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Creatives never warmed to the idea; it was, in the words of one former senior manager, "the devil's own job to make staff take it seriously and clients didn't give two hoots about it. It was a system that could not reconcile cultural objectives with commercial realities.

Then there is today's economic mood, closer to the philosophy of Ed Meyer, Grey's 76-year-old worldwide boss. It was Meyer who reputedly told a senior UK manager: "As far as I'm concerned, you can run a brothel here as long as you deliver the numbers."

The idea of colour-coded agencies, each with their own managing director and dedicated creatives, was the brainchild of the London agency's then chief executive, Steve Blamer, whose career had flourished in the smaller Grey and FCB shops on the West Coast.

The Californian wanted to make a break with the past, introduce more accountability and a sense of belonging, and compensate for the downsizing which had taken place after the assimilation of Grey's Mellors Reay subsidiary.

Some of a more cynical disposition suggest Blamer, now in charge of Grey's flagship New York office and a leading contender to inherit Meyer's crown, wanted to make his mark with a tangible reform.

Nobody is mourning the end of the "agencies within an agency" concept.

"It was a triumph of style over substance, a former Grey executive acknowledges.

There's no shortage of theories why the idea foundered. Some believe it ran counter to a global group structure geared to the needs of giant multinationals. Others claim the units' real autonomy was too limited, leaving them with few of the advantages of a big agency, all the disadvantages of a smaller one and with insufficient business to sustain them.

What's more, it proved difficult to equalise the workload between the units. "Introducing the system was like freezing the agency at a moment in time, an ex-manager says. "The moment a piece of new business comes in you don't know where to put it."

However, it was Tim Mellors, the agency's chairman and executive creative director, who consigned the scheme to history amid growing concern the fragmentation of the creative department was diluting its effectiveness.

"Creatives feel they work better with other creatives, one Grey source says.

The agency's official line is that the team spirit engendered by the units will live on while the return to a unified structure will allow better use of its newly acquired healthcare operation, PTK, and Grey Desire, its relationship marketing specialist, which was recently folded into the main agency.

Grey Worldwide London continues to grapple with its perpetual problems, which have only been exacerbated by recession. It remains heavily dependent on three multinational giants - Procter & Gamble, Mars and Glaxo SmithKline - which are said to account for at least 70 per cent of income.

Carolyn Carter, Grey's tough but shrewd president of Europe, the Middle East and Africa, needs to remain cool under this pressure if she is to continue vying with Blamer for the top job. She must not only resolve the managerial succession in London - Mellors is not expected to remain beyond next year and Grey is in need of a chief executive to bring synergy and focus to its UK operations -but overcome the agency's lack of a clearly defined positioning.