Management consulting firms want to move into the creative process, and creative agencies want to move into management consulting. It seems that everyone wants to swim upstream towards the boardroom and consult on innovation, customer experience and design thinking. The widely held theory is that there are good margins in this type of work (and let’s be honest, it is sexy as hell). But what no one really talks about is that the high-end strategy work is actually important because it leads onto the multi-million dollar implementation projects that secretly feed the biggest global agencies
Over the years, I’ve worked in several of the grey areas between management consulting, advertising, and design thinking so I’ve seen some of these macro industry changes first hand. The toughest part of my career has always been finding the chink in a client’s armour that lets us get close enough to the boardroom to ask the really tough questions. It almost doesn’t matter what the starting point is for a project when your real goal is to get to the deeper issues inside a business. With all these shifting agency services, it’s hard for clients to know who to turn to these days for advice on big problems.
Great consulting always been about getting to the really gritty questions beneath the surface. Personally, I want to know why a company exists in the first place, who they care about, where they want to be in five years time and how they plan on putting a dent in the universe. Traditionally, management consultancies have held the monopoly on long term strategic planning. But that grip is rapidly crumbling. Therefore, when it comes to the agencies of the future, I’m interested in the question of:
Who will be the McKinsey of the next generation?
There are lots of interesting arguments about whether the best core skill-set for this type of work comes from technology, business or design. The global IT consultancies like IBM and even the accounting firms want to get into the innovation game as well.
But the bigger issue is that from a client’s perspective these skill-sets are looking more and more similar. I usually refer to this cross-functional type of work as innovation consulting because it reflects the modern mindsets of lean startup, agile software development and user-centred design.
The global management consulting firms like McKinsey, Bain and BCG have the scale to partner with giant clients to do big global “digital transformation” programmes and see those programmes through for the three to five years that they take to implement. Likewise, the giant advertising agencies (generally tucked inside WPP or Publicis Group) such as Grey, Ogilvy and BBDO are all big enough to throw their weight behind big multi-country, multi-year projects. These two sets of industry titans have their eyes on each other.
The giant management consultancies and global networked advertising agencies are having to fight hard to manoeuvre for these new revenue streams in design thinking and innovation consulting. I’ve noticed some common strategies that they are both adopting to compete on this new battlefield.
1. Growth Model: Acqui-hire
The latest way of getting into innovation consulting is to acquire a small agency doing the opposite of whatever it is that the acquirer does and bolting them onto the mothership. This called an “acqui-hire because it’s an acquisition for the purpose of hiring new staff.
If it’s handled well, an acquihire can be an awesome way of hitting the ground running with a strong team and good momentum. But more often than not, the shiny new team is soon gobbled up and lost inside the bureaucracy of the host organism.
- On the management consulting side: Deloitte have purchased and then absorbed several web design firms into Deloitte Digital (along with a more recent acquisition of Michael Porter’s Monitor Group) and Accenture have bought service design firm Fjord. Here in New Zealand, PWC acquired design thinking firm Optimal Usability to create the seed for what is now known as PWC Digital.
- On the advertising agency side: (from what I’ve heard), innovation agency The Social Partners became a productive part of (WPP owned) Grey pretty much from day one. Both WPP and Publicis/Omnicom have been on social media and digital agency buying sprees in the last five years or so with even big fish like AKQA being gobbled up by WPP. So far the the ad agencies seem to have been winning the acquisition game.
2. Growth Model: Lone Wolf
Another approach is to hire a new leader from outside and let them build an internal team themselves. This takes longer than an acquihire. The advantage is that the lone captain can gradually build a motley crew of rogues and pirates from both inside and outside the mothership who are just tough enough to keep the flame alive.
Hiring a lone wolf looks good in BusinessWeek, PR Week or Marketing Week because the agency can post a photo of their new Chief Innovation Officer standing in front of a brick wall wearing a black t-shirt and looking “innovative”. Appointing a heavy hitter looks good in front of clients and the press. By contrast, acquiring a small consultancy is messier to explain to clients and industry commentators.
- On the management consulting side: BCG, McKinsey and Bain have all been appointing senior partners to manage their digital innovation and design thinking capabilities but none have yet emerged as real heavy hitters with genuine thought leadership and client impact.
Inside the advertising agency networks: LBI have appointed an Organisational Design leader, Ogilvy have established a stealth innovation consulting division, Wolff Olins have been getting into Lean Branding, and BBH have the new Black Sheep Fund. My personal favourite of the lone wolves is Tom Goodwin who is the Head of Innovation at Zenith Media in New York. No one is quite sure what he actually does for a living but he’s very vocal on LinkedIn and he seems to attract the attention of a lot of in-house marketers who may well want to hire Zenith for media planning.
No matter whether you choose to buy a small firm or build your own innovation team, there several roadblocks to making it work in practice.
1. Growth Issue: Innovation is a team sport
The downside to acquiring a small firm or hiring a lone genius from outside is that one or two new people don’t magically create an innovation culture inside a global professional services business with long-established norms and structures. So suddenly the mothership’s HR team has to learn how to hire new people with new skills and professional backgrounds:
- The management consultancies are now trying to hire pure-play creative people. But they are finding it surprisingly hard to evaluate the creative skill set and to make use of those people once they’re part of the team. It turns out that consistently great creativity requires a supportive eco-system.
