Oh... I'm going to be out of the country at the World Championships for 2 weeks.
For those 10 of you out there who read this blog... I'll post more in October.

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What makes a good Strategist?

About twice a month I have someone say to me, "OK, I understand that you're obsessed with an accurate definition of Strategy and agree with you on this... but my real problem is that I can't seem to hire people who actually are any good at Strategy. How can I tell if someone is going to be a good strategist?"

When people ask this question, the answers tend to fall into two camps (both of which are, to be honest, entirely useless).

Stock Answer #1: "You should hire some with a Strategy background and/or an MBA."
Stock Answer #2: "You need to look for someone who is smart, insightful, experienced, analytical and with good communications skills."

The first answer is useless for obvious reasons.... if you're having a hard time figuring out who might be a good strategist you should probably assume that other people are as well, so assuming that being hired for a Strategy position equals skill and ability is, of course, stupid. And having an MBA is no guarantee of anything (other than the fact that they went to the trouble of getting an MBA).

The second answer is equally useless but for slightly less obvious reasons... in essence you're describing a good employee for a consulting firm. In other words... you're describing the absolute lowest common denominator for all your hires.


So what is the "right answer?"

People (as a general rule) like simple solutions and simple answers. More accurately... we like single answers. What I mean by this is that we prefer to see single causes for everything. If your foot is hurting it must be the new shoes you bought. We don't like complicated answers that involve multiple variables and elements that all interact with and are interdependent upon each other. We don't like to think that our foot might be hurting because the combination of walking on the beach barefoot for an hour and a chronic small knee instability problem strained some connective tissue which didn't start hurting until we put on new shoes that were not broken in and had high arch support.

What is my point?

It's two-fold.

First... the answer to the question is going to be unsatisfying as it is complicated and interconnected.
Second... it's the sort of answer that good strategists are good at coming up with.

Most people want a satisfying story.
We're going to introduce a new product. We believe in this product and are passionate about both it and our customers. Because of this, our customers are going to be passionate about the product. We need to communicate these passions to our customers and create this bond and then we're going to sell enormous numbers of product and become incredibly rich and successful.
That's a satisfying story.
But it's not real insight. And it's not a Strategy.

A good strategist isn't interested in a satisfying story. They're interested in meaning and in answers. More than that... they're interested in questions and anomalies.

If we're presented with a whole bunch of data we tend to look for a pattern within the data. That's human nature. We look for the way it fits together. Along the way, we tend to discard data (or at least discredit or reinterpret data) that conflicts with the emerging pattern.

People who are truly bad at Strategy start with the desired pattern and force a fit.
People who are mediocre at Strategy rush the emergence of a pattern or seize upon a potential pattern and force a fit.

Good strategists become obsessed not with the pattern - but with the anomalies.
Good strategists see these anomalies as the key clues to the truth behind the data.

This is why good strategists are always looking for more data and more time. It's why they are constantly reading, constantly watching TV... constantly seeking out input and data. The more data they have, the more likely they are to be able to understand where the anomalies are leading them.

Good strategists are incredibly curious and questioning.
They are incredibly focused while having a ridiculously wide range of interests.

Good strategists are "fast processors" who frustrate you by saying they need more time.
They often (when experienced) know the answer well before they are willing to state it (and constantly look to invalidate their assumptions).

So how do you know who is going to be a good strategist?
Have a good strategist interview them.
Sorry... it's the only way to shave the odds in your favor.

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Migrating Upstream

The generally accepted truism is that it is always easier to migrate downstream than upstream. It's easier for a high-touch boutique design firm to start offering production/execution/volume services than for a job-shop to start selling strategic insight.

But it doesn't seem to stop folks from trying to fight against the current.

I've mentioned in the past that there is (in my opinion) an enormous opportunity coming as a result of the sustained sequential increases in interactive spends. As companies spend more and more money in this space... they're going to want (and need) more than order-takers. They are going to demand not just tactical execution but also strategic planning and vision.

Right now there are a very small number of (mostly small) firms out there that are both capable of delivering these services well and consistently and that are actively marketing such services. These firms simply don't have the bandwidth to satisfy more than a tiny fraction of the demand.

