David Bell – new chairman and chief executive of Interpublic Group (IPG) – did not see his predecessor’s fall coming, or so he claims. If that were really so, he must have been leading a peculiarly isolated existence over the past year. John J Dooner Jnr, the predecessor in question, fell on his sword because he had no other way out; the alternative was corporate assassination.
Dooner’s stewardship of IPG, where he took the helm at the beginning of 2001, does not edify. The public record reveals a catalogue of failures: a botched takeover of True North Communications; botched investor relations, resulting from financial mismanagement, an SEC investigation into accounting irregularities and the consequent damage to IPG’s shareprice; and, perhaps most unforgivably in a former suit, botched account handling, which recently caused the defection of the flagship Coca-Cola account to a WPP Group subsidiary.
Could he have done any worse, or was Dooner in reality a victim of circumstance? It’s tempting to say that he was facing mission impossible. He stepped out of the long shadow of Phil Geier, indisputably IPG’s strongest leader since Marion Harper in the Sixties, and straight into an economic blizzard – the worst marketing services recession anyone can remember.
A genius might have struggled, but assuredly Dooner is not that. For a start, he lacked the financial nous which has become indispensable to running an organisation of IPG’s size and nature. Note how John Wren, once at Arthur Andersen, has managed to rescue Omnicom (and his own reputation) after a very sticky interlude by dexterous handling of the financial community. Or how Sir Martin Sorrell has been weaving the sow’s ear of a 19 per cent decline in WPP pre-tax profits into the silk purse of a ‘saucer-shaped’ recovery in 2004. Dooner, by contrast, lacked savoir faire. He acted early to rid the main IPG board of its operating barons – namely Frank Lowe, Jim Heekin, Brendan Ryan and Bell himself – and to replace them with ‘independent directors’. The move was billed as ‘best of breed’ corporate governance; actually, what it did was expose the two remaining executive directors, Sean Orr and Dooner himself, to the line of fire. Yet when the fusillade came, from irate Wall Street analysts and relentless hacks, Dooner was first to the bunker.
The question is, will Bell do any better? Bell is a proven survivor – a more emollient though scarcely charismatic character, but with genuine experience of handling corporate meltdown. First, he hauled True North out of a managerial crisis in 1999, and then in 2001, after it lost its flagship client DaimlerChrysler, he skilfully sold the business – for far too much money – to IPG. But the challenge he faces could not be more formidable. Not only must he restore public trust in IPG’s battered finances – involving such issues as ensuring the disposal of research arm NFO doesn’t turn into the beginnings of a fire sale, dealing with the financially incontinent Octagon division and forestalling any more nasty shocks at McCann-Erickson; he must also watch his back. Even now, there are rumours swirling that Lowe is exploring a management buyout. And who can blame them, if so? Marketing services businesses are never likely to be cheaper.