- Meanwhile, the advertising agencies are now hiring pure-play business analysts. But they’re finding it hard to evaluate the analytical skill sets and to make use of those new people once they’re hired. It turns out that great analytical thinking also requires a supportive eco-system.
It turns out that creativity really is a team sport, especially the art of solving client problems and helping encourage a client to become more innovative and user centred. When a project gets tough, you need a mix of different skills to get things done.
2. Growth Issue: Building an innovation consulting team of both specialists and generalists
Building an innovation consulting capability inside an agency requires a daunting mix of specialist skills. But it also requires a reasonable quota of generalists to play the role of the diplomat. Acting like a designer when the client is being too analytical and acting like a business person when the client is being too vague. These sorts of generalists bring balance. A good innovation team needs a healthy mix of specialists and generalists.
Specialists: Hacker, Hustler & Designer
The best way to understand how to build a team to advise clients on innovation is to look at how startups build an agile team with constrained resources. To bring a product to life in the startup world you need a hacker, a hustler and a designer. Because every product needs a mix of technology, business and design.
There is a ying and yang balance to innovation. A great design concept needs feasibility testing and a rigorous business model. A great business strategy needs emotional resonance from user-centred design. Both business and design also need technology to bring their ideas to life.
Generalists: Polymath Strategists
It’s rare, but there are individuals from within the fields of design, business and technology that also understand just enough of the other disciplines to be genuinely useful across every field. A polymath is someone who’s speciality is learning other people’s specialities quickly. Polymaths pride themselves on accelerating the time to minimum viable knowledge on a given topic.
The navy seals have a very special style of cross-disciplinary collaboration. Seal teams learn just enough of each other’s roles to be able to do their “buddy’s” job in an emergency. Not because you want your engineer acting as a medic all time, but because being forced to learn another person’s craft makes you appreciate it.
At the first design firm I worked in, I learned just enough Photoshop and InDesign to appreciate how hard it is to design with good taste. Likewise, in my in-house roles with various startups I’ve learned just enough coding to appreciate how much time it takes to built out a new feature.
A true polymath’s job history is almost always a mess. I’ve met polymaths called everything from “Creative Technologists” to “Information Architects”. The job title “Strategist” is a common place for these people to hide in plain sight because it covers a multitude of sins. There are plenty of polymath strategists hidden away inside ad agencies, design firms, market research firms and PR agencies.
These aren’t ‘jack of all trades’ generalists in the old tradition of mediocre MBAs hidden away inside global consulting firms. Instead, the modern polymath still needs a specialisation in one of the productive disciplines so that they can deliver immediate value when in front of the client. And they also need enough skills in the other disciplines to be a productive contributor, not just a commentator. The best strategists that I’ve met are confident in their craft but use it as a starting point for the real work of digging into the root causes of a client problem.
Solution: Innovating in-house
I’m a fan of the old-school management theorists like Tom Peters and Peter Drucker. Therefore, I’m bound to love the idea of building up a client’s own innovation capability. Best practise has always been to bring as much innovation expertise as possible inside the company. In 1996 Steelcase bought Ideo, BMW bought Designworks in 1997 and more recently Facebook gobbled up a design firm called Hot Studio, while Google have established their own innvoation and design thinking practise inside Google Ventures.
Clients are becoming more astute about how they buy strategy, design, and innovation services. The smartest clients are allowing all of their advisors to range beyond the old-school narrow project “briefs” and come back with integrated, creative and multi-channel solutions.
For in-house innovation to work, senior people inside the business need to be open to new ideas coming from anywhere (internal or external). The old way was to allowing grown-ups and “suits” (such as law firms, accounting firms and investment bankers) access to the boardroom. This is fast becoming an obsolete model.
You can’t firewall your advertising agency behind a 22 year old Junior Brand Manager, the agency needs access to the CEO to create great work. Likewise, you shouldn’t stop your design firm from asking to talk to the call centre staff about warranty claims. Great new ideas could come from all sorts of unexpected places.
Some clients are experimenting with internal venture capital models, internal innovation incubators and internal customer experience swat teams. These are powerful and transformative. But sometimes they do suffer from organisational capture and they get too stymied in corporate politics. A helping hand from the outside can make a real difference when taking on something new.
In-house capability is important to innovation but external advisors do still have an important role to play. The ability to brush your teeth every day doesn’t mean that you can get rid of your dentist entirely. I think there will always be a role for the dreamers, the crazy ones, the agencies just bold enough to think that they can change the world.
Note 1: The incumbent innovation agencies and design firms are already doing this type of work but have been caught out by the speed of change in terms of social media, digital innovation and lean thinking. They don’t seem to have a new story to tell (that would galvanise new multi-million dollar revenue streams).
Note 2: I’ve lumped all of the subsidiaries of the creative networks in with “advertising agencies”. WPP owned Hill + Knowlton (who work in PR) are as much a part of this trend as Starcom Mediavest (who are notionally a media buying agency, not an advertising agency).