There are, of course, a large number of mid to large sized agencies that actively sell this expertise within their offerings -- but fail to deliver on the promise. Then again, this is, has been and always will be the norm in this industry.

And now it seems like I'm not the only one who has noticed this opportunity. Organic has announced that they are going to create a dedicated strategy practice within the company. While it is nice to see some validation of my theory - I have to wonder if this is going to be successful for Organic. At this point in time, the brand is firmly cemented in the tactical execution space - and it sounds as if Organic is not going to go outside and hire new talent to staff this practice but merely re-purpose existing headcount. So the company is planning to try and migrate upstream without re-branding or adding marketable new talent. And it doesn't seem like they're going to create this as its own specialized brand or business unit - which means that it won't have that PR leverage, and will have some significant cultural issues - especially around metrics. Doing this well tends to require a much higher tolerance than the company has been used to for high fully burdened costs per employee and low utilization numbers (and instead a focus on high revenues per billable employee per year).

I can understand why Organic would want to be in this space. Especially given their stated aim or selling this practice to companies who are currently not clients for Organic's execution services. But the challenges are going to be significant.

1 - Convincing clients that Organic can, in fact, offer these services (given the brand and the talent) is non-trivial.
2 - Protecting against the appearance (and in fact the reality) of this practice turning into nothing more than a paid business development arm is going to be difficult.
3 - Creating a practice with profoundly different metrics and management methods than the current Organic culture supports will be, let's just say, interesting.


Delivering on the promise (given all the above as well as the general challenges of doing true strategy work) is going to be very, very hard. And if you can't deliver on the promise you can't charge the rates and if you can't charge the rates you can't retain the talent and if you can't retain the talent you can't deliver on the promise.

I still think there is a huge opportunity here. And it seems like I'm not alone.
I'm just not buying that Organic can in this case be one of the rare examples of successfully migrating upstream.

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New Things, New/Old Places

Well... it's been an incredible experience here in Portland. It's a great town... and I'm going to miss it.

But I'm moving back to San Francisco.

I've accepted a position with Method.
As has Valerie.
It's really exciting. I've always been a big fan of the people, the work and the vision of the company. I've watched the company grow from a small scrappy studio into where it is now - and now I'm going to get a chance to participate in taking it into the future. Very cool.
There are big plans and big dreams for Method. That's one of the reasons I took the gig. It's one thing to be good people with great talent who do wonderful work. But when you combine that with ambitious goals and a big vision... that's damn hard to argue with.

All I have to say is... watch out world.

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perspective

Spending the last few months "unemployed" has enabled me to regain some lost perspective. When you work full-time within a single company, you end up with a narrowed point of view. That, sadly, is inevitable. Of course, one of the nice things about working in a services business (and the main reason that I continue to be attracted to this industry) is that you get "vicarious perspective" as a result of working with clients. As a result, the narrowing is less extreme (and instead takes the form of "distortion".

While I've technically been "unemployed" - I've spent a fair amount of time doing independent consulting, and a fair amount of time looking for my next job. This combination has enabled me to notice some things that I'm going to try and keep hold of (and will try to communicate here as well).

1 - Strategy is a more dangerous and loaded word than Attractive. Everyone knows what Strategy means. Unfortunately for those of us who make our livings performing Strategy related services... everyone's definition of Strategy is different. This combination of confidence in your understanding and wild divergence of this understanding makes our jobs really, really difficult. For some people I've talked to, Strategy is Tactics (or more accurately Tactical Planning). For others it's Account Planning. For some it's anything they deem "Strategic" to the business. And the list goes on. As a result, I've had people ask me to do a "Strategy Consulting Project" with a two day timeline. I've had a ton of people ask me why they would ever need to hire a Strategy Consultant -- and almost all of them have financial and metrics goals with no objectives behind them and no plan for how to achieve them around them. Everyone out there is an expert in Strategy... and that makes trying to make a living by delivering well-founded, feasible and intelligent strategic direction very, very hard.

