Too big to scale creative heights

12 Sep, 2012

Bob Greenberg woke up one morning recently, terrified that R/GA, the digital advertising agency he founded more than three decades ago, had become too big to manage.

The agency behind the Nike+ runner and other notable campaigns had evolved into exactly the kind of bureaucratic company against which he had famously rebelled. When he walked through the agency's four buildings in New York, he did not know many of the roughly 1,000 employees working there.

The company, which is owned by Interpublic, the US-based advertising holding company, had become so large that it could take on only work for big clients, eliminating smaller brands that are keen to experiment with edgier ideas "the type of work that attracts the industry's hot, young creative talent.

Mr Greenberg had never intended for R/GA to grow into one of the largest advertising companies in New York – let alone expand into more than a dozen markets across the globe. "It felt like we were losing some of the controls that would affect the quality of our work," he says. "Something was missing."

Mr Greenberg is grappling with the question now plaguing several digital advertising executives: "How big can we get before we get bad?"

Jay Chiat, the late ad executive, tried to deal with this challenge as his eponymous advertising agency grew into an international powerhouse in the 1990s, staffed with more than 1,200 employees and generating more than $1bn in sales.

As many digital advertising agencies approach 20 years since they were founded, executives are worried that their companies are becoming too large and too corporate to keep the spark of creativity alive and to continue producing cutting-edge creative work that can compete with more nimble, smaller start-ups.

"You have to be fierce about that culture. It is what you are selling," says Tim Andree, chief executive and president of Dentsu Network, the Japanese advertising company that recently acquired Aegis, the London-based advertising business.

The challenge of preserving that original culture is particularly acute in the world of digital marketing where technologies change rapidly.

"Our culture, our creativity is the only sustainable competitive advantage that an agency has. Whatever we do now will be outdated in a year," says Bryan Wiener, chief executive of 360i, the US agency owned by Dentsu and whose clients include Coca-Cola, Oreo and JC Penney.

To keep the small agency feel, Mr Wiener has split up the 400-person company into teams of five to 25 people that work autonomously, almost as if they are their own agency within the broader organisation. "Great things happen in small packages," he says.

Other companies are co-opting techniques from the technology world. AKQA, the digital agency that in June was acquired by WPP, the world's largest advertising group, is attempting to replicate Silicon Valley's "fail fast" mantra by creating its own version of "hackathons" – a tradition at Facebook to develop quickly new ideas and products. AKQA holds meetings for its creatives, where they are given a prompt to create a concept or product, and are expected to return with an idea in four hours rather than the typical weeks such tasks can take.

The cultural question often comes to a head when advertising agencies merge. Big holding companies have acquired a series of digital outfits in recent years, making it more difficult for those agencies to maintain their creative independence.

Take Possible Worldwide, for example. WPP created the business over the last year and a half by merging nine digital advertising agencies that it had acquired since 2005. Possible has more than 1,500 employees in 23 offices worldwide. The idea was that as one unit, the companies would be better positioned to take on work from big advertisers that increasingly are demanding sophisticated technologies and global campaigns.

The plan, however, failed. About a year and a half after the merger, the company had not won a single global account. Several senior executives have left and WPP recruited a new chief executive, Shane Atchison, who is rethinking how to structure the agency to rejuvenate the company's culture and creativity.

"It wasn't working," Mr Atchison says. "The companies had just given up their brands for the promise of a greater possibility, the greater opportunity of a new brand. They didn't fulfil that. The soul of why people are proud of where they work was not there."

The 39-year-old has spent the first months of his tenure visiting the company's offices. In attempts to communicate his vision for Possible in terms that resonate with the company's young staff, he has worked with a 27-year-old employee to ghostwrite emails about his vision for the company – but has not told employees that someone else was helping to write his messages. He says he is cognisant of the fact they could be considered inauthentic and disconnected but thinks they help rally support for his strategy.

"The reason is not to be lazy," he explains. "It is what you would do if you were Coca-Cola and trying to market to a younger demographic. You hire people who understand that demographic."

To spark momentum and inject a sense of pride in the creative output at the company, he produced a new website, logo and a private social network for the agency. Employees are required to write 10 original posts for the company's network each year, highlighting inspiration and featuring accomplishments at the agency. "Just talking about culture is hilarious. You have to focus on the people," he says.

Mr Greenberg of R/GA, meanwhile, is attempting to push his company through a transformation before it starts falling behind. The agency remains one of the most highly acclaimed in the industry, winning awards and working with leading brands.

But since he started the company, he has transformed its structure every nine years. The company is entering a new phase he is calling "functional integration". Mr Greenberg says he does not like the name but that it connotes the idea of creating products and services that support a brand – such as the Nike+ products – rather than simply ads.

R/GA is also adding capabilities beyond its traditional work, such as consulting services. That strategy will spark creativity by allowing employees to produce cutting-edge work, he says. It will also set the business ahead, he says, because it cannot be commoditised like traditional advertising work.

R/GA's transformation is following the leads of Apple, Google, Amazon and Harvard Business School case studies. The company will be organised into units of 150 workers, for instance, because research says that the cognitive limit for social relationships is about 150 people.

Mr Greenberg is also plotting a global expansion. But instead of acquiring companies, R/GA will hire people to start companies from scratch – a strategy to propagate its culture of creativity across the world.

"It's not that we want to do this," says Mr Greenberg, highlighting how the transition has been a painful one. "We have no choice."

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