Rakesh Wadhwa:

Would you suggest that traditional big companies must not shy away from self destructing what traditionally has worked for them and if not, then how do you really transform it? And if yes, where should they start from?

Sir Martin Sorrell:

If I go back to my time at WPP, for 33 years, I tried to run WPP and WPP is in exactly that position. It's probably more marked today than it was when I left. When I left, it had a market cap of 60 billion pounds. It now has a market cap of 8 billion pounds. The holding companies have lost $50 billion of value. I look at our own S4 capital, we're worth one and a half billion dollars on the stock exchange. Our share price has risen by 125% whereas WPP’s has fallen by 50%. So you look at that and you wonder now. We have the advantage of being purely digital.  We are a 150% digital business. During COVID we have continued to grow. April was the bottom in terms of our organic growth rates and do about organic growth. We've committed to the market or not committed to the market. We said our plan is to double the size of the company in three years, which means mathematically a 24% growth rate, we think this year, despite COVID 19, we will grow.

Most of the holding company, all of them are talking about being down this year 10 to 15%. Obviously, if you're digital only you have a spectacular advantage. And I have to say that in maybe three, four or five years time, we will be faced with the same dilemma that change will continue at a very rapid pace. And maybe some of the things we do today will be regarded as analog and not digital. In future we will have to pivot and we'll have to watch very carefully over the coming years, the directions in which we're going. So it's very difficult to do. If I look at the holding companies, if I look at WPP, there is a bad bank, at WPP. There's stuff that isn't growing, or that is declining. I mean, there's a good bank. There's the stuff that's growing. I don't know what the relative proportions are.

Basically I would have said when I was there probably there was 40% of the business, which I would count as being digital. That was in the good bank category. The only way to answer the question, head on him in relation to the holding companies. The only way that they can change in my view is you privatize them. You take them out of the public markets or an activist comes in and says I'll go in and I'll try and get rid of the bad bank and concentrate on the good bank  that is on the good parts of the business.

So to come back to your question, you could only do it by, in my view, by separating the good parts and the bad parts. Maybe you try and sell off the bad parts. Well, you ring fence them in some way to privatization or whatever. That's the only way. And I, I used to use the analogy, the cannibalization argument – “If you don't eat your children, somebody else will”. That, post COVID-19 is even more relevant. And everybody we talk to without exception. Is in total agreement that COVID-19 has accelerated these trends. So if it was important in January or December of last year, it's double or triple important today, and you will not change these businesses.  What Warren Buffett said was very true  - “when good management comes in contact with a bad business, the bad business wins”.

When you import a consultant, you, you must check the references. May sound enigmatic comment, but it's an important comment, but you must check the references, but importing a consultant into a traditional business will not change it. It has to be much more radical change then that it has to be structural change. So it's a very difficult question to answer, but at the end of the day it needs violent structure change.