Specialists v. integrators part II.
You’re probably quite familiar with Gartner’s hype cycle (above) which describes the stages of hype, disillusionment, and then actual productivity that many new innovations go through. However, one of the not so obvious implications of it is that the real value in any innovation only gets unlocked when people start to figure out how, when and where to use it. Another way of stating this is that:
The value is not in the innovation itself, rather it’s in understanding how, when and where to use that innovation.
I think this insight is also quite important when overlaid upon the discussion around specialisation vs. integration that I started yesterday. Specialised businesses can each be thought of as separate innovations. In the marketing world we might think of these as SEO companies, social media companies, mobile application developers, Facebook developers, Advertising agencies etc.
While each of these are important, the real value doesn’t lie at this level, instead, I’d argue, that the real value lies at the level of deciding how, when and where to deploy each of these different companies in order to solve a business problem.
The real value is in the creative and/or strategic combination and deployment of resources to solve a business problem.
In fact, in most cases there are almost too many SEO, social media, mobile application, etc. companies to choose from. As a result, these individual businesses will tend to become commodities over time. Even less of the real value will lie among those companies and even more of the real value will lie upon those companies or people who can see the big picture and who can knit together a brilliant, comprehensive and cohesive solution. This being the case, the natural question that follows is, “who owns this very valuable integration or coordination role?”
In the marketing industry there are a lot of different companies who would claim to be architects of a business solution, but this is where I think things start to get tricky. It’s my belief that in order to be able to properly deliver that integration role, you must be compensated solely for the integration role. If your compensation, as is the case for most companies, is around the delivery of specific and specialised skills or services, then you will inevitably be biased towards the usage of those specialised skills or services in the creation of your solution. We’ve talked about this for ages, so much that it’s become clichéd. Agencies often talk about media and solution neutrality but the vast majority of what they create are ads. Consultants, on the other hand, suffer from a different problem. Typically they are paid for high-level strategic thinking but then leave the difficult work of implementation, integration and execution to others. They are paid to articulate a vision but are not paid to implement a vision.
This leaves clients themselves as the ones who benefit most from integration, and I think this is why we’re seeing clients of all sizes shift from single, full service agencies and move towards a stable of best of breed partners. While this solution makes sense it does also clearly demonstrate that there is a large gap in the marketplace. There may be times and situations where clients want to outsource that integration or to turn to a partner better equipped to handle that integration. Right now they have very few options.
It’s for this reason that I think we will start to see a new class of company arise. These companies will truly be architects of business solutions in that they will be compensated solely for the definition and implementation of a full marketing program but will not be compensated for the specific services and skills that are required to implement these programs. In fact, this is precisely where we see the future of our company.
What do you think?
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Tags: business models, integration, marketing industry, specialization
Andy Says:
September 26th, 2009 at 2:04 amInteresting to think about the nature of a business like this. Aren't you just talking about the role marketing should play in an organisation?
Though its become synonymous with comms, marketing that operates across all 7Ps (or Cs… and whatever the current number is) requires more of a creative generalist orientation. To few marketers think this way these days… another symptom of the drift toward specialisation you're highlighting.
I'm seeing a lot more inhousing over the past couple of years, particularly of production, and to a certain extent “creative”. Perhaps the models are utlimately going to polarise to the point where you operate marketing via either a predominantly inhouse or outsource model.
There are clear parallels with the IT sector… lessons can probably be drawn from their experience over the past decade.
ramaral Says:
September 26th, 2009 at 4:31 pmThis is probably where I want to be in the future…
adrianho Says:
September 26th, 2009 at 9:30 pmGood thoughts, I hope we can spare ourselves the fate of the It industry. Internal IT functions are abysmal by and large. They're designed expressly to prevent innovation I think. Hopefully we won't get to that point. But yes I do think things are tending towards more and more of the real value being held internally within companies rather than being outsourced to partners. Where does that leave the marketing industry then if that happens, will we all simply become tactical vendors?
Subbu Says:
October 1st, 2009 at 6:27 amInteresting post, Adrian, this and the one before it. I wish to share a recent experience.
