Sunday, 21 February 2016

How to run a digital agency

This post originally appeared on Medium in April 2015.

Considering how many digital agencies there are in the world, there’s a surprising shortage of advice for how to run one successfully. Which is surprising when you think about it - for such a relatively young sector, undergoing such constant and dramatic change (especially in recent years), you’d think there’d be more words of wisdom out there in the digital space. 

I’ve just completed a three year tenure launching and running the Sydney office for DT, a terrific Australian digital agency. So I thought I’d jot down a few notes on things I’ve learned, things I wish I’d done differently, and things I wish I’d been warned about beforehand. You might think some are obvious, but for me their relevance and application became more apparent through experience - so they’re listed here. You be the judge.

Let’s get started.

15/40/100

I’ve heard this from a few people, that a business goes through a significant period of pain when it breaks through the 15 person threshold, then again at 40 and 100. I inherited a business of 20 people, so I never experienced the 15 person threshold, but the 40 person threshold hit us like a truck. I’ve tried to figure out why, and I believe there are a few factors at play. Not only do these numbers represent the thresholds at which the reporting structures tend to increase from 2 to 3 to 4 levels, but also the people involved change from doers, to managers, to leaders, under significant pressure. The leader has to change too. This happens in stages across different parts of the business, with some people stretched to breaking point by the increased volume of work and the change in their role. Tempers fray, people leave, and it can take months to get through.

Is it worth it? Maybe. We found economies of scale kicking in once we made it through, with people being better able to take holiday and training (and less late nights) because high quality deputies were in place to hold the fort. We didn’t quite make it to 100 people during my tenure, but experience elsewhere tells me that the business would become more sustainable as a result once we made it through that threshold too. That said, margins were affected by having a higher percentage of well paid leaders who weren’t 100% billable rather than highly recoverable doers. Getting the balance right is a challenge, to put it mildly.

What can you do to limit the impact? Part of the answer lies in recognising that, just because someone is a specialist in a particular area, it doesn’t necessarily make them a natural manager or leader of similar people. Our industry has grown so quickly that relatively inexperienced people have been pushed into positions of responsibility, with mixed results. The best thing a leader can do is recognise that this transition into manager and then leader can’t be taken for granted, and extra support is needed during this time.

Incidentally, I’ve now got a whole lot more respect for independent leaders who refuse to grow their agency above a certain size.

Manage your energy

I’ll go on the record here and say I’m bad at this! I used to check my email all evening, send replies (setting a bad expectation with others), write proposals at the weekend, even answer calls while on holiday. It’s unsustainable and makes you worse at your job - it’s that simple. What’s worse, it damages your health and your family relationships. My advice? Stop checking email after 7pm and at weekends. Tell others that you’re doing this - it sets the tone for the business. Take holidays out of town and resist the urge to check in. And take up hobbies. Unplug! Spend time with your family! And come back to work well rested and ready to take on whatever comes next.

What kind of leader are you?

I must’ve asked myself this question a hundred times over the past three years. It’s easy to recount the obvious areas of focus - setting a clear and well communicated strategy, making a plan and following through, building a great leadership team around you, work on the business, not in the business. etc., etc. - but other elements are more esoteric, less easy to grasp, define and achieve. The truth is that leadership means different things to different people, especially amongst the Generation Y talent populating digital agencies, and no one person can be great at all of them. Identifying your shortcomings and working on them - really working on them - is the hardest part of leadership. Having a style that can adapt to different circumstances and people is highly valuable. What got you here won’t get you there.

Give me something to believe in

The team I inherited three years ago had been beaten into submission. They were the passive recipients of decisions made elsewhere, with deadlines, scope and cost imposed upon them without consultation. Failure was rife and systemic. Simply introducing the DT values and brand into the equation made a big difference to some, but it was important for me to also declare my own values - if you have shared beliefs, people are more likely to have your back when the chips are down. My values revolve around quality, a drum I kept on banging. This resonated with some, others decided to leave, and that’s OK. 

I kept coming back to Simon Sinek’s excellent TED talk, but when I first watched this I didn’t appreciate that it applies to everything you want to do - not just company strategy, but project work, individual mentoring and direction, even personal relationships. Remember a good sign of strong leadership is how people behave when you’re not present. If they're aligned with a core strategy and set of values and beliefs, there’s a far greater chance of success. And if you can engineer things so all individuals in the business formally agree (say, through career development plans) how the business strategy aligns with their job and career goals, then you’re in a great place.

It’s all about relationships

Perhaps another truism, but this really is a question of nuance. Before leading an agency, I understood how important client relationships were in the completion of work, or running of accounts, but this changes when you’re leading an agency. First it’s harder to establish relationships with clients because you’re not involved in the day to day (and nothing builds relationships like working together on a project), and inevitably you need to focus on finding new clients, but also the relationship needs to be built well in advance of problems occurring. You need trust in place before you can talk candidly about the problem and solve it together. Relationships need to be nurtured, constantly, internally as well as externally.

Emotional connections

At one point in my tenure I was informed that some of my direct reports found my style a bit too direct. They were right - I had to work on this. And the advice I received was to work on my emotional connection with them. Take the time to get to know them better. And importantly, show some vulnerability. What I learned though was that there was good and bad vulnerability. An example of good vulnerability is showing how your success is intrinsically linked with theirs - that you need them to do a good job or you’ll fail. 

