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Why Do Successful Agencies Suddenly Fail?

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We’ve all seen this happen but it’s hard to detect a pattern. When it happens, it’s usually explained away as a consequence of a tough market or a reduction in client budgets. But if you look closely at agencies asserting these platitudes, you’ll see the internal chaos hidden beneath a well-ordered veneer.

Unrecognized Fragility

Entropy is the tendency of an ordered system to move towards disorder if left unattended. We know from the second law of thermodynamics that closed systems devolve towards a state of disorder unless acted upon from the outside. Chaos is the natural equilibrium. All systems behave like this. You have to unceasingly work to maintain them or they’ll fall into disarray.

As a business leader, it’s easy to minimize and brush off the signs of impending entropy. Inevitably, ignoring these signs altogether will invite catastrophe. This unrecognized fragility, especially within once strong yet traditional, generalist agencies is often why many of these agencies have difficulty pinpointing a root cause of their decline.

We see consumers today navigating rapidly changing cultural contexts, societal norms, and emerging technological and social platforms. An analogous revolution is also underway for enduring agencies, media solution groups, and production houses. Each recognizes they must adapt to the fast-changing contexts in which they operate.

Inevitably, we’ll continue to see new competitive entrants arrive from adjacent categories, often with more efficient or specialized capabilities. These new entrants will bring with them new ways of working and subsequently lower prices and greater price transparency. They’ll aim to address client needs in novel ways, make better use of emerging technologies, and hire people with broadly relevant skills. With these new contexts, organizational pivots may be critical to survival. Structure enables strategy; the more adroit observers will preemptively act to ensure their structure is future-proofed for the shifting tide.

Attending to Your Agency’s Service Capability

The agencies attempting to continually operate the same way as they always have done invite failure. To avoid this fate requires an introspective examination: evaluating your processes, assessing your team’s skillset, knowledge, strengths and weaknesses, and scrutinizing the tools and systems that govern your organization and client work. This should lead to treatments that go beyond identifying symptoms, and instead to solving the underlying causes.

This may shed light on the fact that some services and long-standing agency team members are no longer fit for purpose. You shouldn’t expect the same people to be capable of solving the problem who were part of that problem. This is especially true for company’s looking to evolve their service capability or specialized focus to meet the needs of clients and ensure their organizational durability. Addressing this debilitating issue head-on requires a fresh, often outside, perspective to challenge groupthink and operational tunnel vision.

Charting a New Course: A Three Step Framework

1) It Starts at the Top

Although it’s critical to engage staff at all levels, successful change management begins at the top. It needs to be backed by a committed and well-aligned leadership team and CEO. Giving lip service to a changing the status quo isn’t enough; groundwork must be done in advance of the larger organizational pivots to ensure everyone is in agreement, and their role in implementing that change.

The rational and emotional case must also be made. While articulating business-focused strategic objectives are necessary, they won’t connect with frontline employees on an emotional or empathetic level. Skilled change managers make the most of their company’s existing culture, and will identify a means to align business strategy with something more purposeful and consequential. Culture isn’t more important than strategy…it is strategy. Formal and informal solutions must work together.

2) Involve Every Layer

Leadership teams often make the mistake of imagining that if they paint a vision of the agency’s future state, general staff will understand what to do. However, nothing could be further from the truth. Powerpoint slides or bold statements have only so much impact. Sustained change and transformation requires constant communication. Midlevel employees and client-facing people can make or break the success of a change initiative. Communicating a strong message of change shouldn’t just occur at the start of the initiative, it needs to be reiterated throughout rollout.

Midlevel people retain a wealth of insight into the potential fault lines, as well as an acute sense of the logistical and operational hurdles that must be accounted for. When engaged early and often, these key people will ensure successful change is enacted; their resistance or confusion will ensure its failure. Typical of other internal initiatives, their involvement in developing solutions solidifies their feeling of ownership and accountability – which impacts organizational culture and their sense of purpose.

3) Create the New Normal by Resetting Behaviors

It’s not enough to align on a strategic path forward. Daily behaviors, across all staff levels, must reflect the imperative for change. Leaders and managers should define the critical roles and behaviors that are essential for success of the change initiative – and must also live the change by adopting these new or modified behaviors themselves. With leaders telegraphing their own involvement in enacting these changes, general employees will also begin to shift their way of working and believe the initiative is more than just a Band-Aid fix to a persistent problem. Talking about the need for behavioral changes isn’t enough – other formal elements, such as structure, training, and incentives, must also be redesigned to support them. This last step is often the most overlooked.

Resisting Entropy

Inaction is debilitating and will eventually lead to a ‘crumbling’ system (i.e. entropy). My colleague Alex Davison likes to remind me that “the worst place to be is the gap between idea and execution,” and to not to get lost in that gestation period. Paradoxically, agency stability requires constant (yet measured) adaptation. Changes in our operating environment is certain – whether driven by client need, consumer demands, new technologies, and/or policy changes. Change will come.

Agencies cannot leave their suite of service capabilities “unattended” by well-intended generalists, and instead retool and re-organize to keep their strategic and delivery systems efficient and effective. The work required can be arduous, but the need for major change initiatives is only going to become more frequent. Ironically, keeping order and staving off entropy requires a state of constant evolution.

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