Episode 9 The Bottom Line

On BBC News it is time for The Bottom Line.

What do Chief Executives do? Make decisions, right? We have three,

but as usual we are going to droll down to the process of decision

making, using our own example and a topic perhaps related, we are going

to talk about breath. Each week inspirational spwiz

leaders gather to talk on The Bottom Line. Now you can see it as

well as hear it. As always we start by spending a

few minutes meeting my three guests. manager, chairman of a new venture,

been on the movies soon? We've been doing that for a number of years

now. I think people were sceptical, how can you make money in film,

it's generally an area that people think you can only lose money but

it's a huge industry. There were 1.3 billion cinema tickets sold in

the US alone last year T idea you can't make money is nonsense. We

found a way to do it. It's a classic industry where you would

expect to lose small amounts on quite a lot of investments and then

score very big on a few? Not the way we're doing. What we are doing

is helping mainstream producers, so people with a very good track

develop their movie projects. If you work with the top producers who

know how to get their films financed, the success rate is very

high. At the moment we have eight films and at the moment they're all

looking good, I think they will all get made. Thank you for that. Also

with us, Martin Sorrel, Chief Executive of the world's biggest

advertising and media group, WPP. You've had a good year? Yes, across

the world, pretty much any criterion you get to, revenues,

revenue growth, profitability margins and increased margins by

40%, to graish yait ourselves with our shareholders. It was very good.

But it comes over from three things. It comes from the new market and it

comes from new immediate yarbgs digital and lastly from consumer

insiebgt. And then maybe the fourth thing is increasely is not a good

work but horizontalty in our business, that is getting the

various parts of our business to work effectively to deliver to

clients. We have 180,000 people now in 109 countries. We have a lot of

talent, but it is making sure all that talent is engaged and

available. Also sitting at the table with us is David Jones, the

Global Chief Executive of Havas, the huge French-based advertising

group. Have you had a profitable year, too? I think it was a

terrific year overall for the industry. I think what's happened

with the digital and social changed. I think the importance our

our business to our clients, pretty much everyone worked out the rules

in the old game, how to make a 30TV commercial. I think today they're

working out how to use the up side and down side of social media, we

know consumers want bisz to be more socially responsible; how do we

head down that path. I think it's one of the reasons that haul the

companies in our sector had a good year last year, is because they've

become more important and relevant to the world's largest advertising

marketeers. Now, decision-making. We asked you to come armed with

some recent decisions, not a ground breaking one, not a life-changing

one, just an everyday business decision, so we can examine it

closely to see what you get up to. Martin, you're smirking. I think

I'm going to suggest we go to David first. A recent decision, David?

really recent one and it's so recent I can't name the company, I

recently took the decision to acquire a company that directly

challenges everything our industry is about and very simply what it

does is it uses technology to crowd source ideas. So instead of having

a creative department, which has been the lifeblood of our industry

it reaches out to people around the world in general and uses

technology to use them as the generator of the ideas and I

brought the company to one of the board meetings to present, and I

would say the reaction of a third of the people in the room was

heresy, get them out of here. So it was an interesting thing to look at,

should we acquire that company, or should we position ourselves as

trying to kill that company because they stand for everything that you

know is what we're not about. you decided to acquire it? I did.

And give us a rough idea of the sort of scale we're talking about -

�1 million, �10 million? It's above the bottom two numbers but not at

the top one. Martin is trying to work it out. I think we're aware of

it. We requireed a company, Spot Runner the same ten years ago T

company went out of business. It was a crowd sourceing company today.

The interesting thing about them is their client list, they're working

with ten of the largest advertisers in the world and clients are

running after what it is they have on offer. So I think, my view was

the single biggest challenge facing my business in our industry is

legacy. You know, having bigger and big legacy businesses doesn't

necessarily help you succeed in the future. So my reason for doing it

was, like when the Australians started making wine t French said

we can either ignore it or just buy it. So Jacobs Creek and brands like

that are owned by a French company. I think my view is similar: we have

to change, we have to change fast and it's better to bring that in

and it's part of us than it's on the outside. We should explain

crowd sourceing. Not everyone will know what we're talking about?

