Culture Conflict
by David Kilburn

Cultural conflicts can bedevil international marriages between agencies. Language, egos, chauvinism, and different attitudes to business can all make the going rough. The pains can be most acute when publicly quoted western holding companies, keenly focussed on shareholder value tie the knot with Japanese partners who have different priorities.

Roughly a year ago, Martin Sorrell announced his largest investment in Asia, plunking down US$ 208 million for 20% of Asatsu [now Asatsu-DK], Japan's third largest agency. Sorrell described the Asatsu relationship as a strategic partnership, which would pursue joint projects. He also agreed not to become a predator and hunt additional Asatsu equity.

Earlier the same year, Omnicom bought 20% of I&S, Japan's 7th, and injected BBDO Japan into the agency last summer. At the time, BBDO executives said the plan was to increase their stake in the agency from 20% to 40%. They said this could rise to 60% by this summer, and to 80% thereafter depending on the agency's financial performance.

How have the two fared? Omnicom's deal won applause. It was easier to understand than WPP's; majority control looked a more appealing goal than a strategic partnership.

Yet of the two, Omnicom have faced the greater problems. In early July, BBDO abruptly replaced the Japanese president, Mr. Yonezo Udagawa, they inherited at I&S. The problem was a cultural one. To meet the financial targets that will trigger Omnicom's purchase of more equity, I&S needs either to win business at a rate not yet seen in Japan or to drastically downsize. According to sources, at least 20% of the agency's 800 plus staff need to go. Japanese corporate culture traditionally shuns such pain, and so Yonezawa was doing no more than peers, colleagues, and staff expected by sacrificing financial performance to maintain employment. Replacing Yonezawa was tough. In the end, BBDO and I&S's Japanese owners could only agree on persuading the agency's founder, 73-year old Mr. Mahito Suzuki to wobble out of retirement to act as caretaker and look for someone to wield the axe. Despite the turmoil, no business has been lost and, so far at least, BBDO is succeeding in holding the standards its international clients require. However, the goal of turning I&S into a substantial creative powerhouse must wait till some time in the next millennium.

Meanwhile and with Asatsu's support, WPP launched Mindshare in Japan in June. Mindshare Japan is not the first media specialist in Japan but is the first international media specialist company to start business in Japan and the only media specialist one to be publicly endorsed by a major Japanese agency. WPP are now exploring fresh opportunities involving Asatsu-DK " . . . we have also examined Asatsu's network in the region, and our own, and are looking at how we can consolidate our offers in an effective way for both clients and our people. There are tremendous opportunities both in terms of revenue generation and cost saving with Asatsu-DK and our emphasis in the coming months must be on exploring both these areas," says Sorrell.


First Year Scorecard
Strategic partnerships 1: Performance based acquisitions 0