In tech, it can feel like you’re forever falling behind or madly rushing to define what’s next. The breakneck pace of the industry, the projects, the products…and then, the Joneses. Those enviable organizations and peers who appear to reach the upper echelon of success effortlessly.
Only they don’t. And that’s the starting point of the conversation. Truth is, success is easier when you’re working together with the Joneses, trading success strategies to lift one another up. As Mark O’Brien, CEO of Newfangled and an Owner Summit speaker says,
“I think the key to growth is true belief in a better future. One way I've found to do this is by having real, honest, vulnerable conversations with people who are also running shops. Simply seeing that someone like you is having a tremendously better go of it, and understanding that person isn't much different than you are can almost immediately reinvent your own expectations for what success really is. The key here is to not let all of our natural fear-based reactions to kick—particularly the form of jealousy. We can choose to either falsely compete with each other or lift each other up. This is why I love the basic premise of the Bureau's events. They exist to foster this exact atmosphere of egoless sharing and learning.”
Soon, we’re off to Austin for Owner Summit, to connect, share and learn with over 150 business owners and industry experts. Looking forward to the Summit, we caught up with industry leaders who will be taking the stage, to get their take on trends in the industry and what’s next.
What Shops Are Up Against
From commoditization to cash flow, differentiation, legal, talent and a never-ending to-do list, digital firm owners have their work cut out for them. What are the thorniest challenges facing agencies and agency owners today? What holds them back, and what can be done about it? Here’s what Owner Summit speakers had to say.
Billing Models & Cash Flow
“It wasn’t until I nailed down cash flow that my business really started to grow and become more profitable. We changed our billing from hourly and budgeted work to monthly retainers which helped us even out our revenue and increase repeat business. In addition, I have a new system of automatically setting aside money before it hits my bank account so that I’m proactively managing my profit.”
— Becky McKinnell, President / Founder of iBec Creative
Going with What Works
“I work mostly with technology companies and I would say their sales messaging or sales presentations are usually too personal to the company, too technical and too confusing—and confused prospects don't buy.
Also, the distraction that occurs from having so many different technology tools to choose from. It reminds me of a time I was on a flight but we couldn't find a runway so we circled the airport. We did it for so long we had to divert to another city to land and refuel! So pick a runway or run out of fuel (cash) circling the options! Ask for referrals on certain tools, spend some time selecting the right ones, then stick with them for six months and make data-driven decisions based on the actual results.”
— Brian Williams, Founder, Perspectivity
Calculated Bravery Among Leadership
“This isn't so much a challenge as an opportunity. So many digital firms are facing deep challenges today related to commoditization. The only true, effective antidote to that threat is differentiation. True differentiation, though, requires boatloads of leadership. Choosing to look at one's firm and decide to pursue the anti-commoditization path requires a great deal of fortitude. This is not an easy path, in any way. It is very uncomfortable and there is a great deal of risk involved. No matter how uncomfortable it is, though, it will always be easier than slowly going the way of the dodo.
It starts with getting real about the core truth of the firm. Who are you, really? How can your firm, today, given its unique abilities based on the people in it, have the greatest impact on your clients? Which clients, specifically? These are dangerous, scary questions, but they are the first steps on the path to true differentiation.
This path takes bravery.”
— Mark O’Brien, CEO, Newfangled
The Right (& Wrong) People
“Hiring enough of the right people. Advice: Clarify your core values and ensure candidates are assessed against the non-negotiable behaviors that define your culture. Utilize personality assessment tools such as DiSC to get a better understanding of the personality profile of the candidate and how they compare to your existing team. Ask tough interview questions and have a consistent hiring process.
Retaining the right people. Advice: Recognize that culture matters. In fact, culture eats more than strategy for breakfast, it can eat everything in an agency. Reflect on how much time, effort and resources you are allocating to improving your culture. Measure employee engagement and continually seek to improve morale and culture.
Being slow to deal with ‘wrong’ people. Advice: It can be really tempting in this low unemployment environment to look the other way and not deal with people who either don’t fit your culture or are not performing adequately. As a leader, you have to recognize that ‘It’s not what you preach—it’s what you tolerate.’ Avoiding making a decision is a decision to do nothing. The right people notice indecision. So, ensure you are at least addressing any ‘wrong’ people issues in some way.
— Traci Barrett, Co-Founder, Leadership & Strategic Consultant, Navigate the Journey
Process Waste & Tight Margins
“In my process-thinking world, I believe one of the hindrances to growth that shops experience is the waste that is in the process used by each shop. We tend to keep throwing more bodies at a problem to deliver in time. That in turn increases cost of a project, that then hinders a shop's ability to hire more people because the margins are too tight. Understanding how to effectively and efficiently deliver the work you've won should allow you to run with a leaner team. That then allows you to improve your margins, which then results in your ability to grow and invest into your business.”
