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The most important things to consider before establishing a compensation agreement.

The key to improving your firm’s profits is to improve its pricing.  Nothing can improve your bottom line more than improving the price you get for your services.

Says the author of Priceless, a new book that explores the power of pricing,

“Because profit margins are small to begin with, adding a percent or two can boost profits immensely.  Very few interventions can have such an effect on the bottom line.”

Remember that estimating your costs is not pricing; it’s counting.  More importantly, clients don’t buy your costs — they buy the outcomes you help produce for the brand.  So as you begin thinking about how you’d like to be paid for an assignment, ask yourself these 10 questions:

Questions to ask yourself

1. Who is the economic buyer at this client and will we have access to him or her?
2. How profitable is this company?
3. What level of marketing sophistication does this client have?
4. To what degree do they have professional buyers (procurement)?
5. At what price would this engagement be so expensive a client would not consider buying it?
6. At what price would the engagement be expensive, but the client would still buy it?
7. At what price does the engagement become inexpensive?
8. At what price does the engagement become so inexpensive the client would question its value?
9. What would justify a premium price?
10. What costs can we afford to invest at the target price and still earn an acceptable profit?

As the buyer, it’s your client’s “job” to try to get the best price for your services.  This means they’ll immediately press you to talk about costs.  It’s your job to push back and steer the conversation to value.  Here are some questions that can help:

Questions to ask your prospect

1. How does your brand/company make money?
2. What is the profit model for your brand/company?
3. Based on your profit model, which of our offerings do you most value?
4. What specific results do you hope our services will help you achieve?
5. What have you identified as the drivers of success for your brand?
6. How do you measure success today with your agency?
7. Ideally, how would you like to measure success?
8. If price were not an issue, what role would you want us to play in your business?
9. What are the service standards you would like for us to provide you?
10. What resources can we expect your organization to devote?

Studies show that just a 1% improvement in the way you price your services can result in at least a 10% improvement in profit.  That should be a pretty good reason for your firm to take pricing more seriously.

*sky 3 courtesy Fontplaydotcom Flickr

Without sacrifice, your agency has no strategy

As a agency brand, would you rather be moderately appealing to a large group of prospects, or intensely appealing to a select group of prospects?  Most agency professionals would say the latter.  But most often, their business strategy centers on the former.

In life and in business, our natural tendency is to go broad instead of narrow, to want the most and the biggest.  Diversification feels safer and smarter.

The problem is that if your approach is to “keep your options open” and “not limit yourself” then you actually don’t have a strategy.  By definition, having a strategy means deciding to do one thing but not another.

The fact that most marketing communications firms don’t have a clear and differentiating positioning is usually for one of two reasons:

Reason 1: Unwillingness to think

The leaders of the business simply haven’t devoted the necessary time and attention required to understand how their brand creates value. They simply assume that trying hard and “being your best” are the keys to success.

The English economist David Ricardo is credited with saying “Profits are not made by differential cleverness, but by differential stupidity.” What he meant was that most business executives simply don’t make the effort to think through what actually may be obvious differences in their business model and value proposition.

Reason 2: The desire for universal appeal

Because most businesses would rather be liked than disliked, loved instead of hated, they are extremely reluctant to say or do anything that would cause anybody not to like them.  But of course the very nature of a positioning strategy is that your firm is right for some people but not all people.  Someone but not everyone.  So successful brands are able to plot their position on the spectrum of love and hate.  To be on either side of the spectrum is desirable; to be in the middle is death.

Brand experience expert Kathy Sierra observes in her blog Creating Passionate Users,

“You don’t really have passionate users until someone starts accusing them of “drinking the Kool-Aid.”  Where there is passion, there is always anti-passion… or rather passion in the hate dimension.  If you create passionate users, you have to expect passionate detractors. You should welcome their appearance. It means you’ve arrived. Forget the tipping point — if you want to measure passion, look for the Kool-Aid point.”

