We exchanged emails for this interview and it has been slightly condensed and edited.
J. Francisco Escobar is the President and Founder of JFE International Consultants, Inc
Marc Goldberg :Tell me about your journey.
J. Francisco Escobar : I was a “bean-counter” at Texas instruments, that small global company on the prairie of North Texas that created the digital revolution — I was focused on general ledger accounting for Latin America and moonlighted as a gofer TI Executive Vice Presidents preparing for Board meetings. After a brief stint as a Controller in Paris, I returned to headquarters in global financial planning for the entire corporation. From there, I bailed on my CFO aspirations and joined Worldwide MarComms, eventually managing all global Marketing spend from a Procurement perspective. Late in my career, management perceived I was not busy enough and added Travel to my responsibilities; by doing so, I was now saying grace over the two most discretionary areas of spend in any corporation, where the value of relationships far outweigh any other considerations.
During my time at TI, I had the good fortune to meet and work with the top relationship management consultant in the industry, Gene Jacobson, who literally wrote the book on Agency Compensation for the 4As. Through the course of 7 years of playing good-cop bad-cop with strategic partners, Gene convinced me to remove the Corporate hand-cuffs and launch a consultancy managing relationships in the industry. Of his many wise quotes, his most memorable was, “Francisco, when you know what you know, you won’t be doing what you’re doing !!”
MG: Tell me about what is JFE focused on now.
JFE: We operate uniquely in the “Marriage Counseling” space supporting both agencies AND clients. JFE also has an aligned relationship with “Dating & Mating” consultancy Mitchell&McCue, as well as other intermediaries in the industry involved in Media, Experiential, PR, Production and Market Research.
Main value that JFE brings is Subject Matter Expertise, Objectivity, and Bandwidth; engagements are typically a combination of all three capitalizing on a unique background in Financial, Marketing, and Procurement management. Value varies by assignment and/or relationship, but in general, the clear objective and outcome is optimizing relationships through improved communications, transparency and fairness.
MG: How has the advertising business – and the consultant landscape – changed in recent years?
JFE: The ad business has become less personal but more personalized. Proliferation of all things Digital has vastly reduced human interaction overall, but enabled reaching folks directly and on an individual basis. The industry is struggling with this dynamic, giving rise to the B4H moniker by CMOs.
The landscape has experienced less change. It can still be broken down into four basic buckets as follows:
- Strategy Consultants.
- “Dating & Mating” Consultants – specializing in “marrying” clients with agencies; when business is slow, they double as cost consultants
- “Marriage Counselors” – focusing on all aspects of the Agency/Client lifecycle, from the new business process to proper termination.
- All Other Intermediaries – historically populated by Media and Production audit firms, the explosion of Fin/MarTech now totally dominates this sector
MG: What is your view of the role of procurement?
JFE: Procurement is the most uniquely positioned organization at any company. Since they facilitate the sourcing, contracting, management and evaluation of third parties, they have their fingers on the pulse of all commercial activity. To perform responsibly, they must have outstanding relationships with all internal parties — key stakeholders, Executive Management, Finance, Legal, HR, Environmental and Security, as well as supplier-partner relationships that they are entrusted to optimize. Simply, “Enlightened Procurement” must coordinate the needs and requirements of the internal Demand Chain to get the best value from the external Supply Chain. From the antiquated “arms-length” relationship which Purchasing had internally and externally with vendors, Procurement must now be “arms-locked” with all parties in the ecosystem.
MG:Where does alignment need to happen?
JFE: Throughout the process and life-cycle of the relationships; that is, sufficient transparency — I like Limited Full Disclosure — among all the parties, a commitment to truth and fairness in all business dealings, and consensus on the definition of value and success, from which true alignment can take place,
MG: How are you helping clients today?
JFE: With advisory services, covering customer acquisition, formulation of contracts, pricing models, compensation negotiation, structuring of company standards, performance evaluations, proper transition, on-boarding, and termination processes
These services have remained fairly consistent since 2003, although economic shocks and other external factors have made customer acquisition and revenue growth become more important to agencies, and cost containment and commercial issues more critical to their clients.
