Beers and Innovation 7

So do agencies innovate? The seventh in our Beersand Innovations series addressed an issue that's alwaysbeen at the heart of the purpose of the events. Ian Delaneyattempts to decipher his notes from the session.

Many thanks to our chair and panel: Frank Boyd moderated;the panellists were NicholasRoope from Poke,Desiree Collier from Marsteller and Jamie Riddellof Cheeze.More information on our speakers is here. All were provocative and insightful. These events arenot just about going to a presentation, though, and discussionpoints raised by every participant helped to extend and deepenthe debate. Thanks, equally, to all of them.

The Problem

Agencies are expected to be innovative. But there aresignificant issues. Nik Roope started with a useful attempt topin down exactly what we mean by 'innovation'. Perhapsit's more useful to start with what we don't mean: itdoesn't mean being creative or doing something different.For Nik, it meant making things better. He felt the term wascontinually mis-used: "many creative agencies just pumpout banners". What's really needed are new products andproperties borne from new ideas that move things forwards.

Are UK agencies in a position to deliver this? No, saidRoope, drawing attention to reports of problems at agenciesNucleus and Atomic over cash flow. Cash flow is a significantissue for many agencies. They need to get their jobs signed offand the money in the bank. This can make them risk-averse, whichis obviously likely to stifle innovation.

Later discussions echoed this sentiment and expanded on it.Eachan Fletcher talked about the 'diminishing returns'of innovation – once an idea is out there it loses valuerapidly. Rather controversially, he suggested that the pinnacleof innovation is to 'create a new problem'. RufusLeonard said that 'all too often there is not a catalyst toinnovate' in terms of a client's interest in somethingnew.

Solutions I

There's a glimmer of hope, though, in the recentincidence of stakeholder relationships for agencies in viralcampaigns. A viral that's generated from a clever idea mightnot take very long to make, but should ideas be charged by thehour? What about if agencies were remunerated as a proportion ofthe success of the campaign?

The difficulty has been in getting clients to agree to such amodel. "The marketing departments are not biting," asone participant put it. One difficulty is that innovative modelsoften require the buy-in of multiple departments at the client,which slows work down and often stops it altogether. However,one participant reported a recent deal along these lines atOrange. Lucy Ann Burke from BP said that one of the issues facedby her organisation was agencies not working together, thattechnical agencies and creative agencies sometimes appeared tohave entirely different agendas despite notionally working tothe same brief.

Roope said that perhaps another route would be to adopt theapproach taken by Japanese car makers like Toyota, whereeveryone in the company has the power to stop the productioncycle and is strongly encouraged and motivated to contributeimprovements.

Solutions II

Jamie Riddell suggested that there were two types ofinnovation to think about – external andinternal. External innovation might result in afunky new widget for a client. However, internal innovation -changing the ways in which you actually work – might be neededin order for that to happen. If you can develop processes thatsave time and improve productivity, then that has a clearbenefit.

It also feeds into the chances of being innovative. If youhaven't got time to do anything but crank out products, thenyour chances of doing anything fresh are pretty limited.

So the challenge is to allocate time and resources. Agenciesare never given a blank cheque by clients to spend onresearching and inventing. They therefore have innovate ahead oftime.

Taking the example of Second Life, just flying about a bit inthe virtual world isn't really going to sell the idea to aclient. However, if you've actually invested time, maybecustomised your avatar, mastered the contruction tools and builtan office in the world, then when and if a client shows aninkling of interest then you've got a means to demonstratethe potential value of a presence in the world. Riddell stressedthat this was pretty risky – with only two and a half millionusers, nobody really knows whether Second Life is going to bebig. However, having done the research, it becomes another cardin his hand to potentially play at the right time.

Discussion revealed some scepticism about Second Life. Someparticipants pointed out that it had all been done before inearlier, long-forgotten virtual worlds. Others stated that avirtual presence in Second Life could hardly be counted asinnovative, since it's been done many times already:"it's hanging on the coat-tails of what'scool". In an excellent counter-point, one participant said,"Yes, but it really depends on how youestablish that presence." Innovation, it seems, isn'tjust about the form, it's the delivery too.

Riddell said that innovation was the product life-cycle ofagencies. He pointed out that there's a considerable amountof innovation going on in search engine marketing. Because thatindustry doesn't seem sexy to people in creative agencies,it doesn't get talked about, but nonetheless, it'spushing the market forward.

It takes considerable courage to be doing innovative thingsbecause you don't know whether they are useful or not untila long time after the investment has been made. The agencies areoften 6-8 months ahead of clients, in terms of understandingwhat's cutting edge. Some clients now, for example, areasking for MySpace accounts, when that might seem passe toanyone working in the digital industry. Even worse, with largerclients, it might take a further 6-8 months to get sign off,meaning that your innovations better be pretty startling becausethe chances are that they'll be well behind the curve.