Said another way, the brands with the strongest supporters also have the strongest opponents; Microsoft, the New York Times, the Red Sox.  This means you should stop worrying about being pleasing and start worrying about being polarizing – not necessarily in a negative way, but in a way that clearly sends the signal “we’re not for everyone.”

Most companies — particularly in professional services — desperately want to be loved. They don’t like the idea of admirers and detractors, so they don’t want to take a stand.  What they don’t understand is that being lovable doesn’t get you loved.  What gets you loved is standing for something.

Southern California’s DGWB does this very clearly with their commitment to what they call “values-based marketing.”  They seek only clients that believe what they believe: that for the brands to be successful, consumer values and brand values must be aligned. By “flying their colors,” DGWB knows that some clients will resonate with this approach and some won’t — and that’s exactly what they want.

Think of it this way.  If you’ve done a thorough job of differentiation, your agency brand is defined by the features or clients you don’t have.

Time to bring IT out of the back room and put it to work for clients

Exceptional client service is key to agency success, but the truth is that most agencies deliver it.  That’s one of the reasons our business is called “professional services.”  Your firm undoubtedly ranks high in “high touch.”  But are you fully leveraging technology to help improve the operations of your firm? Are you truly “high tech,” or are you mostly just mirroring what most firms do?  Is your agency deep into the digital stream, or mostly standing on the edges?

Maximizing technology to increase agency effectiveness

Because agencies are populated with knowledge workers, not manual laborers, agency executives assume that increased productivity can only come from making people work harder.  But there’s much more that marketing communications firms can do to improve both efficiency and effectiveness, and it starts with making much more aggressive use of technology.

In the enlightening book Reinvent Your Enterprise, consultant Jack Bergstrand asks:

“Does it take your company a couple of weeks just to set up a meeting? If so, you are either in trouble or headed toward it.  If your enterprise can’t improve its knowledge work productivity, your firm’s best years are behind it.”

In most firms, “Information Technology” is mostly about making sure people have working hardware, access to the network, and reasonably current versions of basic operating systems and software. But increasingly, clients expect their agencies to be using technology to maximize value in the relationships. We now see questions in RFPs like this one:

“What web-based tools or systems do you use to create operating efficiencies, manage costs, or service your clients?”

Technology essentials for agencies

Unfortunately the only technology most agencies use with their clients is email.  Sure, email is easy, but it’s a horribly ineffective way of communicating and collaborating with clients.  The essential job of IT in an agency is to equip the firm with proven technology solutions for:

Project management: Abolishing the traditional job jacket and using a software platform (like Advantage or Workamajig) not only to  move work through the system, but to attach and catalog all relevant digital assets, including creative briefs, copy, art elements, and even finished production files.

Presentation: Attaching a PDF to an email is an exceptionally poor way for an agency to present and sell its work.  Instead, progressive firms are using real-time presentation and communication services such as WebEx, Fuze Meeting, or ConceptShare.

Collaboration: The state-of-the-art way to collaborate with clients is using online services such as Basecamp or Workzone which serve as “virtual offices.”  All correspondence and relevant files are cataloged, organized, and instantly accessible online.

The benefits of making this upfront investment of time and money will be immediately apparent.  Art directors will no longer have to waste an hour looking for a file (a complaint Ignition hears often).  Clients will no longer have to call and ask you to “please email that file again.”  And your batting average for getting good work approved will go up, leading to fewer do-overs.  Even revisions are likely to decline as a result of better communication and more accurate version control of files.

Procter & Gamble’s new CEO Bob McDonald keeps no paper files.  He wants to fully digitize P&G, and to the extent possible, its marketing.  Would you rather be following your clients or leading them?

Positioning isn’t logical.  If anything, defining a differentiating value proposition for your firm will take you in the opposite direction of “common sense.”

