Yeah! This is something I’ve been trumpeting for years. It’s time agencies threw out timesheets and focused on the value they bring to their clients. You don’t measure value in minutes or buckets of clips, but rather in terms of ideas.
Crispin Porter & Bogusky’s bold deal with Haggar, struck last year, in which the agency took an equity stake as part of its compensation, stood out as a rare exception from the sad status quo of agencies selling ideas as if they were pork bellies to be traded by the ton. “We’re in the intellectual-property business,” Crispin’s Jeff Hicks said at the time. “We don’t sell time.”
Ok, I get the value of time sheets in terms of measuring productivity and time spent on a clients business. But why over-emphasize it? Why not focus your talent on what really matters – Ideas!
PR agencies are going to once again have to follow the lead of ad agencies (I fear) on this one – especially as communications continues to be transformed around content and participatory communications:
Agencies’ moves into content creation — such as Bartle Bogle Hegarty, New York’s co-production last year of an MTV special that’s set to become a TV show — is another factor for rethinking traditional labor-based compensation models. Agencies might share syndication revenue or retain rights to creative content. When Crispin created a video game for Burger King, it was paid a fee in addition to what it is paid to create advertising, one executive said, although the agency does not receive a percentage of sales.
Update: My wife and Jesse inspired me to add to this post.
I bounced this off my wife last night and she made a very good point. What about all the tactical work that goes on inside a communications agency? Like it or not, lots of work that agencies do relates to block-and-tackle communications and not just the big idea. How do we charge for that? In this respect, counting the hours might make more sense.
So perhaps what we need is an overlay – where agencies can build and participate in the upside of idea generation (and by default the downside). Reflecting on this, perhaps what we need is more blended models rather than the one-size-fits-all model of today. I believe today’s model kills “ideation” as an activity by confining it to the scope of billable hours. It also has the effect of nuking what I call “idea entrepreneurship” – the creation of ideas that transform business models and models.
Central to the tenet of “idea entrepreneurship” is that agencies co-invest with clients – they put up the hours and nouse, the client contributes products, services etc. The only agency I know of that is doing this today is Arnell Group. Measurement gets easy in when “idea entrepreneurship” is at play. Great ideas = Great dollars.
It’s time we heard this said of NZ’s start-ups!
Several organizers noted that Silicon Valley’s original success as an innovation center was largely because of business and social networks developed over several decades in a community of venture capitalists and technologists.
The Net’s level playing field
Now, they said, with the Internet supplementing and replacing traditional face-to-face social networks, Silicon Valley might be losing its competitive advantage.
“The epicenter was Silicon Valley, but that has created a wave of innovation that has now reached the entire world,” said Yossi Vardi, an Israeli entrepreneur and investor who financed his son’s development of ICQ, an early Internet chat program later sold to America Online.
Also, some interesting stats on Skype:
Like many participants here, Zennstrom voiced the opinion that Internet-based commerce would accelerate in its disruptive effect on traditional businesses. Skype, for example, now says that it carries 4.4 percent of all worldwide long-distance calling.
Some comments from me on what Kiwi’s can do to drive their start-ups to new levels. At the end of the day I believe that NZ’s lifestyle is not a negative influence on entrepreneurship. In fact, it’s an advantage as this post from Rod points out.
We need a deeper shift in thinking and approaches to occur. I also don’t think that this should be viewed in a negative light but rather as part of the natural evolution of entrepreneurship in NZ.
I haven’t met a great entrepreneur that doesn’t think they could be working harder or smarter. I’ve met plenty of Ok entrepreneurs with lots of reasons why they didn’t go the extra mile.
New Zealand’s lifestyle is a competitive advantage. New Zealand entrepreneurs should revel in it and use it to attract talent. What we shouldn’t do is confuse working long hours with productivity and output. While there is no short-cut to building great companies, they do require a combination of working hard and working smart. Platitudes aside, it’s the smarts we have to build. Plenty of Kiwis are willing to work hard.
We also need a shift in the DNA that can only come from experience and role models. As new bars for creating value get set, a new generation of Kiwis will rise to that bar. Look at what we have seen in the past few years with Aftermail, 42 Below, TradeMe and Endance. These entrepreneurs will excite and inspire more to follow in their steps.
Longer-term we need to get more entreprenurial training and skills into our Education system. And that Education system needs to encourage students in disciplines like engineering, sciences and software development. If we don’t do that we will face a worsening skills shortage that can’t easily be corrected through immigration policies.
New Zealand is at a really exciting juncture. The Internet is a terrific leveler, getting about the planet has never been easier, and new models and standards for entrepreneurship are emerging in New Zealand. There is lots to be positive and excited about.