How brand can become your company’s greatest asset - Jonny Bauer

0:06Ladies and gentlemen, welcome back to the Uncensored CMO. Now, something I'm really passionate about is demonstrating the value that marketing has on a company. Now, I've worked in private equity in the past, and in private equity, they are razor sharp about creating value, creating growth, and identifying the role that the brand has to play. Now, my next guest is the perfect person to talk to us about this. He has been the chief strategy officer of Droga 5, and he went from there to Blackstone, the world's biggest PE company. Now, he really knows how to uncover value in an organization. And he's now set up his own business called Fundamental Co.

0:41to do just that for his clients. So I caught up with Johnny to find out about how marketing can better extract value in an organization. Here it is. Johnny, welcome to Uncensored CMO. Thanks for having me. Now, we share a bit of a common interest early in your career, and we actually overlap for a while. But you sort of cut your teeth early as a strategist, didn't you, at BBH? I did, yes. the Black Sheep crew, I had a really very lucky start to my career working with some very big strategy brains like Charles Wigley and Emma Cookson and David Terry and had an unusual amount of access to really senior people for someone in their early mid-twenties at the time.

1:26And I'd spent a little bit of time in the London office and then they shipped me off to Singapore and then brought me over to New York, where I was there for in the New York office for another four years during a really, you know, period of growth of that part of the company. Yeah, I often think that strategists never get the kind of credit they deserve, because we celebrate the creative so much, don't we? We've got the awards, and obviously, everyone sees the creative, the client talks about the creative. But it's the work that happens, you know, in the run ups that that's often so important.

1:58Why is it we don't get that? I mean, I know BBH probably, you know probably different in that respect but why don't we celebrate the kind of strategy and thinking more yeah i mean i think there are a fair amount of like award schemes and systems and things like the fe's and ipa where you know the the effectiveness gets mostly connected with the strategy folks but it's up to the creatives to you know translate the thinking into things that stop people in their tracks. And so, you know, it's, uh, and I read what I really liked about BBH. They kind of taught, I didn't really understand the strategy was a thing.

2:35Right. And, and I was very attracted to so much work that BBH was doing as a young Australian who was just into marketing and advertising. And a lot of the work that I liked, they were doing, uh, many of my favorite things. And then I understood that they were quite unique with, you know giving strategy a real seat at the table to help inspire work rather than in some contexts strategies used to sell work or to post-rationalize work and so you know they it really had a seat at the table and so I like did everything I could to get in there and eventually they they hired me. I think I didn't really because you know I you know I'm British and I worked with BBH over a similar period that you were there actually but I don't think I realized until I kind of worked in the US and other markets latterly, that strategy is quite a British thing.

3:25It's quite, you know, I think it's something that we kind of really kind of got behind. And I'm always amazed when it comes to New York about how many planners here are expat Brits themselves as well. We seem to have exported the idea. Yeah, I think that was true for a really long time. And yeah, if you had an English accent, I mean, I think you got a little bit more of a listen. When talking about strategy, I think that's evolved a lot now as strategy has taken so many different forms. But that idea of strategy from a traditional advertising context, I think that, you know, a lot of the thought leaders and people writing books were from the other side of the pond.

4:04It does seem that way, doesn't it? What are you most proud of from your BBH days? My BBH days, I, let's think, it's really going back a lot. I think the thing that I spent most of my time on was the Axe brand and taking it from one category of just body spray into shower and into hair and into shave. And it really became a very influential brand for young folks in a category that was very unsuspecting. And I think that I did have a hand in that work in the U.S. and it was really lucky and proud to be doing that. We also took, you know, at the time, you know, Unilever packaged goods brand into channels that were really different for the time.

4:50So we made a movie, we made a TV series that ran on MTV. And we did, you know, we really pushed through into less traditional, more content creation channels, including making a film festival that was supporting African-American filmmakers. is and um you know you really found a deodorant brand showing up in some very unexpected places and and having a different level of cachet so also i spent a lot of time flogging whiskey in asia with johnny walker wow which was um definitely a memory when i remember being in um uh sol and was looking at the research screening for who was allowed in the focus group and i rang the research agency and i was like i think that there's a mistake here you're kind of like like recruiting alcoholics to the group.

