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Most agencies know how to get work done
This is called operations
But some don’t know how to approach the market
This is called positioning
You need both to create a competitive strategy
Hope you like the "agency leadership things I've learned" genre b/c this is a thread
This is called operations
But some don’t know how to approach the market
This is called positioning
You need both to create a competitive strategy
Hope you like the "agency leadership things I've learned" genre b/c this is a thread
1/ Operations is how you do the things you do.
Positioning is what things you offer, to whom, and why.
The latter captures attention and converts it to work.
The former captures that work and converts it to profit.
Positioning is what things you offer, to whom, and why.
The latter captures attention and converts it to work.
The former captures that work and converts it to profit.
2/ Doing operations well is called efficiency.
Agencies compete to be more efficient b/c services businesses are lower margin (your product is highly paid people).
The more efficiently an agency is, the larger their margin. Nickel’s of work, dime’s worth of pay.
Agencies compete to be more efficient b/c services businesses are lower margin (your product is highly paid people).
The more efficiently an agency is, the larger their margin. Nickel’s of work, dime’s worth of pay.
3/ At the end of the day efficiency (+/- some other stuff!) is measured in profit: did you make more money than you spent? Ok then, the flavored seltzer water is in the kitchen!
4/ But efficient operations is only one half of competitive strategy
To increase your profit you can always do things like:
* Pay your staff less
* Charge your clients more
* Reduce your operating expenses
* All of the above
To increase your profit you can always do things like:
* Pay your staff less
* Charge your clients more
* Reduce your operating expenses
* All of the above
5/ This is why agencies works long hours, hire freelancers with lower day rates, try to win awards to get famous, specialize in work few others can do, or go fully remote and stop buying that flavored seltzer water for the kitchen.
6/ If an agency based their strategy solely on the efficiency of its operations, their choices would look like something like this:
7/ Each of these efficiency strategies can work! But taken alone, they’re not a competitive strategy. They’re only half of a competitive strategy. Any competitor could copy each approach. To have a defensible position, you must combine them with other activities. Here’s why.
8/ You probably don’t have a unique process
Agencies will say that they have “a unique and proven process”—but most do roughly the same thing as their competitive set with roughly the same tools. They’re pretending their process is different and trying to sell the mystique.
Agencies will say that they have “a unique and proven process”—but most do roughly the same thing as their competitive set with roughly the same tools. They’re pretending their process is different and trying to sell the mystique.
9/ And even if their process is unique, they’re still doing exactly what agencies tell brands not to do: selling features rather than benefits.
Saying you have a unique process is like saying "Everybody else has a Flurgle but we have an Even Flurglier Flurgle!”.
Saying you have a unique process is like saying "Everybody else has a Flurgle but we have an Even Flurglier Flurgle!”.
10/ If you only focus on Flurgle efficiency, 2 things will happen.
Everyone will copy you...
You’ll raise the bar for productivity, but the gains will be captured by customers who can choose among many efficient agencies who use your same process. Just google design thinking.
Everyone will copy you...
You’ll raise the bar for productivity, but the gains will be captured by customers who can choose among many efficient agencies who use your same process. Just google design thinking.
11/ ...and you’ll end up looking like your competitors.
Outsourcing work? So is everybody else. Merging with other agencies? So is everybody else. Working remote? So is everybody else. This isn’t my idea btw, it’s pure, high test Michael Porter:
https://iqfystage.blob.core.windows.net/files/CUE8taE5QUKZf8ujfYlS_Reading+1.4.pdf
Outsourcing work? So is everybody else. Merging with other agencies? So is everybody else. Working remote? So is everybody else. This isn’t my idea btw, it’s pure, high test Michael Porter:
https://iqfystage.blob.core.windows.net/files/CUE8taE5QUKZf8ujfYlS_Reading+1.4.pdf
12/ This is not to say efficiency is bad!
It's very good!
But to differentiate you have to match how you do the work (efficiency) with what work you’re offering to whom (positioning). This allows you to capture the right kind of attention for the type of service you offer.
It's very good!
But to differentiate you have to match how you do the work (efficiency) with what work you’re offering to whom (positioning). This allows you to capture the right kind of attention for the type of service you offer.
13/ Porter would call this needs-based or variety-based positioning. As a 2x2, it looks like this:
14/ By choosing a quadrant in which to compete, you do two things:
1. You limit your target market, so you can truly understand your customer
2. You limit what services you offer, so you help your customer truly understand you
Here it is with some random agency examples:
1. You limit your target market, so you can truly understand your customer
2. You limit what services you offer, so you help your customer truly understand you
Here it is with some random agency examples:
15/ The words “many” and “few” are relative. You can serve “few” customers and still be talking about a marketplace of thousands. Or, you could be talking about a marketplace of tens who will pay many thousands. Such are the remunerative joys of specialization.
16/ This is not a new idea! This is a very old idea! But it’s sometimes lost among agencies: the key to competitive strategy is to combine a specific way of working (efficiency) with a specific target customer and service offering (positioning).
17/ When you do that, it becomes easier to make strategic decisions: like who to target, who to hire, & what to sell. That's a unique value chain that is more difficult for competitors to copy, which means by definition you have a defensible competitive position.
18/ The alternative, of course, is to generalize your services and compete for every customer possible by using your non-unique process and inconsistent referral pipeline in a race to the bottom on price as you jostle with larger agencies.
Hope you have deep pockets!
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Hope you have deep pockets!
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I hope this was interesting and useful to you. For more fun times with frameworks, I have a newsletter. Come hang out. https://stevebryant.substack.com/
Sources and further reading:
What Is Strategy?
https://iqfystage.blob.core.windows.net/files/CUE8taE5QUKZf8ujfYlS_Reading+1.4.pdf
Jobs to Be Done https://jobs-to-be-done-book.com/
What Is Strategy?
https://iqfystage.blob.core.windows.net/files/CUE8taE5QUKZf8ujfYlS_Reading+1.4.pdf
Jobs to Be Done https://jobs-to-be-done-book.com/
