The power of 50% thinking in a time of crisis
A view from Iain Jacob

The power of 50% thinking in a time of crisis

Having to cope with half of the resources can be a catalyst for radical change.

Imagine you were running a business where success was predicated on how many people you can pack into a small aluminium tube. 

Welcome to the airline industry. Every function has been honed to serve this aim, seeking to either reduce the price of operations or to optimise the load factor. The winners were the best optimisers.

Covid-19 just halted that model, but airlines are far from dead. People will still want to travel, but for the foreseeable future social distancing, whether imposed by government or sought after by customers, will cut an aircraft’s capacity by more than 50%.

Incremental thinking will not solve this challenge. Nor will optimisation.

The 50% is a creative catalyst with a great big incentive – make a creative leap or go out of business. 

Having to think through a 50% shift in business is at first sight brutal, with every creative leap comes the risk of failure. However, incrementalism is the real danger – the silent killer.

Every year, a little bit more for a little less but in the same model… this always ends in tears.

In the 1970s, there was a very famous thick and creamy yoghurt brand that defined the premium category. As pressure to deliver more for less increased, some bright spark figured out that if you add a little water, consumers will not notice.

Having repeated the trick, and after a few years of selling incrementally watery yoghurt, a smart retailer launched a genuinely thick and creamy yoghurt that killed the brand.

Advertising has hit its own 50% challenge. Indeed quite literally, given that second-quarter advertising spends may well be down by 50%.

Advertising has largely been an incremental activity for the past few years – direct response, optimisation, automation – and it worked for a while. Indeed, the first response to current dramatic sales declines is to switch more activity to direct response.

This thinking will not work.

Talking to my friends in advertising, the past few weeks have entailed scenario planning, being sent savings targets by HQ, checking cash-flow projections. All very necessary, of course.

But if HQ says cut 15%, and then two months later cut 10%, and then… well, you get the picture.

Death by 1,000 cuts will not go well.

Thinking differently, not just cutting

The power of 50% is not about reducing the size of your enterprise by 50%, it is about applying "50% thinking" to every part of your organisation to build on the fundamentals of value creation and reshape the enterprise.

Office space is a simple example. In a typical week, how many of your hours are spent creating value that is dependent on real social interaction – the successful brainstorm, the pitch breakthrough, the creative development?

Let’s be generous and call it 25%. The other 75% – email, catch-ups, status meetings – is, well, we have just proven that this can be done remotely.

Cutting your property portfolio by 50% would force change to enshrine a new approach, the workplace being there for specific aims rather than the home from home that it has been.

The cut of 50% actually gives you twice the space per person in the office for 25% of their time. Truly liberating.

Earlier this month, PwC and ISBA published their latest analysis of the digital ecosystem.

Once again, we see the magic 50% – this time, with more than 50% of online media spend not making it to publishers. 

As client marketing departments have been increasingly marginalised, they have relied on spurious measures – cost per engagement, cost per clickthrough, cost per action – to justify their existence.

They always appear to show incremental improvement over time, but marketing fails to become more productive. 

Agencies have helped them become slaves to spurious cost optimisation. 

Much price optimisation is built on sand; fraud, lack of visibility, ineffective control of context – and this is based on the famous "new oil" of data.

Don’t get me wrong, my background in science long since taught me the power of data, but in advertising much of the "new oil" is sludge and highly sulphurous – spurious sourcing, questionable privacy compliance, poor accuracy; all issues that are damaging our industry and reputation. 

The industry should cull 50% of data with a resultant doubling of quality, a step change in real outcomes, a reduction in misplaced clutter.

Agencies should not wait for clients or consultants to take the lead as they have done previously. Rather, they should reclaim the high ground and show collaborative leadership with strict standard setting to refine "the oil" and dispose of poor practice through the deployment of strict compliance. 

50% thinking could deliver self-regulated standards from agencies that better serve consumers, clients and, dare I say, our industry reputation.

The age-old pitch conundrum also needs a 50% view. Pitches can be where true creative leaps are made or the greatest drain of resource chasing a client whose sole motivation is more for less. This choice torments agency leaders. It has always been this way.

Except it hasn’t.

The past three years have seen the growth contribution of organic client development outstrip that of new business as good agencies do good work for good clients.

I am not suggesting that pitching stops, or decisions get any easier, but imagine the power of positioning an agency as only pitching the top 50% and breaking the conventional wisdom that fuels the reductive pitching cycle.

Then there is the toughest 50%. Share prices of the top five agency holding companies have declined by between 24% and 65% over the past five years. The average is uncannily close to 50%.

This seriously undervalues very valuable talent and assets. The rise of private funding and competitors with better-listed ratings has created an asymmetric competitive field, with the ability of the agency groups to finance innovation seriously diminished.

This calls for a radical rethink on corporate structure. Indeed, either the listed companies apply some more radical thinking or external, better-financed forces will do it for them.

If ever there was a time for 50% thinking, it is now. Tough, yes, but ultimately liberating and a lot smarter than the apparently benign, but ultimately fatal, incremental behaviour.

Iain Jacob is chair of Cinema First and UKOM. He is a former EMEA chief executive of Publicis Media
Picture: Getty Images