GOOD CEOs: Issue 5

Somebody needs to make a video game where you run a creative company. 🎮

Not play as the striker. Not manage the team. Run the whole thing. The people, the politics, the pitches, the restructures, the tech disruptions, the clients that leave, the talent that doesn’t.

Championship Manager did this for football in the 1990s and 2000s. You could take Grimsby Town to Champions League glory if you were good enough. The game rewarded vision, patience, and the ability to make the right call at the right time.

A creative industries version would be brutal. And brilliant.

I thought about this because of my conversation with Alex Lubar. Former Global CEO of DDB. Now at FundamentalCo, the strategy consultancy carved out of Blackstone by ex-Droga5 CSO Jonny Bauer.

If the game existed, Alex would be one of the hardest characters to unlock.

He and I got together last month for a deeply inspiring chat. Where we covered off things like…

: Why vision matters

: Why balance matters

: What the word ‘dialectic’ means

: How being a ‘house of brands’ is different to being a ‘branded house’

: The comparison between running a famous company of some 8k people, and an upstart of around fifty

Read on for an edited version of our interview.

Ollie Scott: If being an advertising CEO was a game, you’d have completed it. From a career that began in New York at Rapp Collins Worldwide, to McCann in London via BBH and Grey. Then to – arguably – the biggest CEO role in ad-land. Now to FundamentalCo, which is one of the most exciting consultancies right now. On this winding journey, when were you happiest?

Alex Lubar: I have always been happiest when I was closest to the work. And at the times when I’ve been in that position, I was operating with a tight team of best-in-class practitioners. The challenge as you rise up through the corporate environment is that you get further away from the work and the product. I’m where I am today (FundamentalCo) from a desire to get back to what I think is the most fun.

OS: What is the role of a Global CEO of DDB? If we were to compare it to where you were – say – five or six years back? There must have been a shift in the things you’re expected to handle in the day-to-day.

AL: What often happens – and you have to push hard to ensure that it doesn't – is as your responsibilities increase within an organisation, you have more management requirements. Which means being drawn into operations more than output. This is dangerous, because as the CEO you need to be looking at the product, making sure there’s an eye to the future, that you’re close to clients and that the right conversations are happening. This is hard, because running a global operation, you wake up at six in the morning and you've got an email inbox that’s already overflowing with challenges, issues, opportunities.

OS: I always find that you've got different types of CEO. You have a political CEO that's probably more people and operationally minded, and then you have a CEO that's perhaps more visionary. The best can do both. Is there an ideal proportion?

AL: I believe that there is. A creative agency CEO should be spending sixty percent of their time with clients – or more. They should set aside twenty percent of the rest for operations, then the final twenty should be kept aside to lean into any issues that come up with the pace and complexity of running a business of this kind. The reality is, especially in a legacy organisation, the operational component can spike up into the sixties or eighties. When that happens too often, it’s essential to make changes – both in the business and how you operate personally.

OS: Thinking about it, you came up during the golden era of advertising, right?

AL: I'm not that old, Ollie. The golden era is, like, 1960s, isn't it?

OS: LOL! That was the first golden era. I reckon there was another one between the 1980s and into the 2000s, right? Big budget campaigns, cinematic TV ads, and cash flowing clearly into advertising spend. You were definitely around for that one – and the aftermath. What changed?

AL: In the 2010s there was a massive increase in the number of ways that you could connect with consumers. Instead of one-to-five mediums, you suddenly had ten, twenty, or more. That meant the business split. You also had clients realising that they needed to use all kinds of different mechanisms of engaging with their customers. A relatively contained business that had been consistent for multiple decades became very split up and mixed.

OS: How did the best organisations respond to this, from a talent perspective?

AL: It produced a need for polymaths. People that could do multiple things, multiple programs and initiatives in order to succeed. Then different kinds of businesses started entering the industry, because they became experts in particular areas. So the competitive set at company level suddenly got much larger. The additional pressure was the democratisation of technology, with everything becoming cheaper and faster, which invites in more players. That’s a sudden confluence of different pressures. More complicated, more competitive.

