Leadership and Organizational Change
July 7, 2011
Word Count: 1,499
Despite progress in driving operating margins up from a low in 1991 of 4.1% to 7.6% in 1993 (see Appendix) and achieving major wins with new clients and lost clients, Ogilvy & Mather (“O&M”) still had confidence issues. The company was a bit like an abused foster child, pawned off to new parent WPP and in need of tender loving care and firm direction. CEO Charlotte Beers instilled confidence in the executive suite by focusing them on their core strengths in direct marketing and creative advertising and encouraging them to embrace their terrific client roster. Finally, she instituted discipline by demanding leaner operating budgets given macro pressures on clients advertising budgets. However, Beers did not attain full support of the company in her vision. In order for her to complete O&M’s turnaround in 1994, Beers should adopt a matrix organizational structure and institutionalize the philosophy of Brand Stewardship with emotional symbols to make it accessible to every O&Mer. Finally, she should create an incentive system to attract her international agencies away from their local clients to further multinational brand initiatives. Analysis
When Beers became CEO, her goal was to restore O&M’s “beleaguered” image with its clients and to repair the confidence of O&M’s employees. In effect, she had to re-brand an agency whose job it was to define brands for their clients. She accomplished her goal by creating an open environment where passionate leaders were welcome to voice their opinions and take part in shaping the turnaround. She focused on vivid imagery such as “thirsty for change” and symbols like Ogilvy red to create emotional links to the goal rather than financial targets or organizational charts. She crafted an internal corporate philosophy or vision known as Brand Stewardship. And she rallied her executive team around three simple business strategies: (1) retain existing clients; (2) improve the quality of their work; and (3) stay disciplined financially.
However, Beers and her management team failed to win full buy-in from the O&M rank and file employees and to align the local international offices with the new World Client Services (“WCS”) organization. Going into 1994, Beers’ two key challenges were to identify and correct these two principal issues. Challenge 1: The Problem with the Proletariat
The O&M lower level staff did not participate in Beers’ effort to reformulate the new strategy. They were not allowed to be “thirsty for change.” Rather they were forced to accept the consequences of the meetings in Vienna, Chewton Glen and Doral Arrowood just the same as they had accepted the merger with WPP. While it appeared that Beers was running a very collaborative process with her off-site meetings, allowing for dissenting opinions and consensus, she effectively excluded a large percentage of the company. And even amongst the thirty executives that did make the cut at Doral Arrowood, Beers’s unilaterally bypassed the 22 issues that they wanted to address in favor of crafting a more simplistic three-point business strategy. While she needed to make decisions in order to move forward, Beers’ actions in forming O&M’s business strategy seemed autocratic. This led to a certain level of disenfranchisement amongst the below the line staff. And for a group facing confidence issues, what they needed most was affirmation of their skills and inclusion of their ideas. As Beers noted herself, “it did not sound like anything new.”
One particularly resistant group was creative, who felt that the philosophy of Brand Stewardship was limiting their ability to be creative and artistic. Since their entire livelihood centers around their ideas, it would seem natural that they would be threatened by a new ethos handed...