Logic says your agency will grow faster by targeting the “general market.” But some of the largest and fastest-growing agency brands are squarely focused on a particular type of client, not every type of client.

Of the top 25 advertising agencies in America, more than half are specialist firms, not “full-service” agencies. Focused agency brands like Rapp, Digitas, and Wunderman are actually larger than general market agency brands like DDB, Ogilvy, and Y&R.  In Minneapolis, a city that has spawned more than its share of talented advertising agencies over the past few decades, the largest agency is not Fallon or Campbell Mithun – firms that help put Minneapolis on the advertising map – but rather Carlson Marketing, a specialist in customer relationship marketing.  With revenues of some $265 million, Carlson Marketing is nearly four times larger than any other agency in the city.

Logic says that an agency can increase its revenues by broadening its line-up of services. But experience shows that the most successful brands deliberately cultivate a narrow line.  They know that depth is much more effective strategy than breadth.  This is particularly true for professional service firms, where your product is your intellectual capital.   No client ever buys a “wide range of expertise,” but rather a specific kind of expertise.

Being afraid of “too much focus” is the mistake of assuming narrow is the same thing as small.  Starbucks is narrow – coffee – but it certainly isn’t small.  Intel is narrow – microchips – but ranks as a Fortune 100 company.  In professional services, some of the largest firms are some of the most focused.  For example, while most other advertising agencies attempt to position themselves as “full service,” Zimmerman is focused on the retail category.  They call their specialization “brandtailing” – the combination of strong expertise in both branding and retailing.  As far as ad agencies go, this is a pretty “narrow” focus.  But the result is anything but small.  With billings of over $2 billion, this agency employs several thousand people.

Logic says that diversifying and creating other divisions will helpp grow your firm in these economically challenging times.  This type of diversification may add to your revenues, but it rarely adds to your profit.  This is mostly due to the diffusion of your firm’s energy and resources.  Your agency and your management team (especially if you’re one of the smaller independents) can really only optimize one strategy at a time.

The other argument for diversification is that it broadens your risk — if one business goes bad, the others are there to protect you.  Again, this sounds like inarguable common sense.  But experience and research shows that it’s almost never an effective way to maximize your profits.  The most profitable companies in the country are without exception those that are the most focused, not those that are the most diversified.

To make matters worse, agencies that do choose to establish additional divisions tend to make the same mistake their clients make; they extend the existing agency brand name onto these new companies.  Logic says this will create faster, higher awareness at lower cost.  But marketing text books are littered with examples of line extensions that literally destroy the meaning and value of a brand.  In professional services as well as packaged goods, line extensions rarely if ever result in a strong brand that generates profits without cannibalizing the parent brand.  This is because your brand can really only stand for one thing at a time.

The main reason so many brands — agencies and others — fail to reach their potential is because they do what seems logical instead of what’s actually effective.  As marketing professionals, we in the agency business should know better.

*Heraclitus picture courtesy of Cote – Flickr

Now more than ever, marketing communications firms need to analyze their revenue streams and find more ways to extract value from the services they provide.  “Business as usual” isn’t an option in today’s economy.

Agencies need to apply creativity to solving their revenue problems, just as they do to solving their clients’ marketing problems.  Here are twelve good questions to help you capture more value:

1. What opportunities could we pursue to develop or package our intellectual property for sale or license?

Instead making all our money in a “work for hire” model, do we have a knowledge base or proprietary information we could turn into a source of revenue?  What would it take to develop and package it for sale?

2. Could we experiment with charging minimal fees for concept and production and then charging for usage?

This is the business model of most of our creative services suppliers: photographers, musicians, talent, etc.  If it works for them, why couldn’t it work for us?

3. What missed opportunities have we had to apply some creativity to pricing (rather than just estimating our costs)?

This is the first and most essential question we should be asking.  How can we get our people to understand that we’re not selling our costs, but rather our value?

4. Do we have any current clients with whom we could structure a simple compensation agreement in which we are paid for leads, inquiries, clicks, downloads, etc.?

