Sorrell can be replaced at WPP, but only by an outsider
Irreplaceable is an over-used word in business, as in most other walks of life. In truth, most of us, no matter how talented or hard working we might be, can usually be substituted by someone just as good with only a little effort. But if anyone merited that adjective in British industry, it was surely Sir Martin Sorrell. After three decades of building the WPP advertising, public relations and marketing empire up from nothing, he had become the glue that held the whole thing together.
With Sir Martin’s ignominious departure over the weekend, the challenge facing his successor will be a huge one. Not only will they have to fill an enormous pair of shoes, but they will have to reinvent a business that looks past its sell-by date.
No one expected Sir Martin’s three-decade reign at WPP to end so suddenly, or in quite such painful circumstances. Sure, the share price has been under pressure, dropping from £17 to £11 in the last year. And yet, once allegations emerged about his personal use of company funds, the board clearly decided it had had enough.
In a terse statement late on Saturday night, Sorrell announced his resignation. Roberto Quarta, the chairman, is taking over day-to-day control for now, and the search is already under way for a long-term successor.
The trouble is, WPP was very much Sir Martin’s personal creation. After leaving Saatchi & Saatchi, where he had been finance director, he took control of a tiny shell business and stitched together the world’s biggest marketing conglomerate, deal by deal. With 400 agencies and 200,000 staff across 112 countries, it was a sprawling empire, and often the only real thing that linked them all up was that Sorrell had acquired each business.
With a forensic attention to detail, one of the best contacts books in the world, and a relentless capacity for hard work, Sorrell managed to make the whole thing work. But it will be very hard for anyone else to perform the same alchemy.
Even worse, its business model looks increasingly antiquated. WPP was created in the era when huge multinational conglomerates built global brands using mass media to solidify their lock on consumers. Its agencies were the experts in that, and could charge handsomely for delivering the sales. And yet, that world is fast disappearing. Traditional commercials don’t have much impact any more – no one ever watched an ad on Netflix – and need to be replaced by social media campaigns that are far more localised, and often created in-house. At the same time, even the brands are changing – the rise of artisan, specialist products means that there are far fewer mega-selling things than there used to be. Mass markets have been replaced by endless niche ones, but they are far harder for a global conglomerate like WPP to manage.
The result? The new chief executive will not only have to replace Sorrell’s personal day-to-day management, and replicate his intimate knowledge of every unit, they will have to reinvent the company at the same time.
It is a big challenge. So where should WPP’s board start? There are three things to prioritise.
First, bring in an outsider. There is already lots of speculation about possible successors. Mark Read, the head of its Wunderman unit, has already been appointed joint chief operating officer alongside Andrew Scott. Those two men look like the front-runners, and within its 400 units there are plenty of big personalities who will no doubt have spent Sunday thinking about throwing their hat into the ring. It might sound tough, given how well qualified some of them are, but the board should ignore all of them.
At this point in its history, WPP needs an outsider. Only someone from a different background can bring the fresh eyes, and the new ideas, that the business now desperately needs. And only a clean pair of hands can remain neutral between its competing fiefdoms.
Next, it needs to be slimmed down. An auction of its units might well yield a lot of cash, and it’s possible a bid might emerge. That would be a shame, because there are, as Sorrell always insisted, genuine synergies between its different units. There is a big difference between a break-up and a rationalisation, however, and it is hard to escape the suspicion that Sir Martin bought a lot of companies simply because he liked doing a deal. Right now, WPP has too many businesses. Many can be sold off, leaving a more manageable core.
Finally, it should move aggressively into content. The world of mass media that it was created for is not going to come back. Increasingly, marketeers will have to embed messages into the content itself, or into social media feeds. That would be a lot easier if they are involved in the creating the things that people are watching or listening to. WPP has already invested in a range of content companies, such as 88rising, but as the lines between marketing and media are increasingly blurred, it should make a big move into the content itself. How about buying a stake in Spotify, for example, now that the company is listed? Or taking stakes in sports teams so that logo and sponsorship deals are under its control? That will take courage and money, and potentially a lot of both.
WPP should still have plenty to look ahead to. There are still huge brands out there, and they need to find a way of selling their products globally. Indeed, as markets get more fragmented, and consumers more flighty, there may well be even more of a role for a global marketing conglomerate than there has been before. But after being run by the same person for three decades, the company needs radical reinvention. Steadying the ship, and keeping clients on board, will be fine for the next few months. But beyond that the new CEO will have to be as bold and ambitious as Sorrell himself was 30 years ago if the business is to have a real future ahead of it.
‘The new CEO will have to be as bold and ambitious as Sorrell himself ’