Category Archives: business innovation

Explore the Polls: What Will Replace Ad Agencies?

Yesterday’s “Ad Industry Leaders Storm the Exits & Start Innovative Marketing Communications Companies.” triggered lots of comments, emails and calls. Clearly very topical so let’s explore further.

What do you think will replace the Ad Agency? Several forms of organization are being experimented with. Take the poll. Even suggest your own vision.

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Ad Industry Leaders Storm the Exits and Start Innovative Marketing Communications Companies.

Thermal Image LED lamp. ©NatGeo/Tyrone Taylor/WWF

Escape To Entrepreneurship

Increasing numbers of senior people are quitting their ad industry jobs. Some out of sheer frustration or exhaustion, but others are starting innovative new marketing communications firms. This is a critical time for an industry in desperate need of reinvention. By joining & supporting these start-ups we can help build a better industry of Marketing Communications Professional Services.

Nine months ago in “Leadership, Management & The Rising Tide”  I wrote of the 150% jump in already employed people looking for jobs. There were 3 main reasons for the surge:

1. my company is going nowhere and our management is clueless at the helm;

2. our bosses keep beating us up because their bosses keep beating them up;

3. my company retrenched so many colleagues I can’t stand working here.

Most wanted a new job because their managers were too useless, too awful, or had damaged companies too badly for quality people to want to work near them any longer. What had been a growing problem before was magnified by the pressures of the Great Recession. Poor managers had been shown up and quality people wanted out!

Now that the economies of many countries are improving and marketers are increasing their communications budgets, people are on the move as predicted. However, there is now a further and more vital driver of their movement – the Escape To Entrepreneurship.

Talented Leaders Are Quitting, but not Leaving.

In June 2009, Omnicom announced Michael Birkin’s resignation as Vice-Chairman of Omnicom Group Inc and CEO of Omnicom Asia-Pacific. Birkin is no holding company leech. He was global CEO of Interbrand for 8 years, during which he invented their Brand Valuation model. He sold Interbrand to Omnicom, who were so impressed they made him head of Omnicom’s Diversified Agency Services division – half the revenues of the entire holding company, then later, CEO of Omnicom Asia-Pacific.

Last month Birkin launched The Red Peak Group. Brand Strategy & Design, Experiential, CRM, Sponsorship… Their clients? Anheuser-Busch, Intel, McDonald’s, Sony Ericsson… Birkin isn’t just the CEO. He’s hands-on as their Chief Strategist and leader of the Intel relationship. How many other CEOs, Presidents and similarly rewarded heavies can you say that about? Most clock few if any billable hours against paying clients. Ask any agency group CFO.

Last week the two top leaders of JWT North America quit to start their own company. Colleagues in JWT and seniors in WPP expressed surprise; even shock. There was probably envy and shame too.

Recently, self-styled “working class heroes” Iris Nation relocated their founder CEO and several top leaders to Asia. They have made it clear they’re not your average UK- or US-centric network. They know where their future revenues, and retirement funds, will come from and have the independence and wisdom to act on it.

Ad agency leaders feel like they’ve been tossed in a river with their arms and legs bound. They get no respite from holding company strictures, so the best they can hope to achieve is to keep their heads above water and be carried down-stream. It’s soul-destroying and prevents them delivering the service improvements marketers need. Rumours are now circulating of breakaway talks among top mar-comms industry leaders, and those talks are including marketers who are equally frustrated with the situation.

Entrepreneurship To The Rescue

There has always been a healthy trend of entrepreneurship in the marketing communications industry. A steady flow of visionaries, and of the frustrated, leaving to do their own thing. It used to keep the industry fresh, creative and adapted to the changing world, but in recent years too much of that innovative energy has been siphoned off into holding company acquisitions and management service fees.

Many of the best brains in the business work in the holding companies which acquired their businesses. From there they can do little, despite all their talent and skill, to reinvent the industry that made them rich and famous. These are the people who have done it before, know how to succeed, have the money to break away again and are a powerful force for good in starting or helping new ventures in marketing communications.

Rumours are that more of these, like Birkin, are starting to move en masse. If so, that’s great news. It couldn’t come at a better time to save the marketing communications industry.

