Appointing agency heads: Is cultural awareness taking precedence over an outside perspective?

Western expatriates are a fact of agency life in Asia. However, recent restructuring activity suggests that their leadership role may be diminishing. In Japan, Mindshare last year replaced its British managing director Matt Eaton with Takeshi Komuro, a Japanese native with experience in both China and the US. More recently, JWT Tokyo replaced chief executive Mark Webster with BBDO’s Wataru Kageyama after a similarly short stint. And with Paul Maher having just returned to New Zealand, Starcom has installed Bertilla Teo in his place to oversee Greater China.

These are just a few examples. A trend? Or simply a case of appointing the best person for the job, regardless of nationality?

Blair Currie, a Tokyo-based agency boss with 20 years’ experience in Asia, describes the events as part of a “cycle”, partly prompted by the financial downturn, rather than a long-term pattern. Currie says that the situation in Japan differs from most regional markets for two main reasons: the small presence of foreign agencies, and a floundering economy that hasn’t shown signs of recovery. These factors, he says, have conspired to “hurt their performance relative to other markets and put them under the spotlight”.

Taking into account the expatriate package, both global and regional firms are “more inclined to switch their agency heads to continue to feed the demand for higher returns”, he explains.

“Overall, I believe that local people are the best long-term solution,” says Currie. “They have the cultural foundation which communications are built on.” But he adds that foreign bosses continue to assist “in bringing outside thinking to Japan and particularly in dealing with multi-national clients who want an outside perspective.”

Tom Doctoroff, JWT’s Greater China chief executive and North Asia area representative, argues that the desire for cultural harmony in Japan also leads to a preference for local leaders.

Doctoroff says that while native talent is ideally preferable throughout the region, in less developed markets the “local superman” remains rare.

“Generally speaking, local people have not developed the necessary leadership style or expertise,” Doctoroff says, claiming multinational agencies in China still suffer from a talent crisis. “An agency leader needs to have abstract brand-building skills, whereas most senior Chinese executives have more concrete expertise such as accounting.”

However, “foreign” does not necessarily mean “expatriate”. Darren Burns, managing director of Weber Shandwick in Shanghai, notes that an increasing number of westerners in Asia are “localised” to specific markets and work on a local package. “I’m sceptical as to what you can achieve on a one-year assignment when most clients value stability and long-term relationships,” he says.

Seth Grossman, managing director at Carat China agrees, pointing out that cultural awareness is essential if an agency is to develop local business. “Experience in the market as well as cultural and language skills are becoming increasingly critical. China is filled with its own unique characteristics and nothing can replace the experience gained from time spent in the market. As agencies seek to expand their business with local clients, local language and business skills rise in importance.”

According to one China-based agency source who did not wish to be named, local knowledge coupled with an international perspective makes certain foreign agency heads “even more in demand” than a local counterpart. “I think it’s a trend going forward. Western agency heads that are committed to the market and understand Asia are rare, but very valuable.”

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This article was originally published in the 14 January 2010 issue of Media.