OS: So as things wrapped with DDB (RIP) you must have weighed the options. Do you join Publicis Groupe? Do you go to WPP and try to help them turn things around there? Do you start something all your own? What was it about FundamentalCo that made you think ‘yeah, this is where I want to go next’?

AL: I had built my career within the corporate environment, had a ton of great experiences, but I got to the point where I wanted a few things to change. Less bureaucracy, less politics. I wanted a focus on the work, and time with clients. Also, I think the smaller independent organisations can be as successful as the bigger, more complicated ones, because of the availability of technology and talent. So I said to myself: ‘how can I still engage with the industry in a way that is as rewarding and as satisfying as it once was?’ Because I love the industry.

OS: And so, enter FundamentalCo. How did that relationship start?

AL: I was approached by Jonny Bauer, who's the former CSO of Droga5. He had built a fantastic company, FundamentalCo, carved out of Blackstone, and a brand value creation agency. It looks at brand as a multiplier for value, not just as a wrapper. Over the last two years, he has had enormous success, both with private equity, Blackstone portfolio companies, and a ton of public companies as well. It’s a group of very senior practitioners on the strategic side – but on the design and the creative side too.

OS: It’s fascinating, because the two companies represent such a different proposition. You’re no longer selling a communications solution, you’re starting at the highest level of brand consultancy instead. Would a client walk out of DDB or WPP and go to FundamentalCo instead?

AL: It’s about understanding how brand impacts the overall direction of the business. Not just the communications or the marketing. So we like to say, ‘what is the species of our client within the industry they inhabit?’ Then: ‘what is their purpose?’ And then ultimately, ‘what are the advantages that support that purpose?’ The qualities that allow them to have an unfair advantage within that sector. There is an appreciation growing among businesses that there is untapped value in their brand. Or an opportunity to lean into a narrative around it which will deliver a change in the value of the organisation.

OS: Let's play it forward and in twelve months’ time everything goes to plan. What is FundamentalCo going to look like, and what kind of impact would it have had with its clients?

AL: We have seen exponential growth in the last two years. And that’s entirely to do with the success that we're having with our clients. One great metric of success is the net promoter score (NPS). The referral rating. So it becomes incredibly important that you deliver on every single client that you have. We will continue to build out our capabilities. There's probably opportunity for some M&A and some adjacent spaces. And then we have a ton invested in technology. We have an AI support system for our strategic group. I'm sure we'll expand that across design, and all of the business. Doing more, but in smarter, more effective, ways.

OS: The move to FundamentalCo looks like an amazing opportunity. If you were talking to somebody that was a CEO at a holding company right now, and considering what to do next, what would you say?

AL: I would say make sure that you're part of an organisation that has a vision of what the future looks like. And is not just looking at the business through the lens of creating efficiencies, but of innovation and creating something that’s new. As long as you're part of a group that is embracing change and the excitement of change, then it could be fine. But you really have to ask: Does that vision exist in the organisation? And then secondly, where am I spending my time? To go right back to the beginning of our conversation. Am I spending my time doing the interesting stuff? Is my talent focused on the things that I care about and the things that I think will drive the business?

OS: We saw a Gartner report where sixty five percent of CMOs said that AI will change their work. But that only twenty percent of them are making changes. What comes to mind when you hear that stat?

AL: There is an adoption curve to technology. There's always a cultural lag. That happens innately with humans. You've seen it with technology through the centuries. Those who are the most thoughtful about how to implement the technology will create the greatest effect. I don't think that it's about being first, I think it's about being smartest. And I think that those that are quietest, but who can be fast, careful and thoughtful will turn out to be the most prescient in the value they create, and the effect they have.

