don’t want to feel in any way limited, inferior or different as a result of it. The only thing that limits you is the scale of your ambition. Now if you asked me what I think I have failed to do... When I was in business school, there was a man called George Cabot Lodge who was a professor and I didn’t think he was a particularly good professor; he taught Business Policy & Environment, and it was a compulsory course in the first year. George was the son of Henry Cabot Lodge, Secretary of State in the Eisenhower government. He had a theory that in order to get an ‘A’ in his course all you had to do was to draw - I am not joking! All you had to do was to draw a diagram, it was three circles that sort of had a Venn overlap, and the three circles represented family, society and career. I and all 100 others in my section at Harvard Business School thought his theory was a hoax, but it wasn’t actually and it is proven to be absolutely the only thing I remember from the whole two years I was there! It is how you balance those three things. I should probably say they are equally important but I would prioritize them. I would say that I have been pretty good at doing two of those things, or maybe one; I haven’t been successful in combining all. There are very few individuals who give the right amount of effort to all three. My mother said the worst thing I ever did it was to go to HBS, that HBS made me the worst human being and there are a few people who would agree with that. My limitation, coming back to your question, is the balance thing. Management of time is the most difficult thing because the world is coming at you 24x7, but the biggest issue is how you balance all the investments that you should make – family which is core, career which is very important and then society which is very important too. You can do it as long as you have the ambition to do it.
Abhishek Chandran: My question may seem a little tactical right now... In an era with Facebook and Google dominating digital media spends, how do the smaller publishers keep up?
Sir Martin: We plan and buy media investment management worth 76 billion dollars. RECMA has us at $ 104 billion, but that is the rate card; anyway, we are the largest. Of the $ 76 billion, last year three billion went to Google and that was the biggest investment we made on behalf of our clients. This year, it will be $ 3.6 billion. Interestingly, Facebook was at $ 640 billion last year and this year it will be about $ 900-940 billion. Other major offline, traditional publishers are somewhere between $ 750 million and $ 2 billion; so actually Google is the dominant one, and we are the largest investor in Google, Facebook... you are right, they dominate, but it is Google that really dominates. Facebook has caught up and is getting stronger, but it is not as successful as Google. And then AOL is about $ 100 billion, Twitter is about $ 120 billion and Yahoo is at about $ 430 billion. So the rough order is the magnitude for us - Digital is 40% of our business or close to that, so we are over-indexed against 20 for the market. Today to say that Facebook and Google dominate is probably a little bit of an exaggeration; I would say Google dominates and Facebook is very important. Facebook to me is a branding medium - they get very upset when I say that. All of these things are sort of chipping away at the market position, but the fundamental thing is clients demand transparency, so how does the algorithm work? Facebook drives into Atlas or makes that a condition, less so with Google which make it a condition to use Double Click, that is why we have responded with Xaxis on the programmatic side and AppNexus, so we have our own agnostic platform to compete with Atlas and Double Click. I agree with you, it is a conundrum and then if you add in Apple, and its walled garden, and then you start thinking what is happening with Amazon and Alibaba... Alibaba in China is our frenemy, Alibaba will go directly to our clients as well as deal directly with the agencies, so it is complex and it is worrying, and by the way we are capitalized at about $28 billion; Omnicom is No. 2 at $16 or 17 billion. But we are midgets in comparison to Google, Facebook, Jack Ma, Alibaba or Amazon. So, in order to compete with these people, we have to take very different positions.
Garima Bijlani: In today’s world, where digital plays a most important and pivotal role, how do you perceive the role of a client-servicing person to add value to the brand?
