Sir Martin Sorrell, CEO of WPP, tells Jacqueline Toyad the story of a journey that started with wire and plastic products and ended at the doorstep of a global communications giant
When companies want to impress the general public, they usually do it with numbers and statistics. So here are the facts and figures on WPP, currently the world leader in marketing-communications services comprising companies in various aspects of the industry, running the gamut from advertising, media investment management, consumer insight, public relations and public affairs to branding and identity, healthcare communications, specialist communications as well as direct, digital, promotion and relationship marketing. You may have heard of a few of them — Grey, Hill & Knowlton, JWT, MediaCom, Mindshare, Ogilvy Group, Y&R, and TNS, to name but a few.
These companies work with 35 of the Fortune Global 500; 28 of the Dow Jones 30; 60 of the Nasdaq 100; and 33 of the Fortune e-50. Nearly 700 clients are served in three disciplines. More than 440 are served in four disciplines; these clients account for over 56% of group revenues. The group also works with over 320 clients in six or more countries.
Some 138,000 people (including associates) work under the WPP umbrella in 2,400 offices in 107 countries.
And at the helm is one man, the man who took Wire & Plastic Products, manufacturer of products such as wire baskets, and turned it into the marketing communications giant it is today.
He is Sir Martin Sorrell, CEO of WPP.
Impressed? You should be. Sorrell is one of the world’s most powerful ad men and is known for his predictions about the future of media. His global perspective is much respected and most of his predictions have been right “half the time” — his words.
However, ask him about his reputation as a never-wrong oracle where the media industry and world economy are concerned, and he’ll tell you, “I wouldn’t say that ... maybe more the very poor man’s Warren Buffett. The closest I’ve ever gotten was ‘The Sage of Soho’. Well, I mean, if you’re right half the time ... I’ve been right half the time.”
Sorrell was in Kuala Lumpur recently for the World Islamic Economic Forum (WIEF) as a speaker in the WIEF signature session entitled The Global CEO Panel: Survival of the Fittest — The New Game Plan.
“The reason why I’m here for WIEF is that Ogilvy Noor [of WPP-owned Ogilvy Group] has been doing this study with one of our research companies, TNS. The Muslim population is one-quarter of the world’s population and looking at the birth rate, at a point in time, it would be even more significant and we just think that there are some very interesting opportunities to work with clients, with the halal opportunities basically,” he explains. “We know a little bit about it, obviously we don’t know enough and it’s a big opportunity to dig into. If you see some of those things that are happening around the world, there’s a big opportunity to understand those segments of the market, whether it be food or financial services, telecommunications, technology ...”
Sorrell has always been one for exploring possibilities. He was, after all, one of the earlier entrepreneurs north of the equator to look east. It has been said that WPP is probably one of the most Asian of holding companies in the sense that its companies have a very strong presence and operations in the region, and it’s due in part to Sorrell’s bullishness on pursuing growth in new markets. Sorrell abhors terminology such as “developing markets” as he thinks it’s offensive. “A lot of these markets have emerged. They’re not developing markets, they’re developed,” he says, his voice rising to a crescendo as he adds, “The simple fact of the matter is that statistically, they’re the fastest growth markets. So they are, for people who want to grow global businesses, better countries to operate in than slower growth markets, certainly than western Europe.”
“If I include our associates — companies we own 20% to 49% of — we’re about a US$3.8 billion (RM12.5 billion) business in Asia alone out of US$17 billion. We have clear leadership and quality. If you look at the awards in industry, whether it be effectiveness awards or creative awards, across all things we consistently outperform the competition,” Sorrell reveals without a pause. “We have very significant market shares in all the Asian markets. Even in Japan, we’re the largest gaijin [foreigner] group, the third largest group after Dentsu and Hakuhodo. So we’ve really penetrated the Asian market, but that’s because we started early.”
As early as the 1980s apparently.
For Sorrell, the awakening happened in 1989, on a train from Hong Kong to Guangzhou — the memory as ripe as if it had happened yesterday. He was attending WPP’s first board meeting in China — the company by then had acquired JWT in a hostile takeover in 1987, for US$676,000, and in a similar fashion, Ogilvy Group for US$864 million, both of which already had strong footholds in Asia-Pacific.
“I looked out of the train — where there are now six railway lines, there was only one at the time — and I’m not exaggerating when I say that there were literally hundreds of thousands or maybe even millions of Chinese carrying girders on their shoulders and wooden sleepers to build a second railway line. And I thought to myself, this is a Sunday afternoon in China; what are we doing back home in the UK? We’re probably in the pub watching football. And I thought, we had no chance.
And that was the first time I knew ... I mean, then, Deng Xiao Ping in 1985 had talked about significant economic change and growth of the southern zone around Hong Kong, Shenzhen, but seeing that ... it really came home to me,” recalls Sorrell.
