The bad man cometh.

FOLLOWING UP RECENT ROLES AS A COKE MACHINE ASSASSIN AND A LION TAMER, SAATCHI & SAATCHI'S KEVIN ROBERTS IS NOW WINNING MIXED REVIEWS AS THE "RAMBO" OF THE AD INDUSTRY. ADMIRERS PRAISE HIS PASSION. CRITICS DUB HIM RUTHLESS AND CHARGE HE PROMOTES "CHANGE FOR THE SAKE OF CHANGE." ROBERTS' RIPOSTE? DECRYING BUSINESS PEOPLE AS "SINGLE-DIMENSIONAL," HE'S GOT PLENTY TO SAY ABOUT HIS PLANS FOR THE $3 BILLION AGENCY - AND WHAT HE REGARDS AS THE SORRY STATE OF GLOBAL MARKETING.

At a black tie dinner in Toronto in the late '80s, Kevin Roberts, then president and chief executive of Pepsi Cola Canada, wanted to fire up troops demoralized by the mighty power of Coke. So he strode on stage and theatrically opened fire on a Coke vending machine, which had actually been rigged so that lights sputtered when he "machine-gunned" it.

Roberts, 48, likes to shake things up. Come January 1999, when he takes over as chief executive of Saatchi & Saatchi Worldwide and current CEO Bob Seelert becomes chairman, the rumble will be felt throughout the world's 12th-largest advertising agency.

Tremors already are. Before April 1997, when he joined New York-based Saatchi, Roberts, who was born in Lancaster, England, and lives in New Zealand, had never worked at an ad agency. He says he doesn't now. One of his first moves was to drop advertising from Saatchi's name. "My goal is to have Saatchi revered as the hottest ideas shop on the planet - hotter than Disney, hotter than MIT or Microsoft. We're not an ad agency, we're an idea factory."

The "factory floor" has been transformed into a messy graffiti lounge, the center of "denovation. Great ideas don't come from buttoned-up offices," says Roberts.

The theory seems to be paying off. In Roberts' first year at Saatchi, new business billings increased by nearly $500 million. Most of the jump comes from Procter & Gamble and Toyota Motor, which together account for a third of Saatchi's revenue. Among the spoils were P&G's $75 million worldwide Oil of Olay business, Physique shampoo, and Safeguard accounts, as well as seven markets for Toyota - bringing its representation for the car maker up to 31 countries. A Roberts-led Saatchi also lured Beck & Co.'s beer account and Adidas' rugby business.

In the first half of 1998, Saatchi, which bills $3 billion and employs more than 4,000 workers in 162 offices in 91 countries, saw profits more than triple to $26.2 million. Yet, while margins rose from 6.7 percent to 8.2 percent over the year, they still trail rivals' 10 percent to 15 percent. But Roberts anticipates double digit margins by 2000 and a doubled share price within three years. He also aims to grow Saatchi largely in the U.K., U.S., and China, where it's currently the biggest agency in what he says will be the biggest ad market in the world in 10 years.

Anonymous colleagues downplay Roberts' contribution to Saatchi's recent success, dubbing the unorthodox manager "Rambo" - ruthless and restless. One former executive at Saatchi in Auckland predicted Roberts would "pull a few stunts, light a few fires, and everyone will be running around not knowing what they should do." A colleague from Sydney said Roberts had a "chaos theory: change for the sake of change." Another described him as an eight on the Richter scale.

To his clients, that whirling dervish-ness is a plus. Bob Wehling, senior VP-advertising for P&G, applauds Roberts' "tremendous energy, passion, and strategic leadership." Those traits, he says "have benefited our business and our relationship. Kevin shows what a powerful difference one person with a passion can make."

Sports were Roberts' first passion. He first excelled in rugby and cricket at Lancaster Royal Grammar School, but quit at 16. He says it's his biggest regret. The poor boy from council housing was determined to be a millionaire. By age 30 he was one.

In 1969, Roberts joined London's fashionable Mary Quant cosmetics company, where he met his wife of 25 years. She was a model. Three years later he moved to Gillette Co. to develop products for overseas markets. After another three-year stint, he moved to P&G, responsible for Tide, Head & Shoulders, Ariel, and Pampers in Africa and the Middle East. In 1982, Roberts became president and CEO of Pepsi Cola, Middle East. For five years he managed Pepsi's business in 36 countries before taking the same post at Pepsi Canada for two years.

