New Business Intel

» 10 Things MBA Schools Won’t Teach You About Managing Your Agency

Input from entrepreneurs on management, marketing and sales

If your ad agency is new or entrepreneurial, you're in a start-up marketing services company, or you're a CEO, you'll relate to this list of 10 things MBA schools won't teach you and the follow-on comments from street-smart entrepreneurs.

This list was culled from two posts on Dharmesh Shah's OnStartups.com, plus reader comments. I've picked the ten I liked most, that I thought were applicable to anyone thinking about new business or managing your agency. 

From the original post, "10 Things MBA Schools Won’t Teach You":

• There are an infinite number of ways to spend money on marketing.  You have no idea what’s actually going to work.  The idea is to experiment broadly and learn lessons cheaply.  On a related note, no amount of MBA marketing classes will prepare you for the day that you have to produce leads in order to close sales.  As it turns out, marketing is about more than product feature matrices and the right shade of blue for your logo.

• No amount of strategic planning will ever substitute for managing your cash flow.  Financial statements are great.  The most important one is your bank account statement.

• There’s a lot of value to being likable.  Good things happen when people like you.  When people like you, bad things have less of a chance of being fatal.  I advise being likable. 

And from the follow-up post, "37 Pithy Insights from Street-Smart Entrepreneurs":

• Infect employees with pride of ownership. If the employees feel like they are part of something bigger than themselves, then they'll work that way.

• Ritualize the work atmosphere -- every time a contract comes in, ring a bell or gong and let everyone celebrate. There's a reason Survivor has rituals.

• Leave your ego at the door and hire people without big egos that can understand how to look at a problem and be open to solutions no matter where they come from.  Keep those people.

• How are you continuing to invest in your customers and their experience after they have purchased your product? Value relates to the entire customer experience

• Ultimately, the CEO's position is to simultaneously lead and serve others.

• It is important that you like your customers. If you do not like your customers you will by design not do the best you can for them because they annoy you.

• A big lesson for me was SALES. There's very little coursework in MBA curricula around how Sales works... Can be a rude awakening for freshly-minted MBAs who know all about Porter's Forces, and nothing about how the Sales mind, the Sales organization, and Sales processes work.

What are some of the lessons you've learned?

» Ad Agency CEO Skill: The Right Way to Manage Your Business

Think discipline.

Too often, creatively-driven firms forget the business discipline that's required to achieve financial success.

A consultant recently reminded me of this. He's the product of the financial and management discipline learned at Fortune 500 companies, and now helps smaller companies, including a few ad agencies, implement management systems designed to increase accountability and profitability. He said that with a bit more discipline, many agencies could significantly increase profitability - even in a recession.

And then on a recent flight, I noticed the following quote from Jamie Dimon, CEO of J.P. Morgan, in Fortune magazine:

Our management team, 15 to 30 people, talk every day at 7:30, 12 Noon, and five o'clock - what's going on, sharing information, making some decisions on the spot, reviewing facts and information. I'm always surprised at companies that don't have discipline - they don't have business reviews, they aren't looking at their competitors.

If you know what you should be doing, but just aren't doing it, take heart: you're not alone. However, a bit more discipline can yield significant rewards.

If you need help, look for a consultant who focuses on the systems described above. If you need a recommendation, feel free to reach out to me.

Let's say, though that you just want to become more educated about business. You can start a simple continuing education program next week by subscribing to business magazines like Inc, Fast Company, Forbes, and Fortune. I've read each of these since I left college and learn at least one new thing from every edition.

What other business magazines add to your knowledge and expertise?

» Keep Proactive New Business on Track and Avoid “The Pinto Effect”

The single best way to improve results is to measure activity

Those of us of a certain age remember the Ford Pinto. It had problem: hit it in the rear-end and the fuel tank might explode. This was a rather nasty surprise that drivers wanted to avoid, which presented a sales problem for Ford.

I've seen a similar, though self-inflicted, effect with ad agency new business teams. Performance often isn't regularly measured and then all of a sudden someone in senior management realizes there's a problem, raises hell, and the next thing you know the team is blown up.