5:37It was like they were drinking like a bottle a week to be eligible in the group. And they're like, it's just part of the culture. Like that really is the level of seriousness that whiskey has in entertaining. And it was a really eye-opening, amazing experience. So I'm really very, very fond of my time at BBH. I remember around the same time, actually, when I was at Britwick, I worked with PepsiCo in Korea. We were kind of collaborating on a thing. And I remember the CMO, Simon at Britwick at the time, saying to me right two things you must do john get your business card translated into korean and make sure you hand it over with both you know you know about the same time uh and buy everybody a johnny walker blue right and it was like okay so i think i spent a thousand pounds like on on johnny walker but it had exactly the desired effect i mean you know they couldn't have loved the gift more so i i've discovered the cultural power of johnny walker in korea no it's amazing yeah yeah i mean going back to axe axe is links isn't it in the uk i think right right yes so everyone as everyone knows um i think that was a brand that i remember was was you know work was obviously great and you know talked about a lot but that was one where the insight behind young men in particular was a key part of that strategy wasn't it and reframing how deodorant is is kind of understanding what role deodorant plays for young men was was quite a powerful part of that story wasn't it yeah it was and it really i mean ax and links and um you know rexona are essentially the same product.

7:02But the thesis was, if you put a different scent on it, you charge a dollar more for it. And you reframe the benefit instead of the effect that it has on you physically from stopping you from sweating, but the effect that it has on women through the power of scent and have it repositioned as a seduction tool, essentially. It created an entirely new category of body spray and created a different connection or relationship that young guys would have with a personal care brand. It just became a whole different thing, spawned so many different copycats and imitations, and now there would be certainly certain components of that brand that would be cancelled.

7:49I was looking back at some of the work and the inside. It was definitely for a different time, and a time where South Park and subversion was the way to break into culture. But it really was a great example for me to learn the role that strategy and brand could play beyond just informing what happened in the TV ad. So at that point, the relationship with BBH and Unilever was so deep that we were innovating around products and new sense and new categories. It wasn't just putting the advertising on. it was like what's the concept behind this next variant holistically and how can that connect to every component of it which for me was like super exciting and um you know the chance to go deeper and have the work be you know more foundational and more more more connected to to just the tele ad although the tele ads ended up being amazing of course i mean i remember the the the creative teams in that period were like they've all gone on to yeah you know run or lead their own agencies I remember the thing that struck me was if it was a period where people understood the difference between a functional benefit and an emotional benefit, because, again, you know, you can be about reducing sweat or make yourself more attractive to the opposite sex.

9:03There's a big, big difference between those things. And I think that's right. Links kind of tapped into. Yeah, they really they they they were all about, you know, how does X product actually help you get the girl? Right. So how does smelling good get you the girl? How does good hair get you the girl? How does, you know, clean shave get you? So they created this system that could just keep on tapping into different ways. And, you know, obviously. And the innovation pipeline that creates, as you just said there, it takes you in a whole different direction, a whole kind of system of products then emerges from that.

9:34Yeah, absolutely. So you had your time at BBH. And then you were in at the ground level, I guess, what became one of the world's most iconic creative agencies, Droga 5. Yeah. How do you end up kind of ending up with David day one on that side? I was recruited by, you know, I was very happy at BBH and Droga was just starting and they had done a couple of quite stunt driven, but very editorialized bits of work that I found really engaging and thought were kind of at least changing my mind around what the potential of marketing could be and look like in this new kind of digital world. So Droga was founded the year after Facebook and the year before Twitter, right in the middle of that.

10:19So there was no legacy belief around pre-existing media channels. And some of the first bits of work were tapping into these new kind of consumer behaviors around media. And I just found the whole thing very compelling. And it was like there were a table full of people. And David was like, we think, we want strategy to be part of this endeavor. And I was like, do you want strategy to be part of it? Or do you want to say that strategy is part of it? Because there's, you know, two very different discussions. And we went back and forth for around a few months. And he did say, listen, I'll like let you build it the way that you want it.

10:59And I'll let you have, you know, strategy have, you know, the right seat at the table. And he was true to his word. And yeah, Drogger for plus 13 years where I, you know, it was a great company, a great culture. changed you know again the the expectation of what kind of work marketing could contribute to a business yeah yeah it was just a it was a roller coaster it was it was it was an amazing experience i mean david was on the show last year and and i think you reminded me of the quote earlier about you know people came in the door for the creative didn't they but they they stayed for the strategy and that was a key part of success that was a generous thing that david would say but it was um But I do really think strategy was very central to their process and the outcomes.

11:49And so we got to recruit the best people that wanted strategy to have a seat at the table at the really sharp, buzzy creative shop. I think people were surprised, to David's point, like they're doing this great creative, but then they came in and understood that it wasn't throwing spaghetti at all. You know, we were trying to, like, take the luck out of the fame. And there was a lot of, like, deep thinking and understanding to inform the creative and help steer it even through the channel mix and where it was showing up. We had a big communication strategy group that, you know, also had a seat at the table that you were thinking about the where at the same time you were thinking about the why and the what.