Then, in 1989, Roberts became COO of Lion Nathan Ltd. Under his tenure, the brewer became New Zealand's leading beverage company. But in November 1996, he resigned. Lion Nathan's earnings that year had dropped 25 percent, and its beer share plunged to an all time low. Critics contend he didn't develop a long-term brand strategy, missed new product opportunities, and was slow to respond to competition. Roberts is equally harsh about his eight-year tenure there. "I was crap for my last three years," he confesses. "I was entrenched, conservative, and risk averse."

Having skipped university himself, Roberts began teaching management at the University of Waikato, New Zealand, which awarded him an honorary degree in 1998. He still teaches graduate classes there as a senior fellow twice a month. He opened Gaults Restaurant in Auckland and has a new eatery, the Sports Cafe, opening in January. An ardent fan of New Zealand's mighty All Blacks rugby team, he also became a director of the Rugby Football Union before being recruited to Saatchi.

Roberts sees his role as that of a coach developing "a peak performing team." He also aims to entertain the troops. "People come to work to love, to be loved, and to be entertained," he declares. "Theater" is a card he plays. For his first meeting with analysts at Lion Nathan he trotted out with a lion. "After they changed their pants, you can be sure they remembered the name Lion Nathan," he grins.

For all the bombast, Roberts expects the equivalent of a pound of flesh. "Saatchi is about one team and sacrifice," he says. When he was a 19-year-old rugby player, akin to a quarterback in American football, and "was about to have my head kicked in by an opposing player, one of our forwards put his body between me and that guy's boots. He knew the team needed me. This guy got 10 stitches sacrificing himself for what he thought was the good of the team. That concept has never left me." His own sacrifice is that he is lonely, living alone in a Soho, New York loft, half a world away from his wife and children.

While many other agencies have gotten religion - refusing to handle politicians or cigarette companies, say - Roberts, who claims to be religious and a spiritualist, will happily take their business. "We're not Mandela or Schweitzers here," he says with characteristic candor. "We're paid not to transform the world's values but to transform the world of our client."

Since the 1995 exile of the brothers who founded the agency, Saatchi itself is a company transformed. Roberts says that while the firm faltered after British Airways, Mars, and Dixons supermarket followed the Saatchi brothers to the new M&C Saatchi agency, their departure ultimately did more good than harm. "Saatchi survived and has been strengthened by years of turmoil. In 1996, we won agency of the year at the Cannes Advertising Festival," says Roberts, who credits the brothers for building the foundation for Saatchi & Saatchi's corporate image, but is quick to add, "We never did that when the brothers were here."

What's ahead for the idea factory? In a recent interview at Saatchi & Saatchi's Manhattan offices, Roberts told CE, "I just want to try to use my experience and my skill set to eliminate waste and get rid of bureaucracy, so that our people can actually spend time imagineering. Because that's our business."

BRAND NEW WORLD

Consulting firms seem to be edging into your business. What's your feeling about that?

That's total crap. We haven't lost a single client or a single assignment in any country in the world to McKinsey, Booz-Allen, or the Boston Consulting Group. Over the last 10 years, the consulting companies have generally been practicing massive reengineering or restructuring.

That's where all the activity's been. They made loads of money. Why? Because CEOs are driven by quarterly earnings, and it's much easier to cut a bottom line and show quarterly results than to build brand equity. Consulting firms are left-brain disciplined, high IQ, process-driven, success model-driven guys. They couldn't write a marketing strategy to save their lives.

They wouldn't know a consumer if one bit them in the ass. They read Faith Popcorn and think that's where it's at. It's incredibly unusual to get them to talk brand strategy. What they call strategy are really tactics, execution, and objectives. What we write is the essence, the attributes, values, and personality of a brand. We understand what drives consumers. Not where they are, or where they've been, which is where the consultants are, but where they're going. Consultants don't remotely want to get in that area. So I don't see that threat.

What CEO conceptions about global marketing do you disagree with?

CEOs are absolutely driven to create shareholder value, which they use to hide all kinds of sinful behavior. The first thing they cut is communications budgets and the second thing is pricing. Both are massively detrimental to long-term brand equity. CEOs spend all their time in cost meetings, not revenue meetings. They have budget meetings, layoff meetings, HR meetings, but they don't have idea or innovation meetings. And when they do, they're pathetic.

The chief executive no longer gets involved in the advertising, which is a huge mistake. Most of his balance sheet's easily replicable. But he's been handed the Tide trademark or the Ivory trademark and he needs to be the personal guardian of that. It's hard to think about ideas, imagination, and intuition. It's much easier to think about research, facts, and analysis. You can build a culture like that every day, whereas it's very hard to build a culture where people can express themselves.

A lot of these old paradigm companies are going to be dogmeat. I believe that three of what will be the world's top 10 companies in the year 2010 have not even been thought of yet.

