WPP needs to ‘change violently’ – former CEO Martin Sorrell claims it has ‘outlived its purpose’
Martin Sorrell has claimed WPP has “outlived its purpose” and needs to “change violently” after suggesting the value of GroupM is the same as the entire company.
During an interview on CNBC News, Sorrell also said shareholders often shy away from taking action to reshape legacy businesses amid fears it would damage the balance sheet.
“If you are trying to restructure a legacy operation which has outlived its purpose and is not fit for purpose you have to make legacy cuts and take hits to the balance sheet that often shareholders are unwilling to take,” he said.
Sorrell, who still owns 1.4% of WPP and is its largest individual shareholder, said holding groups also promise the markets that money can still be made in the “old fashioned way” through revenue growth and margin. But if the business underperforms, pressure piles up “which makes people less willing to change”.
Asked directly whether WPP has outlived its purpose Sorrell said: “It has and it needs to change violently”.
That should involve breaking up the company, he said, suggesting that its media buying group GroupM is probably worth $15b, the same as the entire company.
The boss of S4 Capital also said that to achieve transformational change, you need someone “from the outside” to lead a “radical revolution”.
“Radical evolution does not work, it has to be radical revolution, that is the key issue.”
WPP has outlived HIS purpose.
ReplyKudos to Mark Read for making many of the tough choices required to move the company to the future. Whether it is enough is another question. I have a lot of admiration for one part of how Sorrell built WPP into the powerhouse it is (less admiration for certain other parts of how he ran it). But it doesn’t seem like he has any shame at all. Whatever decline WPP faced was on his watch.
I am following S4 with great interest as their proposition is interesting, and it’s going to be interesting to follow the decline in quality of the work that will eventually come as they move to “cheaper, better, faster”.
ReplyWould Sir Martin have said the same thing had he not been ousted in such dramatic, irreverent and humiliating fashion? That’s the question.
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