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In the past couple of years, the tenure of the very top agency chiefs started getting shorter and shorter. What made this mass departure even more startling is, that almost half of the exiting executives had been in their job for just a little less than two years. How bad is the game of musical chairs on Madison Avenue? McCann and Ogilvy, improbably, each had 3 different CEOs in two years!
The repercussions of this instability are devastating. People in a firm with a new chief executive face uncertainty. Firings, organizational reshuffles, and changed strategies often result in abrupt disruption and turnover. And this, of course, affects the clients directly, who one day, may wake up one morning and find that the key people on their business are gone.
When evaluating an agency, say, in a pitch, advertisers customarily focus on the creative aspect, or the chemistry with the team. I see this often in pitches that I manage. However, clients neglect understanding and assessing another critical area: Succession planning, especially in regard to the agency CEO and the leadership. In my experience, this area usually falls toward the bottom of the agency’s priority list, a fact that can undermine the client-agency relationship.
Succession planning is critical for agency stability and maintaining high standards. History is littered with great agencies falling apart when an agency goes through a revolving door in the corner office.
My former employer, Young & Rubicam is a case in point. The giant global ad agency with a long, venerable history behind it, had blue chip clients like Xerox, Campbell Soup, Met Life, KFC, and Colgate-Palmolive. The agency holding company WPP acquired it in 2000 for a record amount of $4.7 billion which, was followed by an unfortunate level of turnover in the executive suite.
Y&R had gone through eight CEOs with "global" or "worldwide" responsibilities and another seven executives with the titles such as "North American CEO" or "New York CEO.” That’s 15 – fifteen! – CEOs in 11 years CEOs in total are overseeing Y&R at some level.
This churn predictably has taken its toll. Because of the frequent changes, clients exited in droves, and the agency stopped being a viable entity. WPP had no choice but to swallow hard, and fold what was left of the agency (not much), into one of its other agencies.
agencies often reach out to outsiders when replacing a CEO. The assumption is that an outsider will have the magic touch to fix an underperforming agency and will win new business in the blink of an eye. It seldom happens, and as adverse performance persist the CEO is replaced, and the agency continues to march in circles. Except each successive CEO makes staff changes (often for changes’ sake) and the turnover is damaging to the agency and its clients.
Both insiders and outsiders have strengths and weaknesses. Insiders know the company and its people but are often blind to the need for radical change. Outsiders see the need for a new approach but can't make the necessary changes because they don't know the organization or industry sector well enough.
What agencies must do, then, is, to find a way to nurture “inside-outsiders”, which is an internal candidate who have much needed outside perspective.
Often such executives have spent much of their time away from the mainstream of the organization, and away from headquarters, only to be equipped to seize new opportunities.
Leo Burnett’s Andrew Swinand is an example of a smart inside-outsider CEO. Swinand came up through Burnett’s media sibling Starcom and was its president, and then became an Adtech entrepreneur before taking the helm at Leo Burnett.
The industry finds itself in a period of real significant change in terms of the things that agencies need to do. The disruption of technology and the tectonic shift is forcing agencies to re-evaluate their business models and to think about their management teams. Given this, one would have thought that it would be more crucial than ever to rethink a leadership contingency to deal with this new paradigm.
