Mad Men – But This Time It’s For Real
August 6, 2013
You don’t have to be a fan of ‘Mad Men’ to be bemused, bothered and bewildered by the planned mega-merger between two of the world’s largest advertising groups, Omnicom and Publicis. They are, respectively, the second and third largest in the world, and together they’ll be the biggest, forcing Martin Sorrell’s WPP into second place.
But advertising isn’t about scale, it’s about ideas. If I were a customer of either of these two leviathan-like businesses, would I give a fig that my creative work came from the largest group in the world, not the second largest? I very much doubt it. If I was a sensible customer, I’d know that the creation of ideas needs a culture which is pre-occupied with quality, not quantity.
I might even be a bit unsettled by the thought that the top people in my advertising agency would spend most of the next couple of years jockeying for position in their own business, not worrying about creating better ideas to help my business.
Almost everything about this deal makes me glad I’m neither a customer nor a shareholder of either Omnicom or Publicis: it looks like a textbook example of why you shouldn’t do a merger.
The logic, so-called, of the deal is that it will enable $500 million of “savings” to be generated. This is a euphemism for firing people. And $500 million of salary savings is a lot of people. Will they really be able to save that much? And if they do, why were they so over-staffed before?
But one place where they won’t be firing anybody is the executive suite. It’s been decided that the Chief Executive of Publicis, Maurice Levy, will be co-chief Executive of the new organisation, alongside John Wren, formerly Chief Executive of Omnicom. Oh really? If you want something to work well you need to put one strong personality in charge of it. If, on the other hand, you want it to fail dismally, put two strong personalities jointly in charge, then wait for it all to implode under the weight of two incompatible egos. You can’t have two people in the driving seat: it just doesn’t work.
Of course there are successful businesses which have been built by two people together. David Ross and Charles Dunstone worked closely together to transform Carphone Warehouse from a simple idea into a massive commercial success. Behind the scenes at Laura Ashley, it was the relationship between the eponymous founder and her husband, Bernard Ashley, which made it a huge business. And there’s Dolce and Gabbana; and more. But all of these partnerships are between people who chose to work together to build the business. They will have built a culture and a modus operandi at the same time. None of them are partnerships formed long after the business was built, after the culture and the way of working were established.
When Levy thinks they should turn right, and Wren want to go left, how will they decide? By the time they’ve answered that question it may be too late to go either way. When Levy favours one candidate on the shortlist for a key job, but Wren favours another, will they spin a coin?
So for Levy and Wren to try to run this thing as one two-headed creature seems doomed to fail. But it gets worse: the plan is that Levy will stand down in two years time, when he’ll be 73, to become non-executive Chairman, allowing the younger John Wren, who will then be a mere stripling of 63, to become sole Chief Executive.
It’s generally accepted that it’s a bad idea to let a retiring CEO become Chairman: he’s been too involved to have true objectivity, and he won’t bring a fresh view to bear. It’s also generally accepted that management, however gifted, eventually reach an age when they should make way for a new generation of talent to take over and inject new blood and new thinking. Levy and Wren don’t seem to care about any of that.
This all makes me a bit suspicious. This looks like a job destruction scheme for $500 million of staff. But it also looks like a Job preservation scheme for two men in the autumn of their careers; two men who know everything about getting to the top but nothing about letting go gracefully when they’ve been there a while. Could It be that Levy and Wren can’t see how to grow an advertising business in the face of a weak world economy and a thriving internet, but are too proud to stand down and let someone else have a go?