Big Fish, Little Pond - Part 2 - We're going to need a bigger boat
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In Part One of the series, we explored what when an agency takes on a client or project that is significantly larger than its existing client / project load. In Part Two, we’ll explore the lessons learned while dealing with the single large client. What went well? What would we have done differently?
In rTraction’s case, the initiation of the project created a need to ramp up resources quickly. We suddenly had a large project that consumed the majority of our existing personnel. We still had other clients to service and it was important to be able to maintain service to both.
The tension between past business practices, present delivery requirements, and “future-proofing” our company was the largest problem we faced during our entire engagement with our Big Fish. As I stated in Part 1, the project was a positive one overall. Given the opportunity, I would take on the same challenge again. The benefit of hindsight, however, produces a few things we would have done differently.
If you were to ask most business owners if they’d like to double their revenue in a two-year period, most would say “Hell yes!” We had a similar answer. So, our journey began.
Almost immediately, we ran up against two needs:
Grow our staff to meet the new demands on the business.
Continue to diversify our business to protect against having too many eggs in one basket.
What we did not understand is that those two objectives would be in conflict with one another along a few different lines, from recruiting to marketing to corporate culture.
The Talent Dilemma
First, an issue that influenced both our recruiting and our marketing. We were not allowed to market our relationship with the Big Fish (which is a common practice among big brands). All of our custom application talent went into one team, but we could not market that team’s portfolio to gain a diversification of clients. When people researched rTraction, they saw the public facing marketing agency work which lacked a custom software development narrative. That hurt our ability to market work opportunities to the kinds of developers we wanted to hire.
As we did hire people with the product development skills we needed, we shifted our culture from customer-service-oriented to product-development-oriented. In my opinion, many of the best practices espoused by product-based companies like Google, Facebook, and Basecamp are in conflict with the client-service model. In ReWork, written by the co-founders of Basecamp, the authors encourage business owners and developers to focus on one market need they can deliver on and to focus on that to the exclusion of all else.
Client service, on the other hand, is all about meeting any possible need. A good agency is able to deliver on a diverse set of requests and ensure a consistent service experience across all the different deliverables. It becomes very hard for for an agency to do its best work if the focus is internal (on a product) vs. external (on a client need). Being internally focused on a product is not a bad thing if you’re a product business. It is a death sentence for a client service agency.
As the relationship developed with that Big Fish client, many of our senior people (myself included) became very involved with the project and corresponding product. We could not find new team members and resources quickly enough to fill the increasing need. I believe this is one of the core reasons for the dip in revenue from other clients as explored in Part One.
A Tale of (AT LEAST) Two Brands
The second reason I believe we had a reduction in work not related to our Big Fish client is that we lost our way a bit in terms of messaging and marketing. Were we a software developer to Fortune 100 companies? A local digital agency? A B Corporation focusing on community impact?
We attempted to mitigate both the recruiting challenge and the focus challenge by creating two separate sub brands. Ellipsis Digital was created to continue on the work of the “B Corporation digital agency” and Engine SevenFour to handle our “software developer to Fortune 100 companies” business line. The Ellipsis Digital brand would focus on building out our portfolio in the non-profit space, particularly focusing on mental health and arts and culture. Engine SevenFour’s primary responsibility was recruiting. We couldn’t market who our customer was but we could market what we were building technology-wise.
With hindsight, I still believe this was the right decision to split into two divisions. At the same time, it is easy to spot some mistakes along the way. The first mistake was to underestimate the importance of the rTraction brand. When we decided to create the “recruitment” brand for Engine SevenFour, we also decided to rebrand rTraction as Ellipsis Digital. We had never loved the name “rTraction” (we inherited it and it’s a very long story). We thought the excitement of moving into the Roundhouse would give us a unique stage to market the rebrand. I think a double rebrand ultimately caused too much confusion in our local market, and we did not have the benefit of size to put enough people on the distinct marketing efforts required to make each of our brands as strong as they could be (and alleviate that confusion).
The most problematic decision, in my view, is that we kept the senior leadership teams more or less the same people in both divisions. In a large corporate structure with more resources this type of setup may have made sense. For a small company it did not. We had an overall “corporate” leadership team that oversaw both divisions, as well as leadership teams for each division. The corporate leadership team members were automatically members of the divisional leadership team.
I think we fundamentally did not want to admit something that, I think, is universally true if you’re working for a large client that has more than 40-50% of your revenue. The simple truth is that people working on that particular project are really no longer completely your employees or team members; they are effectively in the employ of the client and that client’s culture will be an influence.
We attempted to keep our culture consistent across both divisions while mitigating the operating mechanics of our client. We didn’t appreciate that, as we hired people to work within our client’s ecosystem, that intent was potentially harming us. Simply put, we primarily hired people during that time period to work on product development for a Fortune 100 company, and so we ended up with a team that was excited about working on product development and/or working for a Fortune 100 company. I believe people initially came to work with us as rTraction, but there was only so much rTraction in their day-to-day world.
