Sir Martin Sorrell, the chief executive and founder of WWP, has recently resigned from his position. He has been one of the most successful business leaders in the world in the last thirty years, turning a tiny shopping basket-maker into the world’s largest advertising company with over 400 separate companies
In 1985 Martin Sorrell bought a stake in Wire and Plastic Products, a small UK manufacturer of wire shopping baskets after searching for a public entity from which to build a global marketing services company. During 1986 to 87 he became chief executive of the newly-named WPP Group and began acquiring marketing services companies across the UK and US, including the advertising agencies J. Walter Thompson, as well as the Ogilvy Group that included Ogilvy & Mather. In 2017, he was named the world’s second best performing CEO by Harvard Business Review, and best-performing in the UK. It is said that Sir Martin’s boast was that he never sold a company, and while his reputation would be a builder of the world’s largest advertising empire, by all accounts he was not a creative advertising man but a commercial manager “par excellence.”
The purpose of any and every business is to make money; businesses exist for no other reason.. Contrary to what some may believe, customer satisfaction is not the main objective of business. Customer satisfaction is important, but customers can be satisfied by the provision of free goods and services. However, unless customers can be satisfied profitably the business will fail.
Commercial managers responsible for producing profitable income, must show themselves to be efficient and effective in producing sustainable profitable income for the long term future of the business. Ultimately, their contribution to their business will be measured on the amount of profitable income produced, and how much cost and investment was used to produce it
“If you can’t measure it, you can’t manage it” said Peter Drucker. This statement applies as much to the commercial function as it does to every other part of business. However, the statement does not say that “If you can measure it, you can manage it”. Measuring commercial performance does not guarantee good management, but is an indicator of management performance.
The most important question which should be asked of every business activity is “how will it add to profit?” in other words, how will this activity or investment, impact on the production of sustainable profitable income for the long term? Many activities will have a direct impact on income, such as the management and direction of sales. But other important activities may contribute collectively, but not directly to the production of income. Advertising, other than direct response advertising, assists the development of sales by making the market aware of the product, but does not directly induce the customer to buy. Similarly, product and market research help to identify customer requirements, and are therefore an important investment, but it will be the ability to provide a product or service solution to the identified requirement, and to deliver it to the customer in a profitable manner that will decide the level of future income.
The objective of the commercial manager is to maximize profitable revenue while minimizing costs and the use of assets. To achieve this objective, the commercial manager must often manage a team of specialists, and ultimately be responsible for a variety of delegated tasks, including planning, market research, selling, advertising, distribution, and many other customer related activities. While commercial managers may not be specialists in all the disciplines that they control, they have to understand how to manage the various activities that collectively produce the income of the business.
However, the most important asset at the commercial manager’s disposal will be the delegated experienced staff, who carry out the specific activities. To be successful, the commercial manager will require good leadership skills to inspire, motivate, direct and encourage the staff, to whom responsibility must delegated in order to deliver results. At the same time, the commercial manager must institute the continuous management process for managing market and business information and for the development and execution of necessary actions, including the continual assessment and reassessment of performance. Metrics and measurements provide an excellent guide to the immediate past performance of all the customer related activities, but their future performance is dependent on the staff involved who have to deliver them. Thus the motivation and direction of employees is essential, as only people get results.
Commercial managers will rightly be judged on the measurements of the business performance that they deliver, but that performance will be dependent on their ability to motivate, organize and lead the commercial team to achieve their objectives. Only effective leadership and management can direct and motivate the staff, to maximize their performance to achieve the commercial and profit objectives. Sir Martin Sorrell may or may not have been a professional “Ad man”, but he knew how to get the best from his staff, in order to build the world’s largest adverting group of companies in WPP.