“China Mobile, according to the brand survey we publish with the Financial Times, is the most valuable non-US brand and No 8 in the world, in the world’s top 100 brands. It has more than 500 million subscribers, which is almost twice the population of the US, on one mobile-operator network. There are 700 million Chinese that are on a mobile network and it’s growing by eight million a month. In India, there are 425 million on a mobile network, growing 12 million a month. There are 12 million SIM cards issued in Russia every week,” he says off the top of his head in a way eerily reminiscent of Dustin Hoffman in Rainman. “I mean, the scale of what we’re seeing in BRIC [Brazil, Russia, India, China] and the Next Eleven countries is golden. This is a 200-year swing that’s being reversed. This is back to the future stuff. This is not new. We think of it being new but it really isn’t new. The BRICs and Next Eleven were 50% of the world’s economic GNP in the early 19th century and they will again be by 2030.”
Sharing knowledge
Research on Sorrell isn’t very difficult. There’s quite a bit of material on the man in all kinds of formats, all available on the World Wide Web. Prior to meeting him, I watched a few video clips of interviews with him and started to get nervous. He seemed intimidating — a no-nonsense character who wore dark suits and grimaced a lot.
Yes, Sorrell in person is a no-nonsense character who wears dark suits and grimaces a lot, but he is capable of smiling and what these clips rarely show is his warm, forthcoming nature, and his ability to engage just about anyone.
“Have you seen the iPad?” he enquires when I ask him if he believes that newspapers will die. Whipping his out, he proceeds to show me how he catches up with his daily dose of the Wall Street Journal and Financial Times, and shows me a few pages, with illustrations, of A A Milne’s Winnie the Pooh electronic book that has pages that flip like the real thing (no doubt for when he’s reading to any of his grandchildren).
This action shows me a generosity to share knowledge as well as to inspire a journalist who works in what marketers categorise as “traditional media”, a newspaper, which some have also deemed a sunset industry.
I meet Sorrell at the Ritz-Carlton, a few hours before he heads over to the WIEF at the KL Convention Centre. He is caught up with the local news, having just finished a breakfast with the leading figures of WPP companies in Malaysia, and is also in the midst of helping a pregnant, senior WPP staff member who is trapped in her house located at the epicentre of the Bangkok riots.
Sorrell reads me updates from his BlackBerry before turning his attention back to me.
How does it feel to have everyone hanging on your every word, I ask.
“Uh, I don’t think that they do, so the answer to your question is, I wouldn’t know,” he says with a laugh. “I’ve got no idea — wish it were the case, but I doubt it. Certainly not at WPP — if I say go left, they go right. My wife doesn’t listen to me. My kids don’t listen to me. My grandkids don’t listen to me. Nobody listens to me.”
Self-deprecation aside, people do. Governments do. In fact, it was WPP that helped China manoeuvre the right course of action during the milk-powder scandals and Darfur controversy of 2008.
Reflecting on WPP’s eventful 25 years, Sorrell says, “If you look at the very first circular that we issued on May 9, 1985, it talks about building a multinational marketing services company. So, I mean it was always there… did I think that we’d have US$14 billion of revenue, US$12 billion to 13 billion of market capital, US$15 billion to 16 billion dollars of enterprise value, US$65 billion of billings, probably no. Did I want to do things on a scale? Yes. I wanted to start something from scratch. I also wanted to initiate something. I wanted to found something, build something, but I also wanted to run something of substantial scale.”
According to Sorrell, it was andropause (or male menopause) that made him decide to get into WPP.
“Seriously,” he says, responding to the look of incredulity on my face. “At age 40 — you wouldn’t know because you haven’t reached the ripe old age of 40 — is the age when you look back at the first 20 years of your working life and you think you’ve got another 20 to go.”
At that point in time, Sorrell had built himself a nice career, starting in 1968 as an associate at marketing consultancy Glendinning Associates (Westport, Connecticut) after graduating with a master’s in economics from Cambridge University and an MBA from Harvard Business School. He then joined Mark McCormack Organisation (a sports and celebrity agency) in 1970, setting up its operations in the UK and assuming the role of vice-president. After four years, he joined food retailer James Gulliver Associates before being headhunted by advertising agency Saatchi & Saatchi to be its group finance director.
The next step for him was obvious: “Frankly, I’d always wanted to run my own business, so 1985 was when I took the decision. I looked for a small, what we call shell company, what the French call coquille. It had to have certain criteria. It had to be worth around £1 million, which was what Wire & Plastic Products was worth at that time on the stock exchange, because that’s what we could afford, and we wanted to buy 29% of it.
“It had to be in a lowly rated sector of manufacturing because that made it cheaper. No debt. Freehold property if possible. A management that was mature but not senile. And we found Wire & Plastic Products. And we were lucky. There was a lot of luck involved because the advisers to Wire & Plastic Products were people I knew. Luck in life plays an important part.”
