THE BATES' MIRACLE WORKER: As the new global chief of the struggling Bates Worldwide network, David Hearn needs to get 'a few quick runs' to restore shareholders' faith, John Tylee reports

Has David Hearn taken leave of his senses? Is he a sandwich short of a picnic?

Switching from client to global agency chief at a time when the advertising industry is enduring its worst recession since World War Two doesn't seem like the smartest thing to do.

Joining Bates Worldwide, a network whose future is, to say the least, an open question, seems to be either very brave or the height of stupidity.

Stupid? Hardly. At 46, Hearn has spent much of his working life running complex businesses. He bought the Phileas Fogg name for United Biscuits, was the driving force behind the "Man from Del Monte

and has a reputation for turning round ailing brands.

And brands don't come much more ailing than Bates. Bereft of almost any significant multinational business, lacking the critical mass to compete with the top five global players, the Cordiant-owned network is financially troubled and a prime candidate for takeover.

Those who know Hearn, however, claim he has never ducked the opportunity to test himself in a new area of business. But why Bates? And why now?

"I think the recession is bottoming out and that Bates is one of the great advertising brands,

he answers. "I also think it's easier to build a business from the bottom in the way you want rather than just trying to keep a successful business at the top."

He acknowledges the fact that "Bates has seen better days and needs rejuvenating

and suggests that the network's position as one of the few remaining independent communications groups could be its sail rather than its anchor.

The pressure on Hearn to get what one business associate calls "a few quick runs on the board

will be huge. Cordiant shareholders, close to demanding the head of the chief executive, Michael Bungey, now need assuring the group is doing something about perceived top-level management shortcomings.

"This problem is long overdue in being addressed,

Bob Willott, the editor of the industry newsletter Marketing Services Financial Intelligence, says. "Even if Hearn knows nothing else about advertising, he knows about the importance of maximising profit margins."

Lorna Tilbian, a media analyst at Numis Securities, believes that Hearn's appointment is an indication of the investment community's faith in a viable future for Cordiant. "Somebody who has run companies as he has done won't have made a move like this without doing his due diligence,

she says. "He will have chatted with the bankers and the fact he's decided to take the job gives us a positive steer about Cordiant's future."

David Wethey, the managing director of Agency Assessments International, adds to the upbeat mood engendered by Hearn's hiring. He claims that perceptions of Bates don't mirror the reality. "Bates is a good network which gets bad press,

he says. "It has fantastic history."

In some people's view, however, Bates remains too trapped in its past to secure its future. The USP pioneered by Rosser Reeves almost 50 years ago is cited as the personification of the problem. "Its USP is showing its age,

an ex-Bates senior staffer claims. "Bates might just as well claim that it makes ads the right way up. It has never managed to evolve the idea and give it new life."

Hearn undoubtedly has the guts to take any restorative action at Bates.

"He'll not shirk from doing what has to be done for the good of the organisation,

a former associate says. He may also have the guile. What is certain is that he goes into Bates on a tide of goodwill. An ebullient, stocky, six-foot four-inch bear of a man who once considered a career as a professional actor and could easily strut the boards as Falstaff, Hearn has been described as "charismatic and instantly likeable".

Some, though, find his almost obsessive interest in advertising people a tad strange. One agency man was surprised to be invited to one of Hearn's bashes when they were hardly bosom buddies. "There's a bit of the small boy in David when it comes to advertising,

he says. "He's an industry groupie. If I was a psychologist I would conclude that although he knows he can run a network, he hasn't thought himself cool enough compared with Frank Lowe or Robin Wight."

The closest Hearn ever previously got to making the switch was an offer from Lowe to run his then newly acquired Allen Brady & Marsh. But, as a client, he attracts widespread admiration and respect. Mike Davies, a board account director at Euro RSCG Wnek Gosper, worked with Hearn at Young & Rubicam and WCRS. He says: "David is intelligent, thorough and rigorous and would grill you rigorously over your proposals. But once he was satisfied he would give the agency its head and even ask you if you needed a bigger production budget."

