Riding the rapids.(adapting to new technology in business)

In this second of the 1997 Stockton lectures, Martin Sorrell uses his experience as Chief Executive of the communication services group WPP to describe how to ride the rapids of the new technology without falling in. A key challenge is communication and integration within companies. The author assesses the opportunities offered by the new media for building brands and sales -- and their limitations.

This article is not a disguised advertisement for WPP. But because WPP is among those companies for which the new media technologies present both the biggest threats and the biggest opportunities, I use WPP to illustrate my perspective on industry in the context of changes in these technologies. The main features of WPP as a company are set out overleaf. In the article I assess the internal impact that new interactive and other media technology may have on our business and also how its impact on the market generally will affect businesses like ours. I then go on to discuss how new technology can help build brands and increase sales. Finally I return to WPP, to illustrate the challenges and opportunities. As we all know, if we do not grasp opportunities they rapidly turn into threats.

The new technologies are making a significant impact on companies and industries internally and externally. My overall theme in this article is that the breadth and depth of that impact is still questionable. These technologies are important -- they can even be life-threatening. But their impact is very varied and unpredictable. At a private gathering in Switzerland earlier this year, I heard Andy Grove describe Intel's hidden agenda as the destruction of the traditional media. He made this comment to an audience full of people from TV networks, newspapers, European and US magazines and so on. But our view is that the apocalyptic vision so often outlined as the effect of the pew technologies must be taken with a pinch of salt. It is the sort of thing we have to think about a lot in the context of our own operation. We worry about it -- but we also think it may provide certain opportunities.

Few companies are more affected than ours:

* Direct marketing OgilvyOne Worldwide, RTC, Promotional Campaigns and EWA have experience in relationship-building skills. Examples include interactive kiosks for Lloyds Bank.

* Research Millward Brown and Research International have extensive proprietary data in the media area. Millward Brown Interactive has been launched and has completed (with HotWired) the first ever study into the effectiveness of on-line advertising.

* Interactive advertising J Walter Thompson and Ogilvy & Mather have worked for Ford, Kodak, American Express, Seagram, IBM, Sprint and Kellogg on a number of specific projects.

* Strategic consultancy Henley Centre works with a variety of media, telephone, cable and entertainment companies, to understand the consumer attitude to loyalty and the use of interactive media.

* Internal knowledge networks/intranet We have our own intranet development through IBM and we are also involved with Concert, the new BT/MCI operation.

So much for the background.

The second area I want to touch on is the future of the new technology in our own business and the potential impact of interactive media on companies like WPP. Internally, our biggest challenge is how to communicate and share knowledge with the 22,000 people that we have in the company. This is difficult for any company that has grown by acquisition, and particularly for those which have grown by what is described as a "hostile" acquisition -- in our case two "hostile" acquisitions. You could argue that two thirds of our business has been established by hostile acquisitions -- and that makes the process much more difficult. We have tried very hard and I think reasonably successfully to co-ordinate our activities through e-mail use. We have over 5,000 people using; e-mail and 1,000 Lotus notes users. Our intranet will accelerate those efforts. An ex,ample is the Web page for JWT giving its corporate profile, its history, its methodology, its leadership, its teamwork, its performance, its clients and its relatives in the WPP Group. For all large companies, the first challenge of the new technologies is using them to solve that problem of internal communication.

The second potential impact of interactive media is in the financial area: its impact on business streams and how the new interactive media will affect the size of various disciplines and markets. In our business, there is a lot of talk about the importance of direct marketing (or one-to-one relationship marketing). Obviously …