Even with the perceived turnaround in the global economy, we are all aware that the global recession has caused, and continues to cause, seismic shifts in the advertising and marketing industry, precipitating the need for rapid change. One area being impacted by the combined forces of recessionary pressures and technological progression is organisational structure.
One of the macro trends that we are starting to see is the deconstruction of the silo mentality that has been the status quo within client organisations, and which is mirrored by agencies in the major holding groups.
Discipline-specific fiefdoms exist around silos, with individuals and agencies behaving territorially to protect their specific areas of competence, guarding revenue streams or marketing budgets fiercely, and having accountability solely for delivery in the channel for which they have been responsible.
“My hope is that the recession will have been a huge wake-up call to clients with regard to that siloed mentality,” explained Bob Jeffrey, Chairman and Worldwide CEO, JWT. “It’s not only inefficient from a cost-savings perspective, but the more you collapse the silos, the more integration you drive, ultimately leading to a more effective environment in which to deliver better ideas and stronger creative output.”
Bob Jeffrey
Chris Colborn, Executive Vice President & Chief Experience Officer, R/GA, sees the silo mentality as a fundamental problem in developing effective creative work: “Many clients operate traditional structures where leads sit within verticals, each in charge of a discipline-specific agency and responsible for maximising effectiveness in a single channel. This model creates an artificial disincentive for collaboration, and therefore doesn’t engender an approach in which holistic synergies naturally form.”
Chris Colborn
“It’s a huge challenge for clients to evolve that model,” says Colborn, “to be leaner, more dynamic, cut costs and develop a more holistic structure, whilst still getting the best out of their agencies.”
The siloed organisational structure not only proves detrimental in terms of developing exceptional creative work, but actually creates natural disharmony and tension within the holding group verticals.
“I’m constantly saying that agencies need to work smarter,” Jeffrey continues. “They need to know when to compete and when to collaborate. Agencies are inherently territorial, tribal and competitive, but it’s critical to take an agnostic, less ego-centric approach to collaboration, and to have a bigger view of the world and the direction in which the world is heading if agencies are to achieve the ultimate goal of making their clients successful.”
Jeffrey understands that, “absolutely each agency needs to develop their own brand and build a reputation for creative excellence, but if client organisations start to evolve to be structured less around verticals, then agencies will be able to collaborate more effectively to deliver better work.”
The recessionary pressures on revenues and costs are forcing every client to analyse in fine detail how effective their marketing department is, and whether they are operating the most efficient ROI structure in a fast-changing environment.
As digital, mobile and social media platforms become more prevalent across all consumer segments, the discipline-specific silo mentality seems increasingly outdated and ineffective.
With CEO’s and CMO’s the world over looking to cut costs and increase the value of their spend, the time for significant and radical structural change is upon us. This will not only impact the client organisations themselves, but by definition the relationships with roster agencies across all disciplines.
Bob Greenberg, the Founder, Chairman, CEO & CCO, R/GA, believes that, “if you’re organised with a client around the consumer, then you’ll be much less affected by the storm than if you’re part of a siloed organisation. If you’re organised in verticals then the impact will be felt much more keenly, as cuts across each silo will need to be made. Nike are a client that have reorganised their internal organisational structure to revolve around the consumer, which is a model that I believe is much more efficient and effective.”
Bob Greenberg
If we look at some of the work that Nike are delivering, through R/GA as well as a number of other roster agencies, it is clearly evident that the reformulation of their organisational structure is paying dividends.
Ideas such as Nike+, the Ballers Network, NikeID, and HEAD2HEAD demonstrate that the company has truly put the consumer at the heart of all its thinking, delivering multi-platform solutions that are implemented more effectively by running a streamlined, de-siloed structure.
Chris Colborn summed up the dilemma facing many clients by describing why digital agencies are increasingly being perceived to offer greater value for money than the traditional agencies: “Initially digital agencies were one of the siloed verticals, but it quickly became apparent that every other silo needed a digital equivalent, in some form or another.”
“If you combine the breadth of experience, therefore, that digital needs to deliver, along with the relatively low spend in comparison to other channels, you can see why digital agencies are able to think more holistically in their approach to marketing, and also to deliver solutions that improve ROI levels.”
Although Colborn and Greenberg are approaching the topic from a different angle to Jeffrey, they are all in agreement that the concept of the traditional silo structure is fundamentally flawed.
The deconstruction of this model, reformulating around a more consumer-centric structure that has engagement and participation through digital platforms at its heart, is one of the major shifts that the recession has precipitated.
As with many of the changes this recession has brought, and will continue to bring, it is not that the shift wouldn’t have happened eventually; it’s just that the economic downturn has forced dramatic change to happen much more quickly.
The problem is that a rapid, fundamental structural revolution within the advertising industry has caused, and will keep causing, a great deal of pain while it happens.