use technology which allows, you can have hundreds of thousands of

people around the world contribute ideas to you. The thing that makes

this work is the technology that they have in place that allows you

to manage that process. But basically things like, I did the

tick, tick, tick campaign and the whole was to make it an open source

campaign where we said if we try to do a campaign centrally, there's no

way we will be able to get the cut- through, but if wu turn it open to

the world and say, do what you will, we ended up with 18 million people

being part of the campaign. But the idea came, you'd been keen on it -

but who said this company is the company? I meet a lot of, our

business is still enormously about talent. I think in the future it

will be about talent in technology, but I meet a lot of interesting

people in companies in this space, and it was something who I thought

had a fantastic combination of talent and technology. And it's a

risk. Your appreciate it's a risk? Well, Martin's point, it is a brand

new model business, so there's no guarantee that in five years time I

won't be sitting here saying it's kpwon out of business. My view is I

don't think it will, because I think there's a legal of interest

in the world's biggest advertisers which says there's something

powerful in it. But that is a risk. There's a risk that client also go,

version of what you offer, so we will have that thank you and we

will reduce the fee we're paying you. That is another risk. Let's

look to Nicola. Tell us about a decision you made. If we focus for

a moment on our business and how we select a project, we have to look

at the producer who is bringing us the project, and how likely is this

film to be made. And not particularly interested in the

genre. It's actually quite helpful if it is something like horror or a

thriller because the cast is not so important. So thaes helps to get it

made, that you don't need to get big stars. So there's all sorts of

consideration and we have to question them intensely about how

you are going to finance this movie T movie industry has changed

dramatically N the old days the studios yueszed to make everything.

Now they only make 20% of the films and in terms of what they

completely finance themselves, it's literally a handful. There are

1,000 English-speaking films made every year and only 50 are

completely financed by the studios and they're all the Supermans. The

blockbusters. You make an investment decision every day. I

thaulgt you would probably have people doing that for you. I mean,

you literally, you're the person t founder the Chief Executive of the

company, you said thrbgs is good, this one's not good? We have a team

of people. I have found over the years, having been in investment

management for 29 years, that better decisions are made by small

groups, you can't have a class of thousands, other wise you get poor

decision making. But if you have a small group of people and they have

to be unanimous decisions, that's the best way of doing it. Small,

people are involved in the investment committee for this

particular project. They will have foun this project, they will have a

written the paper about it, will present it to the rest of the team,

be the advocate for that project. And will have asked all the right

questions and the rest of us have to then question the person who's

putting it forward to make sure they haven't forgotten something

and all the stones have been unturned. That's almost like a

pitch. It is a pitch. One of the team pitches it to the rest of you.

That's right. If it's unanimous, we all have a right of veto. So

interestingly nothing has been vetoed by anyone so far. We've got

nine film projects that we've approved; eight in the first

vehicle and one going into the second vehicle and all have been

unanimous decisions. And being nice to people at the start? We believe

these are good films. Can you make good analytical, we will come to

Martin's decision, but can you make good an litcally-based decisions,

if you are expected to do it quickly and you want to be so

precise? I tecise? I te got to be really careful. As I explained, it

take twos or three weeks to do the analysis: if we had a meeting with

the producer and they I got this and that lined up and we took it on

trust, we will make bad decisions because we haven't done the due

diligence, checked it out. Can Rockpool, we're looking at

companies. Things are changing because the Government is going to

allow people to put more money into these businesses with tax relief,

so you are going to have some larger businesses coming into this

arena now. A lot of due diligence will have to take place. That will

be accountants going in and legal, due diligence on contracts and so

on. That can take two or three months. So yes, it's important to

take quick decisions, but you can't be so quick that you're going to

jeopardise your investors' money. Martin? I think all good decision

making is, that's tactical, decisions are tactical. What you

need is a good plan. I was thinking about, whether it was big decisions

or smaum dough -- small decisions that I'm asked to contribute to or

make, and a lot of the most important ones, I never get to make,

because they never bring it to me. If I say go left, they go right.

But everything really should be in line with the plan. What do you two

think of that? You go first? Presumably you do refine the plan.

I mean, the great thing... I have a small mind. The thing about

business is it has to be dynamic F you look at the constituents of the

FD 30 industrial average, it used to be called, 30-40 years ago, they

are completely different. The top companies today. That's because

companies are dynamic. I think there are fundamental things

happening, like the shift in pow tore the east t south-east etc,

which is fundamental. The shift in technology. The importance of data,

the application of technology. I'm just talking about our industry.

These are things which... Over periods of time - I was in Vietnam.

85 million people, wonderful country, I mean, terrible history,

in many respects but a wonderful country and then the neighbouring

country, 6 million people, which is on the cusp, I get off the plane

this morning and the Government are putting in a five-year tax holiday

investment plan and you can't get a hotel room or an airline

reservation in Durangoon apparently. That is a tkhaipbg. And you have to

change your -- change, and you have to change your attention. We will

expand our business aggressively in Myanmar. But that's totally in line

with new markets. In a way Martin you're saying the CEO's job is not

Apology for the loss of subtitles for 44 seconds

When you make decisions or go in directions outside that. Or you

have no plan whatsoever. Before we move on, we thought we may like to,

as always, get a little bit of comat over a top call issue.

