Accenture Interactive has acquired Malaysian full-service agency Entropia for an undisclosed amount as it seeks to become “the best experienced agency in the region,” according to Azwan Baharuddin, managing director of Accenture Malaysia.
Entropia, five, which has rejected several takeover offers in recent years, believes it has found a partner that will allow it to go “much further, much wider and up the value chain,” according to the founder and partner principal Prashant Kumar. .
In an exclusive interview with Asia-Pacific Campaign, Baharuddin and Kumar reveal what attracted them to each other, their future growth plans as a combined entity and how the integration will be handled.
Why Accenture bought Entropia
Entropia brings capabilities across data, customer experience, commerce and emerging technologies, which, when connected to Accenture’s digital transformation prowess, will deliver “a more holistic business approach” to customers, says Baharuddin .
A new approach to customer experience is needed since the Covid-19 pandemic has changed behaviors in the way people shop, work and interact, he explains.
“Gone are the days when customers would compare two brands in the same space. Now you have the convergence of industries, the confluence of technologies, so customers are now comparing their experience between multiple brands, across different parts of their lives.” Baharuddin said.
The rise of “super-app” offerings indicates a broader trend that “everyone wants to be everything for the customer,” Baharuddin says, leading to a “renaissance of the experience”.
“Companies are starting to push this conventional CX philosophy and focus on a much more holistic customer-centric strategy that really meets the changing needs of the customer,” he says. Accenture calls this philosophy “business of experience”, or BX.
While Accenture has built up its sales experience team, most of its work with clients relates to strategy and consulting, technology implementations and operations.
“So when you could suddenly add 220 people with talent like Prashant and his management team … it became clear that this was not an option, it was something we really had to do,” said Baharuddin.
“These guys have all the skills that we really need and it’s always very difficult to recruit the best talent in the country… We realized that this was a real gem of a company that could really overload ours.”
Baharuddin is particularly proud that a local Malaysian agency is Accenture’s first acquisition in Southeast Asia. “It opens the eyes of leaders in the region to the fact that there are in fact companies in Malaysia that just don’t have the visibility or reputation. [yet],” he says.
Why Entropia sold
Kumar d’Entropia has spoken in the past about the virtue of independence, particularly with regard to agility and establishing differentiation. He attributes Entropia’s rapid growth over the past five years in part to its ability to poach clients from large networks such as GroupM or Carat, offering a new approach to their business needs. So why did he decide to negotiate independence to be part of a $ 10.6 billion marketing empire (according to 2020 Accenture financial data)?
Kumar continues to see the benefit of being independent “when you try a new model”. In this scenario, you need “all the degrees of freedom you can get to be able to experiment the way you want”.
“Decision times can be really quick, you can go at high speed, you can be extremely agile, whereas with scale it will be less likely. This is why startups are so much more successful at disrupting than, say, large established companies. Kumar explains.
But Entropia’s model is now well established and, with 220 employees, it claims to be one of the largest agencies in Malaysia with a comprehensive and extensive service offering.
“Now we find ourselves at a certain inflection point in our evolution, where we realize that the next level of growth, to realize the vision of a true consulting firm, we really need a strong and large organization. to give us the diversity and depth of skills required, “says Kumar.” We envision a future where we can deliver a full end-to-end experience for customers, including value chain recreation, business transformation. demand, the reinvention of the business model and the reimagining of the customer experience. ”
“It’s a natural inflection point in our life cycle, and at this point we couldn’t have done it alone,” Kumar adds.
Accenture is not the first company to take an interest in Entropia. Kumar reveals that he has received several takeover offers from consulting firms and advertising holdings in recent years. He says the management team didn’t start considering selling until late in 2020, as the agency neared the end of its five-year growth plan. “We were very careful that a premature acquisition could mean that our model was not yet validated,” he says.
Kumar believes the deal is a model for the marketing business of the future, which he calls “consultancy.”
“Consultants realize that technology alone is not enough. Agencies realize that creativity alone is not enough. Technology and creativity therefore have to come together for us to be able to create empathy in business. ‘whole business experience,’ Kumar said.
“We can finally see with Accenture and Entropia coming together, so that we can live this expression in all its depth and breadth. We believe the significance of this event won’t be reflected until 10 years later when you see a very different consulting industry and a very different ad industry coming out of this mix. We are only the first bet.
Baharuddin calls the deal a “match made in the future”.
Develop the partnership
Accenture attracted Entropia with a regional and global offering.
“The team [at Entropia] has this ambition to be more successful but they are limited in scope. Accenture is the highway to other markets because we are present in virtually every country in the world, ”says Baharuddin.
The majority of Entropia’s business over the past five years has been in Malaysia, with a few clients in Singapore and the Philippines. While Kumar looks forward to expanding into other markets, his mantra for Entropia has always been to “go deep before going deeper”, something he intends to maintain for the six. next months.
“We will use this year to integrate closely, to define the frameworks of our way of working together, to strengthen the model. Then we will extend it to other places,” he said.
Entropia has an existing partnership with Havas Group through which Entropia brings its expertise to Havas Immerse media briefs in Malaysia, and Havas helps serve Entropia customers in markets in which it does not have a presence. Kumar does not consider the partnership to be in conflict with his new ownership structure and intends to maintain it. Accenture did not comment.
For Accenture, Baharuddin sees “a tremendous opportunity” to build a new model of experience in Malaysia and then export the capabilities to other markets.
Further acquisitions in Malaysia to complement Entropia may be on the horizon.
“I don’t think we’ll stop at Entropia,” Baharuddin says. “The ambition is to capture as many great talent as possible, fantastic creative ventures that will help our country grow.”
Accenture would not share the terms of the deal or details on how the integration will be handled, but Entropia’s Kumar says Countryside that the Entropia brand will remain “for the foreseeable future” and that it will remain with the brand “for at least three years”, suggesting a three-year pay period for the agency’s management.
“I hope to stay for the long term,” he adds.
The acquisition is not expected to result in job losses for Entropia’s 220 employees. “If there’s one thing Accenture has always been very clear about, it’s that they wanted to put people at the center of this team. The quality of people is what attracted them the most,” said Kumar. .
As proof of Accenture’s commitment to its employees, he says the deal has been structured to benefit not only Entropia’s 19 shareholders (of which 13 are employees), but its employees as well. “It has some very progressive elements that will be wonderful for everyone,” he says.
Likewise, he hopes to be able to protect the agile and fun culture that has been at the heart of Entropia’s success. “I would like to believe that, even though with Accenture, the ladder we have is suddenly a whole different monster, that we can create the best of both worlds: a leader ladder, but a challenger attitude.”
Baharuddin is aligned: “The only way to be successful is to infuse the culture we want to create – this fun, creative, forward-looking mission-building entity.”
Accenture Malaysia has 11 offices in Kuala Lumpur with 7,000 employees (up from 2,000 four years ago). Baharuddin said the company is working on a way to rotate Entropia staff in offices and remotely through Microsoft Teams.