The Future is Now: Midwest Embarks on Restructuring

By early next year, the structures of Ogilvy & Mather/Chicago and Minneapolis' CME-KHBB and Fallon McElligott will have undergone significant shifts, and DDB Needham Chicago is expected to undergo a reorganization in line with the reshaping of its New York office.

O&M's new general manager, Derek Carstens, last week took the first step in its restructuring plan, driven, insiders said, by the agency's determination to protect its Sears, Roebuck & Co. business after the apparel segment was moved to Young & Rubicam/Chicago, as well as to generate additional new business.

O&M dismissed 19 staffers, including senior vp/media director Chris Thompson and senior creatives Jim Root and Keith Condon. Carstens plans to reshape the agency by filling those positions with a heavyweight media director and a 'top-level creative team,' as well as a strategic planner and a top financial person, but said he hasn't started interviewing for those positions yet.

'It's a first step to restructure the agency,' Carstens said. 'The real focus here is to first strengthen the top end.'

But insiders say a string of account losses is what led up to last week's decision. In addition to the loss of Sears apparel, the agency has seen EyeMasters, Cellular One and Eagle Food Stores business disappear and Petrolon (Slick 50) dry up during the last six months. Now, according to insiders, the first priority is to ensure the rest of the Sears business isn't vulnerable to Y&R or anyone else.

O&M's cut comes on the heels of another cut of 17 staffers earlier this fall. Insiders said that those cuts 'weren't enough,' and that when Carstens came in, he had to make additional cuts to meet the agency's profit goals. In total the office reduced staffing nearly 20% this year.

Meanwhile DDB Needham Chicago is expected to undertake the next phase in the agency-wide restructuring plan, engineered by chairman Keith Reinhard, aimed at improving client service. In part, the plan includes a reconfiguration into major-client service units run by autonomous senior executives.

The approach has been tested and proven successful in Needham's New York office, which in August was carved into three customized business units each run by a managing partner. One unit includes Johnson & Johnson and James River; another houses a group of accounts including Hershey's, Cigna and Bermuda Tourism; and a third unit, which as of last week will be run by Ken Kaess, formerly president of DDB/L.A., is dedicated to Amtrak and Seagram.

Chicago is expected next year to undergo a similar restructuring, sources said, with one of the service units anchored by president Susan Gillette.

Gillette said last week neither specific restructuring plans nor timing for changes have been decided.

'Long-term (this office) is still evolving, but short-term nothing major is going to happen,' Gillette said. 'It will be evolving to whatever Keith intends for it over time, but there's nothing dramatic that's imminent. Right now we have a team system as the structure (in Chicago). Might there be some changes and (might we) put a new spin on part of it? Probably. But not immediately.'

CME-KHBB/Minneapolis last week announced formation of an Integrated Communications Group, including media, pr, promotion, programming, graphic design and, for the first time, direct marketing. A new unit, CME Direct, will be headed by Brian Blanchard, who moves from Northlich Stolley LaWarre, Cincinnati. Senior vp Rich Rosengren was named director of the integrated group.

The Midwest's largest agency, Leo Burnett Co., already has begun a restructuring effort. It began with a reorganization of its handling of General Motors' Oldsmobile business, with the account broken into four separate service groups.

Burnett also engineered a realignment of top management, forming a Global Management Group that gives each of six top executives group presidency titles and global responsibilities. The GMG reports to president-ceo Bill Lynch and chairman-chief creative officer Rick Fizdale.

At Fallon McElligott/Minneapolis, recently-named president/integrated marketing Mark Goldstein is close to launching his plan for a new structure that will help the agency work with clients to offer a variety of integrated services. Although Fallon executives maintain the agency has offered clients integrated services on an informal basis, Goldstein aims to establish a method of working with clients unlike that at any other agency.

'We are talking to people and hiring and developing the blueprint for a way of working with clients to deliver integrated services that is different from other agencies,' Goldstein said. 'It will be unique, like everything else we do.'

Goldstein's plan is expected to be launched by the end of the year.

Copyright Adweek L.P. (1993)