Commentary

A Frog in Boiling Water: Are Fortune 500 Clients All They're Cracked Up To Be?

P&G's new CEO, Bob McDonald was asked, in a recent interview with Ad Age, what keeps him up at night:

 

The biggest thing is the parable of the frog in the boiling water. That's why today, of the Fortune 50 from 1955, only nine of those companies still exist. P&G is one of them. I want P&G to be on that list 172 years from now, because that means we're touching and improving more lives. The only thing that can kick us off that list is complacency or inability to learn new things or unwillingness to change.

The Allure of the Trophy Client

In search, we love to deal with marquee clients. We love to put the brag badges on our Web site, the list of logos showing the Fortune 500s we all deal with. A quick non-scientific survey shows that every digital and search agency in the world has worked with HP, IBM, Microsoft, P&G and GE. If one is to believe the plethora of logos slathered over the Web, these companies have more agencies of record than employees.

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I get the temptation. I really do. In search, we all struggle for credibility. These clients bring the sheer mass of immediate credibility with them -- if you're good enough for P&G, you're good enough for me. Come on, admit it! We've all done it. We've all slipped the logos into our PowerPoint "About Us" slide.

But McDonald's observation deserves our attention. The Fortune 50 in 1955 only had an 18% survival rate. I suspect the toll will get even greater as the digital landscape accelerates the pace of online marketing evolution dramatically. This means that dinosaurs will be dropping right and left. And as the lumbering behemoths keel over and crash to the primordial forest floor, might we SEMs be caught under them?

How Do You Steer an Elephant?

Look at McDonald's trio of evolutionary sins: complacency, the inability to learn new things and the unwillingness to change. My suspicion is, despite the reams of rhetoric to the contrary in the typical annual report, that McDonald's fears represent the norm rather than the exception for the average Fortune 500 corporation. I applaud his self-awareness, but can't help but wonder if even a tuned-in CEO is enough to overcome the inertia, bureaucracy and legacy investment that typify many mammoth multinationals.

And if the CEO can't change a company's direction, how the hell is a search agency expected to? For a puny little search agency (and let's face it, compared to the sheer bulk of a Fortune 500, we're all puny) to try to change the direction of one of these corporations is like a spider spinning a web to stop a stampede of pachyderms before they plunge off a cliff. I give it an "A+" for intention, but an "F" for grasp of reality.

Where Do You Invest Your Time?

So, this brings up an acutely pertinent question: What is a better investment of an SEM's time and resources, fighting the inertia of those marquee clients so we can use their logos on our Web sites, or instead, actually doing something with the clients that will eventually replace the dinosaurs in the inevitable march of marketplace evolution?

It's a good question to ask. And, philosophically anyway, not a hard question to answer. But in practice, well, in the words of Hamlet": "Ay, there's the rub."

Perhaps, for a select few companies, the two categories are not mutually exclusive. Perhaps the answer lies in CEOs like Bob McDonald, who can steer at least some of the Fortune 500 safely into a new digital reality. Let's hope there are more where he came from.

3 comments about "A Frog in Boiling Water: Are Fortune 500 Clients All They're Cracked Up To Be?".
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  1. Volker Mendritzki from Interactive Voice, January 21, 2010 at 12:38 p.m.

    I think this is universally true - every small company tries to secure an elephant to provde credibility.

    Why? Because it works. If you land a major in an industry, it often provides the opportunity to generate more business from other players in the same or related industries - large and small.

    Conversely, being successful with lots of smaller companies doesn't open the door to larger opportunities.

    But there are some traps to watch out for including being aware blue chip accounts demand more time, will demand lower pricing and will expect higher service levels. If you aren't careful, they can reduce your capacity to bring on other business.

  2. Katherine Putnam from Package Machinery Co Inc., January 21, 2010 at 1:02 p.m.

    The degree of difficulty in doing business with a Fortune 500 compared to our smaller and more nimble clients is impressive. It is with smaller companies that we can make a difference in their operating performance and where we experience gratitude which the staff here finds rewarding. The flip side is that Fortune 500 customers challenge us to be better than we were and demand more than we think we have and, as the previous commenter says, at a lower cost with more time and effort on our part.

  3. Ashish Kumar from ArohaTech IT Services Ltd, December 17, 2010 at 2:27 a.m.

    Anything done with all devotion and dedication earns good results.So if you start a small business or large one, it's your effort that counts.

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