My first project when I ventured solo this April was with an IT Major here in Bangalore. I wrote what I thought was a brilliant presentation and shared it with a friend who was a successful serial entrepreneur from the Valley. He looked at it and said “Nice story,Subbu. But where is the cookbook?” What he meant was that my presentation was a whole lot of BS and that I had avoided the part that would have made me commit. Cookbook I realized is IT and Entrepreneur speak for Commitment. My presentation which was story-telling was a hangover of my advertising experience.
Thanks to him I did the 'cookbook'. I had to think a zillion times on each slide. The impact of the presentation – story telling + cookbook- was such that the client was forced to act on points raised. The action involved integration.
I think what I did is possible by anyone and will be the norm in the coming days. Agencies will be forced to commit if they want to retain their business and clients will be forced to be the integrators much like what Andy had rightly said. I also agree with you when you say that Marketers are probably not ready. But when agencies and experts do their part, marketers will be forced to….
adrianho Says:
October 1st, 2009 at 11:48 amGreat story Subbu, we've had the same experiences and the same conversations here too. The “cookbook” as you call it really is the vital ingredient and is something we've realised we need to put into every single presentation and plan that we present. The issue is that there are too many ideas and too few ways forward. This is why the way forward or the cookbook really is the value.
However, we take pride in being an industry of ideas not an industry of action. To me this is more evidence that we are placing our value upon the bits of the process that aren't really the most valuable.
Subbu Says:
October 1st, 2009 at 12:22 pm“An industry of ideas and not an industry of action”. So True. I will borrow it.
I hope agencies wake up. I read somewhere a piece by Lee Clow wherein he urges agencies to drop terms like 'Media Neutral' and 'Media Agnostic' and instead become 'Media Passionate'. He specifically mentions the need to work hard on each media and not replicate the same idea everywhere. It is a great piece by a great man. Wish there were more like him…..
Andy Says:
October 2nd, 2009 at 12:09 pmI certainly hope not. Does it become a talent challenge? And a question of capability transfer? Consultants tend to have a vested interest in the underlying problem not be solved despite protestations to the contrary (problem = revenue). What if agencies were about developing more (creative) capability within client orgs? And then innovating flat out to stay ahead of the irrelevance curve… I quite like the thought of continually reinventing the business versus a static offering and business model.
jeanallary Says:
October 5th, 2009 at 2:01 pmNice thought ! I'm agree with you, even if it sounds difficult to legitimate a consultancy/operational approach… Tough, it reminds me the Naked vision
jeanallary Says:
October 5th, 2009 at 2:08 pmCould you please give me the url of this post? I d'ont get the point about not being neutral.
Is it really possible to be media passionate without being involved and bonded to this busines model?
I tought being media agnostic was against the 36O° view, ie. “replicate the same idea everywhere”
I'm not sure i'm following you, would u be more specific?
Subbu Says:
October 6th, 2009 at 6:06 amManaged to get the url. Here goes, http://www.mad-blog.com/2009/02/11/lee-clow-the...
I think some of your doubts might be cleared and probably raise new ones
jeanallary Says:
October 6th, 2009 at 8:17 amSorry but I don't beleive in what i red. It sounds like admen bullshit over and over. Tough, i understand advertising agencies fight for defending their business model.
Anyway, many thanks for the link
Adam Ronich Says:
October 16th, 2009 at 1:01 amJust saw this on Adage from Unilever CEO Paul Polman.
“However well traditional advertising agencies read the signals and recognize the need for radical change in their capabilities,” he said, “few agencies can address all the communications needs of a brand. … This is making the management of agencies increasingly complex, and raises challenging questions on how best to measure the value added by the respective partners and consequently how to manage remuneration.”
Looks like something that's on a number of people's minds.
Lachlan Says:
October 16th, 2009 at 9:20 ama running theme… follow the money…
…where's the money incentive for agencies (ie what skills base is on their payroll, and so certain to be deployed… and how do they earn more fee etc?) This is both clear and clearly biased for most agencies of all types both big and small.
…and how do you pay according to results, when even the best econometrics can struggle with the complexity of interactions that lead even to the most borring of things like a click thru?
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