Critically, marketing communications entrepreneurs must address the 7 pressing issues of:

1. Delivering consulting grade recommendations with fully integrated planning, technology, content management and business building ideas;

2. Getting paid fairly for all that despite the rise of qualitatively illiterate Procurement departments;

3. Tracking and proving the value they add, instead of just winging it old-school style, which will help keep Procurement at bay;

4. Recruiting, training and retaining top quality people including industry outsiders with the new skills needed – content strategy, mobile technology, data analytics and visualization & neuroscientific research included;

5. Rewarding all their people honestly and properly for their efforts;

6. Staffing to the right levels instead of driving their people to exhaustion, stress, despair and depression, none of which produces great thinking, unique ideas or added value and;

7. Resisting the temptation to sell to one of the holding companies as the exit strategy. A good-sized block of stock in a thriving independent will make a much better retirement annuity.

It takes the right people in the right environment with time to think and work things through to deliver a professional service. Pressure, fear and panic give bad advice.

Treat them any other way and quality, professional people simply storm the exits.

How Ad Agencies Could Learn To Stop Worrying And Love Crowdsourcing

Is crowdsourcing a riot that'll wreck ad agencies or an innovation that'll save them?

Mention crowdsourcing over a meal with ad agency pals you’re likely to put them off their food, and you, for some time.

For a creative, liberal, experimental, edgy, fashion-aware, up-to-date industry, it seems advertising is very conservative and defensive about crowdsourcing ideas for their clients.

The most common reaction is “But ideas are OUR business”.  Perhaps. Even if you aren’t getting paid for your ideas because much of the industry is half-way between the old commission model and being hung on the FTE cross by Procurement (see earlier posts on this blog).

Last year Unilever used it, for Peperami in the UK, causing lots of dark muttering in the trade press. They used IdeaBounty (Slogan: “The best ideas get paid“) as lead agency and dumped Lowe from the brand altogether. Another key crowdsourcing player, BootB call themselves “The Borderless Creative Engine”. Their web-site runs in 14 languages including Arabic and Simplified Chinese, proving their point. Check out the clients listed on both web-sites. Big names.

For Peperami it was discovered, once the feathers had been swept away, that the winning ideas were thought up by a copywriter in London and a Creative Director in Munich, both of whom had recently been made redundant. The selected ideas were produced through a specialist agency called Smart Works.

In the USA, Frito-Lay brand Doritos has made a Super Bowl Special out of crowdsourcing. This is the fourth year that they’ve put crowdsourced ideas to work. 4,064 videos were submitted this season and they’re all available on the Doritos “Crash the Super Bowl Contest” site. The landing page features the four winners and two runners-up. The rest are in a 362 page gallery. The Herbert Brothers (two then-unemployed guys from Batesville, Indiana) who created the Doritos big winner for Super Bowl XLIII in 2009, are also featured.

The top 20 commercials aired at Super Bowl XLIV this year include Doritos in 2nd, 11th, 14th and 17th places as ranked by the USA Today AdMeter poll. They also topped the Visible Measures most watched viral videos listing week commencing 1st March 2010.

Marketers turning to crowd-sourcing seems to reflect a combination of 4 things:

1. Frustration with the speed and calibre of ideas from their agencies;

2. Giving their less adventurous ad agencies a firm shove in a new direction;

3. Exploring ways to get more for their money, including better results;

4. Getting their feet wet for educational and publicity reasons. It certainly did the latter for Unilever with Peperami and seems to work well for Doritos where the crowdsourcing idea has become a key brand attribute.

Instead of panicking, perhaps the ad industry should take another look at crowdsourcing but with their innovation hats on. There’s a whole new model for the ad business here and when it takes off …

For those who still don’t want to look too closely, think of it as bringing in free-lances. From the whole world. And you only pay for the ideas you use. The best ones.

There will still need to be a strong ad team at the core representing all disciplines and collaborating closely with clients. Their responsibility, finally, will be the Brand itself. The core idea of the Brand will remain the preserve of that marketer/ad agency team, as will the management of the communication platform. It’s expressions of that core idea that will get “free-lanced”.

I wonder which ad agency will crack first.

Oh, hold on. Goodby, Silverstein & Partners managed the entire “Crash the Super Bowl 2010” process.

OK, then I wonder which holding company will crack first and buy BootB. Anyone care to bet?

The Way To Succeed Is To Double Your Error Rate.