— Robert Sfeir, Senior Director, Delivery, Huge, Inc.
Working “on” the Business While “in” the Business
“Digital agencies are consumed with working ’in’ the business and the need to deliver client projects. Little to no time is spent working ‘on’ the business by taking a step back to plan, assess, solve big problems and work on team health. Failing to work ‘on’ the business eventually makes working ‘in’ the business harder. Advice: Implement a business operating system such as EOS / Traction. EOS is a set of simple, real world tools that helps agencies strengthen the six key components of an entrepreneurial business:
Vision: Clarifies where we are going and how we are going to get there
People: Get the Right People who share our core values on the bus and in the Right Seat by clarifying everyone’s role
Data: Run your business on objective facts and figures
Issues: Identify the root cause of problems, discuss how to solve those issues at the root and really solve issues as they arise
Process: Identify the 10 or so core processes to grow and scale the business; document those processes in a simplified way, and ensure the processes are followed by all
Traction: Create a healthy culture of discipline and accountability where people are getting the most important priorities completed every 90 days.”
— Tom Barrett, CEO, Navigate the Journey
Legal Processes, Cash Flow & Partner Communications
“Two evergreen issues seem to be: (1) building stable cash flow and (2) communications among partners. As to the first, consider billing methods other than the traditional net 30 or net 60. Monthly installments paid in advance over longer projects (like rent) can be a benefit to both agency and client. As to the second, give your partnership agreement a tune-up every 12-18 months or so. Talk about the challenges facing the business and goals to be accomplished. Amend the agreement to address concerns or motivate work toward goals.
I think many shops can further benefit from standardizing their legal-related processes. This is more than just a standard agreement. But improving workflow from first incoming call to last invoice. ”
— Josh Barrett, Principal / Attorney at Matchstick Legal
“I think most shops are at least six months behind where they need to be investing in business development. It's an area where owners typically hire only once they're feeling overwhelmed closing deals. The one thing I can't manufacture for my clients is more time. That's the biggest issue. If owners could unlock five hours per week, they'd stay ahead of where they need to be in business development. Find problems you can throw money at. You can typically spend a little more money on part-time or contract resources to round out your outbound, marketing, content creation, paid search, etc. efforts. You can't manufacture more time.”
— Joe Rinaldi, Business Development Consultant at That Was Clutch
What’s Next in 2019 & Beyond
As we begin 2019, what will tomorrow bring? Here are the trends and innovations that industry leaders are seeing as design, UX and dev take a seat at the table in client organizations.
Iterative Improvements & Data
“I think there is still so much more we can do to be faster to launch. Companies are struggling to get good, reliable data from their digital strategy so they can make better decisions about how to move forward. Gone are the days of spending a year to launch something perfect. Today, it’s about working with what you have, making iterative improvements and collecting data that will give your client confidence on where to invest next. I think the agencies that will continue to grow are able to tie data to the design and dev work and present it to clients in a meaningful way.”
— Becky McKinnell, President / Founder of iBec Creative
Long-Term Partnerships & Full-Service Solutions
“More retainer-type arrangements, and longer relationships (both anticipated and actual) between agencies and their clients, in general. Also, more white-glove / full-service solutions.”
— Gabe Levine, Principal / Attorney at Matchstick Legal
“Design systems for marketing sites (not just products), themed design systems and design systems that integrate into both marketing sites and products.”
— Carla Hale, Director of Client Services & Partner, The Scenery
“In terms of trends and what’s next, the continuing commoditization of many aspects of the industry. Recognize that the hourly rate of much of traditional development won’t increase in the future. Advice: Agencies that are adding more pronounced strategy practices and services that clients will actually pay for. Not old school ‘strategy’, i.e. ‘discovery’, but really going deep into understanding how a client’s business works and what your agency can do to move the needle.
Continuing to look for quality and lower cost labor from offshore to less expensive nearshore. Experimenting with having a resource mix of less expensive labor, and higher cost labor for different practices. Adding more dedicated and beefed up ‘strategy’ or ‘consulting’ practices and actually charging for that work.
Data. The expectation that agencies will demonstrate the value of their work through data will only increase.”
— Tom Barrett, CEO, Navigate the Journey
Get in on the Conversation
What challenges or emerging trends are you seeing in your business? Share them with us here, then take the 2019 Digital Services Outlook Survey to weigh in on the state of the industry, and hear what others are saying too.
Need a support group to help you sort through challenges and get better at business? Join us at an upcoming event.