12:28Yeah. I mean, you're talking about the reason for joining. Like, they're doing different things. Was that around the Air Force One? Yes. So that was the first piece of work that Droger ever did. And that was, I had nothing to do with it, but that was, you know, kind of invented this concept of viral marketing or reframed the idea of the necessity of spending a lot of money to create awareness, you know, of something. And so there was definitely, you know, something to that and digging to understand how and why they got to it. but they didn't keep making Air Force Ones for everyone else, but it was with that real questioning around what do people actually want, what are people actually doing, will people do that, how are the behaviours changing and how do you fit in with existing behaviours rather than changing people's behaviours.

13:26It's really hard. So there was just a really enormous focus on understanding how the world was working now and how you could tap into to this new like digital landscape yeah i mean it was wild that that what they did isn't it you know yeah it was amazing like you know stretch of imagination and daring and i think um i think when i spoke to him about it he was saying he had to understand what the patriot act was because yeah it was it was pushing the boundaries that far yes yes could have really gotten everyone into a lot of trouble yeah you know and for those that are listening that haven't seen it, they kind of created a replica plane of Air Force One and defaced it.

14:06And the news was covering the story as if the real Air Force One was defaced to the point where the White House went to check the plane. And that was like really widely documented. So I think if you had actually done that, you might have gotten into trouble. But the world for a certain period of time really thought that this brand had done that. And, And, you know, in graffiti culture, it is all about, you know, tagging the impossible. That's where the status comes from, from finding ways to tag things that, like, you know, are the hardest to get to. So it really worked well to build credibility with a youthful audience that was, you know, energized around graffiti.

14:42Definitely worth looking up. It's quite astonishing. And it does that brilliant thing of you're not quite sure if it's real or not. You're thinking, really? Yes. Is that actually happening? Yes. it's so it's filmed in a way that kind of looks like it someone's just got their phone out their pocket and it's you know it's grainy and it's sort of bumpy and that sort of thing so it does it almost it's it's unprofessionally filmed on purpose to make it feel like it could have been authentic and observational and someone's just you know filming this on the fly which again also was totally counter to the very glossy high production value that were then dominating that so it was a real yeah left turn yeah real demonstration of what could what could be so as you look over 13 years what are you what's been the standout i mean maybe from a strategy point of view as well what are the um kind of campaigns or initiatives that really showed off the strategy from while we're at droga i mean personally maybe the biggest point of pride being australian was Tourism Australia work where we, it was again another dupe, but telling the world that maybe there was a new crocodile Dundee movie coming, starring Hemsworth and the gang that transformed into a really effective advertising campaign for Tourism Australia.

16:01Really proud of all the work done for the New York Times, which, you know, I spent a lot of time with at a time of uncertainty. and the brief from the client at that point was to preserve democracy and and the role that the press plays in that preservation really prescient now and also one of the earlier things was a reframing of of puma to create a new category that we branded the after hours athlete at the time they didn't have the credentials to go after the athletes in the right way until they got you say bolt a little bit later but they had all of these um you know sporty looking clothes that weren't that sporty and we kind of like created a new category called um you know the after hours athlete yeah which um you know really did a lot for their business at the time and was a very different looking and feeling bit of communication where you know all the competitors were talking about sport as a war you know get up at five in the morning work till you throw out and work work out till you throw up and puma was like sport should actually be something that you play there should be joy in it should and it was a really refreshing um perspective on um that sport should still be fun and and uh and and again that that idea connected to new product new experiences they started making ping pong puma ping pong paddles and and and ping pong clubs and and and that way that was a really nice very long-standing campaign was amazing actually in that category how much sportswear has become fashion and the amount of sportswear that's worn where there's no sport happening as well it's very lifestyle isn't it i think you can see that kind of from adidas and puma and nike how much of their portfolio now effectively is kind of high street fashion rather than ultra performance absolutely so you did you did quite a pivot after the droga years which i think is fascinating to talk to you about because you went from you know one of the most celebrated famous advertising agencies in the world to the biggest private equity company, Blackstone.

18:04How on earth did that came about? And what was the brief in hiring you? It came from a progression that did start at BBH and then, you know, become more true in Droga. And then there was a period where after Droga was acquired by Accenture, I was, you know, part of that, integration and transition and was just the intent for brand thinking to be useful to more than just marketing folks and for brand thinking to be connected to just more than advertising. And so at Droga and even at BBH, we would come up with a lot of transformational ideas that might just get stuck in advertising. And that was a point of personal frustration to me.

