I once heard the ECD of one of America’s most respected agencies say, “If you get the structure right, everything else will take care of itself.” The more I think about it, the more I think he’s right.
Don’t think of structure as an organization chart with lines and boxes that reveals hierarchy and reporting relationships. Think of structure as the manifestation of your business model. Having the right structure means you have the right competencies organized in the right way.
In the many agencies I’ve worked with on this issue, most have a surprisingly similar list of challenges and opportunities that they expect a new structure to solve. And done right, it can. An effective structure can help your firm:
1. Inspire and facilitate channel-neutral problem-solving (paid, earned, shared, owned)
2. Continue to integrate digital competencies throughout the organization and develop stronger digital solutions
3. Ensure better social marketing capabilities
4. Better implement the discipline of professional project management
5. Bolster the agency’s ability to provide proactive ideas and marketing leadership
6. Evolve from “creative” to “content development”
7. Elevate the importance of data as a service offering
8. Institutionalize agency innovation and product development
9. Put in place a structure that is scalable to accommodate future growth
10. Optimize the agency’s ability to work virtually and draw on a global talent pool
The right structure also ensures that your firm is delivering not the widely-available “overdeveloped” services offered by virtually every agency, but rather the “underdeveloped” services designed to meet the emerging needs of today’s clients. A recent study by Adobe ranks the solution sets marketers feel will be most important in the next three years:
In my experience, most agencies already have 80% of the talent and skill sets they need to meet these emerging client needs. The missing 20% is what separates average firms from great ones. The great agencies are willing to invest the financial and intellectual capital necessary to develop the next generation of agency competencies.
Unfortunately, the great majority of agencies are stuck in a “harvesting” strategy where they are wringing the very last drops of revenue from yesterday’s business model. Their rationale can be pretty convincing. They’ll invite you to look at their numbers and note how revenues have actually been increasing the past few years. But look at their profit margins and those numbers tell a different story. The goal of a business is profit, not revenue, and agency profits over the last decade tell the story of an industry that is expected to do more and more work for less and less profit.
Industry observer and consultant Michael Farmer observes that “Agency retainers and resources are routinely cut, year after year, under the relentless assaults of procurement, even though agency workloads are consistently growing. Agencies can make fair profits only by downsizing their staffs at year-end and working with a more junior mix of staff. This means that more work is done by fewer and more junior agency people. This is self-destructive for the agency; there will be no happy ending if this pattern continues.”
Is structure the solution to this problem? Yes, if you view structure as a business model instead of an org chart.