Rethinking Big on Madison Avenue

Name: Peter Kim
Title: Vice Chairman, Chief Strategy Officer
Company: McCann Erickson
Age: 36
All-Time Favorite Book: "The Brothers Karamazov," Fyodor Dostoyevsky
Favorite Rock Group: The Beatles
Favorite Singer: Frank Sinatra
All-Time Favorite Movie: "Shane"
Drink: Vodka Martini (on the rocks)
Sports Team: New York Knicks
Hero: Richard M. Nixon
Villian: Richard M. Nixon
Leisure Activity: Fly Fishing
Vacation Activity: "Don't take them"

What is an ad agency? Better yet, why?

In a world where a talent agency can win the creative account for Coca-Cola's advertising, Peter Kim, 36, is responsible for trying to answer these and other basic questions for McCann-Erickson, the world's largest advertising agency. Kim was recruited to McCann in September 1993 after spending nine years at J. Walter Thompson (JWT), where he became executive vice president and the company's top strategist. At 32, he was the youngest executive ever elected to JWT's worldwide board. He is also author of the best-selling book, "The Day America Told the Truth."

How are ad agencies doing?

If you look at the level of organizational change in ad agencies compared with the rest of corporate America, it's like one is standing still and the other is running at 100 miles per hour. Agencies have not changed in 50 years. Contrast that with the pace of change at P&G, Unilever, Coca-Cola, GM, and AT&T where they've gone through a dozen reengineerings. Agencies must find news ways of working; we must experiment.

What's the problem?

Somehow we lost the kind of competency we once had in terms of being able to manage brands successfully, to have the intellectual, creative, and imaginative firepower to be able to manage brands long term. If you put the agency business into the food chain, I think we're feeding on plankton. We somehow lost access to the highest levels of the corporation.

Has the notion of a brand and its value changed?

There's the emergence of a thing we call the hyperbrand, brands that are becoming indistinguishable from the companies they represent. Look at Microsoft. It refers to its incredibly sophisticated products as "stuff." So what is it that Microsoft owns? Microsoft owns a trajectory in consumers, that it will help unleash the power of the human imagination. That's what Microsoft is. That's what it stands for.

How will hyperbrands change advertising?

In the world of hyperbranding, you're going to reverse the process, engineering products to fulfill brand vision. In a world where rapid changes are taking place, positioning is an arcane notion: the "creamiest" ice cream, the detergent that gets your clothes the "whitest." Positioning assumed a stable product category and a fixed competitive frame, and you constantly reinforced that position and owned it in the consumer's mind.

Today the greatest challenge isn't, how do you position a product within a category? It's, what category are you competing in? Categories are converging all the time. It's the difference between how generals fought World War I and World War II. World War I was all about positions. You threw your line, built your trenches, and held or lost ground at a cost of hundreds of thousands of lives. When the French generals built the Magnet Line before World War II, they were fighting World War I. And what happened? The Germans deployed a war of movement, bypassed the line, and France collapsed in a matter of weeks.

The same thing holds true in advertising. You don't position brands anymore, you "direction" them. You find a trajectory at a destination you want to own as a brand. We can't tell you how we're going to get there yet; we don't even know what kinds of products you're going to have. What we have is a vision of where you want to go.

One of your main initiatives has been to create two autonomous units within McCann-Erickson -- Amster Yard and the 14th Floor. Why introduce these independent groups into McCann-Erickson?

Amster Yard is run and managed only by creative people. That's important because the advertising agency business has become so bureaucratic that it has failed to attract the best creative talent. The best people find it easier to work directly with clients outside traditional agency structures or to freelance, which allows them to choose the assignments they want.

What's the purpose of the 14th Floor?