2 - Interactive is valuable. Valuable is scary. Therefore Interactive is scary. I've spent a lot of time talking with execs at advertising and marketing firms and their parent holding companies. They all are (now) aware that they cannot ignore the interactive space. They're in a panic and are desperate to be seen as reacting to this new threat/opportunity. But they're very, very uncomfortable with the people with the expertise. We're a threat within the organization - we represent a threat to the organization. An enormous amount of time is spent in these conversations to make it clear that we are weird and different. The more like them we try to behave, the more conflicted they become.

3 - Words have Power. While the truth is that Marketing is Marketing and Design is Design and Talent is Talent and Clients are Clients... there actually are some differences between the old school firms and the new school (read "Interactive") firms. These are largely cultural and demographic in nature. But there is an artifact of this cultural and demographic difference that makes things very challenging when it comes to bridging the gap between the two schools. Words. The language spoken by people within these two camps is fundamentally different. I actually spent a little while doing a consulting gig where I, in essence, served as a translator between folks in management of an interactive group and folks in management of their parent traditional ad firm. They each thought there were irreconcilable differences between the companies - and in the end it turned out they both wanted the same thing... but were expressing it in different ways. In fact, they were each expressing the same goal using language that truly terrified the other. If, in the end, we're going to see integration of the two camps into a "future offering" then we need to develop a common shared language and understanding. This is going to be vital.

4 - Interactive Firms are not Practical enough. The vast majority of Interactive Firms are still either Idealistic or Cynical. Mature agencies are, as a general rule, far far more pragmatic. Until Interactive Firms become more practical - we will continue to be treated as strange children from Lord of the Flies.


Oh... and on a personal note, I'll probably be making a move to another full time job in the next month. I've talked to a lot of folks and I'm starting to narrow the field. There are some good opportunities out there. Consulting is fun and all... but it's rather lonely. More as things come to fruition.

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Demographics - Management

Twice in the last month I've had conversations around the challenges of retaining talent in this industry.

Obviously, part of the problem is the limited (or perhaps shallow) talent pool combined with the exploding demand for that talent.

In talking with David Lai from Hello Design, one thing we came to agreement on was that there is only so much you can do when faced with this particular challenge at this particular moment in time. When it comes right down to it - everyone leaves. Given this, and given the situation we face, you just need to accept this fact. Instead of treating turnover as a shocking disaster, you need to build relationships with the talent you have - and focus on helping them become more experienced, better and more talented. They can then focus on doing the best they can do for the company and the clients - and their career will take care of itself. In the meantime, you need to develop redundancy to avoid single points of failure - and develop contingency plans for all key employees of the firm. This, of course, means carrying more bench - but if there was ever a time you could afford to do so this is it!

I'm not saying you shouldn't try to keep your good talent - god forbid! Fight for them - but at the same time be prepared for them leaving and make it as pain-free for everyone involved as you possibly can.

At the same time... there is another element to the retention challenge. As a great article in Fast Company recently pointed out, there are profound differences in retaining (and managing) the younger demographic that tends to be the Talent in our organizations.

Brian Rekassis from Goodness Manufacturing pointed this article out to me after we had a long talk about creating Culture, acquiring and retaining Talent and the challenges associated with building a business.

Both Brian and I commented on how our resumes look like we have "career ADD". There are few if any jobs on there with tenures longer than a few years - and the jobs seem to have no logical flow; jumping all over the career map.

This is something that is common with a lot of the folks I know - and I think it is an artifact of both demographics and industry.

"Their world has proven that nothing is a guarantee - from nationwide layoffs to war to soaring divorce rates, they have decided that there's not a lot you can count on. As a result they are not interested in promotion plans for five years from now." -- Fast Company

Given this sort of short-term focus, retaining Talent in our industry becomes even more significant. The combination of competitive pressure and demographic attitudes is non-trivial for a business owner or executive in this industry. So what do we do?

Well... first, as noted above, we need to accept that everyone leaves. And we need to make it clear and explicit with our employees that we know this, and that we're going to invest in their Talent in exchange for them investing their Talent in our business. But there is a great section in the Fast Company article that, to me, points out the path we need to all follow as managers.