Riddell finished by saying that perhaps the way to leadclients into welcoming innovation is to think more carefullyabout what they need, as opposed to simply answering thequestion. Finding solutions to their needs can sell ininnovation.

Solutions III

Desiree Collier made the point that her company Marsteller -an international PR agency – is very well-placed to rise on theinnovation wave. For all kinds of companies, in all kinds ofcontexts, conversations are becoming key. So, in many respects,PR matters are at the forefront of companies' marketingconcerns. Marsteller is in a position to be involved atdifferent levels of the larger businesses it looks after. Thiscan allow it to take a holistic view of the client's overallaims and try to ensure that their communications on thesedifferent levels are consistent.

Public Relations companies are now hiring digital experts towork alongside traditional PRs and extend the possibilities oftheir offerings. One enormous advantage that they have over manyof the creative, digital agencies is that they are hired on aretainer basis. It's very rare for them to be asked toproduce one or two objects. This advantage helps to suggest oneanswer some to some of the earlier concerns about creativity -finding the time and keeping the cash flowing.

The PR company's role is no longer just about gettingcolumn inches. And some of what they're doing is helping tocreate the conditions in which their clients are able to embraceinnovation. One secret to innovation that came out of an earlierdiscussion was the necessity of getting as close as possible toclients' customers, something that agencies find hard tofind the time and money to be able to do. Collier said that alot of time at Marsteller was spent monitoring every aspect oftheir clients' communications and communicationsabout them. This can lead them into a position wherethey're able to advocate models of best practice and canlead them into very deep involvement into the release cycle andpositioning of a client's products and services.

This apparent luxury and involvement comes at a price, ofcourse. Consultants are expected to be experts in any newcommunications ideas and techniques. They need to spend time andmoney researching the future of communications on an ongoingbasis in order to have the answers within reach at alltimes.

Collier finished by pointing out the need for bravery inorder to foster innovation. Agencies should not be afraid toquestion their brief if they believe their clients' needsactually demand a different solution.

Solutions IV

Frank Boyd recounted the story of the invention of the mouse.Stanford Research Institute came up with a prototype afterconsiderable technical struggle. The only trouble was, oncethey'd produced this contraption, no-one had any idea whatto do with it. They ended up licensing the design to Apple andXerox at $50K apiece. The researcher in question apparentlystill wakes up thinking 'what if I had a dime for everymouse made since?' His point was that new ideas are onething, but creating value is something very different.

One issue facing potential innovators is the nature of thepitch process. To win a pitch, agencies have to have done asubstantial amount of the work before they are even in with achance of earning anything. Naturally, innovative pitches tendto involve more time and money, and so are even more of a risk.Participants also pointed out that even if their innovativepitch is the best idea, it's not unknown for theirprospective clients to take that idea and work with it usinganother, presumably cheaper, agency.

He described some of the work of the BBC Innovation Labs,part of which involves paid pitches. This is a practice that fewof those working within the industry had encountered. The BBC,however, adapts the model it uses for commissioning programmes,whereby the programme makers retain intellectual property rightsover the programme, and the broadcaster obtains the right tobroadcast it a few times. The model allows Innovation Labs toadopt a very extensive in-depth pitch process, with fourdistinct stages. However, because companies are paid for theirpitches and obtain intellectual property rights, it encouragesinnovation. Boyd was keen to establish that there are processesand a methodology to innovation, rather than it being theproduct of a mystical muse.

Learnings

The discussion continued late into the night, of course, anda lot of the arguments won't be settled any time soon.However, for the sake of neatness, I'd sum up some ideasthat seemed to attract a lot of support from participantsthus:

a) Agencies certainly want to be innovative.However, structurally, meaning both the structure of themarketplace and their own internal structures, they find it hardto be so.

b) Agencies can become stronger and moreable to innovate by working with each other. Or forming looseassociations with agencies that complement their own skill setto deliver 'full service'. They can become more likelarge organisations in this way.

c) Focusing on theclient's wider aims and needs can help foster innovation toa greater extent than thinking about what they're asking fortoday. Your need to putmoney in the bank might work against this, though.

d) For agencies, both the pitch process andthe way in which work is paid for discourage innovativesolutions. Clients looking for such a thing might consideralternative approaches such as revenue sharing, IP agreementsand paid pitches.

If you have blogged about the session, do let me know, andI'll link here:

Innovative Agency Theory or how to get a head inAdvertising

Recipe forInnovation

Beers and Innovation (Not Attention)

Innovation

Bookfor Beers and Innovation 8: The Attention Seekershere.

2 thoughts on “Beers and Innovation 7

  1. Hard to say
    Hard to say, Paul. London is lucky (?) to have loads of digital, creative, advertising and PR agencies all working in a very dense area. That said, there are many UK cities – Bristol, Leeds, Manchester and Sheffield come to mind – with a very vibrant digital culture that may be very receptive of some sort of think-tank/booze-up.

    Like

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