Having wrestled with this challenge over the years, I've finally realized that there is one way to avoid surprises by non-performers. CEOs can use this to manage their proactive new business team, and new business people can use this to manage themselves, improve their skills, and demonstrate this improvement over time.

Manage activities.

Most of us manage to results. By this I mean, we look at reports that show meetings held with prospects, meetings held with search consultants, number of pitches, pitches won, dollars of new revenue generated. The problem is that all of these are results; what you want to measure are the activities that caused these things to happen.

Instead, you might want to look at:

• Number of calls made - sales is a numbers game - without the calls, you won't generate new business. Track this by hour, by day, by week.
• Average length of call (use your phone system's call reporting software) - indicates how often you are able to engage with prospects and have substantive conversations. Track this by week and month.
• Number of "good conversations" (of a certain length and quality) - indicates your ability to ask good questions and develop rapport with your prospect. Track this each day and set expected minimums and goals.
• Number of meetings set - indicates your ability to demonstrate the value of meeting with your agency. Track this by day, week and month and set expected minimums and goals.
• Ratio of good conversations to total calls made - measures your ability to engage. Track by day, week to show improvement in this skill, as well as efficiency.
• Ratio of meetings set to total calls made - measures overall sales ability. How effective are you at getting the person to the table? Track this by week and month.
• Ratio of good conversations to meetings set - once you have a good conversation, how effective are you at establishing value and a reason to meet? Track by day, week, month.
• Ratio of meetings held to meetings set - measures how good a meeting is being set. If meetings are regularly cancelled, you aren't demonstrating the value of meeting with your agency. Track this by month.

There are other activity measures that you can employ, but these are a great start. Best of all, if you set up your spread sheets and create a few graphs from your data, you'll be able to show - in picture form - exactly what's taking place.

Even better - once you have pictures of what you're doing, you'll be able to see where you're falling short. For example, let's say that you have a 30% close rate from "good conversations" to first meetings. This means that you're really, really good and demonstrating value once you get that prospect into a lengthy conversation. You're probably asking good questions, and demonstrating value (if you want to learn more about questioning, search on "good questions" on my blog and you'll find a variety of relevant posts).

However, let's say that you're only able to convert 1% of your total calls to good conversations. Your opportunity to improve is therefore to learn to better engage with prospects. The best remedy for that is role practice.

Hopefully, you get the idea from this how to measure and improve your results. I've found that if you measure and track your activities, you'll avoid The Pinto Effect: you'll see early-on what the problems are, with plenty of time to take corrective action and avoid an explosion.

» Changing Role of Ad Agency New Business Rainmakers?

Adweek doesn't suggest an answer; Here's one.

Large, well-known agencies are getting frustrated at the length of time it's taking to fill open CMO positions and with the lack of available talent, according to a July 13 article in Adweek.

I wonder if they're looking for the right person.

Here are some of the main points in the article:

• There aren't many people who know how to do the job well now - the job is more complex
• Client reviews are more complicated
• The involvement of search consultants requires a skill unto itself
• Holding company-led contents are a whole new animal
• Procurement execs are changing the dynamic

Let's consider some of the things agencies expect this one person to do:

• Market the agency
• Nurture relationships with consultants
• Complete RFPs
• Play well in the sandbox with sister agencies in holding company pitches
• Develop relationships with procurement execs
• Prospect with client CMOs and hold meaningful conversations with them
• Organize pitches 
• Manage a new business team
• Be strategic and contribute at the highest levels of the agency
• Be current with social media, and every other channel that's out there (traditional, new, emerging)
• Understand and be conversant about every agency capability and client, including relevant metrics
• Similarly understand their closest competitors

Oh, and do this in an environment where the new business role is often undervalued, usually seen as an expense - not an investment in future growth and sustained revenue, and is susceptible to down-sizing when times are good.

Volunteers, anyone? No? Okay, let's put a junior person in the role and see how they do.

Pardon my sarcasm, but this happens every day and only perpetuates the problem. Face it: new business development requires sales and marketing talent, which is rarely found in one person. Most importantly, the actual job of generating new revenue is determined by sales skill. Sales is a learned skill that takes time to develop.