"They have great respect for leaders and loyalty. But no, as a rule they don't respect authority "just because." For the younger generations, every ounce of loyalty and respect must be earned. But when it is earned, it is given fiercely." -- Fast Company

This is one of the more true statements I've read in a long time - and it clearly points to one of the failings in our industry (and a huge challenge facing this culture as a whole).

We, as leaders, need to understand that each and every day we go to work to prove ourselves to our employees. We need to understand that we must earn and continue to earn the loyalty and respect of our employees. Our past successes, our gray hairs, our war stories and networks of highly-leveragable contacts and our awards and kudos mean nothing - they are the past.

If we can earn the loyalty of the Talent that we, after all, make our livings from - then we will be able to retain this Talent longer.

And then we will be successful.

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A Good Time to be Smart (and in our business)

So I've joked a couple times in the last 9 months about suddenly feeling "valuable" again.
And I've shared my projections on valuations for the mid-sized independent (talent-driven) interactive shops.

It seems that now we're seeing measurable confirmation of both these comments.

If you've been working in "interactive" or "digital" for more than 5 years and have a somewhat senior role - you should be smiling when you think about your career growth options.
If you've been working in "interactive" or "digital for more than 10 years and have a senior/executive role - congratulations, you just won the lottery.

The very large holding companies and the large agencies are getting desperate - and they're discovering just how rare experienced talent is. They're realizing how far behind they are - and how at risk they are.

Brilliant twisted logic from Tom Carroll, Worldwide President TBWA:

"I don't think we're behind, but we're not ahead. So therefore we're behind. We're probably like everybody else, so we've got to work twice as hard to get ahead."

And, as noted before - this shift is NOT being driven by the Agencies. In fact, the desperation comes from the fact that the Agencies are falling behind on this. The shift is being driven by Consumers - and demanded by Brands... and the Agencies are in last place.

Agencies have spent the last 40 years getting fat off a control-relationship that put them in a leadership role, with the Brands in a secondary role and the Consumer a passive tertiary recipient. The whole package has been flipped on its head... and we're getting to see the first hints as to which firms are going to adapt (and which are going to go the way of the cigarette TV spot.

Of course... the proven model for Agencies (and even more so for the big holding companies) when faced with a challenge like this is to acquire.

"We are building creative capability organically. And to accelerate this we're interested in acquiring proven creative digital talent startups because client demand is growing fast and we want to be ahead." -- Kevin Richards, CEO Worldwide - Saatchi

What does this mean?
Well... as predicted -- if you own an independent mid-sized digital or interactive firm with a concentration of talent and good clients... time to start thinking about your future. Do you want to continue to do whatever you want to do? Or do you want to get rich? Is it about the work and the freedom -- or is it about the ducats? 'Cause right now, the traditional "1.2x to 2x trailing 12 months' revenues" valuation model for your firm is not relevant.

This is one of those weird moments in time (read "1999 all over again") where the base financial logic behind a services business valuation is and can be ignored. Acquisitions are not being done for financial reasons - but rather for competitive reasons --- and out of desperation.

How long will this last?
I'm projecting a continued sense of desperation and intense competition and even feeding frenzy for the next 6 to 9 months.

So to sum up...

- If you're talented and experienced and senior in the space... you're very valuable (right now and at this moment in time).
- If you're an owner or major shareholder or investor in a mid-sized firm with a concentration of talent and good clients in this space... I'd suggest an immediate discussion about your goals and a good talk to a lawyer about potential acquisition negotiations.
- If you're an owner or major shareholder or investor in a mid-sized firm without a concentration of talent... Time to raid the small shops in your area. Spend whatever it takes (fiscal discipline is pointless right now). Get their talent.
- If you're an owner of a small firm with a concentration of talent and good clients... you need to immediately consider merging with one or two other small shops or you're going to start losing your talent quickly (you cannot compete with either the mid-sized shops or the big Agencies and holding companies).
- If you're talented and experienced and senior and are an owner or major shareholder or investor in a mid-sized firm with a concentration of talent... feel free to drop me a line for suggestions on who you should have manage your riches come 12 months from now.

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