Luck or hard work ... what’s the ratio?
Sorrell says, “Persistence is an extremely important attribute. I don’t think you have to be a brain surgeon to be successful, or a Nobel Prize winner to be successful. I don’t think you have to be academically brilliant in business. But I think you do have to be persistent.
“To some extent I think you make your own luck. People say that maybe it’s false humility when others say they’ve been lucky but I think you make your own luck. If you’re persistent and you continue to pursue certain objectives, it sort of tends to fall into place. You’ve got to have a certain degree of courage I suppose.”
When Sorrell was knighted in 1999, he chose the motto “Persistence and speed” for his shield.
“In this day and age, it’s important to respond quickly. Delay is a negative, my father used to say. I think that’s dead right.
Delay indicates indecision,” he explains. “The intuitive reaction is often the best reaction. You know, when you intuitively react to a situation, the initial reaction is in many cases the right reaction. And if that decision involves doing some difficult things or painful things or significant change, you always put it off. It’s human nature to always want to put things off that are difficult. And those are always the things that you probably should do.”
Sorrell pauses a moment and adds a caveat, “Of course, this is all homespun philosophy. No great sophistication to it. But I do think it’s true.”
‘More important than life and death’
In most of his interviews, Sorrell often borrows a quote from Bill Shankley, the legendary manager of Liverpool Football Club, who said, “You know football is not a matter of life and death. It’s more important than that.” Sorrell’s version goes, “WPP is not a matter of life and death. It’s more than that”.
I bring it up in the course of the interview, and Sorrell quips, “I can do it again if you want.”
It isn’t necessary. All we want to know is, seeing how WPP is so close to his heart, what the emotional costs have been thus far?
“It’s alway very personal. The point of the Bill Shankley quote is that this is not a job. It’s a way of life,” he muses. “I shudder when I think about what I’ve been doing in the last couple of weeks in terms of travel, and what I’m going to do in the next week or so in terms of travel. At the end of the day, why do people do the things they do? Because they enjoy it. There is no such thing, in my view, as stress. It’s just that you’re not enjoying yourself. All of it is not really stress, it’s that you’re not having any fun. You get stressed when you find it too difficult, it is becoming more difficult or you’re frightened.
“I’m fortunate enough to have chosen, when I was 40 years old, to do pretty much what I wanted to do. I wanted to invest in a shell company, use leverage to acquire companies or use the financial leverage, not financial leverage in the sense of debt, but financial leverage in terms of the rate of the stock.
“When we took over JWT in 1987, we were rated at 150 times earnings so the math of it was such that as long as you didn’t pay more than 150 times earnings for the company or what you thought the earnings were going to be, you were going to come out ahead. It was 13 times our size, we were making money, it was losing money. You don’t have to be Einstein to figure out that that’s an interesting opportunity. So we built the business over 18 months, rapidly, and we did 19 deals in 18 months; we’d become the biggest below-the-line operations on both sides of the Atlantic, since we started in the UK and the US.
“We hadn’t done very much, but nobody else thought it was a very important area to get into. We thought it was going to become more important and it was an opportunity to consolidate when this industry jewel [JWT] fell on hard times. It was a ‘Heads I win, tails you lose’ situation, really.”
So when does Sorrell think he’ll be ready to put his baby in the hands of another? Probably because it’s not the first time he’s heard this question about succession, he laughs.
“Probably never. That’s the problem with founders. Founders have founders sickness, which means we never let go. But I’m not in a particularly strong position — unlike a Rupert Murdoch or a Sumner Redstone or a Martha Stewart, I don’t have A shares or ordinary shares. I’ve only got 1.5% of the company, so I’m there at the board’s will, or however you put it. So at some point in time, someone’s going to tap me on the shoulder and say, ‘You’ve screwed up enough, now go away, bugger off’.
“But I’ll carry on as long as I’m physically able to. I love what I do. I enjoy what I do. And I think that’s the key thing. People talk about money and it’s a bit like cricket. Money is the [number of] runs on the board. It’s not really the objective. Money is in a way like the score. People come out of uni or business school or they come out of whatever they’re doing, they often say that their objective is to make money. I think that’s always the mistake. It’s really about trying to figure out what it is you enjoy doing. If you have good people who run businesses, who enjoy what they do, they do it well, which generates the profitability. Money is not a side result but it’s the result of doing things well. You don’t make money per se, you make money as a result of doing things in a certain way.”
Intuition versus gut instinct
Sorrell is not a believer in gut instinct. In fact, he hates the phrase. But he believes in intuition, intuition built from experience. “Your instinctive reaction to something is conditioned by your experience, so the the more experience you have, the better you’re going to be intuitively,” he says.
