2 Causes of Undesirable Agency Performance
Leading An Agency Is Hard
As an agency leader, you’re often faced with the challenge of juggling competing interests. On the one hand, your clients want everything to be “better, faster, and cheaper.” On the other, your employees want the freedom and resources to do great work while enjoying a work/life balance. At the same time, you want to grow a profitable business while ensuring your clients and employees will be cared for — now and in the unpredictable future.
Each party’s desires are entirely reasonable, but that doesn’t make them any easier to provide.
Let’s put the interests of your clients and employees aside for a moment. The agency leaders that I’ve helped have shared that, in general, it’s become increasingly harder to maintain and grow their businesses. My conversation with them usually begins with a nod to the economic environment, increased competition, or more work moving in-house. These external market factors are certainly relevant to the discussion, but they’re not what’s at the crux of their challenges.
What these agency leaders share is a variation of one or both of the following:
“We’re not winning enough of the right kinds of clients.”
“Our quality of work, speed, and culture isn’t what it needs to be.”
They can’t quite pinpoint the exact causes, but they know they’re internal and that something needs to change.
A Pragmatic Solution To Underperformance
Less-than-desirable agency performance commonly stems from two internal sources:
An unfocused or non-existent business strategy
An unstructured or outdated operating model
Your business strategy and operating model are two very different — but very connected — areas of your agency. Your strategy shapes your operating model. Your operating model brings your strategy to life. Together, they make up a system of 5 interconnected parts:
Business Strategy and Operating Principles
Structure and Adaptability
Leadership and Talent Development
Communication and Transparency
Process and Tools
Your Agency’s Business Strategy
A good business strategy will position your agency in a differentiating way, making it easier to attract more of your ideal “right-fit” clients, affording you higher pricing power, and resulting in better win rates for your agency.
There are four key sets of questions that should define an agency’s positioning strategy, which I discuss here.
For more related to agency positioning strategy, read these related posts.
Your Agency’s Operating Model
A good operating model is purposefully designed to facilitate the execution of your agency’s business strategy.
Operating Principles
Operating principles are the most important part of your operating model.
Principles shape your employees’ mindset and behaviors related to their work. They’re different from organizational values, which are a set of beliefs that help to define your culture.
Principles guide your organization in how it operates. Therefore, you should draft them based on external market factors. For example, marketers today expect agencies to deliver work with greater speed and flexibility, so I’ve been helping agencies draft principles that help them operate with more agility at all levels of their organization to meet client expectations.
So, principles unite your people in support of the market’s expectations. They enable you to grow while also maintaining consistency of quality. And they help you scale your agency with less oversight.
For more on using principles for agility in the agency environment, read these related posts.
Structure & Adaptability
The purpose of structure is to guide your people’s day-to-day decisions and actions down a pathway that supports your strategy.
Your structure should thoughtfully organize your people around the different types of creative products your business strategy says your agency will provide. It will enable your entire agency to deliver differentiating value with speed and agility, internally and to clients. It also dictates how authority flows through your structure, leading to how people make decisions across groups and projects.
For a deeper dive into redesigning your agency’s organizational structure, read these related posts.
Leadership & Talent Development
This area of your operating model is about the leadership practices throughout your agency and how you develop and grow your employees.
Supportive leadership styles and employee development are critical for agency growth. If you desire stronger performance for your agency, your leaders need to be self-aware and work to create an environment of psychological safety for your people to do their best work. In my work with agencies, this often means reskilling senior-level people to become less focused on controlling management and more focused on collaboration and mentoring.
At this level of your operating model, the work starts to become more tactical. For example, it includes:
How you draft role descriptions
How you recruit and hire
How you develop team and individual performance indicators
Creating professional development programs
How you provide feedback and recognition
Compensation planning
New employee orientation practices
Continuous learning programs
For more on leadership and talent development, read these related posts.
Process & Tools
This area of your operating model is about designing the ways work will get done at the service and team level. It should focus on creating a system that fosters consistent team alignment, effective collaboration and coordination, and uninterrupted productivity. Some of what this area covers is your:
Scoping practices
Pricing practices
Determining the level of transparency you will provide to clients and employees
Determining how information will be made available throughout your agency
Designing workflows
Establishing meeting rhythms
Determining how you will learn as an organization for continuous improvement and innovation
Determining how you will support remote work
For more on process and tools, read these related posts.
In Summary
Leading an agency is hard, and it isn’t getting any easier. But having a focused business strategy supported by a well-structured operating model removes a great majority of the woes that plague agencies today.
If you know something needs to change within your agency, please reach out for a call.