There's nothing new about that. If you look at the Dow Jones from 1897, except for GE, all the other companies are more recent.

I'm not saying it's new. I'm saying that I don't think CEOs are building brand equity, and I don't think they're concentrating on building brand revenue, and I think they're going to get their asses bitten. What you're saying is, "Yeah, they've always gotten their asses bitten." And that's true. Because these bozos never learn.

AD GROWTH GAME

Agency                  $ Increase   % Change   '97 Billings(*)

Young & Rubicam           276,324       9.7        3,126,143
Gray Advertising          216,000      11.2        2,141,000
BBDO                      208,800      15.7        1,539,000
McCann-Erickson           207,000      18.0        1,357,000
Ogilvy & Mather           182,178      11.6        1,558,684
MVBMS/Euro                150,000      17.4        1,010,000
Ammirati Puris Lintas     141,654      14.9        1,093,192
Saatchi & Saatchi         126,900       3.7        1,582,000
Lowe & Partners/SMS       125,000      21.7          700,000
Deutsch                   121,200      31.9          500,700

Worldwide Gross Income
AD PLAYERS

Agency                        1997       1996    % Change

Omnicom Group               $4,154.3   3,750.9     10.0
Interpublic Group of Cos.    3,384.5   3,037.1     11.4
Young & Rubicam              1,497.9   1,356.4     10.4
Grey Advertising             1,143.0   1,027.7     11.2
Saatchi & Saatchi              657.0     616.9      6.5
TMP Worldwide                  274.1     222.5     23.2

* Billings in thousands Agency reports and Adweek magazine

How should CEOs rethink global marketing?

First, global equity - the essence of the brand, the values of the brand - should be driven at headquarters. The success model should be driven by headquarters and all execution should be local. Advertising should be taken completely away from the marketing people and given to specialists, who should be career consumer communications experts. Advertising is the single most important part of a company, because that's what builds brand equity. It should be handled by the CEO and key people. This layered, U.S. system of going through the brand manager, the marketing manager, the marketing director - is like a load of geese nitpicking an idea to death.

Who best executes this model, who do you think is the ideal?

Nike and Pepsi - they both execute it that way. Phil Knight gets passionately involved in the ads. And when Alan Potash ran Pepsi advertising, we had the best advertising in the world. But now you get all these junior G-men, straight out of b-school having a point of view in advertising. None of these pricks can say yes, but they can all say no. So you get lowest common abominable "No"-men.

Let me read you an observation from an advertising agency peer: "Advertising quality seems to have slipped, campaigns don't seem to be as strong as they once were, companies are no longer allocating the same budgets to consumer trade and other forms of advertising, and the industry seems to be in a state of disarray."

That's total crap. This is truly the age of the idea, where ideas will be the only competitive advantage possible, because products are immediately replicated within six months. The only thing that differentiates is the idea that turns that product into a loved brand. Love and respect - I believe you enter every relationship with a brand or person somewhere on this axis. With many products, it's the respect axis. But to be successful, you must be on the love axis. You can't name one brand leader that isn't loved. Tide, which has 37 percent of the U.S. detergent market, is loved by housewives. They grew up with it; they love it. Coca-Cola drinkers are in love with Coke.

Even after New Coke?

That was when I knew they were in love with it. Because Coke came up with a product that beat the shit out of Pepsi. At Pepsi, we'd spent 100 years on the Pepsi Challenge and then they produced a Coke that blew us out of the water big time, 6535. And instead, these dummies call it New Coke, and they take away old Coke.

Head & Shoulders is respected, because it gets rid of dandruff, but nobody loves it. That's why it's only got a six share.

Because it's an unpleasant category?

No, because P&G thinks the category's dandruff and that it's an anti-dandruff brand. It isn't. The category's kissable hair. The benefit, in my mind, is kissable hair.

Some of the outrageous things you've done - shooting the Coke machine, bringing a lion to a meeting - what's that about?

It's theater.

Is theater necessary?

Part of it is being unpredictable. If I'm the same every day, why would anyone want to see me? It's mystery. As soon as you unravel the mystery, it's gone. As soon as you tell people what the strategy is, it's boring. There's mystery to Clinton. You look at Hillary Rodham Clinton, and you think, why is she doing this? And everybody's got a theory. But if she told you why she was doing it, it would fall apart.

You've mentioned that ads need to have immediate results.

Absolutely. If you haven't moved the Nielsen in three months, toss it. We've got a lot of research from P&G, General Mills, and J&J that if an ad is not effective after 90 days, it's highly unlikely that it's going to be effective 180 days later.

