Restructuring Is Intended to Broaden Client Base
CHICAGO--Leo Burnett Co.'s decision to spin off its Idea Lab unit as a separate subsidiary reflects the basic strategy of the firm's restructuring. The general goal is to work more closely with existing clients while maximizing opportunities to bring in new clients that may want to work with just a small piece of what is often perceived as a monolith.
The Leo Burnett Idea Lab will get a new name during the spinoff, which is set to take place by the end of the year, according to the plan. Born seven years ago as a new product development resource for clients, the unit has since evolved into a broader brand-management consultancy.
"We don't work on advertising issues, although obviously, as a unit of Burnett, we understand the role advertising plays in business," said Brenda Williams, vice president and director of the Idea Lab.
"While we understand that creativity and strategy need to live together," she said, "we usually work with companies, often at the chief executive officer level, on long-term, future-oriented opportunities.
"Probably 80 percent of what we do now involves strategic business models, with the remainder in new product issues," she said.
The lab has eight full-time employees in Chicago and another four working in Burnett's London office. More staff will be employed in both locations after the spinoff, Williams said.
The unit has operated largely in the shadows because it has worked on projects with clients that are both on and off the Burnett advertising roster. Becoming an independent subsidiary--like Burnett's Giant Step interactive unit and Williams-Labadie healthcare agency--will make it easier to work with clients outside the main agency's roster, she said.
Another key part of the restructuring is to rename Leo Burnett Media as Starcom and give it more autonomy--although not independence, as with Idea Lab. This move is also intended to help that unit work with companies that are not clients of the general agency, said Rick Fizdale, Burnett chairman and chief executive officer.
The media unit, headed by worldwide media director Jack Klues, may seek media-only clients or take on buying responsibilities for smaller agencies.
Fizdale said, "Clients believe they get more accountability from a [unit] with a single-minded focus."
Media will not be formally spun off because its members need to participate in the "mini-agencies"--organized by client business categories--into which Burnett will be divided. The goal of this restructuring is about "more than just dismantling bureaucracy," he said. "It's about getting closer to clients."
Each of the mini-agencies will "develop its own environment and evolve its own variation of the Leo Burnett culture," Fizdale said. Each will also develop its own versions of Burnett's Creative Review Committees to evaluate work.
While former Nike executive Joe McCarthy has joined Burnett as a consultant, he will report to chief creative officer Cheryl Berman, to whom Fizdale said he remains "totally committed."