IBM: Culture supersedes individuals and org charts

The news that Ketchum and Text100 will end their 17-year stints working on IBM's PR account raises questions about the integration of communications and marketing, agency longevity, and innovation in a disruptive world.

IBM is changing its agency arrangements after 17 years with Ketchum and Text100.
IBM is changing its agency arrangements after 17 years with Ketchum and Text100.

All good things must come to an end and that is exactly what happened this week as IBM said goodbye to its incumbent PR firms Ketchum and Text100 after 17-year relationships.

It is one of the iconic client-agency relationships and will always be associated with now-retired IBMer Jon Iwata and agency teams led by Rob Flaherty at Ketchum and Aedhmar Hynes over at Text100.

The relationships have effectively been ended by IBM’s new CCO Ray Day, who assumed the top comms role from Iwata at the start of this year. Text made the no doubt difficult decision not to participate in the pitch and Ketchum was eliminated after the first written part of the RFP process.

IBM currently works with around 20 PR firms, including Racepoint Global, W2O Group, and Highwire as well as the two well-known incumbents. Day wants to rationalize that to two major global players for widespread comms support, augmented by specialty agencies for business areas such as health and various tech specialisms.

All’s fair in love and war – and business – and anyone coming into a new role has to do what they feel is best, whoever they are succeeding and however long the previous arrangements might have been in place.

Flaherty (plus new Ketchum CEO Barri Rafferty) and Hynes both posted blogs celebrating their relationship with IBM and pulling out highlights from their 17 years of service.

Reinvention and innovation are processes that involve constant revolution, and in-house teams need to work closely with their agency partners to achieve this under differing circumstances over time.

Day’s aspiration is to create a "blended team," which he defines as full integration between IBM’s in-house talent and its agency partners. Some choose to continue the status quo, others plump for a clean slate and wield a new broom through the organization.

This applies to a new incoming CCO just as much as it does a new CEO, to whom CCOs are usually closely connected and must have a symbiotic relationship.

Day principally served two CEOs in his 28-year career at Ford, including Alan Mulally, finally moving on when Jim Hackett took over from Mark Fields as the automaker’s CEO in May last year.

WPP yesterday changed its Team Ford account lead from Gary Koops to Chris Preuss, bringing on the former Delphi communicator to be EVP of global public affairs and marketing communications and the main integrated, multi-agency group client coordinator for the holding company’s Global Team Blue division.

Preuss returns to Ford and renews his relationship with Day’s successor Mark Truby, VP of communications at the automaker.

Mark Fields joined the board of IBM in 2016, so that was no doubt a useful connection for Day in securing his new role at the tech behemoth after their time working together at Ford.

It’s all about people and relationships. Sometimes you benefit, sometimes you lose out, whether you are an in-house executive or an agency supporting a brand.

Hynes and Flaherty originally won the IBM business in 2001, when the tech company consolidated its 50 agency relationships down to three major players: Text 100, an Omnicom cross-agency construct dubbed One Blue - led by Flaherty - and Magnet Communications.

The pitch was overseen by Iwata, who became CCO of IBM in 2002, and subsequently took on marketing and CSR as well in 2008. He became chief brand officer in 2017, before announcing his impending retirement later in the year.

The One Blue construct, a consortium of Omnicom PR firms including Ketchum and Brodeur, eventually morphed into a predominantly Ketchum offering.

At the time, the account was estimated to be worth $40 million. Sources close to the existing account suggest it is worth much less than that now. It is understood that Burson Cohn & Wolfe, Zeno, and Weber Shandwick are among the firms involved in the race to win final roster places in a process Day says will be wrapped by the end of March.

Weber Shandwick’s North American corporate practice president Paul Jensen used to work on the IBM account at Magnet back in the day. Magnet was subsumed into Euro RSCG in 2004 and its work with IBM faded.

Iwata’s tenure at IBM included spells under Lou Gerstner, Sam Palmisano, and Ginni Rometty, who took over as CEO in 2012. He is widely credited for leading the charge toward integrating communications and marketing, and was one of the few comms pros who rose to oversee marketing as well, becoming an aspirational figure for his peers in the process.

His vision was to rethink and remake the role of communications and marketing as a whole and solidify the value and influence they play in enterprises.

But in the last phase of his tenure at IBM he was looking to put in place a succession plan across the marketing and communications functions, bringing in Michelle Peluso as SVP and CMO in November last year.

Unlike Day in the comms sphere, Peluso has seemingly chosen to continue her agency relationship with Ogilvy, one that goes back even further than IBM’s with Ketchum and Text100. In fact, Text has done some business with the marketing department as well as communications, so it is not necessarily completely the end of the road for the Next Fifteen firm’s relationship with IBM.

Refreshing the chief communicator role over the years had proven more problematic for Iwata, with executives such as Ben Edwards, Mike Fay, and Andy Whitehouse all experiencing short-lived spells in the comms lead chair prior to Day coming on board on Iwata’s retirement.

Communications and marketing at IBM are now firmly split again, with distinct executives running each function. Time will tell whether one discipline wins out over the other in time, though that is probably the wrong way to look at it. Whatever the construct, it is essential in any effective business or organization for these two functions to cooperate and work together effectively.

Some might see this as a deconstruction of the idea that a combined function as envisaged by Iwata is the optimum way to structure an enterprise.

My view is that it is more dependent on the particular people involved. Whether it is One Blue, Team Blue, or any Kind of Blue, individuals and structures come and go - the most important thing is to foster a culture that is strong enough to sustain above all those considerations

IBM has worked its agencies hard over the years, on the PR and creative sides, challenging them to keep pushing in the ongoing process of transforming a business in increasingly disruptive times.

You can be sure that this process will continue under Ray Day and the successful agencies in this new PR consolidation will soon enough find themselves with a challenging but inspiring brief on their hands.

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