Date posted: 01/12/2016 6 min read

Russel Howcroft on business success and collaboration

Advertising guru Russel Howcroft discusses innovation in Australia and why CFOs and marketers must join forces

In brief

  • Advertising guru Howcroft has written a book on Australian innovation and how great ideas are born
  • Australia is experiencing a decline in productivity and needs to celebrate innovation
  • Tension exists between marketing and finance teams but they need to collaborate

Photography by James Penlidis

Russel Howcroft has been fighting for ideas all of his adult life, and he’s got the scars to prove it.

During two decades in the advertising industry, ideas were his secret weapon in the battle for the hearts and minds of clients and consumers. And today, as executive general manager of Australia’s Network Ten television, Howcroft is entrenched in a TV ratings war that will be won or lost on the strength of ideas.

So it is little surprise that, in his new book about ideas, Howcroft pulls no punches. “Don’t believe your own BS”, “Sell is not a four letter word” and “Your boss can often be a dick” are just a few of the tips contained within.

The book, he says, was partly born out of exasperation.

“In the past ten years or so, as I got to the pointier end of business, [I felt] more and more frustration around how difficult it was to get people enthusiastic about ideas.

“I think we use the word ‘no’ far too quickly, far too readily. The ‘no’ word is a really powerful word, because that just means stop. ‘No I’m not going to do that’ is the end of it.”

An economy of ideas

The danger for nations like Australia is that if ideas and innovation are stifled then productivity suffers too. Productivity measures efficiency in the use of resources — and efficiency is what drives economic growth. Reports from the Australian government’s Productivity Commission have shown a gradual decline in productivity over the past decade. And last year The Economist’s productivity growth ranking placed Australia second-to-last out of 51 countries, just ahead of Botswana.

Howcroft says Australia has a lot to learn from the US, the UK and New Zealand.

“If we go over to the US, they celebrate innovation and they celebrate ideas, and they are great at building businesses off the back of them. They commercialise ideas fantastically well.

“You go to Britain and they are equally brilliant at it. They just love talking about ideas as well. They love debating, they love conversation, and they love pushing and prodding and trying to find which idea on the table is the better idea.”

Howcroft enjoyed a five-year stint in London, working at creative agency Lowe Howard-Spink.

“I suppose when I was living over there that was something that really dawned on me — surely Australia can be a bit more radical, be a bit more creative, a bit more interesting. Because the Poms are better at it than we are — what’s going on?”

He adds that New Zealand punches above its weight when it comes to innovation.

“In my previous advertising agency job [CEO of George Patterson Y&R] I was over in New Zealand quite a lot. Their advertising sector is highly creative but equally they’re innovative in textiles, dairy, sailing, and fashion. I think it’s almost a strategic plan for the country.

“It’s always struck me that they have a really strong view of what their key success factors are and I think they’ve pursued them really well.”

New Zealand is small but it’s highly innovative, he says.

“It’s concentrated, I think that probably helps. There’s, sort of, clusters of categories — and they do that really well.”

I’ll say to a CFO, so is the advertising working for you? And they invariably say yes. And then I’ll ask, so why are you cutting your budget?

Celebrate commerce

So what can Australian business and government do to emulate these other nations and foster a culture of innovation?

“I think leadership around this is important,” says Howcroft.

“We have a Minister for Innovation now [Christopher Pyne MP]. I think that matters a lot. And giving people a sense of what the future might look like does encourage change.

“In the end, we need it from all leaders — political leaders but also business leaders. We need the big business community leaders to talk about their investments in innovation. There’s an NAB advert at the moment where they’re talking about how much money they’ve got that they want to lend to enterprise. This is great stuff. We want more and more of that.”

Championing great business ideas is one of Howcroft’s passions. He’s been doing it on television screens for several years now, as a regular panellist on the ABC’s Gruen series.

“It’s an opportunity to celebrate commerce,” he says of the show.

“I think that’s culturally interesting. I don’t think that we [Australians] celebrate commerce that readily, which is weird, because we all need a job. We need companies to be successful, and we need them to grow and we need them to be highly profitable. If they’re highly profitable then they can put the money back into the business and make it even more successful. And yet we seem anxious around success.

“We celebrate international brands and their success. We love talking about Apple and we love talking about Google. And I obviously admire them, I think they’re amazing. I just would like it to be something that Australia’s done, that we’ve created, that we get excited about.”

Message for CFOs

In his book, Howcroft addresses the tension that still exists in many organisations between marketing teams and finance departments.

“We have to satisfy the rationalists and the CFOs of the world by putting structure around creativity, researching its effect, researching in order to predict effect, researching into previous similar endeavours. There are whole departments created to take the risk out of being creative,” he writes.

So what is his message for CFOs?

“They are really powerful because they hold onto the purse strings,” he says.

“I’ll say to a CFO, so is the advertising working for you? And they invariably say yes. And then I’ll ask, so why are you cutting your budget?”

He says it’s curious how often the advertising budget is used as a variable expense.

“It ought to be part of the cost of goods sold. It should be above the line, if you like, not below the cost of goods line. It’s the same as electricity. You’re not going to really be in business if you haven’t got electricity. And you’re not going to have ongoing currency unless you’ve got that investment in advertising.”

Howcroft recognises the desire to cut spending but says it strikes him as being the opposite of what people should be doing.

“You ought to be seeking out opportunities to spend more to get more growth. And I think that the start point [for CFOs] is you’re spending too much. Why can’t the start be to spend more and let’s see what happens?”

Magic happens

Which brings us to the famous old quote attributed to Lord Leverhulme: “50 per cent of my advertising budget is wasted. I just don’t know which 50 per cent.”

Howcroft smiles wryly at this. “There’s a nuance to what Leverhulme was saying. He wasn’t saying therefore find the 50% that is wasted. He knew that it was working and working well for him, and he accepted the fact that there was an immeasurable element to it.

“There actually is a bit of a magical element. There is a part of it which is extremely difficult to put your finger on. Now, you can’t apologise for that. But the problem with Leverhulme’s quote is that the rationalists try to find the 50 per cent that isn’t working.”

He provides an example.

“So let’s say, for fun, that my budget this year is $100. The rationalist says: ‘Well you don’t need $100, you need $50, because Lord Leverhulme told me.’

“So okay, you’ll lose the argument because the rational argument will always beat the irrational argument. So you’ll have $50. The problem is that the following year you’ll have $25, and the following year you’ve probably got $12.50. By the time you get to four or five years hence, you’ve actually got a budget that’s not doing anything, and then the discussion is: ‘You see? It’s not working!’

“Even the most sophisticated advertisers experience declines in budgets. It gets really hard, really tough,” Howcroft laments.

To overcome this self-defeating spiral, Howcroft suggests that the rationalists and the creatives need to speak the same language.

“This word ‘brand’ sometimes frustrates me,” he says.

“In my former advertising life I used to say to the guys I was working with, look let’s just try for a day. Whenever we think we should say the word ‘brand’ let’s say the word ‘business’ instead. And it works quite well: ‘We’re here to grow your business’ sounds a little better than ‘we’re here to help you grow your brand’.”

An economy without innovation and productivity is an economy in decline. But if we open our doors to innovation, Howcroft says the future is bright.

“There’s great energy in ideas. And of course it’s giving birth to ideas that create wealth, and that’s how businesses are born.”

This article was first published in the December 2015 issue of Acuity magazine.