Arun Sudhaman 13 Mar 2023 // 7:56AM GMT
'Stakeholder solutions' firm Penta was only formed six months ago, via the merger of six firms across strategy, analytics, research and intelligence. But the group already expects to reach $100m in revenues this year, following a rapid roll up that now features nine firms in total, employing 400 people across 12 global offices, and backed by majority investment from Falfurrias Capital Partners.
Significantly, around half of Penta's revenues come from the intelligence side of the business, with the remainder from a consultancy offering that includes the recent acquisition of public affairs firm Hume Brophy. Meanwhile the group's board features notable PR industry veterans such as chairman Alastair Gornell, board chair Alexander Jutkowitz, and board member Beth Comstock.
Penta president Matt McDonald believes the equal footing of data/technology and strategy/execution sets his group apart from both legacy PR networks, and SaaS commstech providers. Alongside Europe/Asia managing partner Conall McDevitt, he recently spoke to PRovoke Media about his growth plans for Penta. An edited transcript of the interview follows, encompassing the industry's data challenges, Penta's acquisition plans, and today's geopolitical realities for corporates:
When we talk to in-house comms leaders, we often hear about the challenges they face in terms of data and technology stack. How are you addressing that?
McDonald (MM): When we think about the intel side of the business, we're focused on measuring two important components. One is information flow to stakeholder groups that our clients are concerned about. The second is sentiment and understanding of what they actually think.
That flows into, what do you do about them? I would say that we approach a lot of these issues from a data/tech native perspective — having those capabilities in-house and tied up with the strategy side of the business, means we really focus on the 'so what' and applicable insights.
There's a challenge in the SaaS business models serving the communications industries, where they are typically not founded by practitioners — they are providing data — but the insights are largely dependent on the internal teams being trained on the platform. In a discipline like communications, you have a lot of people that are not quantitatively disposed out of the gate, that's not really a recipe for impacting the industry in the field, in ways that we've seen in other industries. There's a host of structural reasons why data has been a struggle for the communications field.
Are you finding that clients, in terms of in-house communicators, are data savvy enough?
MM: Yes, I think so. There's versions of that role that have the implicit trust of the CEO based on experience — often times those are really serious players within a company, and have the confidence to engage on the data side from the perspective that it will make their function better. If it is less C-suite facing, if you don't have that kind of implicit trust, then you're in the camp of 'trust but verify'. Data can serve two core purposes. One, innovation and strategy to make the work of your function better and second is to report on the work of your function to other parts of your company. That becomes important as a question of measurement. For most of our clients it's a little of [both].
Do you expect to make more acquisitions over the next 12 months, and are there specific areas in which you are looking to add breadth or depth?
MM: 2023 will be a little bit more of a consolidation and growth year. We've had a lot of success on integration to date. For our M&A strategy, we were looking for capabilities on the data side, and geographic reach on the strategic side. And on the strategic side, there was a lot of attention paid to culture and disposition. That has made the integration side easier on that score. We've been moving very quickly. While the past couple of years have been focused on that roll-up strategy, we're pivoting this year from an internal focus to an external focus — talking to clients and potential clients about our vision and what we can do help them. If you ask me in 6 months, I might have a different view.
Companies are increasingly finding themselves drawn into political and cultural conflict. How do they navigate these issues?
MM: Political tensions within countries and between countries are going to be with us for a while. Bad decision making is usually a result of weak understanding of fundamentals. But the danger for every company is not understanding where they have the decision space to comment and operate between different audiences, constituencies & stakeholder groups. This is why we are trying to build the quantitative understanding about different audiences.
You can't blithely wander into a political knife fight, where your employees have a different view from your customers. That doesn't mean there isn't a role for companies to speak out on societal and political issues. Like anything, it should be disciplined and considered and driven by a deep understanding of facts on the ground and the audiences they are engaging with. My critique isn't necessarily that people have spoken out when they shouldn't have spoken out, but there's not disciplined decision-making on these questions at all. They don't understand where the permission and expectations are — I think it all requires a new framework for how you make these decisions.
Will companies become more wary in terms of speaking out because of the associated backlash?
MM: Yes. If you are a company operating in a diverse society, you're going to deal with the same level of complications that exist across society. The leadership question for companies is how do you engage across these issues in a way that is consistent with what your company is about, and your role in society.
The danger comes from the blind spots. From the US perspective, you have gotten a situation where corporate advocacy has been the purview of the left, and that is no longer the case. We live in a world where the advocacy of organizations has gone much broader than just activist groups of the past. That transition is a complicated one for a lot of companies to handle and absorb.
Related to populism, are these questions about different political views driven by educational attainment, which has not been as prominent as it has been recently. We live in an increasingly complicated and volatile world, where navigating these exercises cannot be a gut level decision, or a hand waving exercise. Companies that do that aren't going to always end up in trouble, but they can.
McDevitt: It's also globalised. When you look at legacy companies, their expertise is jurisdiction. What we're determined to do is introduce a research approach that acknowledges that jurisdictional expertise, but if you're asking them to advise on a global level you need them to work from common data. What we know from the past decade, from the democratisation of information, is that stakeholders communicate with each other. It's transjurisdictional — so I think there's a really interesting opportunity for government relations and public affairs globally to become more research led. It's not just who you know and what you know, but also what you understand through data.