Creative Agency COOs: It hasn’t been the same without you… it’s been better
Thanks to everyone who read and responded to my musings on agency financials last week. Some fascinating feedback and ideas there. I listened to a brilliant podcast by Michael Lewis throughout the week that talked about the ability of men to over-estimate their capability by around 30%… with that in mind, I’m trying to taper the language in this post and not sound like I have the one true solution (but I do /s).
This article builds on the previous ideas but focuses on the fact that agencies need to be more efficient, despite the negative consequences for workload and finances.
Most creative agency operations leave money on the table. A lot of it. This is to say that, even if you’re running a spectacularly profitable creative agency, it’s highly likely the most significant opportunity to extract greater value would come through operational improvements within the business, rather than new clients or new services.
As I stated in my first piece, creative agencies are running like we’re still in the 1980s — we rarely leverage the technology and process opportunities that could improve the business. When we do, it’s done poorly.
Some ideas in this post will connect to future posts, so I’ll mention them here to preview where I’m going. Agency operations are tied to management and leadership skills, and the engagement leadership has with the operation of a service business. Not with a client… with a service business.
And then, the strength of leadership and insight will determine the structure of the business — think org charts, staff engagement, clarity of roles, structure, and service lines. Many people believe outstanding leadership makes-up for poor management. IMHO, people are far less likely to follow someone into an impossible project if they can not organise a simple leave calendar. Management and competency come first, and then leadership.
But right now, I want to start with two ideas that are entirely opposing to one another:
1. Internal systemic operations are the biggest single opportunity for improved creative work and profitability.
2. Most agencies should not have a dedicated operations person
Defining Creative Agency Operations
Let’s start with an agreement on what agency operations should be. Creative agencies often claim to know how to create the best creative outcome for their clients. Usually, it’s through unique IP or a process only they have. Yet, the first thing to be done when a new client is onboarded is to create a custom agency, a custom way of working, adopt the client's technology and more. All things that would compromise a real system designed to create the best creative outcome.
And it’s embarrassing for the agency. They should have an operating system they know creates great outcomes for clients. And clients are buying that system, plus the people, to create great work. So creative agency operations should be about refining that system… and the agency USP is then your version of that system.
Within my posts here, I aim to cover both strategic and tactical because I want to share some of the tools I’ve used to implement operational strategy within agencies and make it actionable.
Starting with the strategy, I define the operations of a creative agency as follows:
The ability to create an operating system that is predictable, transparent and enables repeated successful projects to be delivered by teams. In addition, it should minimise key-person risk, retain agency IP and focus the talent on client-valued actions while eliminating redundant effort.
Tactically, operations should deliver:
A framework for decision-making from those closest to the clients to make intelligent decisions about addressing problems and improving the work / product. It should prescribe only the minimum mandatory requirements to move a project from brief to live, leaving the team to make smart choices about how best to deliver, innovate and improve as they go.
In short, you want a clear and simple system that delivers the work, and you want to give freedom to your team to make decisions on the best way to operate within that system.
Where are we now?
I’m going to address point two from my introduction first:
Most agencies should not have a dedicated operations person within their business.
Operations people are a path to greater profitability, lower stress on the team, higher staff tenure and engagement, greater predictability and moat building for your agency. But nearly all agency CEOs, MDs and senior leaders do not want to engage with a service business’s operational problems and opportunities. They don’t want to think about them, go through the pain of change and transformation or be a part of creating the outcomes they say they want to achieve.
They also come to the role blinkered by their previous experience, where client happiness or creative awards are all that matter. So, reacting to those two things, whatever the cost, is the only role anyone in the business has in their eyes. This is not how to run a professional service firm.
Additionally, most Operations Directors, COOs and Ops Managers aren’t great at their job. I don’t believe this is malicious or because they’re incompetent, but they’re not doing the actual job required. They address shallow symptoms, don’t think deeply or systemically about the root causes of the problems they need to solve, they avoid dealing with or understanding the clients, won’t pitch for new business, and opt out of essential elements that are required to do the job successfully.
The cost of the average operations person means that the business needs to generate between AU$300,000 and $737,500 in revenue to cover the salary, and I rarely meet ops people who generate that kind of value. No wonder so many senior leaders are so disillusioned with the role.
If either of the above is true for your business, an operations person is a total waste of funds. Hire someone who can help deliver work for clients instead, or put the money into the margin.
Both the above conditions mean that agencies are underperforming to comparable businesses. But knowing that, we have an amazing opportunity for agency leaders and operations professionals to make serious, fast gains.
Suppose I am hiring for a senior agency operations leader in Australia. I can only think of two (maaayyybbbeeee three) people who are worth the money and understand the space enough to add the required value for the salary. These people look at business operations as an interconnected system and a series of links that serve the desired outcomes. But luckily, their skill can be easily taught with the right coaching and exposure.