I've learned a few things about sales and marketing people over the last twenty-five years. From my experience...

1. Sales people are not paper-pushers. Good sales people are hunters, relationship-builders. Give a good sales person a RFP and while they may get it done, eventually, it's not the highest and best use of their time.
2. Sales people are generally not good managers. Let them sell, without having to manage anyone but themselves.
3. Marketing is not sales. If you want a CMO, hire a marketing person. And if they do well marketing your agency, don't ask them to sell - it's a completely different skill set.

Recommendations:

1. Invest in the sales and marketing of your agency.
2. Hire a marketer to do your marketing.
3. Hire a sales person, or two or more, to sell. Have them build relationships with consultants, procurement, prospects, but do nothing else.
4. Assign the completion of RFPs to someone who does this well, and fast.
5. Assign pitch preparation to your best manager - the person who can really organize people and gets tasks done well and on time.
6. Educate your sales and marketing team about social media - marketing needs to own it, and sales needs to use it to drive sales.

As you can see, new business is not a one-person job. If you structure your agency as your clients do - with a sales and marketing team - you will build your talent base and be able to promote from within. This will eliminate the need to conduct long and fruitless searches for that one person who is rarely found.

» The Ad Agency CEO’s Lifelong New Business Learners Permit

Leaders never let their minds shut down, always strive to learn more

In college, I don't think there was any way to comprehend what a professor meant when he said, "learning is a lifelong occupation". All we wanted to do was graduate and not have to take another exam or write another 25-page paper.

It was when I went to graduate school four years later that I realized how little I knew about business; the first time I really messed up a management situation when I learned how little I knew about managing people; and the pain and pressure associated with learning how to manage a large sales force when I learned how little I knew about sales. And that's when I remembered that learning was supposed to be a lifelong occupation. If I wasn't making mistakes and learning from them, I wasn't growing.

In a recent Forbes article, Sangeeth Varghese, founder of a leadership organization in India, describes three ways leaders keep learning and growing:

1. They learn constantly. They actively strive to learn at every opportunity, even in their sleep (that's my best time for processing information).
2. They learn continuously. They will not let themselves be distracted. (He also notes that, "Research has shown that it is more efficacious to study for one hour straight than for two hours with interruption.")
3. They learn cyclically. They know that life is three-dimensional, and they study things from every angle. They also learn best from repetition and regularly reviewing what they've learned.

This reminds me of something Michael Gass predicted I would benefit from social media: the opportunity to get out in front of topics that will impact my companies, our clients, and ad agencies in general. And he's right. It's another steep learning curve, but one that's becoming more and more rewarding and relevant. And I have not doubt that it is going to have a significant long term impact on ad agency new business.

The subject of learning is as important for any CEO as it is someone who is an up and coming leader. New technologies are rapidly changing the way we work and interact with people. Staying current is essential if you want your agency to grow and prosper.

So, are you learning constantly, continuously and cyclically? Are you encouraging your employees or coworkers to do the same?

» Sad But True: How One Ad Agency Completely Blew Their New Business Credentials Presentation

Making brownies while presenting your credentials doesn't mix

One day during the week of June 15th, 2009 a multicultural ad agency that can't be named had a conference call with a very large, well-known telecommunications company. They completely blew it.

Here's what they knew going into the call, which was set up a week earlier:

• The brief: present ideas on how to further segment the African American, Asian, and Hispanic markets.
• Expected content: a credentials presentation that addresses the agency's experience, shows case studies, and answers the brief.
• Participants: senior marketer, agency president, new business director.

During the week before the scheduled call, the new business director tried to engage her president to help prepare a deck. But she was unsuccessful, despite the fact that this was a big opportunity for them, they needed a new business win, and they had the background necessary to do so. The president felt they knew the material and should just have a conversation with the marketer.

At the appointed time, the new business director initiated the call. The marketer was in his office, and the president was on a speaker phone in the agency's kitchen. As the call got started, the president began to make brownies. Seriously.