18:49right how can it bust out of just a marketing silo and be useful to everyone and and that you know i've always believed that brand isn't you know a logo or an identity or even an advertising campaign but when it works its hardest and at its most integrated brand is an is is a set of ideas that you can truly organize a company around yeah and so um we had we had kind of flirted with some of expanding brand beyond um we definitely expanded beyond traditional advertising to non-traditional marketing, but I wanted to take it further and see if it could be more foundational to the company itself. Right.

19:24And so, and we experimented also with, you know, Accenture and the technology we started to, but I don't know, I wanted a different, I thought that in order to realize that, that ambition, I needed a radically different context. And so I thought that private equity was the right context because a, they're private companies, right? So there, you, you, there are less hoops to jump through in order to take action, right? Like there's an owner, right? And they're not public. There's not a public board or shareholders to answer to in that way. So that context is there. But most importantly, the timing is where they're most receptive to evolution because the company's just been bought.

20:11And that company will most likely be sold. And if you want to sell it for more than you bought it for, it will probably have to evolve, right? Or become different, right? Otherwise, you're selling the same thing. And there was a bigger shift in how private equity was thinking of value creation, where I think that for a number of years in the past, there was more of an efficiency-based approach to value creation. How do we make this company more valuable by making it leaner, more efficient, taking stuff out, getting fat, maybe expanding globally, but the same kind of offer. And that playbook, I feel, is being replaced by more of like a vision-based approach to value creation, where you're really thinking, how do we not make it just lean, but what could this company's next chapter be?

20:59What could it become over the course of this investment cycle? and so I thought that that was really like the moment of receptivity right you've got the control to make changes and you've got the need to change yeah and so when I spoke to my my friends uh you know in finance they were you know through my thesis and my my my ambition to affect greater parts of the company it was unanimous of like you need to go to Blackstone and I was to a degree like what's Blackstone? Like, of course, I, I knew, but I didn't really understand like the scale and the breadth and how many different kinds of businesses they, they, they have and, and how many portfolio companies they have of a different nature.

21:43And they were recommended to me as like being the highest integrity folks, like very high integrity, but also like always evolving and experimenting and rethinking the model. And so, you know, I approached them with a thesis around could brand take a different position of intentionality within your process of value creation for your portfolio companies. And they had just, you know, at the time got a new head of their portfolio operations that was looking to also, you know, make changes and additions to this group of operators that she oversaw and was thinking, I think, like kind of thinking many of the same things.

22:20And, you know, I think it was like 40 interviews later, you know, and lots of, background checks and this is all at the very beginning of COVID-2. Going to meet a different organization. But the thesis was really simple. Companies are required and there are a ton of different interventions to transform that company or to make it more valuable. And then very often, not just in Blackstone but in the PE-backed context, the brand people are then brought in to say, who are we? And the thesis was, what happens if we brought brand much further upstream in the sequence of value creation earlier and translated you know an investment thesis into what we call or at fundamental call we call like value creation strategy which is a set of ideas and tools and words and things and objectives that everyone can grab onto that connect these interventions and can be used as a filter to inform decision making, if we're going to become this thing that we're all agreed on and using exactly the same words, you know, it's not just about what we say in the advertising, but can potentially be connected to what we're making, who we're hiring, you know, do we need to buy another company?

23:37Do we need to change capabilities? And then of course, once these, you know, transformations are happening in place, how are they branded? How do we communicate them? And how do they then start to show up in the world? So it's a very long, you know, walk for a ham sandwich there. But But that kind of explains what I was trying to do and why I thought this context could be a good place to try out the theory. I mean, the logic is super sound. I mean, I've always wondered why you've got these very smart strategists that typically sit in communication agencies. And they usually receive a brief way down the line in terms of strategy.

24:16And so rather than brand informing comms, brand should inform the company. That's the distinction you're making there as well. And I think the best experience I've ever had is when I've actually brought the strategist into my upstream brand planning, where we look at five-year strat plans and look at annual plans. Then you get the benefit of that thinking. And then all bets are off then in terms of where it could go. That's really true. But when you're brought in later, you don't know what the strategy needs to solve for if you're not included or don't have understanding of all of those different components of the business.

24:51You're guessing and often second guessing. And so the strategy can't answer or be accountable to them if it's not included. So coming in earlier and having that understanding and being connected to parts of the business that you don't normally typically meet in an agency context just force you, put pressure on you to deliver strategies that are more inclusive and that everyone within every part of the organization knows what to do with and knows what it means for their decision-making and crucially know how it's measured, right? These are your KPIs. If we're becoming this thing, like this is your role in becoming it, right, and bringing everyone together.

