There are three types of growth that independent agencies pursue: lifestyle (ie none really); steady growth; fast growth. Lifestyle is fine if that’s the kind of thing that floats your boat. Steady growth is nice but can feel pretty painful (two steps forward, one step back). Fast growth – well – that is more interesting.
Most independent agencies I know are going down the steady growth route and as a result progress can be slow. One thing that is seldom talked about by founders is fast growth strategies.
Consistently in our independent agency and digital census reports, it is clear that the companies that do the best are the ones that aim to grow fast. As each year goes by, they not only retain a bigger slice of the pie, but they grow their slice faster.
That is why the middle route of slow growth is difficult. The agencies pursuing this approach are really up against it in the face of the focused fast-growth competitors.
So I am surprised that I don’t hear more from agencies about ‘scaling-up’ which is a term spawned in the tech world but is now adopted more widely by any ambitious business.
Even the government has realised that it’s not all about supporting startups, but that what happens to companies after they have been trading for a while and want to push on to the next level deserves support and recognition.
Because The Drum is scaling-up, I am always-on with looking for education and resources around how to scale.
A couple of months ago, I saw Paul Fifield speak at an event about scaling-up tech businesses. I scribbled pages of notes and have been implementing several of the ideas in the intervening time.
From very early in his presentation I had in my mind that the content he was sharing would be of value to agency leaders and so I persuaded Paul to come along and do a keynote slot at our forthcoming Agency Acceleration Day event.
Paul isn’t from an agency background, but sometimes the best lessons come from outside our normal ways of thinking and doing.
He was co-founder of technology company Ceros (which has just been valued at $150M) and then went on to the role of chief revenue officer at UNiDAYS where he led revenue growth from $2m to $40m in less than three years and built a 300 person team.
Since I met him he has taken on a new role as UK managing director of Openpay, and he is a mentor for Techstars, the Mayor of London Business Growth Programme, and PWC’s Scale-Up Programme. I’m interested to know how the learnings from tech growth can be applied to the agency world.
I asked Paul what he thinks are the issues that agency leaders should consider when deciding whether and how to scale. He said: “The first question is whether it is actually appropriate to consider scaling at the speeds often associated with the tech industry. ‘Hyper-scaling’ is a whole different ball game from normal growth and requires a totally new way of thinking that can even be foreign to some tech execs.
“Codification of the business is key – your mission, vision, culture and values. Abundance of capital is essential, as is talent lifecycle planning, your communications architecture, org structures and organisational rhythm.”
He has a strong view on the use of share options to impact positively on scale, saying: “I believe that all staff should have share options and that options should be retained by all leavers. This gets true buy-in and avoids non-healthy retention.”
There is much to be learned from how the tech companies have built so much value so quickly and any founder worth their salt is looking at lots of different models which can secure and enhance their offering to brands.
For the independent agency operating today, with massive changes in the market and the more established big players having to rethink their place in the market, there has never been a better time for independent agencies to go for the kind of growth that could see them build a global business.
Diane Young is chief executive and co-founder of The Drum
If you are an ambitious agency leader, you can learn much more from Paul at The Drum’s Agency Acceleration Day on 28 March in London. Find out more.