Hearn is a Londoner, although his background and upbringing belie his claims to genuine Cockney status. His father, who ran the pharmaceutical company Abbott Laboratories, is said to have had a profound influence on him and to have urged a commercial career rather than an impecunious actor's life. He was educated at Rugby before going to Oxford to read English.

He opted to become a marketing trainee at Procter & Gamble and, after three years at Johnson Wax, became the marketing director for Sterling Health's over-the-counter business.

The managing directorship of Del Monte Foods in the UK was followed by a similar job at Smiths Crisps. When the company was bought by PepsiCo he ran the company's European foods business out of Barcelona. At United Biscuits, which he subsequently joined, Eric Nicoli, the chief executive with a reputation as a hard task master, quickly marked him down as a star performer.

Stephen Meade, who ran UB's business at Publicis for almost ten years, remembers how Hearn's purchase of Phileas Fogg changed the company's marketing culture. "UB was a sales-driven organisation which saw advertising's role as helping to shift products rather than building relationships with consumers. Phileas Fogg was a symbolic acquisition."

Hearn's seven years at Goodman Fielder should prove a good preparation for the hard calls he will have to make. The Australian food manufacturer had made a series of disparate acquisitions in the 80s. Hearn's task, similarly to the one he faces at Bates, was to create a cohesive management and company culture.

His actions weren't universally popular. Indeed, the Sydney Morning Herald sent him on his way to the US with a particularly nasty flea in his ear.

"His tough times in his Sydney stint will be useful as he takes up the position of chairman and chief executive (at Bates) in a time when the ad industry is in a downward spiral which, we suppose, means there has to be a lot of upside - just like at Goodman Fielder before and after his tenure."

Hearn's apologists blame this kind of vituperation on Aussie xenophobia and a predilection for Pommie-bashing. "He was a Brit running one of Australia's most esteemed and traditional brands,

a long-time observer of the country's commercial scene says. "Australians are still sensitive about such things."

Can Hearn now resurrect and energise a similarly disparate set of businesses united only by British American Tobacco's global account? Can he transform himself from a buyer to a seller of advertising? Hearn cites Anthony Simmonds-Gooding at Ammirati Puris Lintas and Kevin Roberts at Saatchi & Saatchi as examples of clients who have crossed the divide. What's more, he is skilled at combining complex business management with good people relationships.

"David has the credibility with international clients and Bates will seem simple to manage in comparison to what he's done before,

Jim Kelly, the joint chief executive at Rainey Kelly Campbell Roalfe/Y&R, who worked on Hearn's business at GGT in the mid-80s, says.

Nevertheless, he's once again the Brit entering a potentially hostile business environment. In his favour is the fact that he is married to an American, has worked in the country before and owns a house in Vermont. What's more, he has a first-class knowledge of the global FMCG business Bates is desperate to attract.

"Bates has long been inhabited by non-Americans in its US domain and David is very conscious of this,

Peter Fitzpatrick, the international president of the New York headhunting company Gundersen Partners, who met Hearn in Australia several years ago, says. "But he has shown great dexterity as a manager. He knows what he doesn't know."

What Hearn knows for sure is that pulling US-based multinationals into the network is paramount. "It's my biggest challenge,

he admits. "The advertising world is dominated by the US and the successful networks tend also to have a successful US operations base."

Establishing Bates' credentials with such huge clients will be a monumental task.The very name Bates Worldwide is a misnomer and Hearn has a vicious circle to break. Bates' lack of global business turns off global clients. But the network cannot make itself attractive unless it wins some. Moreover, Bates has had little success translating regional into global business at a time when clients tend to work from the centre outwards.

There'll also be some tricky political demarcation lines to be drawn up in what has always been a political organisation famous for its fiefdoms.

Bill Whitehead, the no-nonsense head of Bates' North American operations, is much liked by major clients; Jean de Yturbe, the former European chief who is now Bungey's deputy, expects the status and respect that goes with membership of one of France's oldest aristocratic families.

It seems churlish not to hope Hearn realises his ambition of "restoring some of our former glory and having some fun in the process". But it's hard to ignore the Cassandras. "I take my hat off to him if he can pull Bates around,

one says. "But I fear that the sheer scale of the problems are beyond any individual's capacity to do anything about."


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