CREATING AN UNCONTESTED MARKET FOR YOUR FIRM

If it feels like you’re in an unrelenting race for new business, competing against agencies offering similar services in a similar way, there’s an easy way out: stop offering similar services. The new business frustration experienced by talented agency teams is largely of their own making, the result of getting caught in a cycle of “harvesting” instead of “planting.” 

The unhealthy, unrelenting pressure to perpetually keep the firm “billable” undermines your mission to create and cultivate new, more innovative forms of client value. In most firms, there’s no job number for “product development,” and if there were, it would be unbillable. Talk about misalignment of above-and-beyond goals and on-the-ground practices. 

This stems from a flawed paradigm of what your firm really sells in the first place. Agency leaders imagine their inventory as a warehouse full of hours. But what is this inventory really? There’s a much better answer: intellectual capital. 

The Enemy of Innovation

If you shake off the self-imposed shackles of “high utilization,” you give permission to your team to develop their ideas for services and products that can fill the unmet needs of clients. You can fly in the blue skies where no one else is flying.

The holy grail of business strategy is to compete in an uncontested market — in effect, to create a category of one. While helping to build TBWA into an international powerhouse, chairman Jean-Marie Dru preached “It’s not good enough to be the best at what you do; you need to be the only one who does it.”

The goal isn’t just to be different, but to create a more valuable spot on the client value chain. If you only offer services that clients need today, you’re pursuing a strategy rooted in the present and the past, but not one that will take you successfully — and profitability — into the future. 

Not Just a Matter of “Better”

Offering widely-available services puts you squarely in the world of “perfect competition,” where price is unfortunately often the deciding factor. In this context, the real problem with most firms isn’t that they’re overpriced, but rather that they’re underexclusive. 

The lazy approach to differentiation is to claim “Yes, we do a lot of the same things as other agencies, except we do them much better.” Imagine if Apple had adopted this approach. In place of an exclusive portfolio of innovative products, they would be producing the same kinds of products as HP, which has 250 times more SKUs than Apple and only 5% of the market value. 

Doing the same thing, only better, isn’t really a strategy at all, but is unfortunately the unconscious approach of most firms. Excellence is not a game plan, but rather the price of sustaining a successful enterprise. 

Innovating Your Own Brand

The imperative for agencies is to not only innovate on behalf of your clients’ brands, but for your own brand as well. You’ll have a devilish time doing that as long as you keep your staff running on the hourly billing treadmill. As Anomaly’s Jason Deland opined, “It’s almost impossible to innovate your business model if you think you sell time.” 

Anomaly is a prime example of a firm that has innovated its own brand. At least a third of their income is generated from investments of both intellectual and financial capital into new products and agency-owned IP. It’s no coincidence this firm is Advertising Age’s “Agency of the Year.”

Among Fast Company’s “Most Innovative Companies” is the firm Ammunition, which designed Beats by Dr. Dre, created Adobe’s Ink & Stand, developed a smart dashboard for Lyft, and is the habit of taking equity stakes in promising clients. Work & Co., recognized multiple times by Fast Company, not only has an astounding track record of innovation, but has created a model for it, featured in a report from Forrester.

Agency professionals flourish when they can apply their considerable creative talents in ways that don’t involve “billable” time for “billable” projects. British adman Phil Adams puts it this way: 

“Creative people obsess about output. To them your obsession with measuring input is a bummer. They want to be swashbucklers, not a high-nineties utilization number. They want to be part of Jack Sparrow’s Black Pearl crew; whereas nothing says East India Company like an all-staff do-your-timesheets email.”

 

 

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