Which of our clients might be willing to pay us for the results we produce rather than the hours we work?

5. Which of our clients would be willing to pay us more money if we take more risk?

Do we have a client who is sophisticated enough to want to “grow the pie” rather than focusing on how big of a slice they give us?  Are we willing to accept a different form of risk (knowing that every client relationship carries some risk, not the least of which is the risk of not making money!)

6. Could we propose a “value audit” for current or prospective clients to help identify drivers of success upon which we could base a compensation agreement?

Rather than jumping straight to “scope of work,” could we get some experience with the concept of “scope of value” Could we use this approach to help differentiate ourselves in a new business situation?

7. How can we help our clients identify their real brand success drivers and measure what matters (not just sales and market share)?

Could we employ account planning or analytics to help our clients identify and test their real success drivers, then build our compensation around our ability to move these drivers in the marketplace?

8. Would we make more money if we raised our prices on “high value” services and lowered our prices on “low value” services?

Could we make most of our profit on the services that are most highly valued by clients?

9. Could we add value to a particular service and charge more than other agencies?

How could we take a “standard” service and differentiate it in a way that adds more perceived value?

10. Could we find a more efficient way to deliver a particular service and charge less than other agencies?

Could we use technology or streamlined work processes in a way that would allow us to deliver a production/distribution service at a much lower cost than other firms?

11. Which 20% of our clients produce 80% of our profit?  How can we cultivate more work from them?

Knowing that a handful of clients produce most or all of our profit, how could we provide (and capture) even more value from these clients?

12. Who are our low-value, unprofitable clients?

Unprofitable clients really offer us only two options: develop new compensation agreements with them, or resign them.  What are we waiting for?

Because most agency leaders want to create an environment in which ideas can flourish, they go out of their way to grant as much freedom to their staff as possible.  Most of the time this takes the form of a relaxed workplace, a relaxed dress code, and relaxed personnel policies.

But a laid-back environment, by itself, isn’t a very powerful catalyst for creativity.  Otherwise, every stress-free work environment would be a hotbed of innovation.

Putting energy into the right things

Sociologists have shown that the best way to create a sense of freedom in your people is to instill a sense of purpose.  A former worldwide creative director for Ogilvy & Mather, Norman Berry, once said “Give me the freedom of a tightly-defined strategy.”  Once you know the strategy – or the purpose – you have the freedom to solve problems rather than wonder about which problems it is you’re trying to solve.

People in purpose-less organizations spend much of their energy wondering what it is they’re supposed to be accomplishing (beyond their day-to-day tasks).

The primary unspoken question on the minds of most agency people is “Where is this agency headed?  What are we trying to become?”  Imagine the collective power of an agency focused on a common goal and vision of the future.

Defining purpose

While most business organizations seem motivated mostly by external factors — the “competition” — purpose is about being motivated from the inside.  It involves questions like:

1. Why does this agency exist?  Why was this agency started in the first place?  What did you expect to accomplish that was different or better than other agencies?

2. What is the meaning in what we do?  Beyond providing a paycheck, what rational, emotional, social or psychic benefits does this organization provide to its stakeholders?

3. What significant contribution does the agency make to the industry, the profession, or the world?  Is there a “greater good” served by the agency?

A calling beyond employment

Most advertising professionals realize that they didn’t just land in this business.  Rather, they were called to it, much like teachers, artists, or civil servants feel called to their line of work.  Defining the agency’s sense of purpose is largely a matter of remembering why you all got into this business in the first place, and what you expected to be able to accomplish by devoting yourselves to a career in advertising and marketing.

You know you’ve been successful in defining your purpose if:  1) It’s inspiring. 2) It’s about meaning, not money, and 3) It’s very difficult to fully achieve.