Previous to 2013 (and moving forward in 2018) rTraction has offered a unique employment experience. Being a team member at rTraction is a mix of creativity, hard work, fun, and spontaneous community improvement. During the 2013-2016 era, we became more about the work that we do, the specific technology we follow, and methodologies of work than why we do it, and we had developed a muddy (even divergent) set of cultures.
The tension that developed is perhaps best illustrated in a “dot democracy” exercise that I did with our team in late 2016. In the first exercise I drew 3 circles and asked people to use a dot sticker to mark how they primarily derived value from their work. I also asked if people felt proud that we were a B Corporation.
There are a few different takeaways from this exercise. One is that people really liked the fact that we are a B Corporation. Secondly, most people were interested in being at rTraction for the positive impact we make or the ability to work with the technology they prefer. The “positive impact” result makes sense when you consider the type of work that rTraction has always done. The tools answer also makes complete sense when you consider that we hired people primarily based on their ability to work within a given technology stack on behalf of our client rather than for their alignment with our mission.
The next question became even more intriguing: what if we combined the circles and looked at primary and secondary motivations? I did allow participants to stay in only one primary circle if they had a particularly strong pull to only one circle.
Once the secondary dimension was put in place, it became clear that there was a fairly significant problem underlying the culture of rTraction at the time. When looking at the secondary dimension we were fairly split into 3 camps - one that were focused on impact, one on financial benefit, and one on tools. It’s not that any of these individual focuses are problematic; it does mean that any decision to focus in one area would potentially alienate 2/3 of our staff.
Surprisingly, in the first exercise very few people marked financial as the primary motivator, but many had it as their secondary motivator. Put another way, if you were interested primarily in impact, then you likely weren’t interested in tools. Similarly, if tools of the trade were your passion then impact was not as important to you than the financial returns. Ultimately, we had built different cultures and values into our two brands, and this exercise brought that truth forward.
If I Did It Again
I stated in Part 1 that I would do it again if I had the opportunity. It may seem counter-intuitive based on some of the challenges I’ve outlined in this piece, but there were some real benefits (that could have been even better realized). If rTraction’s core purpose is to make communities better, especially our local community, drawing in seven figures of economic activity into our company is a good thing to do. We were able to increase employment, renovate the Roundhouse, and increase our CSR & philanthropic impact.
If I had to do the series of events again I would make three significant changes to our approach to creating the Engine SevenFour recruitment brand:
Recognize that the team working on the Big Fish client were now essentially working for the Big Fish, rather than being aligned with our core mission. It would not have precluded us from being focused on a common purpose but the way that our value to community through that brand would come primary from being an exporter versus a community member.
Fully separate out the Engine SevenFour division (possibly to the extent of creating a separate corporation), and hire/promote a completely separate leadership, sales, and marketing team to manage that new division.
Not rebrand the other service lines to Ellipsis Digital at the same time, as the work required to build and steward two brands was beyond our capacity at the time.
I’ll expand a little further on my second point. By placing the Big Fish project into a separate division with a different leadership team, we could have empowered that division to work with and expand the book of business with the Big Fish and others in their space. Instead, by sharing leadership teams, we were always trying to find the common consensus on tools, technology, purpose, impact, and financial results. It watered down our ability to have positive impact and made us less sharp on the delivery of tools to the clients across both divisions.
A new division could have continued to focus on and live by the B Corporation guidelines in its own right. Meanwhile, clearer messaging could have been drafted about rTraction, its purpose, and the work it was doing separate from that Big Fish project.
The incentives for the various teams would also have been easier to keep aligned. It would have been easier to craft stronger mission statements for each division without the common leadership team. Those passionate about tools, technology and financial rewards would be neatly woven into the same fabric. Similarly, those focusing on impact and financial returns would be free to continue on working in the existing rTraction model that had served us well for 10+ years.
Lastly, from a financial/legal perspective, separating out into a separate company for the division draws a fairly sharp line under that division’s P&L. A simple message could have been delivered to the leadership of the new division: Keep the existing customer happy and engaged if you’re going to stay around. It also may have given some flexibility to the division’s leadership regarding how to make adjustments in the event of the relationship changing between us and the Big Fish.
The key takeaways are:
Appreciate that a large client changes your organization (for better or worse) and how you manage your culture becomes critical.
Understand that your core purpose can still be expressed through a lens of a large client relationship. The underlying how and what may change, but that is different from changing why you do it.
A successful long-term relationship with a Big Fish is going to consume many of your best/senior people (that’s why they hired you in the first place). Keeping a diverse portfolio or attention on other areas of the business will be a struggle.
The latter becomes particularly important because eventually your Big Fish client is going to move on. I knew this on day one of our engagement, yet still struggled to diversify quickly enough.
How we survived the loss of 60%+ of our revenue is explored in Part 3. We had to be creative, transparent, and downright stubborn to survive. If you want a sneak peek at how we resolved the third/third/third split amongst our team, read “Pondering our Purpose” for a hint.
My marketing team says I should end with a lead generation prompt... so here it is: As you may have noticed, we collect, analyze and measure ourselves quite extensively. It’s work we believe in and can demonstrate how it’s valuable to a team. It’s also work we can help you with - if you have confusion in your brand, brand story or engagement online - contact us and we’ll help you out!
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