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Is Your Advertising Agency an Adhocracy?

Is Your Advertising Agency an Adhocracy?

by Mike Carlton

My First Client

I became an agency account executive in the early 1960s.  My first client was a small trade association.  It primarily served the automotive industry.  Its leading - or one might say dominant - member was General Motors. 

Now in those days that was a good thing.  General Motors was one of the largest, most successful corporations in the world.  It was also a giant advertiser.  And was the epitome of what a company should be.  Their organization was widely studied and analyzed.  Business schools celebrated the way GM was run.  So did the business press.  It was a model that worked.  One for others to emulate.  GM was the essence of successful Americana.

In fact, at that time GM’s CEO was widely quoted (not quite accurately) as saying “What’s good for General Motors is good for America.â€

Heady Stuff

While this account was not very large, working directly with the people from GM was a heady experience.  Particularly for a brand new account guy like me.  It was a great opportunity.  I wanted to learn everything I could from them.

I was like a sponge.  I hung on all their principles and practices.  And, they were very good to me.  On top of that, unlike lesser clients, meetings weren’t held in their offices or ours.  We met in tony places like the Broadmoor or the Homestead.  Entertainment was lavish.  Nothing was too good. 

Working with them was exhilarating, glamorous fun.  And they paid well, too.

Intramurals

One of the GM principles I learned almost immediately was the importance they placed on competition within their company.  It appeared that each GM unit was an independent profit center.  And essentially each was in competition with all the others.  This was an alien concept to me.  Kind of like sibling rivalry on steroids. 

And it seemed to me that the GM people I worked with spent about two thirds of their time competing with other parts of GM and only about one third of their time focused on the outside market. 

This struck me as an odd expenditure of effort.  But, GM was colossally successful and almost revered.  While I was still very wet behind the ears.

Also, during my time in the military I had learned how giant organizations work.  So GM’s bureaucratic processes appeared in keeping with their global scope.

Our Agency

Against the GM framework, our agency was tiny.  We were quite simple.  We had very little structure.  Not much in the way of departments.  And no profit centers.  Nor subsidiaries.  No accountants, only a bookkeeper.  And certainly no lawyers. 

It had a very family type of feel.  Everyone did what was needed, when it was needed.  And if we were successful, we all shared in the rewards. 

It was a micro model that worked.  Our strategies and creative solutions were effective.  We made money.  We grew.  And we had fun.

Emulation

As time went by the agency blossomed.  To manage that growth we decided it needed a bit more structure.  And of course the GM model came to mind.  Remember, at that time it was the world standard for an effective organization.

The big agency holding companies were being built the GM way, too.  They had multiple silos.  And multiple profit centers.  In essence, each unit competed with every other one.  So did their people.  It was the way things were done.

So, we set up departments.  Then profit centers.  And even subsidiaries.  A bunch of silos.  We had loads of internal transactions.  We frequently bought and sold services from each other.  Our small simple agency became not only larger but a whole lot more complex.

We had all kinds of numbers to tell us what was happening.  And we needed a comprehensive computer system to keep track of it all.  We had lengthy management discussions about arcane issues like overhead allocation formulas and intracompany transfer rates.  Very businesslike.

The Dark Side

On the surface it all looked great.  We were viewed as a very buttoned-up agency.  Clients somehow were attracted to that.  We were applauded within the industry for “doing it right.â€Â 

Yet we had some quiet, nagging concerns.

Our work was not any better.  Or more effective.  Our people were not any happier.  And we were not as profitable as we had been.  Things were OK.  But somehow not quite as much fun.  Things didn’t feel as right as they used to.

An Epiphany

One morning one of my partners walked into my office with a big smile on his face.  Without saying a thing, he wrote this word on my board.  ADHOCRACY.

I had no idea of what it meant.  He then told me that he had discovered it while reading a book by Alvin Toffler.  He said that adhocracy, according to academics, is an organization which is the opposite of a bureaucracy.  One that cuts across bureaucratic lines to capture opportunities, solve problems, and get results.

Learned proponents of adhocracy, like Alvin Toffler and Robert Waterman contended that bureaucracy was an organizational structure of the past.  And that adhocracy is the organizational structure of the future. 