In a recent “Recession Survey” from the Association of National Advertisers (ANA), 71% of client respondents are challenging agencies to reduce internal expenses and/or identify cost reductions. 56% are planning to reduce agency compensation (compared with 32% a year ago).

My friend Tom Finneran, Executive Vice President of the American Association of Advertising Agencies, says AAAA members are under tremendous pressure from clients on compensation. Current client tactics include:

• RFP’s that focus extensively on price.
• Procurement inviting more “competitors” to pitch and bid on projects.
• Unilateral procurement mandates to reduce fees with little to no reduction in scope of work.
• Procurement led processes that demand extensive agency “transparency” of agency labor costs, overheads, profit margins, hourly rates, etc.
• Clients being coy about revealing what they are budgeting for major marketing expenditure components.
• Procurement groups trying to use the recession to re-negotiate contracts and to edict extended payment terms.

Moving toward “perfect competition”?

It’s no wonder agencies are feeling more pressure on their margins than ever before.  Some parts of of the agency business are starting to match up with an economic theory called “perfect competition,” which is characterized by these conditions:

1. The customer is in control. (This is increasingly the case, evidenced by the rise of procurement.)

2. Excess supply. (There are 12,000 agencies in America vying for client business.)

3. Large numbers of small firms. (Most of these 12,000 are definitely small firms).

4. A homogeneous product. (While the quality and inventiveness of agency work certainly varies, increasingly clients view agency output as similar. When it comes to production, clients view these services as identical.)

5. Total access to information. (Clients demand — and mostly get — very detailed information about every dimension of the agency operations and cost structures.)

6. Low barriers to entry. (The belief that “anyone can start an agency” is largely true. It’s also true that small agencies come and go with great regularity.)

The above conditions are truer for the “tactical/manufacturing” side of our business than the “strategic/conceptual” side. Nonetheless, we’re on dangerous ground.

Magic and logic

The IPA (Britain’s version of the AAAA) has coined the terms “Magic” and “Logic” to describe what agencies do. The “Magic” is the high-value brand development, strategies, and concepting — things that clients generally can’t do for themselves (at least can’t do well, because the best talent in this area still goes to agencies). The “Logic” part of our business is the lower-value production and execution work — work that clients actually can do themselves (or at least believe they can).

The Project Lifeline

John Minty, CFO of Venables Bell & Partners, believes that every assignment has a “Project Lifeline.” On one side of the lifeline is the strategy/concept work that clients still value and are willing to pay for. On the other side of the lifeline is the increasingly-commoditized production/execution work that clients believe they can get cheaper down the street. The goal of VB&P is to maximize the value they provide to clients by emphasizing their abilities and services on the left side of the lifeline.

The agency business must begin charting a course away from commoditization if it is to remain relevant, valuable, and profitable. We must do that by developing and offering differentiated, high-value services. Particularly when it comes to dealing with procurement, we cannot negotiate our way out of pricing pressures; we can only differentiate our way to success.

An important part of the value agencies bring to a new client relationship is their ability to help focus the client’s brand messaging. Often the brand strategy is scattered and unfocused. The brand is not speaking with one voice, the messages are off-strategy, and the client organization isn’t really sure what the brand stands for in the first place.

As an observer of the agency industry, I often see agency brands behaving in exactly the same way. Not only is the agency brand not well defined, but the message strategy is almost schizophrenic. For some reason, this is particularly true when it comes to the agency’s social media strategy and messaging.

What kind of agency would you assume is behind a Twitter stream like this?

• Recipes for most popular cookies.
• This year’s strangest clothing trends.
• Top 5 ways to host a successful dinner party.

These are paraphrased tweets from actual agencies. Not only are these messages irrelevant to the marketing business, they do nothing to build a positive, consistent perception of the agency. They say nothing about what the agency believes or advocates, and do nothing to differentiate the firm from the thousands of other agencies participating in social networks. Can you imagine this agency executing a similar program for a client? Not likely.

