KK Tsang on leaving GroupM and founding The Bees

Campaign Asia-Pacific talked to Tsang (pictured) at The Bees new office in North Point, which the agency has been in for a month and which still smells of fresh paint. Tsang sits among his staff of about 20, who are mostly post-80s generation. There is no 'big boss' office nor secretary. And with Tsang dressed in a checked shirt and jeans like most of his colleagues, it feels like a university IT centre with a creative vibe.

Why did you decide to leave GroupM after 19 years when you could have worked till retirement or gone for a Greater China or regional CEO role?

I am 47 years old now. Even if I still work for another 10 years, I still will not reach my retirement age yet. I don’t want an uneventful life, starting up my own business is an achievement itself.

I always have this entrepreneurial DNA. Even when I was running GroupM Hong Kong since 1999, I treated it as if it was my own business, and the company’s profits increased over tenfold. With my career so smooth with rapid promotions in GroupM, my entrepreneurial seed has been hidden underneath.

GroupM Hong Kong is a very stable company. I have reached a stagnant stage where I foresee that there won’t be much big changes in the next five years, and I do not want to relocate to other markets due to my family.

With my career bottleneck, and the market environment with sufficient room for smaller companies to strive, that is why I decided to venture out on my own.

What are the key reasons and visions for starting your own agency business?

Advertising and communications is a very localized industry with rich local cultures. There is no such thing as ‘global consumers’. American consumers are very different from Hong Kong consumers. Even Chinese consumers in Beijing, Shanghai, Guangzhou are very different. Hence there should be room for local agencies and brands, but most of the dominant agencies are 4A agencies. My wish is to build up a local group of agencies with strong relevance to local cultures.

Our shareholders all want to nurture the agencies as a long-term business, and are not just looking for making them into big agencies, getting IPO, then selling them off to holding companies to make a profit.

Many companies in Hong Kong, whether they are local or international advertising agencies, there is no clear profit-sharing system. Normally the top management gains the big shares of profits, ordinary staff get smaller shares. Some do not even share their profits with their employees.

We have set up a 3-3-3, profit-sharing system. That means 1/3 of the profits would go to the employees, 1/3 to the shareholders, and 1/3 would be for the companies' long-term development. [The system was suggested by Shih Wing-Ching, a shareholder in The Bees, who has been using the system successfully in his companies Centaline Real Estate Agency and am730 free newspaper.]

We believe this profit-sharing system would be applicable in advertising industry, and help to enhance productivity and motivation among staff. Hence if the companies earn more profits, they could also gain more.

The relationship between employers and employees does not have to be win-lose one. If we give employees more, there is actually a chance that the company could gain more.

The market environment in the media industry in the past five to six years has been changing rapidly, especially in digital and social cultures. Instead of running a big and well-established organization like GroupM, which has some 250 people in Hong Kong, and many strategic policies from its headquarters, why not start something on my own? I believe small companies are quicker and more adaptable to market environments than bigger companies.

Moreover a further objective of starting out business is to nurture new bloods in order to sustain the development of our industry. I feel that the ability of attracting new talents to the advertising industry is dropping due to low salary in junior level and long working hours. Many of them leave the industry after three to five years, just when they start reaping some fruits of rewards.

Tell us about The Bees. What's the meaning of the name?

Advertising is a labour-intensive industry, I named our group 'The Bees' as bees have strong team spirit, are very hard-working and share in the results.

Tsang's inspirations During the interview, we turned our attention to the bookshelf in Tsang's conference room. He is a keen reader and said his home is also packed with books on topics from advertising to business and from investment to parenting, as well as biographies. He cited two books that are among his favourites: Stephen R. Covey’s Principle-Centered Leadership and Lee Kai-fu's (李開復) [世界因你不同] (Make a World of Difference: The Kai-fu Lee Story). Tsang also cited business partner and The Bees shareholder Shih Wing-Ching as his idol. Tsang once said that if he could have an opportunity to work for Shih for free, he would. And in a mysterious way, Shih expanded from his property business into media and got to know Tsang as Tsang was opening his own startup companies. Shih then invested his share, and Tsang did not take a salary for a while. "There seems to be a ‘magical hand’ leading me", Tsang said.

The Bees represents three Cs in communications: consumers, content and media channels and platforms.

The Bread Digital, which was set up in March 2012, is our digital focused platform, which we hope to create advertising campaigns that have a rich reference related to Hong Kong local culture and history.

The Right Side is a consumer-focused agency which only established last June. It has a strong women's touch as the key partners are both ladies.

The third agency is The Secret Tour HK (香港的), which originally organized some unique local-interest guided tours. Since I took over, we have transformed it into a marketing and communications agency, though we still keep the special guide tour service as part of its branding marketing.

What are your competitive edges compared with 4A and local independent agencies?

To say we are competing with 4A agencies would be to overestimate ourselves, as they are so well-established.

However the advantage of small companies, we are more flexible and quicker in adapting market changes. We would have more senior management staff to serve clients and have more interaction with them compared to 4A agencies.

Compared with other independent agencies, which are formed by other ex-4A veterans, they tend to only focus on their own expertise, whilst our Group has different specialized areas which we could offer opportunities in cross-selling and resource-sharing.

Who are your clients? Are they mainly local?

We are not just working with local clients. Clients of The Bread Digital include Unilever, Canon, Burt's Bees, Glad; and Fortune Pharmacal and Oxfam are Secret Tour's accounts.

Do you pitch for new clients?

Usually clients come to us, and we tend not to do pitches. Even if we do participate in pitches, we want to get pitch fees from clients, unless some clients have hinted to us that they would most likely give the business to us and only call the pitch due to their company's formalities.

It is very time and labour-intensive for agencies to take part in' pitches. Many 4A agencies use 30 to 40 per cent of their resources in pitching.

If agencies do not charge pitch fees, some clients would just take it for granted and may invite eight to 10 agencies to present their ideas, then steal the best ideas from each of them and pick the agency with the lowest fees.

Hence as an independent agency, we could decide to join a pitch or not, but for many international agencies, they may not have a choice. Even global head offices are pitching for a business, then local agency teams have to follow suit.

What are the main challenges of being independent and running your own business?

Of course our staffing is still limited, and I don't have a secretary and have to make my own tea. And we are still hiring new talents for creative, content and project management.

Working for big companies, we always have to chase annual profit targets. But here, profitability is not our target as long as we can break even and be self-reliant, our short term goal is to survive. We do not need to gain lots of profits, but at least break even.

What is your management style?

Shih and I are very alike. We are very Laissez-faire (無為而治) and do not like micromanaging. I would share my advice to my staff but I won't give orders, my staff have absolute rights to decide how to do the execution.

I believe the bigger the company, the more you need to be hands-off as senior management,
as however smart you are, you can't be good at everything. That's why you need to attract a variety of people with different expertise to help you.