Sir Martin: I think it has to be on a fully integrated basis. I remember seven years ago, when we pitched HSBC, it was the first client really to want a holding company integrated approach. If you walked into the office in the 1950s, there was the advertising agency, the planning department, the creative department, media department, there was a PR department, British Market Research Bureau, all in there... what we have done is sort of deconsolidate the functions, specialize and then try and build. HSBC wanted one holding company, and everybody laughed. But when we won the business, people didn’t laugh. And then that became Samsung and the rest is history. So the mantra now and strategy in our fast-growing markets is Digital, Data and Horizontality, though horizontality is a crude word for getting people to work together for the benefit of clients, that is absolutely critical. On the account service side, we have account people who manage our top 45 accounts - $7 billion out of $19 billion in revenue. There are 3,8000 people, the biggest account is Ford, second biggest is Unilever, third biggest is Procter & Gamble; they each have people who co-ordinate or run the accounts and the model that works the best is the Team Detroit model, the Blue Hive model and the Colgate Red Fuse model, which are fully integrated and literally seamless. If you have got a large organization which can provide the resources, integrating it is very difficult but we have to do that. People running advertising agencies didn’t understand the importance of medium and so you had all these people who went off and started independent media planning and buying operations and they have all been reconsolidated without exception into the “full service agency”. In the old days, you had weak pillars which we tried to put a roof on and of course the thing came down. That’s why it didn’t work, so I would say the answer is to have people who fully integrate in an agnostic way... so they don’t come from the creative department or the strategy department of the ad agency... It may be that we start with experiential which Encompass and Geometry can focus on, it may be we start with Digital and there are campaigns which are now done which are totally Digital... there are cars that are launched without any traditional media.
Aniruddha Bhagwat (AB): When we started Ideosphere Consulting, one of the things we took inspiration from was the WPP group in terms of structure... we also took it from Tata & Sons... the way they have the holding structure...
Sir Martin: Their structure is very different from ours, though, as they have separate companies.
AB: I couldn’t get yours right! So despite taking it slow over five years, we have built five separate companies and they are profitable. The problem lies in managing this growth - How does a young independent agency manage growth and what is the balance it should strike between organic sustainable growth and inorganic fast-paced growth?
Sir Martin: It depends on what you start out with - I started with nothing, I had a wire basket company. One of the things if I look back at my Harvard Business School days is that for two years, we were doing three case studies a day and it was always what should the Chairman and CEO do, and there was stuff on small companies, but it was basically big companies. It was AT&T, or equally massive companies in the furniture, electronics or oil industry. So we tended to look at big companies and I like scale. I don’t like rinky-dink, and we had rinky-dink, manufacturing pots and pans, kettles and so when we had the opportunity to buy a company - the JWT group, which was 13 times our size - to my mind it was a no-brainer and at that time I had 16% of WPP and I could take over a company that was 13 times our size. It was unprofitable, we were making money but it would shrink my shareholding from 16% to 8%. In my case, inorganic acquisitions played a heavy role because I had nothing; if I had a big company to start with, I could focus more on it... inherently a company that grows by acquisitions is weaker than a company that grows organically. I mentioned Goldman and McKinsey - they are uni-branded, so they are different to us as we are multi-branded. They have grown organically whereas we have made acquisitions. Interestingly, when they have made acquisitions they have largely found it very difficult and the reason is that they have strong cultures which like amoeba reject foreign bodies (it is the only thing I remember from Biology!) so usually the acquisitions they make are difficult or fail. So it depends - some people are good at starting businesses and are lousy at running them, some are lousy at starting and good at running. I wanted to start something, people say I am lousy at running them but I have always wanted to do things on scale. I am not a serial entrepreneur, I want to build a long term sustainable business and everything I do is to that end. People tell me I am a lunatic so all my net worth is tied up in WPP, and conventional wisdom is that you shouldn’t do that - you should diversify, you should not be dependent for your pension - you should work in a company, and you should be paid for working in that company and you should invest in something else. I disagree with that - my Dad always told me to invest in the company that you know best, the one that you work in. The portfolio investment was a mug’s game in his view because you were investing in things you didn’t know. Leveraging what you have inside the businesses is easier when they are in one structure than when there are in five... and when you get five, you tend to have different share-holders in each and the difficult thing about horizontality is that we run our business vertically - we do our planning, budgeting , evaluation, incentivization, all on a vertical basis. We are diametrically opposed to Omnicom’s philosophy that we are a holding company and the benefit of joining Omnicom is that we don’t interfere - that is a 19th century philosophy or if I am being generous 20th! The 21st century thing is how can we work together to be more effective because the Omnicom model, if I can call it that, is so old-fashioned and it doesn’t keep up with the times because the demands on our clients is so violent and difficult. You have disruption, you have zerobased cost models, and then you have activist investors, all of whom are forcing clients to take a short term view. I think that is wrong but that is life and what we have to do is bring everything together.
