Cannes Lion 2016 Exclusive: Interbrand's CEO Jez Frampton Talks About The Challenges of Digital Transformation

by: Navjot Singh on 25 June 2016

To Jez Frampton, Global Chief Executive Officer of Interbrand, being able to connect with and understand the client is they key to a company's success in digital transformation

"You have to start within an organisation, and truly understand how they work before you have any hope whatsoever of creating any kind of real change"- Jez Frampton

12ahead: It would be great to get insights from your perspective on where you think agencies, and your clients, can improve on in relation to embracing digital transformation? If you can elaborate with any particular case studies, please.

Frampton: First and foremost, let's start with a couple of statistics. There was a great piece written about mergers and acquisitions in Harvard Business Review recently that said that "75 per cent of all acquisitions fail. In other words they don't generate added value for shareholders. And the primary reason for that is culture, and as Peter Drucker once said that "Culture eats strategy for breakfast". Now, the second fact that goes along with that relates to digital transformation and funnily enough the figures that are quoted are about the same- 75 per cent of thereabouts digital transformation's efforts do not succeed. In other words, there is no transformation and you don't end up digital. And again, the primary reason for that is people. I think there is a very simple common learnings there which is that you have to start within an organisation, and truly understand how they work before you have any hope whatsoever of creating any kind of real change. The second thing which I would connect with that is the importance of why people are doing this. They are doing it for a number of reasons. Firstly, because they want to catch up with perceived threats or possible entries from the digital world. I.e. is this the end of my business because if I don't catch up then I am dead. In order to do the right thing, where you need to end up as the ultimate objective, is to create a seamless connected experience, online, offline, environments, products & services, people and communication services. In other words, a lot of hard work. At the heart of all of that is the human beings of digital organisation.

Now, if you stand back and look at those challenges and consider why M&As and digital transformation fail, the common factor is the human being. For most large legacy organisations, who are the ones who are generally trying to catch up with the cheeky young start-ups who are changing business models and working behaviours, they do not, these new companies, have fractured separated silo systems inside their businesses which take one business capability and separate it from others. Sales Vs MKT, new product dev. They tend to be customer focused. Then they bring in all the other capabilities to deliver against the need of the customer. If you look at companies such as Uber, Apple or Facebook, you will see that it is what they are really good at. So it has to start by aligning organisations. That means agencies need to do the same thing. Because we work in many different situations with multiple agencies groups, digital companies, and the most successful ones we work on are the ones where actually the client or the agencies themselves have created seamless alignments between themselves. Then they can work on creating seamless alignment within the organisation, and ultimately then create an experience.

The interesting thing about this is that I haven't mentioned technology because technology is effectively just the way in which you go to the market. You need to understand what's possible and what's not possible in order to be able to radiate, to be able to challenge existing ways of going to market, to understand the behaviour of consumers nowadays, how social affects things, how we interact with our mobiles and all our other devices. It is very much in that order. Any transformation of any kind, digital or otherwise, requires a clear vision - where are we trying to get to, what should that experience feel like and then you employ digital technologies ad techniques in order to be able to achieve your goals. That’s what I would say is where agencies need to start and where they probably need to change their own behaviour. For some reason, the most creative companies in the world, are not very creative when it comes to working with each other.

12ahead: How do you believe agencies, and your clients, have structurally changed the way they work within the five years, specifically in relation to digital transformation?

Frampton: If you look at the differences in broad terms between agencies and networks in Western Europe and North America vs Asia, when the agency networks entered Asia, one of the things they did from almost the start was that they created businesses which were more joined up. So, if you look inside things JWT, Ogilvy, TWBA and even our business, versus the WPP's businesses, a lot of them are quite well integrated from the inside, and a lot of them have digital baked in right from the beginning. I think that's just a factor of history. So, the challenge in Western Europe and North America is to actually try to emulate that- to break down the barriers internally, change the structure of the way things works, to shift people's perspectives, particularly in the creative markets about what they do, that it is about ideas and the ability to not be too precious about that, and recognize that the task of everyone is to work together to execute to being that idea to life.

That has been going on to a degree: a lot of businesses have shifted their production and behaviour of where they actually execute, how they do it to align to create centralised units, to bring more digital thinking into it, to change senior creative leaders within organisations and to create more joined up behaviours between different agencies within a bigger group. So, for example, we are part of the Omnicom network and to see how you actually work with your other agencies in order to come to the market. I think we have seen that change come along in the last five years. Do I think it is going fast enough and have we gone far enough? The answer is probably still no.

When you look at some of the companies that we broadly compete with now, like Facebook, Amazon and more so Google, they are organised in a very different way, they take a different attitude to innovation and new product development, and I think there a lot we can learn from them, as well as learn from our clients in terms of the business transformations that they have gone through.

12ahead: Is there a particular case that you would like to highlight?

Frampton: Yes, there is actually. I won't divulge on their name, but they are a large logistics company in the US, both for Business-to-Business and Business-to-Consumers. They called us originally because they wanted a name for their Small-to-Medium Enterprise (SME), and we asked them why. Their reason what because people are not using our products and services and they don't understand how we actually have tailored capability for this particular type of market. So, we recommended them a brand and business growth model to help them transform into what they wanted to be. Initially, we started looking at their customer to understand how SMEs have changed their behaviour over the last five years and their own product and service offer. What we discovered is that there was a very big gap between what people actually wanted and what was actually being delivered, not just by them but also by their competitors.

Therefore, we had a real opportunity to do something. We went through the process of understanding the customer, we prototyped different service offers and all the time we had a business case running through so we were constantly doing check backs with research and market sizing in order to translate that into possible business uptake for investment model. So, within a six-month timeframe where we went from a new name to a completely new product and service offer, prototyping for new apps, desktop services and right the way through to redesigning their environments that they have quite a lot of but were completely unfit for what their markets were looking for.

The net results are that they are making the investments because we have the business case for it to actually transform their business model for that market.