Thomas J Watson Sr. IBM archive.

Thomas J Watson Sr. IBM archive.

Thomas J. Watson snr. known as “The World’s Greatest Salesman” was also one of the richest men in the United States at the time.  Having built the enormously successful IBM, he was asked for advice on how to succeed. This was his reply:

“Would you like me to give you a formula for success? It’s quite simple, really. Double your rate of failure. You are thinking of failure as the enemy of success. But it isn’t at all. You can be discouraged by failure – or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember, that’s where you will find success.”

This is sometimes misquoted in the abbreviated form I used for the headline of this posting. The sentiment and the implications, remain the same.

One cannot innovate without trying what has not been done before. That means you are bound to make mistakes. The point Watson made, speaking in fact about sales, holds well for accumulating learning on the path of innovation, or any exploration of new things.

Lots of pop psychobabble has been published about the notion that the only failure is to give up, that one should not expect to get through life without getting knocked down but should rather make sure one keeps getting up, and so forth. I thought I’d take the practical route show you two examples of failures which went on to be great successes.

Sildenafil Citrate

Sildenafil Citrate

Sildenafil Citrate.

The molecule on the right was put together as a treatment for angina, a very painful condition which is sometimes mistaken for a heart attack and can sometimes be a precourser to one.

The users of these drugs are older and generally have circulatory problems.

In the testing phase for the drug the results showed that it hardly beat a placebo – a sugar pill – in effectiveness. The drug company asked the few thousand trialists who had been provided with the drug to return all the remaining tablets in their possession. That was when the drug company ran into an interesting problem. A very large proportion of the trialists wanted to hang onto the pills and their reaction was rather stronger than anticipated.

viagraCareful exploration revealed that while the drug did not have a viable effect in preventing or treating angina, it did have one very unusual and valuable side effect, which was why so many trialists wanted to hang onto their remaining supply.

Sildenafil Citrate, or Viagra as the world knows it now, was a splendid failure that went on to become a raging success.

PTFE

Polytetrafluoroethylene

PTFE as it is more commonly known was discovered by a researcher named Albert Plunkett of the Kinetic Chemical company who was experimenting with some alternative CFC refrigerants. These are the gases which, when compressed pumped through a refrigerator or air-conditioner, produce the coldness we so value.

In one experiment, perfluorethylene was being tried. However, when Plunkett tried to use gas from the canister of perfluorethylene he found that none came out. Exploring further he found that the perfluorethylene had polymerised through the action of the iron in the cannister acting as a catalyst. It had become a solid described as polytetrafluoroethylene. That’s it above and to the right.

The resulting colourless powder had some very unusual properties and one in particular which impressed him and all of us since. It is almost impossible to make anything stick to it, or vice versa.

Plunkett and Kinetic patented it and resitered a trademark. The Kinetic company was acquired by DuPont and the trademark is still used today. Teflon.

TEFLONOf course there are have been thousands of failures which have not turned out to be successes in any form and that is all part of the process. However they have probably all served to educate those who worked on them and ultimately led to more successful results.

Keep making mistakes if it means you are trying new things on the path to innovation.

Creative Services & The Vicious Cycle of Procurement

ouroboros_by_Saki_BlackWing

ouroboros by Saki BlackWing

Creative services aren’t generic.

They are unique. They have to be. Without uniqueness they can’t add value. That goes for content like advertising, design, games, on-line worlds and music. It goes for idea based consulting like branding, communications and media strategy and the plans to implement them.

Their uniqueness depends on the backgrounds, experience, inspiration and leadership of the people creating them. They are creations of unique individuals for unique circumstances.

Experience and the ability to produce high quality, unique creative ideas set salaries for those who create them. The less one is prepared to pay, the lower the quality one should expect.

The increasing role of procurement in buying creative and strategy services from advertising, media planning and branding industries may indeed save marketers some money, but can have undesirable consequences.

Not least the loss of the very thing that makes creative services valuable – their unique ability to add value to the procurer’s business.

The result? As procurement drives down the cost of buying those services it will drive down their value. With that will come dissatisfaction with those services, canceling of contracts and the appointment of the next low cost bidder. The vicious cycle will continue and the problem will worsen.

The solution? Innovations in procurement to correctly value creative services. This is easier in the on-line space where accountability is high. Off-line it may take longer.