It was like a blinding flash of the obvious.  Was our little agency becoming a bureaucracy? 

Had we become infected with the GM disease?

Characteristics of an Adhocracy

We began exploring the concept of an adhocracy.  And how it might apply to an advertising agency.

Today, Wikipedia defines the characteristics of adhocracy as follows:

• Highly organic structure
• Little formalization of behavior
• Job specialization based on formal training
• A tendency to group the specialists in functional units for housekeeping purposes but to deploy them in small, market-based project teams to do their work
• A reliance on liaison devices to encourage mutual adjustment, the key coordinating mechanism within and between these teams
• Low standardization of procedures, because they stifle innovation
• Roles not clearly defined
• Selective decentralization
• Work organization rests on specialized teams
• Power-shifts to specialized teams
• Horizontal job specialization
• High cost of communications
• Culture based on democratic and non-bureaucratic work
• Ultimately all members of the organization have the authority to make decisions and to take actions affecting the future of the organization. 
• There is an absence of hierarchy

A Paradigm Shift

The more we dug into it the more profound adhocracy appeared.  It represented a fundamental change from the way things were being done within the agency business. 

And at its core it raised important questions about just what services advertising agencies provide their clients.  And the marketplace value those services delivered.

The Role of Advertising Agencies

From the very beginning, the primary purpose of advertising agencies has been to solve business problems for marketers.  That’s what clients hire agencies for.  That is the end result they are seeking.  The solution to those business based marketing problems is the value they receive.

Agencies do that by changing the behaviors of their client’s customers in the marketplace.  And those behavioral changes are driven by advertising and other forms of market communications that agencies create and implement.

So the value the client receives is the solution to a business problem.  A solution that is usually denominated in monetary terms.  While agencies generally get paid for just the creation, production and placement of the ads themselves.

And no two of those marketing business problems are ever the same.  Each is unique.  And so each solution is unique.  Each is a one-off custom job.

Mass Production vs. Custom Work

When you stop to think about it, the GM business model was created for mass production.  The more of the same thing you produce, the more efficient and effective the model is. 

But agencies are not in the mass production business.  Or at least they shouldn’t be.  Highly efficient factories that can turn out lots of similar ads may appear to offer a beguiling business model.  And the one that some agencies appear to have adopted.

But is it a model that best serves the business needs of the client?  Has a popular business structure derailed us from the principle purpose of an advertising agency?  Have we inadvertently lost our way?   

An Agency Adhocracy

Against this background, an agency adhocracy seems to make a lot of sense.  Instead of having multiple silos arranged by professional disciplines in which client work is passed around sequentially, an adhocratic agency would have fluid, task specific, teams.  Task groups that are formed to address individual unique client business problems and then disbanded once each problem is solved.

Teams would be formed, disbanded and reformed on a continuing basis.  And each team would be constituted by different people who would be selected solely on their ability to contribute to the issue at hand.  At any give time every person may be serving on multiple teams, each with a different client problem to solve.

Constant change would be an organizational characteristic.

A Continuum

Understand that bureaucracy and adhocracy are at the two ends of a continuum.  Each agency is positioned somewhere on that continuum between the two extremes.  Few are at the extremes.  Most are scattered in between.

No organization can, or should, try to change from one extreme to the other overnight.  However, the leadership of every agency should have a good idea of where they are on that continuum, and have a proactive plan for moving the agency in their desired direction.

The Human Factor

Within a bureaucratic organization each person knows, usually in precise detail, the scope of their responsibilities.  They know what they can do.  And they know what they can’t do.  They know their rank.  And they know the rank of each of their colleagues.  Rules and process seem more important than improvision.  It is a tidy world.

On the other hand, adhocracies look like a mess.  They have few rules.  The objective is simple – solve the client problem at hand.  Period. 

Don’t worry too much about internal rules or process.  Focus on an effective solution.  Outcomes matter most.  People are measured by their contribution.  Not their rank.  Or their tenure. 

The “I†Shaped Person and the “T†Shaped Person

People who thrive in an adhocracy are different from people who thrive in a bureaucracy.