MG:Has the pandemic given your clients buying power?
JFE: I’m not sure it has; it truly depends on the category in which a firm operates. Given working from home and resulting lack of direct physical contact with colleagues, and the attention afforded to all matters, there has been a real impact on decision-making and the ability, or inability, for folks to empower themselves to make any decisions with financial implications.
In some industries and service categories hardest hit by the pandemic, 3rd parties have especially suffered the brunt of the damage, allowing their clients to act like predators..
MG: Is there a big cull and/or restructuring of Client Marketing departments on the horizon (and how it relates to perceived growth of in-house agencies)
JFE: Possibly, but I truly believe that the “in-housing phenomenon” has been overblown, particularly by the ANA (creating another conference from which to profit). Companies have always had internal capabilities in Content, Graphics/Design, Events, PR, Production and Studio, in some form or fashion. There may be a greater emphasis on “in-housing” as Procurement has run-out of places to squeeze agencies, and as companies have put a greater emphasis on Digital mediums, like Social and Programmatic, and how Marketing and IT can have greater control over the latest shiny objects.
The Next Normal is going to continually evolve. Pre-pandemic, we were not in a Polaroid picture moment, and we WILL return to yet another motion picture setting that will be constantly morphing and adapting to industry stimuli and overall global economic conditions.
MG: “A Polaroid picture moment” You just lost half the audience with that reference!
JFE: Not so fast Kimosabe – they are currently available at Best Buy and at Wal-Mart!
MG: I must have missed that aisle, For procurement, beyond cost savings, what are best practices in elevating the “value” conversation?
JFE: Equity and civility in commercial relationships – the deterioration of Trust is palpable in our industry, best reflected by the exorbitant payment terms pervasive across many relationships; the industry associations, both nationally and globally, have an obligation to call-out “bad players” and fix this damaging practice.
True value-based remuneration models – Coca-Cola and Procter & Gamble bandied their models about a decade ago, but they were feeble attempts to institutionalize the most creative and “sexy” forms of Agency compensation.
A spirit of humility in personal interactions – we as a human race, with digital proliferation becoming commonplace in all daily experiences, need to look beyond self, rediscovering our humanity through our conversations, interpersonal dealings, and care and concern for others.
MG: What are some of the best trends in procurement?
- Effective integration of the needs and requirements of the Demand Chain across a commercial entity’s various brands and/or business divisions.
- Complete Supplier Relationship Management (SRM), soup-to-nuts, of the most critical supplier-partners, from best-in-class Strategic Sourcing to Evaluation Stewardship.
- Functioning like trusted business partners, internally and externally, as the objective, dispassionate voice of reason that is always looking for a “Win-Win” solution. “Win-Lose,” in every single instance, always becomes “Lose-Lose.”.
What are some of the worst trends?
- Treating valuable supplier-partners like “vendors.” Vendors are only found in ballparks trying to “sell” you something. Follow the Golden Rule — treat people the way you want to be treated. Doing things that you would not tell your Mom is a perfect example.
- Not pushing back on the CFO or CPO about blatantly unfair payment terms — basically anything over 45 days or amounts that do not allow supplier-partners to achieve cash neutrality; if the trend continues, clients will be shooting themselves in the foot, as their agencies will either find a way to “cheat the system” or will go out of business.
- The most dangerous Procurement persons understand what they are buying and then explore all of the ways to become “Corporate Heroes.” It’s all about them and NOT the relationship. “Cost-cutters” employ bottom-feeding consultants to exploit the situation with deceptive benchmarks, unreasonable demands, and unfair business practices.
MG: Where are you located?
JFE: The Dallas Fort Worth Metroplex
MG: Where do you travel first?
JFE: Most importantly, to visit family in Mexico, Houston/Austin, Denver, Chicago, Southern California, and Wyoming. When possible, combine this travel with professional networking.
From a consultative perspective, NYC, Florida/Arizona for conferences, and anywhere my clients require. I wish to build-up international opportunities involving greater global travel.