The same goes for blogs agencies produce for themselves. I see agency blogs that feature random commentaries about travel experiences, how much they like the new iPhone, and a call for entries in a moustache contest. That’s fine random fodder for a personal blog, but it hardly helps build the image and reputation of a professional service firm that wants to be known for innovation and thought leadership. Can you imagine visiting a blog published by Apple and finding posts about favorite recipes, the last Harry Potter movie, or the lamentations of a stay-at-home mom? Such are the topics I often find on scores of unfocused, uninteresting, undifferentiated agency blogs.

Branding firms (aka agencies) preach building the brand at every point of contact. They counsel clients that everything the brand says or does should combine to create a unified, meaningful, distinctive impression. Why isn’t it more obvious to branding professionals that they should be doing the same thing for their own brands?

Just like everything else, your social media program needs a strategy. Ogilvy recently published a strategic approach to using Twitter that is a good place to start.

Part of the reason many agencies fall short on their online marketing efforts is because the leaders of the firm are often out of the social media loop. They actually don’t know what’s currently on the agency blog, what’s being posted to the agency Facebook page, or what’s being sent from the agency Twitter account. Instead they relegate these jobs to junior associates (sometimes even interns) who don’t have the depth of experience to speak on behalf of the agency in these important ways. This is inexcusable. There is no more important job for an agency leader than to set the messaging strategy for the agency brand. This doesn’t mean that the agency CEO has to personally manage the agency’s presence on social networks, but he or she should certainly see that the agency is communicating in useful, relevant, and differentiating ways that support the agency brand positioning.

Especially given the emerging importance of social media, agencies should be setting an example for their clients to follow.

Given that a great many agencies are struggling financially right now, the question “Are you risking enough?” may seem wildly out of context. But this is precisely the right question to be asking.

Agencies, like most businesses in today’s economy, are going to great lengths to avoid risk. It’s easy to assume that the least risky path is to pull in your horns and keep plowing forward with your current business model. This is essentially the strategy of “just try harder.” But marketing communications firms are at the nexus of the Great Recession and the Great Upheaval of Mass Marketing. Continuing on the traditional agency path is by far the greatest risk you could possibly take.

Don’t risk everything, but be willing to risk something

Especially now, it’s important for marketing executives to understand the nature of risk. Risk is inherent in absolutely everything you do, starting with your drive to work every morning. If you own a business, just turning on the lights and incurring payroll expenses every day is a risk. Then there’s the risk that your largest client could get acquired, your most talented creatives could leave, a group of employees could decide to start their own agency, and everything else that may keep you up at night.

Choose your risk instead of letting it be chosen for you

There’s risk in every decision you make about your firm, but there’s actually greater risk in not making decisions. You can choose to be either proactive or reactive when it comes to risk. You can make active decisions about the kinds of risks you believe your agency should take, or you can sit back and let your firm be passively subject to the risks that are inherent in running a marketing communications firm in an era of constant and disruptive change.

In Ignition’s view, here are 15 of the greatest risks to agency profitability now and in the future:

1. A skill set built mostly around “interruption” instead of “engagement.” Attempting to solve marketing problems through paid mass media.

2. A digital department in place of a digital competency. Viewing digital as a separate discipline rather than mandating that every agency professional learn and practice it.

3. Core competencies focused on “one-to-many” instead of “one-to-one.” Irrational fear of databases and CRM, which are the future of marketing. Mass messaging instead of mass customization. Broadcasting instead of narrowcasting.

4. Continuing to focus on “brand-to-consumer” communications at the expense of “consumer-to-consumer” communications. Viewing consumers mostly as an audience instead of as a medium. Continuing to practice controlled communications instead of open conversations.

5. Lack of analytics and tools to measure and demonstrate effectiveness.

6. Production people skilled in traditional media output instead “producers” in the Hollywood sense. Linear instead of organic approach to production. Moving on to the next campaign vs. analyzing and optimizing the current campaign.

