NEWS ANALYSIS: 'Overmanaged, Underled'

How J. Walter Thompson's New York Office Got Into This State NEW YORK--On Friday, Nov. 7, the 375 staffers at the New York office of J. Walter Thompson filed into the cafeteria to attend the first agencywide meeting led by worldwide chief executive officer Chris Jones. A tumultuous week marked by the sudden exits of the office's two most senior executives had left employees at the agency apprehensive and confused. Jones' mission: clear the air and reassure the troops. The abrupt departures of chief executive Susan Gianinno, 47, and worldwide creative director Helayne Spivak, 45, were the latest and most public signs of distress at the once high-flying shop. But they were not the only ones. For almost two years, JWT has been struggling to reverse a moribund new business spell during which two major clients, Citibank and Eastman Kodak, took flight. To make matters worse, discord among upper management reached a deafening level. Morale had plummeted. "What is going on?" That has been the question asked continually both inside and outside JWT. When one staffer at the recent gathering posed that query to Jones, 42, his response was brief but direct: "The agency has been overmanaged and underled." Gianinno had successful stints at Young & Rubicam and then BBDO before joining JWT in April 1995 as general manager of the New York office. The agency posted an increase in revenue of approximately 17 percent that year. That was followed by a 14 percent increase to $873 million in billings in 1996, spurred by the wins of DeBeers' $50 million U.S. business (a high point for the team) and Weight Watchers' $25 million account. Losses during that two-year period included a $15 million assignment from Reynolds and the agency's resignation of the $30 million Boston Market account. When Gianinno was promoted to chief executive officer of the shop in March 1997, she was widely regarded as bright, capable and tireless. Though she lacked experience running an agency, the shop was hopeful she could build upon the revenue increases of the previous two years. This year, however, revenue will be flat. The tremors could extend beyond New York as WPP in London has mandated its agencies match the 13-15 percent operating profit margins achieved by its competitors. Executives at the agency laid the blame for the lackluster revenue record at Gianinno's doorstep. Specifically, sources say, it was her inability to delegate and empower others that alienated some executives and created a leadership vacuum. "Agencies thrive when there's a collaborative environment and when each colleague's contribution is valued and everyone involved feels a sense of ownership," says Jeff DeJoseph, JWT's executive vice president, director of brand planning and communications. "Her tendency to not work with others or listen to others does not come out of meanness or even disrespect," says one executive who once worked with Gianinno. "It is a reflection of her intensity and tendency to focus on ideas by herself." Gianinno would not respond to questions regarding her management style. Her tendency to micromanage the strategic and creative development processes was evident during several new business efforts, sources say. Creative staffers complained she and Spivak, who joined in October 1996 and was Gianinno's greatest ally, hijacked new business strategies at the 11th hour, confusing some and angering others. The recent global Pepsi pitch was probably the agency's most chaotic and curious. First, at least two executives known to have strong relationships with Pepsi, through JWT's servicing of the Pepsi/Lipton Tea Partnership, were told to steer clear of the pitch, ostensibly to avoid a "conflict." (At stake were new product assignments in the U.S. and 7Up business overseas). Later, Gianinno, a researcher by training, jumped in and rewrote the strategic brief herself. Sources say she eschewed the initial positioning based on fun and attitude for one that centered more on product benefits. "Pepsi was micromanaged like you wouldn't believe," said one insider. "No new business pitch, no matter how important, requires daily meetings." JWT, which pitched against two other agencies for the Pepsi business, was the only contender to walk away empty-handed. Both BBDO and Goodby, Silverstein & Partners were awarded significant assignments. Similar problems arose in JWT's unsuccessful bid for the $90 million Red Lobster account earlier this year. Lacking a decisive direction, creative development under co-creative directors J.J. Jordan and Tod Seisser came to a standstill until Spivak provided the tagline at the last minute: "Inside every Red Lobster is a little seafood restaurant." Without elaborating, Jordan says, "It's fair to say we didn't clearly define individual roles in new business pitches." Sources say the creative process generally was often paralyzed as second thoughts over completed strategies resulted in what one source describes as a series of "endless circular arguments." Spivak declined to comment on her role in JWT's new business efforts. All told, JWT's success on the new business front in 1997 is limited to winning a $20 million assignment from existing client Sprint. That poor showing is not from a lack of effort or expense. In fact, the office pitched at least nine