What Can Digital Agencies Learn from Startups?

Digital agencies seem to have all the resources of some of the best web companies in the world. Some of the most talented designers, strategists, developers, architects and engineers walk the halls of the typical digital agency yet not one such agency has produced the equivalent of a Facebook, Twitter or Google. Why?

While it can be debated that digital agencies are in the business of servicing clients for a fee and that basic fact is counter to web innovation, the reality is that what digital agencies really do is solve go to market problems for business. That is no different than what web startups do to make an impact in the marketplace, so why should digital agencies fall short of creating the next big thing on the web/transmedia landscape?

Maybe the answer lies in looking at the business from a different lens than simply delivering expected services within the “hours for dollars” business model. Maybe it comes down to looking at what works for web startups and use that to the advantage of the brands digital agencies partner with to deliver value. Maybe it’s rethinking the pitch, the engagement and the partnership with brands to create what digital agencies should be in the first place:

A value innovation partner to deliver the market

Before we get into the mechanics of what digital agencies can do differently, let’s look at why it makes sense to emulate the success model of startups:

First, startups are businesses boiled down to their essence. Startups do not have the luxury of making marketing, operational or leadership mistakes with layers of middle management, complex processes, or overhead costs because without acceptance in the marketplace, they will quickly cease to exist. People with expense accounts, personal assistants and offices with slick conference rooms and catered lunches do not exist in the startup world, because those are not the things that create value for the business concept, only innovation and results do.

Second, startups tap into a previously hidden market need that no one successfully tapped into before. Who ever thought that anyone would want to reveal their location on a mobile app or reveal their thoughts in 140 characters or less or share their videos with the world before Foursquare, Twitter and YouTube existed, much less create a viable business out of it?

Third, startups make the most of what is available in terms of people, cash and other resources because the market has yet to reward them with the luxuries that make wasteful spending like offsite retreats an expected performance perk. The real perks come in terms of growing a user base who loves your product and getting the best and the brightest wanting to work with you for less than their market value for a potential upside.

So how does this map to digital agencies today? If you look closely, these attributes are identical to helping client partners create value during changing times. First, web solutions need to work to create value, and thus are measured by the same metrics as early stage startups. Second, if you are not tapping into a desire that’s new, your solution rapidly becomes meaningless in a sea of similarly executed solutions for competitors. Third, no smart client regardless of the depth of their pockets can afford to plan a long term spend without seeing relatively quick returns. In other words, in times of flux every digital campaign is essentially a new startup effort that can only benefit from the same factors that make or break emerging web businesses. So what can digital agencies do to thrive and even innovate in a world that favors ideas both bold and first to market? Here are some ideas to get us thinking:

1. Constraint=Creativity: Innovation is nothing more than the manifested solution for efficiency. Doing more with less is basic to inventing a better way of doing things, yet the common wisdom for agencies wants to throw people, time and cash resources at solutions. Fancy offices, budgets proportional to the “win” and industry experts are counter to what works for successful startups, and wiser digital agencies should take note. As the Heath brothers have pointed out, The Box is actually a good thing, and nothing creates the “Box” better than limited resources typical of early stage startups.  It’s not just about having less to spend, but learning from smart startups on what to spend on and eliminating what does not matter.  Flying coach on Southwest, having bare bones offices and getting rid of desk phones may be the obvious, what’s not so obvious are also the constraints of setting a specific time to launch, measuring against what users really want, and having dedicated people who can both do and make decisions to eliminate frictions. The best ideas come from a real need experienced first hand, so the people best at delivering innovative solutions are also people who can identify with users with limited resources.
2. Get to Users First: No matter how cool your idea seems, if people don’t find it useful, it’s game over. The legacy culture left over from the mass marketing era makes it very attractive for digital agencies to invest in focus groups, industry research and more to validate what they think users may want, but if failed online experiments with extensive research from major brands like Condé Nast are any indicators, the research that really matters is the authentic reaction your users have to a working version of your idea. Startups that do well “get” this and don’t spend their resources on analyzing what already exists. Instead, they spend their limited resources in building what they think will work, put it out there and adjust to their users’ reactions. They get to users first, because they understand what Henry Ford understood nearly a century ago when he said: “If I’d asked people what they wanted, they’d have said ‘faster horses”
3. From Me to We: Born from a position of mass marketing control, digital agencies innately view relationships as us vs. them. From targeting “consumers”, a term that is as archaic as mass marketing itself, to the agency to client relationship that is largely still about impressing clients with smoke and mirrors to win the account and then locking the relationship down in a contract to guarantee the revenue stream. The wiser digital agencies see the writing on the wall and know that it’s officially over. In the networked market ecosystem, there is no me vs. you, there’s only us. We co-create with connected and empowered customers to engage in meaningful exchanges, we partner with clients to create mutual value. The tech startup world understood this a long time ago. For tech startup successes, the value creation is first and foremost with its users, and the earnings relationship is mutually beneficial between the creators and their investors. The customer and client relationship for the modern digital agency should be no different. When we deliver a compelling brand experience online, it should be to co create it with customers. When we define the client relationship, it’s about collaboration where it goes beyond a relationship between buyer and seller to one that is about mutual benefit. That means licensing, revenue share and/or success fees in lieu of maximizing the hours for dollars for rote tasks that are more about delivering than creating. In short, it’s about us, and it’s about time.

Change is hard. It is especially hard to rethink a systemic cultural legacy that digital agencies are born from, but it is necessary for our survival in the new connected world. As more individuals become socially interconnected to everyone and everything, the traditional role for marketing can quickly become a relic if we don’t think ahead of the curve. The good news is that the ability to creatively solve problems is in our DNA. The only difference is that the context has changed and new behaviors are needed to meet the challenge. We already know how to change customer behavior. Now the challenge is to change our own. Are you ready?