In a bureaucracy the person shaped like a capital “I†is celebrated.  This is a person with a lot of depth but little breadth.  One who knows a lot about a little.   A person who is increasingly expert at his particular specialty.  But has minimal expertise in the disciplines of his colleagues.

These folks work nicely within their silos.  And usually have professional aspirations to manage their particular silo.

That generalist’s view is the top of her “T.†  A series of disciplines in which she knows a little about a lot.

So while a “T†shaped person may be a copywriter, she feels quite competent and comfortable making a visual suggestion.  Or if she is a media expert she is fully capable of championing a PR idea.

At heart, this is a Renaissance person with generalist aspirations.

A team constituted of “T†shaped people may overlap and bump into each other a bit.  Their precise individual responsibilities may be fuzzy.  But the team is also more likely to come up with creative, holistic, exciting, effective solutions.

Staffing Challenges

“I†shaped people and “T†shaped people are not interchangeable.  A person who functions effectively in a bureaucratic organization may be a complete failure in an adhocracy.  And vice versa.

Some people are much more naturally at ease within a highly structured environment.  Each knows his place.  And his authority.  They aren’t required to think much about the big picture.  Just do the work and turn in their hours.

What this means is that agency talent in an adhocracy must have all basic discipline skill requirements of the “I†shaped person plus two additional key requirements to be a successful “T†shaped person.

1. They must view their responsibilities much more holistically and become active students of disciplines other than their own.  They need a generalist’s overview of the big picture.
2. They must have high self-esteem.  They must be confident in discussions outside their primary discipline skills.  Able to contribute to the team appropriately.  And the ability to handle idea rejection with grace.

The reality is that a lot of effective people in bureaucratic agencies today may never be happy or successful in an adhocratic environment.

Leadership Challenges

On top of all this, bureaucratic organizations are easy to lead and manage.  Adhocracies are not.  Leading them can be kind of like herding cats.

Movement from a command and control bureaucratic model to a more collegial adhocratic model can be fraught with all kinds of problems.

It is all neat, orderly and comfortable.

Managing vs. Mentoring

In fact, pushback in the move from bureaucracy to adhocracy can be strongest among folks who now head discipline silos.  Think of their mindset.  Most have spent their entire careers moving up the ladder to manage a key function.  They may see the change, almost any change, as threatening their rank and authority. 

When in reality it is an opportunity to become the key mentor of their discipline.  In essence, becoming the evangelist for their special expertise throughout the agency as well with clients and the general marketplace.

This may be a very difficult transition for them.  Some can’t or won’t adapt to this different organization and leadership style.

Why Adhocracy?

At this point you may be asking, “Why would anyone want to trade what we have now for the disruption of an adhocracy?â€Â Â 

1. It focuses, in a laser like way, the entire organization on finding solutions to client business problems.  After all, this is the deliverable that clients value the most.  That is the business for agencies to be in.  And the one that can be most rewarding to the agency in the long run.
2. It is the organizational model used by many of the most exciting and successful new breed of firms entering the creative marketplace.  Organizations that are competing with agencies for a place in the client’s inner circle.  And threatening to ultimately displace agencies.
3. It has very high appeal to the best and the brightest young talent that agencies desperately need.  Like it or not, Millennials will drive the future success of all agencies.  Getting them on-board early will be a plus.
4. It is more efficient.  Work is almost entirely client task focused with very little time spent on intramural activities.  Thus it can make the agency more cost competitive.  And boost profits.

A New Day

Clearly, the General Motors model worked great in the 20th Century.   And just as clearly it doesn’t look so good in the 21st.

That leads to the ultimate question.  Which century is your agency built for?

About the Author

Mike Carlton has spent most of his life in and around advertising agencies. For over a quarter of a century he served in various agency functions, including general management and ownership in a 150-person shop. Along the way he held offices in the American Association of Advertising Agencies, agency networks, and became a frequent writer and speaker on agency issues.

In the 1980s he founded Carlton Associates Incorporated, a consulting firm that focuses on agency business and leadership challenges. He was also a founder of World Systems, a first generation accounting system supplier for agencies, and 600 Monkeys (now a part of Computer Associates), a provider of new technologies for agencies and other professional service firms. In addition, he founded Centre for International Business, which has assisted advertisers and agencies globally.

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