The biggest thing facing us now is that people are totally sleep deprived, and time stressed. In the old days, people watched nine hours of television a day and there were three channels. Now you have a few hundred channels and everybody's in front of the Internet, looking at billboards, listening to the radio, reading newspapers.

How do you benchmark success, know whether you are delivering value?

I'm meeting John Pepper of P&G tomorrow, and I'm going to say, "John, your company's goal is to double its business every 10 years and currently your business is growing 4 percent. The brands we handle for you have grown 24 percent in that period." Does that answer your question? [Ed note: P&G declined to confirm.]

What preparation do you have for running this company?

I spent 30 years being trained by the best of the best at P&G and Pepsico. Saatchi & Saatchi asked, "What can you bring to an agency?" And I said No. 1, financial acumen, because agencies are quite naive in that area. No. 2, a global view, because clients went global a long time before agencies went global. And No. 3, a real sense of branding, because working in a client company you really understand what goes into a brand. I spent 30 years building brands, and my job is to build Saatchi & Saatchi's brand as an ideas company, and as a company that will transform clients, business, brands, and reputations.

But you can't get paid by clients just for doing great Ideas.

I want to. The current system of media commissions is nonsense. It's never made sense, will never make sense, and it is stupid. It's lucrative, so everybody's just gone along. But it encourages you to be FDL - fat, dumb, and lazy - because if the economy's good, and you're with a good company, they increase the media budget.

The second way, a fee basis, is equally stupid, because it implies that hours spent somehow equal the value of a great idea. Of course, that's oranges and apples. I saw a great quote once from Picasso. When he was 82, he was in this restaurant and a guy there asked him to draw something. So Picasso drew a dove on a napkin and the guy said, "Oh, can I have it?" And Picasso said, it'll cost you 10 grand. The guy said, "But it only took you 30 seconds." Picasso said, "No, it took me 82 years."

An idea can make P&G famous. It can make a brand like Tide go on and on and on, and we've either given it away for 15 percent commission or for a fee. Film actors don't play that game. They say, we want a percentage of the box office gross.

TAKING IT TO THE BANK

What would P&G say to that?

We haven't found the right formula, but we are debating it. P&G are great listeners, and fair. They want to reward performance, and they want us to be fast and great. And we want to be fast and great. They want us to make money; we want to make money. They're the world's biggest advertiser, and when they sneeze, the world catches a cold. They want to double their business in 10 years. To do that, you've got to get to the future first; you can't be dorking around at the speed American business normally works, which is glacier-like, hierarchical-like, and bureaucratic-like.

How different is it on the agency side?

Much more fun. The people who work in agencies are insecure paranoids with fantastic ideas who totally want to change, to embrace the new, and to be loved and cared for. These are just great people to hang out with, as opposed to left-brain MBAs from Northwestern.

Most firms today manage by lowest common denominator and fear. You get promoted if you make your short-term numbers, and if you do something brave and screw up, you're out. People operate at their peak when they're nurtured, supported, and encouraged to fail. CEOs have reneged on that responsibility and gone for the short-term - result, result, result, shareholder value, shareholder value, shareholder value. That's why working in many firms is shit, because there's no appreciation, there's no love.

Do you deliver that?

Totally. Ask the guys who work here. My job is to be a coach. We've done a study on successful organizations, and most coaches are hands-on leaders who roll their sleeves up, pick the right team, set the right game plan, share the vision, show people what they want, and get the hell out of the way. I follow that cycle.

Most HR departments focus almost entirely on correcting weaknesses. I spend zero time on weaknesses. If they're over 20, they're going to have those weaknesses for life. Let's focus on what they're good at and build towering strengths. If you've got a quarterback who can throw a ball 50 yards and hit every time, and he's a little slow on braking, well, don't worry about that. Let's get his throw from 50 to 60.

In terms of assets, you've said that other things are more Important than people.

That your [primary asset] goes up and down the elevator every day is a lot of crap. People are a replaceable asset. We have more talented people than we need. What isn't replaceable is your brand name. Because of the Saatchi brothers, Saatchi & Saatchi has an incredible brand name in the U.K., higher, frankly, than its real equity. And that's worth a fortune.

What do you need to fix within this firm to bring it to where you need to have It?

We've got to get eagles to fly in formation. That's all. Nothing's broken. I've got to eliminate the shit that ruins their lives. For me to still be running Saatchi & Saatchi in five years, it will have to be a different company - bigger, smaller, or hugely different. We're trying to move from an advertising to an ideas company. We have no barriers here except our own imaginations, because we don't own anything. We don't have any assets whatsoever, except our brand name and our people. That's the way you can really truly reinvent yourself without any inhibitions.