Stuart Smith's Blog

Harris Diamond – who’s he? The new chairman and chief executive of McCann Worldgroup, replacing Nick Brien as of last night – that’s who. Brien’s position has long since looked untenable – to all, that is, except senior Interpublic management. Brien is a dynamic, no-nonsense, deal-cutter, inured to the ways of media-buying, but the woeful inadequacy of his social skills made him a poor choice as leader of one of the world’s leading creative agencies.  Never one to let personal relationships get in the way of what looked like a sharp business initiative, Brien managed to alienate first his key staff and then senior clients. What finally condemned him, however, was McCann’s inability to win any major new business on the world stage.

True, Brien did manage to hold the pass with the General Motors creative business – and that may have won him a short stay of execution. But let’s not forget it was a holding operation –  the rear-end of the pantomime pony, with Goodby retaining the interesting upfront part – and not an outright win. Let’s also remember that the client – Joel Ewanick – has moved on and it’s anyone guess how the collegiate Commonwealth vehicle he devised will fare in his absence. Other than that, what can we say of Brien’s tenure? He came close to losing L’Oréal – a foundation McCann client – or a substantial part of it. He lost more Néstlé, Lufthansa and the Exxon business. He won a small slice of AOL business, which might – or might not – lead on to greater things. And he has got McCann onto the HSBC global review shortlist. The smart money on this last still has to be WPP: JWT will indeed lose the “Team” lead, which will move all the way to … Grey. On new, keener, financial terms, of course.

So, there’s very little on the positive side of the Brien balance sheet, and much on the negative – notably a huge amount of staff demoralisation and growing uncertainty in the advertising community about what McCann as a brand actually stands for.

The fault for all this is not exclusively Brien’s. Michael Roth, chairman and chief executive of IPG, must also share responsibility. He put the former head of Mediabrands (IPG’s media operations) in place back in April 2010 and has been seemingly deaf to the crescendo of criticism ever since. Of course, admitting such a serious wrong call only two years down the line is never easy: there’s personal pride at stake; the corporate loyalty owed to someone charged with a difficult mission – as Brien undoubtedly was; and not least the uncomfortable realisation that one’s own judgement might be questioned over putting the wrong appointee into the job in the first place. These things take time to come to terms with.

But there is something extra to consider in Roth’s case. Excuse the fanciful metaphor, but Roth is like the captain of a stranded ocean liner whose attention has been distracted by a massive hole below the waterline. His first duty must be to plug the leak and save the ship from being broken up. Which he has now done. But in spending so much time below deck pumping the bilges, Roth seems to have been blinded to other major failings aboard his blighted vessel: it is rudderless and powerless. Not surprisingly really, in view of the explosive situation developing in the engine room. First engineer Mr Brien – the smooth-talking man-of-action recruited from a rival shipping line – has not proved all he was cracked up to be. He said he could save the ship but, far from restarting the engine, all he’s actually done for the last two years is talk. Second engineer Mr Boschetto is no help either. He’s old and tired – dead-beat in fact; major bits of machinery keep coming away in his hands. He’s going to have to be replaced, and pronto.

Enough of metaphor. It’s clear that Roth deserves some sort of accolade. He’s achieved what only someone of high financial competence (all right, he had some help from his CFO Frank Mergenthaler along the way) could do: repaired IPG’s catastrophically impaired balance sheet – and credit-worthiness in Wall Street. That means a better market rating, easier loans from now on, and maybe the wherewithal to embark upon a late round of acquisitions after being so disastrously excluded from the last 10 years of industry consolidation. Ten years that has seen IPG drop in global ranking from number two to number four. And, let’s not forget that it was once number one: being biggest in the world was the defining drive of IPG’s megalomaniac founder Marion Harper when, in the early Sixties, he brought McCann, Lintas and much else together to form the first marketing services conglomerate.

So size matters for IPG. But where’s the growth going to come from? Not, it seems apparent, from the McCann engine room, or DraftFCB – which between them account for about 45% of IPG’s $7bn annual revenue (at a ratio of 2:1) – under their current management regimes.

Taken side by side, the situation at McCann appeared difficult but hardly existential; whereas DraftFCB clearly shows signs of meltdown, with the recent loss of key clients MillerCoors and SC Johnson. Replacing DraftFCB CEO Laurence Boschetto might therefore have seemed Roth’s first, if unenviable, priority. That was certainly the takeaway from a recent Wall Street Journal article, in which the company soft-pedalled on the Brien problem, but was singularly forthcoming on the urgent need to find a successor for Boschetto. Something it has so far failed to do.

Which is why the timing – and nature – of the Diamond (left) appointment comes as something of a surprise. Indeed, it bears all the hallmarks of haste – and possible future instability. Diamond, currently chairman and CEO of IPG’s Constituency Management Group (CMG), is well-regarded internally (unlike Brien) for his hands-on people skills. Note, for example the emphasis in this extract from IPG’s official communiqué: “He has created a strong culture of collaboration, which is increasingly key in a marketing landscape that requires integration of services.” But he knows no more about the culture of a creative ad agency than his predecessor. Whatever management skills he may have, Harris Diamond is essentially a PR man, not an ad man. Before taking on such responsibilities as Weber Shandwick, Golin Harris and Octagon at IPG, he was a political campaign consultant who helped to elect US senators and governors.

So, to help ease him into his new role, IPG has devised a committee of two chairmen to babysit him: Luca Lindner and Gustavo Martinez. Lindner, president, Americas, is definitely the coming man at McCann, having driven the agency’s success story in Latin America. Roth clearly marked his card for greater things last June, when Lindner’s responsibilities were extended to include the agency heartland, North America. He will now superintend Middle East and Africa as well. Martinez is Worldgroup president of Europe, and will now add Asia Pacific to his portfolio.

If this new set-up was designed to send out a message of confidence to McCann clients, it is badly misconceived. The thing about triumvirates – take your pick: Caesar, Pompey, Crassus; Lenin, Trotsky, Stalin – is that they are inherently unstable. Someone always has to come out on top, after more or less bloody infighting. Diamond has been made to look weak by being presented in this way. When, if ever, will the fairy-cycle stabilisers be thrown away? Meantime, there’s ample scope for a destructive managerial blame-game. Once things go wrong at McCann, as they inevitably will, who is going to take the responsibility?

To judge from the recent WSJ article, Roth was hoping to fill Brien’s position with a prominent outsider (perhaps, but not certainly, BBDO’s Andrew Robertson). What we have here is fudge and less than second-best. Clients will not be impressed.