Needless to say, the call went downhill from there. It was difficult to hear due to the racket in the kitchen, nothing was prepared in advance as requested, and the president was paying half-attention while reading the cookbook and mixing ingredients in the background.

Is it any wonder that the call went nowhere?

Lessons learned - if you're the new business director in an agency like this:

1. Prepare on your  own in advance
2. Keep your president off the call, off a speaker phone, and out of the kitchen
3. Or, alternatively, find a new job

If you're an agency president who acts like this: either stay completely out of the new business process, or hire someone to take your job (perhaps make yourself the honorary chairperson).

Quirky may be funny once a client gets to know you, but few senior marketers are going to find it amusing on the first call.

» Gen Y, Shapeshifting, and What the Future May Hold for Ad Agency New Business

The greatest change of our work lives is on the horizon

Michael Malone's new book, The Future Arrived Yesterday hit bookshelves on Monday. You may remember his name from the early 1990s prediction that work was going to become increasingly virtual. He got that right!

He now predicts that:

The best companies in the world will use the latest information processing, communications, and social networking technologies to become shape-shifters, constantly restructuring themselves to adapt to changing circumstances and new opportunities. They will become protean.

"These new protean corporations...will behave like perpetual entrepreneurial start-ups, continuously changing their form, direction, and even their identity."

We need to plan for the following fundamental changes to our business worlds:

• Technology: digital devices will be ubiquitous; new management tools will be required to manage a globally diverse and scattered workforce.
• Organization: we'll see accelerating de-centralization and destruction of hierarchies in larger enterprises; also, frequent restructuring - in a matter of weeks or months, which will require employees to continuously find their place in the new organization.
• Historical - there will be a continuing trend toward more web-based, mass-customized, "smart" products and services; a company's history, myths, values and culture will be what keeps it together.
• Generational -Gen Y is an entrepreneurial generation whose impact will be making the new technologies work right; they will demand that their work be as challenging and change as frequently as the rest of their life.

Malone also suggests that the tools for success already exist for becoming protean, and cites companies like Google, Twitter, and Wikipedia as being early-stage protean, as well as some large, well-known companies like HP, Intel and IBM.

How will these changes impact agencies and new business? Here are a few of my recommendations and predictions...

• Stay current with the latest technologies. Those agencies that fall behind will be left permanently behind. Marketers will need to be incredibly adaptive just to survive the coming upheavals in their own companies and industries, and will depend on marketing partners who are more knowledgeable than they are.
• The continuing destruction of corporate hierarchies is going to make it harder to determine who's in charge, and that responsibility will change and morph more than it already has.
• There will be increased opportunities to communicate a company's myths and history internally to widespread and diverse employees. Everyone will need to know what the company stands for; effective communication to all stakeholders will be critically important.
• One of the greatest opportunities will be harnessing the creative, entrepreneurial energies of Gen Y employees.
• New business development will also change shape, and will likely be driven by connections that will begin and grow digitally through social networking. Meetings are likely to take place more virtually than they do today.

What I don't predict will change: people will still do business with people they like. The ability of your new business person to "connect" with your prospects will be as important as ever.

This book is likely to become a business bestseller. Change is coming and you'll want to keep up with it.

» Confucius on Ad Agency CEOs Emerging Strong from the Recession

Think twice, then act decisively in pursuit of new business

Chi Wan thought three times before taking action. When the Master was informed of it, he said, "Twice will do."

Shaun Rein writes about "Confucius' Three Keys to Successful Leadership" in a recent Forbes magazine article, making the case that too many executives either:

• Act without thinking, or
• Don't act at all.

Decisions made the first way may be rash and lead to unintended results, while avoiding decisions altogether often leads to failure, because doing nothing usually won't carry you through a crisis.

Instead, do as Confucius recommends: think twice before taking action, but then act boldly and take decisive steps.

Yesterday I wrote about an expected uptick in spending by marketers, which could represent the beginning of the end of the recession.This is a good time to think and carefully plan your "recession exit strategy", and then act boldly. Don't wait to ramp up your new business efforts.

