If Your Agency is Three Years Old or Less ...

I find that many new agencies start and exist in their “formative years” (say 2-3 years old) by operating by the “seat of their pants.” Often I’m told, “We don’t know what we don’t know.”

Typically that’s because the owners grew up (as we all did) as account people with little or no experience running a business.

Many of these firms are doing well or at least holding their own – even in the recession. However, this is a critical time for newer firms.

As we begin to pull out of the recession, more established agencies will reap the benefits of longevity, reputation, vision, and an awareness of who they are and what they do well.

Newer firms normally don’t have the luxury of brand reputation or brand recognition and often they have no clear direction or vision of the kind of firm they want to become nor of the niches in which they need to specialize. Specialization helps builds reputation, and determining where and how to specialize is one of the most difficult decisions facing a young firm.

So what do new firms need to do to remain or become competitive? Here are four tips:

1. Create a vision of the firm you want to become (to look like) over the next three years. This vision will then lead to the strategies to help you get there. But, be sure to also identify the barriers to success and how you will overcome those barriers.

2. Be brutally honest with yourselves about what you do well and for whom. Decide what your agency will focus on. It could be a functional skill (e.g., crisis communications) or it could be an industry niche (e.g., luxury goods). It’s OK to have 2-4 specialties, but not seven or eight.

3. Identify your ideal client. Where have you been really successful? Profile that ideal client (what factors made it successful?) and resist the temptation (read money) to take business that doesn’t meet your ideal client profile.

4. Build a marketing program around your wisdom and knowledge. What do you stand for? Where is your thought leadership? If you don’t know, then think long and hard. Gaining recognition in the long haul comes from your clients and the work you do. But, for newer firms, getting those great clients will come from building a reputation based on what you stand for. That’s thought leadership.

There will great opportunities for communications firms in the near future. If you are new, if you have been successful, congratulations. Now the real work starts.

When Growth Stalls -- Read About It

At the recent PRSA Counselors Academy Conference in June, I heard Steve McKee speak about what happens when a fast-growing business (his own advertising agency) stops growing.

Steve’s own company problems led to two research studies and ultimately a great business book called “When Growth Stalls”, subtitled How it Happens, Why You’re Stuck, & What to Do About it.

While external market factors – McKee calls them Market Tectonics – clearly can and affect the growth and health of a company (can anybody spell recession?), McKee’s research points out that external factors alone are rarely responsible for stalled growth.

Instead, his research identified four, what he calls, “subtle and highly destructive internal factors that conspire to keep companies down.” The four are:

• Lack of consensus among the management team
• Loss of focus
• Loss of nerve
• Marketing inconsistency

Lack of consensus among management is easy to understand. You and your partner(s) simply do not agree on direction, strategies, or actions. There is a loss of trust and maybe a loss of confidence. I have seen this almost destroy more than one agency.

Loss of focus often plagues agencies in recessions. Loss of focus does not mean not adding new services or even going after new markets. What it does mean is straying from the strength of the firm to pursue strategies or actions that distract management from what it does best.

Loss of nerve is an affliction that has plagued many a firm during this recession. McKee says that fear of taking a risk, resisting change, not investing in the business are all signs of loss of nerve. I have seen and spoken to agency heads that are almost paralyzed by economic uncertainty even though they know in their gut that things will be better. He goes on to say that loss of nerve is a common “wake-up call” but one that companies must heed to return to a growth mode.

Finally, marketing inconsistency. Pretty self-explanatory. Frankly most agencies don’t even have a real marketing plan to be inconsistent about. But, for the companies McKee researched, changing one’s marketing frequently is a sure sign of a company in trouble or looking for trouble.

There are plenty of lessons in McKee’s book for all leaders. It is well worth reading.

Traits of a Great Agency Leader: Part Two

Last week I posted three of the six traits that I have observed in great agency leaders. I asked the question then and it bears repeating: What are the behaviors that separate the great from the average? Can good CEOs become great? Can mediocre ones improve?

Here are traits 4-6. Comments and challenges are welcomed.

4. They live in the present but have a clear, compelling vision of the future -- they know exactly what kind of firm they want to become
• They have an unwavering focus and commitment to make the vision a reality.
• Their vision is a filter for decision-making. It simplifies and provides a strategic context for all their major decisions
• They are willing to take risks to achieve their vision

5. They are “star-crazed”
• They understand that a great leader needs great lieutenants not foot soldiers
• They invest in “stars”
• They don’t tolerate the “average”

6. They live by standards of excellence (external and internal)
• They set the standards
• They meet the standards
• They understand that standards of excellence are non-negotiable

In part three, I’ll show a simple scorecard to rate yourself as a leader.

Traits of a Great Agency Leader: Part One

As a former agency CEO who now advises CEOs and owners of public relations firms, I have observed great agency leaders, good ones, and some that are just mediocre. What are the behaviors that separate the great from the average? Can good CEOs become great? Can mediocre ones improve?