25:33So the biggest effect that I think that this has is around alignment, right, and, you know, togetherness. and it sounds so obvious, but just find ways of, we call this process purpose propagation. After we come up with any strategy, we say we need to turn in on ourselves and make sure that, and often you have to evolve to a degree a little bit around how it's articulated to make sense for that part of the company. But you've got to work with them and sit with them until they're like, okay, I get what I need to do with this. And that takes time, right? And patience. But from our experience, it's really worth the investment.

26:16Yeah. I mean, one of the things I learned, I had four years in private equity myself, which was a real wake-up call, actually, for a couple of reasons. One is actually, counter to maybe perception, actually, I found that the PE company obsessed about brand. Because when they were valuing what they were buying and valuing what they could be selling, the research mattered a lot. I mean, the advice I got also is interesting that they bring marketers in really early because they were going, we need people to understand the brand that can solve the positioning that can kind of get the design and start the innovation plan.

26:48So they absolutely obsessed about that. And I remember them saying to me, right, we want you to find the world's best design agency and strategy agency and do that. And their advice was that the teams that they put in place that get that work done, you know, that nail that first time are the ones that are successful. because they really recognized that what they were going to sell on an exit in a few years time would be a brand and they needed to kind of establish it so and in fact i remember actually one of the things that i found really helpful is on day one they got us together and said write the investment memorandum for a potential buyer of the future what would it say and they kind of had four boxes and they said what would it say about the brand what would it say about the market what is there about finance what is there about operations and supply chains we kind of went through and said, you know, well, revenue will be 2x, profit will be 4x, you know, margins will have doubled, you know, the brand would then be in these different kind of segments, the market will have proven that it could stretch into here and go over there.

27:45And it created this real clarity. And it was rather than I think in marketing, we, we think in narrow senses in terms of our role, you know, immediately, I was thinking about the whole business. And, you know, how would I fund the sort of marketing I wanted to do. I needed to earn the money before I spent it. As a shareholder, I had to think about what's going to get the best return for me and us because all our incentives were aligned because we all won and lost based on the same metrics, whether we were the operations director, marketing director or sales director kind of thing. So I certainly, I found the sort of purity of the approach really refreshing as it's real business.

28:21And I think I worked out, I probably spent no more than 10 % of my time on marketing and the way that most people would think about it as communicating to the consumer. And I found that kind of closeness to business really refreshing. But I'd love to know from, you know, I mean, I was in a boutique, kind of quite a small peat house and Blackstone's obviously the biggest in the world. What did you learn in those years from the team at Blackstone about how to kind of run successful business? Yeah, I mean, that was probably the most gratifying part of working at Blackstone. It was, you know, at my age, I really did start again.

28:58And people didn't know like what drug five was, you know. And so there was that anonymity coming in to just really be able to, you know, throw out what I thought I knew and rebuild, you know, a toolkit to be more useful to more stakeholders. And it was very humbling. But my learning curve was like at 45 degrees. And it was like from the. And so I love that and recruited a team of people to Blackstone. that really wanted that opportunity too. And you're also working on companies that are far, let's just call them less sexy companies than some of the ones that we've all been working on previously.

29:42So things like even JPMorgan Chase or The New York Times or LVMH or all these different kinds of companies. But I learned about these companies that are really shaping how the world works. right so so so blackstone's portfolio is is mostly not consumer they have a nice consumer practice but they're the you know the biggest owners of commercial real estate in the world they invest in a lot of like what would be called the infrastructure of of the future things like, you know, data centers and technology, AI driven and companies and infrastructure and processing companies and enterprise technology companies.

30:31And so all of these companies that you don't normally get, you know, access to or understanding from. So when you're coming in at this kind of like at this altitude through being part of who has ownership of them, I just feel like I was like kind of embarrassed about the things that I didn't know. Right. And these industries that are so critical to how the world will continue to evolve and support some of the biggest changes in consumer. So it's not just around, you know, if internet, if e-commerce becomes a growing thing, it's the surrounding infrastructure that enables e-commerce and those types of companies that are actually like really important and critical.

31:13And so just understanding the connectivity between those things probably sounds obvious to you, but it was like, oh, okay, I understand what's underpinning all of this work. So that was truly fascinating. And then it was also really, you know, understanding around how, you know, challenging and competitive it is to be chosen to be the acquirer of a company. Not all money is thought of equally. Right. So what does it take to really be chosen to buy a company? What does it really take to straddle the balance between, you know, ownership and empowering a management team to operate that company? And then also, what does it take to then exit a company?