At the same time the providers of creative services must improve leadership, innovation and accountability to improve their ability to deliver and value what they do.

Finally, both sides must realize they share  the common goal of adding higher value to brands and their owners through superior creative ideas and innovation.

Leadership, Management & The Rising Tide

Wave by Lee Fenyves

Wave by Lee Fenyves

A leading businessman told me something remarkable last week. More than 30% of people are looking for a new job.

He wasn’t talking about those “between jobs”. He meant 30% of people in jobs.

On average around 13% of employees are looking for a new job at any point in time, but that number has jumped nearly 150% in the past year

Among the would-be movers there were 3 reasons for the urge:

1. my company is going nowhere and management has no idea what to do about it;

2. our bosses keep beating us up because they keep getting beaten up by their bosses;

3. my company retrenched so many people that I can’t stand working here any more.

The majority of people want a new job because their managers are too useless, too awful, or have damaged the company too badly to work with them any longer.

There has been a consistent theme in this downturn, summed up wryly by Warren Buffet as: “It’s only when the tide goes out that you learn who’s been swimming naked.”

That vivid mental image applies to more than just banking and derivatives. It sums up how we are recognizing all the bluffers, muddlers and office politicians who have risen to their highest level of incompetence and beyond.

Anyone can succeed in management in the good times when nearly everything seems to make money and there’s enough of it sloshing around to cover up one’s mistakes.

That all changes in a recession.

Managers run to find costs to cut. Real leaders, not having surplus costs, have no need to cut and know that one can’t cost-cut one’s way to market leadership.

Managers feel lost in a crisis because their plans were built on “more of the same” from the good times. Real leaders are used to innovating around what their organization is and does so are used to managing change and creating successful options.

Real leaders know where their costs are going and their profits are coming from. They can defend everything they have without their staff even knowing they had to be defended. Their staff often think the recession isn’t nearly as bad as everyone else is saying.

We all have to do some “management”. It’s the administrative part of any leadership role; part of tracking one’s progress in leading an organization. It’s also the protective equipment we use when running a subsidiary or division of a company with its headquarters and focus elsewhere.

As the “green shoots of recovery” grow taller, leaders will increase their pace of innovation and build even greater advantage; managers will breathe a sigh of relief and go back to what they were doing before the downturn.

The rising tide will lift all the boats again. However, talented people will jump ship to better organizations and wise captains will lead superior crews, in better equipped craft, to greater glory when it does.

Does Your Company “Immune System” Kill New Ideas?

Macrophages & T lymphocytes by Dennis Kunkel

Macrophages & T lymphocytes by Dennis Kunkel

Innovation is almost always the difference between success and failure.

That difference is between increasing share and margins on the one hand and producing at parity in an over-traded market for negligible profits on the other.

The ability of any company, big or small, to innovate is tied to three things.

The company Leadership

The company Culture

The focus of the Business

Leaders who are outward looking, who send clear signals that they expect and reward innovation, are usually rewarded themselves in two ways.

– They attract smarter, more talented creative people who are much better to work with and;

– Those people have better ideas that make the business more successful.

Company Culture which encourages exploration and differing views, which accepts the occasional mistakes and costs that go with those, is more likely to produce significant innovations and to keep doing so.

A Business Focus on looking for significant changes to alter the landscape of the industry and how it addresses the needs of its customers, instead of fine-tuning small changes over a long period, is more likely to pull the rug out from under its competitors.

None of this is a surprise. Nothing written here is new. So why aren’t more companies doing it, especially now?

One reason is a lack of leaders empowered to do their jobs this way. This is a shareholders and supervisory board problem. If your company is hogtied this way abandon hope; abandon ship.

However, the biggest innovation killer is often harder to fix, more sinister and rooted in the very success of a company.

As businesses grow, they start to believe their own bullshit about why they are doing so well. That in turn starts to form an ideological immune system which reacts against anything unexpected from outside The Company Way. The watch-phrase in those organizations goes something like this:

“No, that’s not how we do things around here.”

Think about your company. Is an ideological immune system becoming part of your culture? If it is, fix it fast if empowered to, or abandon ship if you’re not.

The only time a company can ever condone that statement is when a type two hiring error proposes canceling innovation, abandoning reason and copying what the competition did last season.