Many people suggest that this is a taste of something more permanent.

What do you think about Sunday trading opening for six hours?

think it's not good. I'm against it. I don't think Sunday is the day. It

is a family day. You should take your dog for a walk. All the people

would be trying to go shopping. What it you are going to see your

mother? It would be a nightmare. It's not warn about shopping.

Atkinson may have lost its charm about family him. It would be good

for the Olympics to get the foreign money in. I have a pulse in France.

I live in New York. Everything there is open 24 hours. France is

like a ghost town. I prefer a happy medium. There is something quite

nice about France. There's a few days every year. The bakery is open

on Sunday. He is nice to go out on Saturday. We don't have much land.

Nothing is wasted. We may be in danger of becoming fat and lazy.

Look at the French. They have gone back to late 35-hour week and that

they want to retire at 60 years old. It may be that you are right that

the French a happy. In the end, somebody has to pay the price. The

Saint is used that we are facing. We have all been debating about

this. Do we need the economy to move away from financial services

and retailing. But does have kept the company and that country going.

Quite often in Germany everything consumption. It's about service and

socialising. We need to save more money and invest more money.

last time I was in China, the smile was so bad it was actually bad it

inside my terminal and I could not see my suitcase. They have taken

400 million people out of poverty. No-one is knocking them. When they

reach an income of $35,000 each year they will start to become like

us with all the same issues. This it sustainable? Look at Japan. 20

years ago it was all about those decisions. China needs to make the

right decisions to supersede the US. The reason they did not do as well

in Japan is because they were very good at copying and not in a native

and that's why the US is fundamentally strong because it in

abates. It will be interesting to see it China can start to innovate.

Maybe it's something about the oriental mind. What about when I

was in China a few days ago. I came across two countries -- companies.

A woman could not find clothing volatile so she started her own

company. She built the business a

smart phone brand which the Chinese have developed. These are two very

good examples of companies that been built up from scratch in a

short time. Do not underestimate the innovation there. The same in

India. Its complacency. They are in a very different place to us.

are like the new VC-driven companies. When they become like a

legacy, the rules changed. It can be very painful in the meantime.

What a great discussion. Let's talk about stress. As human beings we

have evolved. It must have some positive benefits but it can be

paralysing. Have you all suffered stress? Not massively. From a work

perspective, what is important but it's not my life. Personally with

children, that his life and stress. Things in the workplace, what is

the worst thing? You can get a job somewhere else. I don't let that

caused me any stress. Ronald Reagan said that hard work would never

kill anybody but why take the risk. I keep a distance from my work. I

watched my father worked for 30 years as a CEO and then in her

merger coup, never forget the one day that someone will stay put you

out. You need a meaning to your life. We run businesses. She has a

mother. We combine a lot. Luckily I'm a very lm a very lm a very lt

people have a lot of things thrown high that Buckley I'm good with

dealing with that. I was just made that way and I remain calm. Dealing

with teenagers is very stressful. Far harder than a business decision.

Teenage girls, mainly. I'm very good at keeping my head went

everybody else loses themselves. There is no such thing as stress.

You need to have fun. That's all it is. You need to do what you enjoy

it and then it will not be stressful. Put yourself in the mind

of somebody who have someone above them shouting at them. They will

try to please them but they are red genuine person. They want to

realise that they are not doing it correctly. The FAA under mental

difference for stress is technology. The used to be big separation

between your life and your work. email and the computer. Some things

can reduce the stress by spreading your work. When I had very young

children can we had a nanotechnology I needed to do

everything in the Office before going home. As technology now

allows you to go home and do a little bit more work. Put yourself

in the mind of somebody below you. What should you do or do nothing to

manage stress? Tell you that your staff below you. There are people

well. You need to try to assist them. If it's insurmountable maybe

they need to simply get another job. Some people are not suited to

stress. Certainly in the city over the years I have had to do with

some people who could not take the pressure. When you manage huge sums

of money for individuals you are being measured by the minute. There

are programs on the screen to tell you how you were doing every moment

and that is very stressful and some people cannot cope with that. They

should not be doing their job. people can improve with stress from

examples of that. Many others it will paralyse them. It makes them

very fearful. There is her difference between the long-term

and short-term. I don't think it's the same kind of thing if you wake

up every morning thinking you have to go into the Office. Many high-

achievers have rapid feedback. Rapid feedback is the key and

that's what you get. If you do not like it you should not do it.

Teenagers need to have a mixture of personalities. If they are all very

highly strung it will not work but it you have many laid-back people

it will not work you need a mix to play off each other. Does a laid-

back person at school, I ate used to work very hard but never got

anywhere. There were people that did no work at all. But they were