You can describe what this means in terms of likely repercussions for you. But be careful, people still need a boss who stands strong and remains positive when things go bad - not one crying in the corner. That kind of vulnerability is incredibly destructive. I’ve spent a fair amount of time researching emotional intelligence (another area I’m working on), and have found it very helpful. It applies 360º across your whole reporting line (up, down, across), and worth encouraging in both directions AND through your direct reports to the next level down if you have one. Here’s a good place to start: https://hbr.org/2004/01/what-makes-a-leader

Shut the hell up

Oh, this is an obvious one - but so true. When you’re running an agency you haven’t got time to listen to people give long winded explanations and descriptions - it’s so tempting to jump in and give them the answer. But this is a false time economy. If people realise that they’ve been listened to, they’re far more likely to listen back. And learn. And draw the right conclusions themselves, reducing the prospect that they need you again. Plus, it’s just good manners. So if you’re struggling to get something done on a tight deadline, tuck yourself away and get it done - but make sure this is an exception to the rule. Your role as a leader is to be available.

Ask the right questions

I was lucky enough to have a great leadership coach, and he imparted all sorts of useful knowledge. Perhaps one of the best soundbites was that “90% of leadership is asking the right questions”. This ties into the prior item in some respects - rather than solving people’s problems, your goal is to help them figure out solutions themselves. And if you can do this in a group setting, you’ll come up with exponentially better outcomes than if you figured it out on your own.

Hope for the best, plan for the worst - always

Even when things seem to be going well, assume that something, somewhere is hiding the truth. No-one else will. In our case we were growing quickly and we seemed to be coping with extreme change pretty well, but later we found that things weren’t quite as rosy as they seemed. They rarely are.

And if you look and still can’t find the problem, you haven’t lost a damn thing. Go have a drink.

Work that pipeline

In good times and bad. Every agency I’ve worked at has had difficulty managing the peaks and troughs of business. And it seemed to me that, the faster we were growing, the more tumultuous the pendulum swings. The important message though is that, when times are good, you know what's coming next, and you might be the only person in the business with the time and courage to focus on it. You can’t afford to wait for the pendulum to swing back. And even though I knew this to the case, I still failed to do it. Success can be incredibly seductive, especially when it comes off the back of a sustained period of very hard work.

Track commitments

It’s fundamental for you to set the tone for how commitments are managed within the organisation. People have to make their own commitments, of course, but then you need a system for tracking them and holding people to account. If you want the business to be efficient, people need to depend on each other’s commitments. The standard you walk by will be the standard everyone accepts.

The camera is always rolling

Lorks, I learned this the hard way. As a leader, your behaviour is amplified 100x across the business, whether it’s good or bad. One night after a couple of drinks I made an offhand remark teasing a colleague intended as a joke. I remain convinced that, if I hadn’t been a leader, it would’ve been laughed off. But it came back and bit me in my 360º review that I was insensitive. I learned my lesson - always best to work on the premise that people are extra sensitive to the words and behaviours of a leader.

Actually, that’s one of the principle reasons I haven’t been blogging much since arriving in Australia. It isn’t so much that I haven’t had much to say (hopefully you’ll see from this blog post that I’ve had a lot to think - and write - about). It’s more a case that the need to vet content to make sure it can’t be misconstrued is time consuming, tedious, and ultimately very frustrating. I now have a lot more sympathy for leaders who accidentally say what’s on their mind and get into trouble for it. Unless, y’know, they’re racist assholes or something. Keeping the mask perfect is a proper pain.

Manage up

Even if you’re the leader of the agency, chances are you’ve got someone to report to. In previous roles I had gotten into the habit of doing everything possible to solve a problem before presenting the result as an unfortunate fait accompli. But I learned over time that it’s much better to present options because it forces you to find them. This also builds trust.

Quality is everything

As I mentioned before, I believe that shipping a quality product that delivers against strategic goals is the ultimate test of a digital agency. Word will get around if you deliver a poor product, and rightly so. Plus demanding a high quality outcome is a great way to attract and retain the talent that can actually delivery it. The best people want to contribute to something they can be proud of, and this isn’t going to happen unless it’s a shared ambition for the team and the agency.

I like to describe this as focusing on outcomes, not outputs. The best people will want to know how their work will impact the client and their business. The worst people will deliver a set of wireframes or some code and consider the job done. Hire the former, change the latter - fast.

Don't stop believin'

Running a digital agency is easily the hardest, most nuanced job I’ve ever done. At first I thought there were too many problems too far beyond my control, and it took time to understand that the methods I’d learned in previous roles weren’t enough for this one. Giving out orders wasn’t going to cut it. Fixing problems myself was unsustainable. I had no idea what I didn’t know when I started. But whenever things weren’t going as planned, I leaned hard on the advice of Chris Savage (COO for DT’s holding company, STW). He channeled Walt Disney, who said “The only difference been winning and losing is most often not quitting”. Back yourself. You wouldn’t have got the job if you weren’t qualified. And like every business leader on the frickin’ planet, you’re figuring it out as you go along - and that’s OK. Keep your chin up, and keep going! “If you can meet with Triumph and Disaster, and treat those two impostors just the same…you’ll be running a damn fine digital agency, my Son!" 

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