In Part I of this series, we introduced the idea that many digital agencies benefitted from a growth-friendly economic environment over the previous decade, but because revenues and profits were dependably growing, they never felt the need to optimize performance. Now facing economic headwinds, agencies need to develop operational savvy. Part I covered five Building for Scale tenets focused on financial and operational best practices. Part II addresses five Building for Culture tenets: the changes to how business is conducted that provide organizational durability.
Agency DNA vs. Agency Culture
When we hear about agency culture, we typically associate it with how the company treats its employees, its ESG positions, or whether the organization is “innovative” or “data-driven.” We might more accurately call our focus here Agency DNA: the intrinsic habits and traits that infuse everything a company does to maximize capabilities and longevity. Agency DNA is solely for internal consumption.
Building for Culture: Five Organizational Imperatives
1. Focus on the Doable
Agencies, by their wonderful nature, tend to over-engineer or pursue grandiose solutions, so that by the time they’re implemented, the negative implications have already arrived and the agency is facing even more difficult decisions. A decent improvement in production is far more useful than an even better one still in development.
The path to improvement and organizational sustainability is through the rapid implementation of continuous improvements rather than moonshot overhauls. As veterans of several business turnarounds, we cannot stress this enough.
2. Know Your Future (With Forecasts)
What was once acceptable as a loose approximation within a sales funnel now becomes a critical path to the health and long-term viability of the agency. Good forecasts provide a window into the future state of the business and give management the necessary time to make adjustments. If sales are looking weak, hiring can be slowed or sales efforts increased, but only if leadership knows early enough.
An unforeseen drop in revenue levels could be catastrophic for companies slow to realize their world has changed. The forecast is not a prediction; it is a decision-making tool that buys time.
3. Be Resilient
Operational resilience must be the goal when entering a period of uncertainty. Acting proactively is critical versus being forced to react to losses. Cost reductions: reducing overhead, eliminating the “nice to haves,” and improving team efficiency, are all critical considerations. But the lasting value is in building longevity through automation, market differentiation, and focused offerings.
The concept of “make change before change makes you” is a necessity, valued in the long term while frequently painful in the short term. Resilience is critical to ensure the value that has been built is ultimately retained through more difficult economic times.
4. Change the Mechanics of the Bench
For the last several years, a significant limiter on growth has been the scarcity of talent. The strategy for building and managing a bench is now quite different. For those with a remote workforce, the flexibility of not being tied to a high-cost geography has provided a competitive advantage. Fractional talent: global in footprint with varying cost structures, requires a change in philosophy across Recruiting, HR, Operations, Finance, and Project Management.
Flexibility in bench structure, based on Bravery Group’s experience, is critical to weathering the unknowns of the current environment. Critically, “managing a bench” means forecasting bench time over the next few weeks and actively doing something about it, because bench time is a perishable good that, if only known in hindsight, represents wasted opportunity.
5. Build a “Yes, and…” Culture
Soft cultures create significant challenges. As much as leaders want to be liked, running a business demands fiduciary responsibility as the highest priority. Building a performance culture that understands the critical aspect of running an effective and efficient business is key to navigating uncertainty.
The “Yes, and…” construct facilitates insightful solutions by removing the inertia of leaders who refuse to accept the need for change. Having leaders who remove personal biases and adhere to a common objective, while focusing on the positive nature of the “and,” guides decision-making and creates the collaborative problem-solving that difficult economic times inevitably require.
For agencies entering this new economic reality, it’s time to seek counsel, whether from a board, external advisors, or leaders who have served in senior roles during previous times of uncertainty. Relying on intuition built entirely during the salad days is not a strategy for what comes next.