Let’s say that you have the right person in the operations seat and an executive team leaning into the operational opportunities for the agency. Then you’re in a great place to take advantage of point one;
Internal systemic operations are the biggest single opportunity for improved creative work and profitability.
Regardless of the broken financial model, creative agencies don’t have long in this world if they don’t improve their product. And improving the product means gaining greater time for client-valued actions and creative thought.
If you ask most agency employees what would make their job easier, they would say longer timelines and a lower workload. These are perfect operational opportunities that can be addressed if you challenge internal assumptions about what “needs” to happen and what’s really important and valued.
As one practical example, on average, people spend around 11 hours weekly in meetings. That’s nearly a third of your contracted hours in a week (if you’re in a full-time position). In one instance with an accounts service team, I did a simple diary analysis of the team. I looked at which meetings they were adding value to and that I could justify as being productive to a client versus those they were in for various unproductive reasons. One of the key reasons they needed to be in unproductive meetings was to hold others accountable and ensure they were meeting the project requirements. Let’s think about that for a moment — an accounts person was there to ensure that other “professionals” (who were often paid a multiple of their salary) would do their job.
Now if we adjust the accountability in the scenario and say we expect all people to act like the well-paid professionals they are, then the accounts person’s attendance in that meeting is no longer necessary. They can take on another client or dedicate more time to strategic thought and research for the client… they can add more value in the process than babysitting people who we should expect to be better. The underlying assumption in the behaviour burdens the client and the agency with the cost of that person abdicating their responsibilities.
The Impact Of Suboptimal Operations In An Agency
Operations can’t entirely solve the financial problems discussed in my previous post, but they can improve them. Sub-optimal can take two paths: one is negligent and focused on the wrong things, and the other is over-processed and focused on the wrong things.
The negligent path is one where the operations person for the agency is narrowly focussed on single client issues and solving for an isolated edge case with a bespoke solution that needs to be taught to new staff onboarding into the client. As we’ve discussed, agency staff churn rates are eye-wateringly high, so a bespoke approach to a client process will consume endless training and onboarding hours. In addition, this doesn’t benefit the whole business and system, and it limits staff portability for load balancing or scaling. The harder the person works in this framework, the worse the business position gets.
The other failure of operations people is over-processing. I worked with an agency that had a nine-point process for updating a disclaimer on a banner ad. The process would take a minimum of three days. The campaign process map made me feel ill. It was a document designed to assign blame when things inevitably went wrong. It gave the executive team a warm feeling of safety because every conceivable path was covered and independent thought eliminated. My initial question when I saw it was, “What’s your average salary in the business?” My thinking was that if it was any higher than minimum wage, they were overpaying. You didn’t need someone creative or with experience to work here. You need someone to run a checklist, and they can come straight out of university at a low starting salary.
These are the main failures of operations people and operations approaches in agencies. And it’s why money is wasted on this role and value isn’t returned to the agency at the rate it should be.
What makes great operations and a great operations person?
Taking the definitions at the start of this piece, great operations aim to achieve those outcomes. But to get to them requires the right conditions.
Great operations come from understanding your components’ intersection and the competing priorities of each division. Ideally, you can align the objectives (OKRs are a great way to get top-down alignment here), and then the operations person builds a strategy to achieve it and works the tactics between the divisions.
The operations person needs to hear honest arguments over the issues; a seat on the executive or leadership teams is essential. They should also have operational control within the creative agency too — production is usually the right area for them to lead. Being accountable for a division helps to guide their thinking, give them a test space, and let them have a practical application for changes for which they can be responsible and gives them skin in the overall game.
The connection to the CFO and the CEO is also essential. These three roles should shape the agency and drive the right professional services structure and outcomes.
A Position Description Template for a COO / Ops Dir role
I’m going to finish by offering up a position description for an agency operations professional. This is one I shaped based on the above information — truth be told, I was offered a PD I didn’t like for a previous role, so I rewrote it to something similar.
A couple of key tips about position descriptions;
- They describe a position in the company and how it returns value to the business. It DOES NOT describe a job for an individual.
- It shouldn’t contain KPIs; they should be set based on the individual that accepts the role.
- 80% of a position description (IMHO) should describe the company, the ethos and the principles you’re asking the person to buy into. The other 20% is the specific role and how it returns value.
I will cover this in the coming weeks, but the weak leadership in agencies and lack of a point of view around how the business is structured and how individuals contribute to that structure is astounding. The way we shape PDs is another symptom of that.
If the template would be helpful, please drop me an email and I can shoot it to you: dave.keating@operative.agency
As with the previous article, thoughts and arguments are welcome.