He credits his experience to his four employers prior to WPP — Ralph Glendinny, Mark McCormack, James Gulliver as well as brothers Morris and Charles Saatchi — for the intuition he’s revered for by those in the industry.
“I really grew up with four sets of different entrepreneurial characters,” says Sorrell, although there is one particular man on whom this CEO places the utmost importance in terms of influence in his life — his father.
“My father was a very big influence in my life. Very big, He died, sadly, in 1989, at the age of 74, from cancer. But you know, I had a very, very close relationship with him. I never had a closer relationship with anybody apart from my wife ... my two wives ... than with my father,” he quips. “I would speak to my father, and it’s not an exaggeration, say, three or four times a day, irrespective of what I was doing. So in the midst of the JW Thompson takeover, I would speak to him four to five times day.”
His father was the third son of Russian émigrés who came to the UK in 1907 from Kiev, Ukraine.
“My father changed his name. Anti-semitism at the time was quite significant,” shares Sorrell.
“He had to leave school at the age of 12. He actually had a music scholarship to the Royal Academy of Music — he played the violin extremely well. But because he was one of five children, he had to leave school early because he had to become an income-producing unit of the family. So he grew himself a moustache to look older than he actually was and became a barrack lawyer — an unqualified lawyer in court — for people in the East End of London even though he had no qualifications whatsoever,” he says, laughing. “He was amazing. He could recite Shakespeare. It was quite extraordinary actually for someone from that background; who played the violin, and recited Shakespeare. I would have trouble learning it and he would recite it off the top of his head. Unbelievable. So he was one of those who never fulfilled his potential.”
Sorrell, on the other hand, was an only child, the only child his mother could bear and was therefore showered with every ounce of his parents’ emotional energy.
Some time, at age of 14, Sorrell was asked by his father’s boss, “What do you want to be when you grow up?” “I want to go into business,” young Martin answered. The older man told him, “If you want to go into business, then you better go to Harvard Business School.”
“It sort of stuck,” says Sorrell, who admits that he then started reading the Financial Times, or rather “I loved carrying the pink [newspaper] around with me. I mean, I couldn’t understand half of what I was reading, or sometimes three-quarters of what I was reading. I was really entranced by business and I really wanted to go to business school. I thought it was a passport. And it was”.
Sorrell decided to major in economics, thinking that it was his best route towards Harvard Business School. He admits that he struggled with economics but still managed to finish in the top third of his class.
“I probably had trade attributes rather than academic attributes. In other words, I was probably more street smart — I don’t know if that’s the right phrase — but more street smart than intellectually intelligent,” he says.
Well, you kept at it, I tell him.
“Of course,” he says, matter-of-factly without a trace of arrogance. “I didn’t skive out of it. I always worked immensely hard and my tutor always told me, ‘you’re going to get a 2:1’ [Second Class Honours, Upper Division], but in my three years at school I never got a 2:1. So I worked hard but never could make it. I only managed a 2:2 [Second Class Honours, Lower Division], back when a 2:2 degree actually meant something.”
And while Sorrell’s résumé reads as if he’s a junkie for a challenge, he says, “I’d like things to be easy, for crying out loud. Then, I wouldn’t have to get up so early in the morning or get to bed so late,” he laughs.
Outside of WPP, one of Sorrell’s priorities is his family although it hadn’t always been the case.
“I’m married for the second time. The biggest difficulty is maintaining balance. I did this ‘Planning in the Business Environment’ course at Harvard. It was a compulsory course during the first year, taught by George Cabot Lodge. To get an ‘A’ all you had to do was draw three circles on the final paper — he had this theory about the balance and we were actually quite cynical about it,” says Sorrell. “One circle was for family, one circle was career and one circle was society. So it was a question of intersecting those three like a Venn diagram, to put the three together. Looking back, it was a really good way of thinking about life— it’s about those three things. There are very few people who can balance the three. Very few. People, at worst, probably get one right. At best, get two right. Only truly exceptional people can do all three.
“I think, obviously, being divorced and so on, I’ve been lucky enough to get married for the second time. Maintaining the balance — the three kids, the six grandchildren ... it’s unfortunate that when you look back, you realise that you had to sacrifice certain things. You get two of those things right, the other one has to suffer. And some people do one right and two suffer.”
Obviously, Sorrell isn’t immune to sentimentality, although he doesn’t quite get misty — just a little more serious. On a lighter note, Sorrell reveals that he plays cricket.
“We’re in the cricket season and I missed the first two games as I have been travelling. We play about a dozen games a year. I run a WPP team so we play on one of the fields at the St Paul’s school grounds. I do some skiing. And that’s probably about it. I don’t collect grand paintings or cars or ... I don’t have any great fetishes like that. So that’s it. Boring really,” says Sorrell,
Hardly, Sir Martin.
This article appeared in Options, the lifestyle pullout of The Edge Malaysia, Issue 809, Jun 7-13, 2010.