OS: My next question is one that’s coming up a lot among subscribers to GOOD CEOs. It’s whether WPP should be a house of brands, or a branded house. What’s your opinion?

AL: Everybody loves to sort of villainise the holding companies that move from a house of brands to a branded house. The key question comes down to this: how do you enable businesses to work better together within a single organisation? The biggest challenges that the holding companies have is that the subsidiary companies, or operating units, are highly competitive with each other. They have capabilities that crossover, and competing P&Ls. So it becomes less about, ‘what are we called?’ and it becomes more about ‘how do we operate together?’ Because if there's a better system of operating together, then there is room certainly to have a house of brands. But what there isn't a room for is people on your own team battling for the same slice of cake.

OS: You’ve prepared three predictions for this interview. Let’s talk about them in turn. What’s the first thing you can see coming along the horizon for the creative industries?

AL: Let me start with two caveats. The first is that anyone claiming to know the future nowadays is either a charlatan, or a or a drunk. And it’s a wild, dynamic, fast-changing world. Second caveat is that I intend to be disgustingly self-serving in my predictions.

OS: Fair enough. Please continue.

AL: OK, prediction one is this. As tech – and specifically, AI – gets better, we will continue to see that cultural lag. Where human behaviour takes time to catch up with the technology that exists out there. We know that it takes time for humans to change. However, there is a period of time prior to mass adoption where there's a ton of opportunity. For individuals and for businesses to capitalise on that change, whether it's through understanding the technology before others, or perhaps more importantly, understanding the influence of that technology on behaviour and being able to bring human behaviour on board with the technology sooner than others. So my first prediction is that there is an opportunity for those to capitalise on that cultural lag between technology and the catch up of human behaviour.

OS: OK, I like that. Prediction one accepted! What’s your second?

AL: Prediction two is that there is a dialectic effect with the ongoing rise of technology. that means two opposing forces shaping one another. The more deeply tech impacts our lives, the more we’ll seek experiences that are opposed, or different, or do not require it. Like the rise of hotels with no WiFi or off grid escapes. In a broader sense you're going to see more live experiences which enable us to connect with each other in a more human way. The Winter Olympics, the FIFA World Cup. These things are enabled by technology, but they are about people, community and stories. And as soon as technology becomes more commoditised, some of the rarer skills like creativity, become more important. And so one of the dialectic effects of more AI in our business is a greater importance given to the creative thinkers.

OS: Great prediction! And I’ve learned a new word ‘dialectic’, so thank you for that. What’s the third and final one?

AL: I think we will see an ongoing return to cottage economics. Where more individuals are able to start more businesses that have more capability than ever before because of the democratisation of technology. Typically, cottage industries existed in a pre-industrialised world. There’s a certain irony of returning to that. In fact, there's a term that I heard the other day: ‘solo unicorn’. It’s the idea that in the next 10 years, there'll be single individuals capable of creating a billion dollar company, which sounds problematic for all sorts of reasons.

OS: A billion dollars?

AL: Yes, if you dial that idea back it does means a mass of people capable of creating a huge number of things in much smaller groups. That is very exciting. Because one of the things that inspired me was joining a smaller company that still had the power to do big things. I think a lot of people would like to be able to do some of the work that they're doing in a smaller, more human environment. And technology will allow for that. And so I think we'll see more of this - small teams achieving huge things.

OS: Finally, if you were to speak to Alex Lubar fifteen years ago – what piece of advice would you give to him?

AL: There's a great line in a John Irving novel, The Hotel New Hampshire. It goes: “Keep passing the open windows.” It’s used repeatedly in the story as a family motto about perseverance. That in order to supposedly succeed in life, you've got to get enthusiastic, stay enthusiastic and keep walking forward – rather than trying to escape difficulties. You don’t have to love everything you’re doing, but you have to give it your all. As I say to my children all the time, it's okay to have two feelings at the same time. It's okay to be happy and to be sad. It's okay to be angry and to be excited. It's the duality of life.