In the Forbes article, Rein relates an example of a recent missed opportunity. "In 2007 hardly anyone knew what a netbook was. Looking at the market, people at companies like Asus and Acer noticed that laptop makers like Dell weren't giving consumers everything they wanted. They pounced on the unmet need and began selling inexpensive small computers that would provide the basic functions like Web surfing that most consumers demand. Major laptop makers held back, seeing netbooks as a low-margin fad not worth getting involved in. They didn't take the time to see the big picture. In 2008, sales of netbooks topped 11 million. Asus and Acer between them control 68% of a market that some estimate will reach 35 million units in 2009."

What new business opportunities do you see that no one else does? How might you reorganize your agency to pursue them? What new business tactics will you employ? When will you start your marketing campaigns?

Don't wait. Some say this recession represents the biggest new business opportunity of our lifetimes. How can you make it so for your agency?

» Strategy to Drive Small Ad Agency New Business

4 steps to benefit from focused learning and strategic targeting during slowdowns

Elizabeth Baskin of Tribe passed along a good idea to me yesterday that may be of use to those who work or own small agencies. We ran into each other at Catapult New Business' New Business from Social Media conference, which is being held through today in Atlanta (full disclosure, I have a financial stake in Catapult).

Elizabeth founded Tribe about 10 years ago. She describes it as "a branding company with an expertise in niche markets. Our sweet spot is building relationships between specific tribes of people and the brands that can make their lives better." This is a good, solid positioning statement. And what I really like is that you can tell they live what they say they do; this is not some fluffy positioning written by someone uninvolved with the business.

One of her secrets to drive new business in this: every summer, when things slow down a bit, her team focuses on in-depth learning of a new niche market or skill. In the past they've immersed themselves in Gen X employees, Millennials, and high income households. This summer, it's social media.

They use their new-found knowledge immediately. Here's their simple 4-step process:

1. Identify very specific corporate marketers who you believe will be interested in the subject matter.
2. Create short, focused thought-pieces.
3. Send one to each prospect.
4. Follow up with each prospect, engaging them in conversation about the subject.

They've found that if what they study is current and they target appropriate marketers, it's relatively easy to begin a conversation.

And that's all you can ask of a new business strategy like this: use it to crack open the door so you can start a conversation.

» Organic Growth Drives Ad Agency New Business

Recession success proves the power of a well executed strategy

Amid stories about client losses, staff cuts and reduced spending are powerful reminders that a well-executed organic growth strategy can be a powerful revenue-generator in good times as well as during the recession.

I've had some impromptu conversations with agency leaders recently about what's working in their drive for organic growth. Most recently it was with Nancy Katz Aresu of Lowe NY during our 25th college reunion (Trinity College class of 1984) this past weekend.

Nancy runs Lowe's Unilever business across North America and has 25 years experience in the agency business. She knows something about the subject and confirmed the three keys to organic growth that I've been hearing:

Build a relationship.This can only be acquired over time and requires that you:

• Ask smart questions to learn your client's business. Know their goals, opportunities, and most importantly - what keeps them up at night.
• Demonstrate your capabilities on the project or account you've been awarded.
• Communicate daily - by phone. There is no substitute for direct, verbal communication. Find any excuse to call and talk.

If you've built your relationship well you will have developed a solid foundation based on mutual respect.

Develop an honest and trusting connection at the top. Assuming you've earned you're client's respect, you need to develop this level of communication with their key agency decision maker. You need to be able to talk openly about the good, the bad, and the ugly. If you're unable to speak this way, keep working on number one, above.

Ask for more. Once your agency proves itself on one piece of business, ask for more. Use what you've learned about your client's business to identify a problem or new opportunity, and then ask the agency decision maker for a shot at it. Note: if it's a large client don't get greedy; build your relationship one step (project, brand) at a time.

This is consultative sales at its best: you need to ask good questions, build trust and respect, prove your capabilities, and then ask for the sale.

A successful organic growth effort requires experienced, self-confident account executives with strong consultative sales ability. If you have these skills at your agency you can drive revenue growth, even in the recession (as Lowe is). If you don't, you might start thinking about either providing training to your account execs, or consider upgrading your agency's talent base.