high-profile accounts through October of this year, including Citibank, MasterCard, Delta Air Lines, Continental Airlines and, most recently, Bausch & Lomb, coming up short each time. Gianinno believes the responsibility for that lackluster record should not be shouldered by the New York office. "The Citibank pitch was led by corporate, and the only instances where New York pitched on its own were for Sprint Youth Marketing and Red Lobster," she said. Earlier this year, Peter Schweitzer, JWT president of the Americas, centralized the agency's North American new business efforts at the corporate level, to be led by Brian Hefernan. Memorandums were sent to each of the regional managers in New York, Detroit, Chicago, San Francisco and Atlanta, requesting they complement Hefernan's efforts with growth from existing clients. Schweitzer says that the New York office, however, did not embrace the new system as enthusiastically as the others. Again, Gianinno's need for control interfered with office procedure and the agency's goals. "The office manager who says, 'If I don't own or control, then I don't want to be involved,' has no place at J. Walter Thompson," says Jones. The atmosphere at the office was in stark contrast to the collaboration inside JWT's top management four years ago. "Heekin, Patterson, and Kim were a helluva team," says one insider, referring to general manager Jim Heekin, U.S. director of strategic planning Peter Kim and creative chief Jim Patterson. By the end of 1993, however, Heekin and Kim left for McCann-Erickson while Patterson's flourishing fiction-writing career diminished his role in the agency. Many observers believe the dissolution of this trio and the fact that the next generation of leadership was slow to emerge were the genesis of JWT's current woes. Following Heekin's departure, North American CEO Ron Burns took the helm of the New York office. Longtime worldwide CEO Burt Manning, meanwhile, was preoccupied with grooming a successor for himself. Schweitzer had been asked in October 1993 by Worldwide management to replace Manning as chief executive officer of JWT Worldwide, but he turned down the offer and chose to stay in Detroit and run the global Ford account. Jones was eventually identified as the heir apparent in July 1995. During an 18-month transition period, Jones blessed the hiring of Spivak. She had been recommended to him by Gianinno, who had been hired by Manning as general manager in April 1995. In March 1997, after officially taking up the reins as worldwide CEO, one of Jones' first significant moves was to promote Gianinno to CEO in New York. All told, Burns had been minding the store for more than a year. Gianinno says she was brought in to be an agent of change but was thwarted in her efforts. "Burt Manning hired me to deliver on an objective that would make the agency a creative force, but, unfortunately, I encountered great resistance in that pursuit," Gianinno said after she left JWT. Jones refutes that allegation, noting that JWT this year has upgraded creative talent in each of its major U.S. offices. With Spivak gone (she resigned one week after Gianinno, claiming the situation had become untenable), it will be up to Jordan and Seisser to create a collaborative environment in the New York creative department, where political infighting has been de rigueur. Jones has expressed his support, although tempered, for Jordan. "J.J. is learning how to get people to think as well and create as well as he can," says Jones. "People have been overmanaged," Jordan acknowledges. He and Seisser "need to guide and help rather than drive," Jordan says. Jordan's detractors say he attempted to mimic Patterson's autocratic management style but lacked the conviction to carry it off. Schweitzer adds, "J.J. is not a concern. In the past, there had been doubts, but he has proven to be bright and professionally solid." For now, all eyes are on Jones and his selection of the new CEO. The 13-year JWT veteran (he joined the London office in 1984) built a solid reputation as an adept account manager in Europe on multinational clients such as Unilever and Kellogg before being tapped by Manning. Considered extremely bright and a consummate client handler, many insiders only got their first taste of Jones as an agency chief at the Nov. 7 meeting. By most accounts, he displayed the "charisma" and "clarity" the agency has been lacking, sources say. "Jones was excellent. It was the first time in a long time that I heard the agency applaud in an unobligated way, " said one JWT N.Y. manager. WPP chief executive Martin Sorrell has also expressed his support for Jones, but the depth of that support will be tested in the coming months. Jones knows it will take more than a few rousing speeches to fix JWT. He has said he will not replace Spivak, but he has a pivotal hire to make in replacing Gianinno. Specifically, Jones has told others that the new CEO will need to better define people's roles, and stick to the leadership role of CEO. "I'm looking for a CEO who exudes clarity and optimism," says Jones. "I want this office to feel like a noisy Italian restaurant." --with additional reporting by Alison Fahey

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NEWS ANALYSIS: 'Overmanaged, Underled'

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