Here are three of the six traits that distinguish great agency leaders:

1. The “possibility” mindset
• They are committed to being great and wildly successful
• They always focus on the positive
• They understand that doubts will interfere with the outcome they want.
• Especially today, outstanding leaders think, act, and believe in abundance and prosperity. They are open to receiving it

2. Action-oriented
• They are doers – not just thinkers and talkers (motivate by actions not words)
• They are always moving their firm forward – not just treading water
• They work on their business, not just in their business
• They run their business like a business with an active business plans, marketing, business development and financial plans

3. Personal change agent (“If I am not part of the problem there is solution”)
• They recognize the need to change (awareness)
• They embrace the need to change (acceptance)
• They make changes in their own behavior (action)
• They invest in themselves and their firm

Test yourself. How do you rate against these first three traits?

Get Out of Your Comfort Zone

It’s rewarding when I hear clients repeating to me some of the suggestions, advice or phrases that I’ve used in my coaching and consulting sessions. At least it shows they are listening to some of the things I say.

The other day I was working with one of my individual clients, a person who has started his own business and I heard him say to me, “You know, I’ve got to start working more on my business rather than in my business.”

It is a phrase I use often with my clients because I see the positive results of this simple piece of advice often.

As the leader you have a choice each and every day, each and every hour. That choice is simple: to work in your business or on your business. In the business means spending most of your time on client business – conference calls, account team meetings, attending client meetings, writing proposals, participating in or leading new business presentations, etc.

Working on your business means thinking about and doing things that move the firm towards its vision and your desired culture.

It’s not one or the other – it’s a combination of both. Too often, however, I find that most owners and CEOs spend the great majority of their time working in their business. I have one client where the CEO and COO are often 90-100% billable. That’s just too high. I have another client where the CEO is proud of the fact that he does no billable work. That’s just wrong – you never want lose touch with the work.

The reason you are more comfortable working in the business is simple: most people who run agencies mounted the promotional ladder in other firms. You like the client work. That’s why you stayed and that’s why you grew as practitioners. It’s your comfort zone. Now that you own or run an agency, it is still your comfort zone.

Working on your business, making tough decisions on investments or new hires, or new services takes you out of your comfort zone. It makes people nervous. Why? Because it often involves taking a risk.

Ultimately, how you spend your time as owner or CEO is totally up to you. It’s your choice. Remember, however, if you want to become a great leader and create a vibrant, sustainable business, getting out of your comfort zone and working on your business is a necessity.

Is Cutting Prices Smart Marketing?

Obviously the competitors for stressed out coffee drinkers think so. In the face of McDonald’s spending $100 million on a new marketing campaign touting the quality of its coffee at a more affordable price than its competitors, Starbucks announced it is cutting prices on some of its drinks and Dunkin' Donuts followed suit.

In an MSN.com article, Jean-Pierre Dube, professor of marketing at the University of Chicago Booth School of Business, said it is “extremely important” for McDonald’s to advertise lower prices during the recession because they are less expensive than others.

This brings up a question for me. Is it smart marketing for agencies to lower their prices and promote that to prospects?

Everyone knows it’s more competitive out there. Large firms are going after prospects they wouldn’t touch if times were good. Yet, large firms have a cost structure that makes it more difficult for them to change or lower billing rates and client fees. Smaller firms don’t necessarily have that problem. They can be more flexible and more nimble. And, they can emphasize lower fees in new business presentations. Despite what we would like to believe, many (good) clients initially buy on price and that’s even more true today.

Some will argue that lowering fees or reducing billing rates, or “giving work away” cheapens the value of that agencies bring to clients. They say once you lower costs you can’t raise them. I don’t buy into that philosophy.

If you can establish a price advantage over a competitor (and still make money) why not use this to win the business, develop a relationship and look to increase the scope of work (and fees) over time. Since many agencies increase their billing rates annually anyway, why can’t you lower them and then increase them in years to come?

I think you can. And it may help you win the business!

Less = More = Opportunity

I hear from numerous agency owners who have reduced their workforce over the last several months that they feel they now have a stronger staff than ever before.

Could fewer staff mean a stronger staff? Absolutely.

I have always believed in the adage that great people create great organizations. Nowhere is that more true than in a “people” business like public relations.

Many smaller firms have reduced staff down to a core group of high performers. Larger firms have eliminated marginal people from account and practice groups. In both cases, the team that’s left primarily represents your “keepers”.

We are slowly emerging from this recession. As we do, firm owners have a great opportunity to add new strength to their agencies by beginning to look for that new “star” who may have gotten caught up in a layoff. They are out there.

Start looking for your next “star”. You don’t have to pull the trigger and hire just yet, but we all know how difficult it is to recruit when times are good. It’s a much better idea to recruit when times are tough.

Now is the time to start capitalizing on the opportunities to get your firm ready for the second half of the year and even 2010.

Make your strong staff even stronger with a smart hire.