7. Developing media plans instead of channel, communications, conversation, or engagement plans. Media placement instead of media creation.

8. Creating brand transactions instead of brand relationships. Producing one-time sales instead of helping clients nurture and cultivate customer relationships.

9. Continuing to rely on the mass media-centric “big idea” instead of “big multichannel ideas.” Advertising production instead of multichannel production.

10. Expecting “account executives” to be both strategic leaders and project managers (these are two very different skill sets, especially in the digital age).

11. Working exclusively in the realm of brand perception instead of brand experience. Helping clients only in the “pre-purchase” phase instead of purchase and post-purchase.

12. Standing for everything instead of standing for something. Supporting the increasingly unrealistic cost structure that comes with attempting to house every possible service under one roof. A business strategy that must support both high-value product offerings (strategy and ideation) and increasingly “commoditized” product offerings (basic production and execution).

13. Continuing to manage knowledge workers in a framework left over from the industrial age. Knowledge workers — especially those in the professional services — need a different set of tools, resources, and work policies to be effective. Staff management instead of talent management.

14. Continuing to allocate client budgets to media instead of creative. In a world where many of the most powerful media have a cost of $0, ideas are the real currency of marketing, not money.

15. An accounting and compensation system built on time, costs, and efficiency rather than outcomes, value, and effectiveness. Selling hours worked instead of value created.

This adds up to a lot of change. Which is why agencies need to move from an attitude of “tried and true” to “test and learn.” Because they’re used to functioning as third-party “agents” on behalf of their clients, agencies aren’t used to investing their own capital and taking risks on behalf of their own brands. But now agency leaders must move beyond disrupting their clients’ brands and instead disrupt their own brand.

Let’s say your agency management team just completed its annual offsite retreat to plan the agency’s objectives and strategies for the coming year. You spent a fruitful day identifying opportunities that could make a big difference in the agency’s future success. Now the question is, will you actually follow through, or will this be yet another year of “We were just too busy to work on our own brand?”

Executing your strategy isn’t just an important thing; it’s the only thing. Unless you actually put your initiatives into action, nothing will have been accomplished. Without execution, there is no strategy. And if you really analyze the agency landscape you’ll realize that the main difference between mediocre agencies and great ones is not vision, but execution.

The problem is, most agencies are too busy working on yesterday’s problems to work on today’s strategic imperatives. This chronic challenge can produce real cynicism within the agency. Employees begin to doubt not necessarily the sincerity of management, but rather their commitment.

Talk is cheap, but execution is priceless

Talk isn’t really cheap – it’s expensive. Think of the countless hours wasted talking about the same issues over and over again. Talking is talking. Only doing is doing.

Unless and until you translate your initiatives into action, the initiatives are really only intentions. And the only way agency initiatives will get done is if the top management of the firm models the behavior it expects of other agency associates. Commitment, discipline, and action start from the top. If it’s important to the CEO and the management team, it will be important to everyone else.

The main difference between mediocre agencies and great ones
is not vision, but execution.

Most importantly, if agency leaders have high expectations, they will get high performance. If they have low expectations, the status quo will prevail. In fact, research has shown that high expectations centered around a goal that takes unusual effort produces unusual results. Normal expectations centered around a goal that takes the usual effort produces the usual results.

Agency managers can’t delegate their responsibility for personal involvement in executing the firm’s initiatives. “Many people regard execution as detail work that’s beneath the dignity of a business leader,” observe Larry Bossidy and Ram Charan in the excellent book Execution. “To the contrary, it’s a leader’s most important job.” A leader’s ultimate success isn’t a result of strategy, but execution. Nobody has ever achieved greatness without results.

Deciding isn’t the same
as doing

There’s a story about five frogs sitting on a log. One decided to jump. How many frogs were left? Five. There’s a big difference between deciding to jump and actually jumping. Many agencies make the decision to change. But only a few transform their decision into action.