The Cobbler's Children Face the Digital Age

“We have one simple purpose: to create growth for our clients.” – WPP

“Physician, heal thyself.” – The Gospel According to Luke


The cobbler’s children are still barefoot, as growth continues to evade WPP, according to its recent quarterly results. Down slightly, the bottom line is that WPP did not make any more money in the first quarter of 2018 than it did in the same quarter of 2017.

Apparently flat is the new up for Wall Street, as the stock rallied almost 10% on news it did not lose even more money than was expected. It was a peek inside the quarterly earnings game of smoke-and-mirrors that gaslighted Sir Martin Sorrell for years, seducing him to abandon vision and strategy in exchange for super-sized bonuses and bragging rights over the French and Americans. All hare, no tortoise, Sorrell cashed in early and often rather than patiently take the longer and higher road to cross the finish line with market cap and integrity intact.

I imagine it is bittersweet to watch your vast wealth increase partly in response to your leaving the company. Reputation aside, it was another win for Sorrell, who like, Eva Peron, nobody is crying for. While enquiring minds still want to know about the allegations of personal misconduct that led to his fall, from a strategic perspective, Martin Sorrell is water under the bridge. The shopping spree is over, bills are in and it seems like a lot of purchases don’t fit as well as they did in the dressing room. Some will have to go back.

Which was the real news in the WPP call, a quiet admission that underperforming assets and minority stakes in digital, data and mobile companies would likely be sold, couched in a loud assertion that it would in no way divest to get to growth. The pivot was not lost on investors who finally got the news they were waiting for that the world’s most gluttonous communications company is going on a diet.

Of course, it is ironic that the company most frequently mentioned to be for sale, Kantar, is in the data analytics business. If the “world’s leading research, data and insights” company can’t profit from a strategy of “horizontality” in the era of Big Data, what hope is there for the rest of the portfolio? Truth is the rewards of agency integration have always been little more than wishful thinking, packaged and sold to CMOs and procurement departments as cost efficient models, despite a failed record of results. Whether Co-COOs Mark Read and Andrew Scott have the courage to slay the beast they helped birth remains an open question.

After all, the logic to creating bespoke teams for a client with best of breed talent from across the WPP network is appealing. Everything you need, nothing you don't from an agency menu the size of the Cheesecake Factory's. The challenge is hidden in the small print. No agency is willing to lose its best talent to an All Star team, whether they book the revenue or not. And the best talent has no desire to leave the team it joined for a random assortment of people from elsewhere in the holding company, a transactional organization that means nothing to them or anybody else. It is a recipe for mediocrity that could only operate by decree from on high, a mandate from the CEO formerly known as Martin, who invested all his energy into championing the model. L'etat, c'est moi.

Not anymore. The surprise departure of Sorrell has provided an opportunity for WPP to reverse course and switch strategies. It is time to loosen its grip and decentralize control.

Frankly, they have no choice. We live in an era most effectively governed by local autonomy and mutually beneficial strategic alliances. A forced marriage didn’t work for the Soviet Union, and it’s not going well for the EU. Global agency networks like Grey and Ogilvy, massive in their own right, are already challenged by governance in a shape-shifting industry. Creating and managing a hybrid, independent and – wait for it – matrixed entity that draws talent from each of them, along with hundreds of others, is unworkable.

Which is why clients are rejecting them. In a contest against lean and agile, bloated and clumsy loses every time.

For WPP to succeed, it needs to become the digital company it has always aspired but failed to be. It is much more foundational than simply acquiring talent who know how to write code or create content and billing them out on an hourly basis through the same old account-managed structure. 

To transform, WPP needs to place innovation at the core of its strategy and incentivize agencies to compete and cooperate with each other through the strength of their ideas, not by fiat from the corporate office. A strategic shift from staffing resources to nurturing imagination. From bodies and billings to collaboration and creativity. Redundant layers of seniority to flat as a crepe.

Rather than dilute culture and brand equity by forcing a roster of agencies to hold hands and sing as one, why not celebrate differences and help each succeed at what it does best the way it chooses to roll?

And then connect them. Enable the sourcing and sharing of ideas through an intentional "open source" network, an API-like structure that fosters a frictionless exchange across the global network with creativity as its currency. Local and global. Crowdsourced and co-created. Independent but allied. Vertical yes, but effectively horizontal.

If you want to compete with technology companies, think like one. In tech, people are the most valuable asset, not a fungible expense to be staffed wherever the spread is largest that day. They cultivate and hoard their precious resource. The result is ingenuity, innovation and the elusive growth WPP believes lies full speed ahead, just beyond that iceberg.

Despite the current backlash, our world is increasingly borderless, and no wall can block the free flow of ideas from person to person. In our business, control has shifted rapidly from top to bottom, mass to micro. Fox News attacks a Parkland student, and he fires back, instantly chasing away advertisers terrified of being on the wrong side of public sentiment.

Marshall McCluhan was right. More than ever, the medium is the message. In the Digital Age, like it or not, we all have a voice. Resistance is futile, which is why WPP must seize the moment to change or risk being marginalized by stronger players – Google, Facebook, Publicis – that understand how influence is shaped, ideas shared in a time of disruptive communications. It starts by letting go and getting out of the way. Giving companies the autonomy to evolve or die, the encouragement to try things different, the space to fail and the currents to fly.

After all, imagine what the cobbler could make happen if he finally got his shoeless kids a pair of Air Jordans and told them it was time to lace up, step forward and Just Do It.

Marty LaiksComment