If you work in either an agency, consultancy or professional services firm, then you've likely seen an article or five over the past few years making the case for agencies to act more like start-ups. The logic goes something like this: start-ups are nimble and product focused.

They embrace "cultures of code" and they build things. Start-ups move fast and adapt, and they celebrate experimentation and innovation. And some of the most famous start-ups are literally changing the way we live, work and play (see Facebook).

In the spirit of full disclosure, I once subscribed to this point of view but I do not any longer. Professional service firms like any industry are facing multiple challenges, from disruption generated in places like social media (anyone can be a publisher now) to the fact that there's convergence making it less relevant to distinguish how different your firm approaches the areas you provide services in (is it advertising, marketing, PR, or other?). In many cases, the dollars being pursued are up for grabs.

First, let's state that start-ups have their own issues. A very TINY percentage of them ever make it to a sustainable business model. Many start-ups are founded by ADD ridden entrepreneurs who build one, sell it for a modest price and move on to the next because that is what they do. Also, start-ups are in truth a commodity—there are thousands of them out there that are trying to be the next location based network just like the others before them trying to be the next Twitter and Facebook. Nobody talks about those.

Now let's move on to agencies and or consultancies. Some have actually figured out (or at least are trying to figure out) how to reconcile products vs. services. A social media agency called Mr. Youth created a community-rewards type product called Crowdtap and it's worth noting they even they call out the differences in the models:

Screen shot 2011-06-28 at 12.16.43 PM

Back to agencies and perhaps business in general. A few weeks ago in London, I had a very stimulating conversation with an Edelman colleague who was talking about "corporate memory" or simply put, the connection between the knowledge which is retained in any organization between their employees & their work product. It hit me that this is not only a challenge for "client side" businesses, but for agencies it can be a complete nightmare. Many agencies are revolving doors, where high turnover rates are expected and planned for. However, like any other business—each time a professional services employee leaves a firm, they take their corporate memory with them. In my opinion this may be the number one issue that any business, especially the professional service industry faces as disruptions continue to enter the market place.

My hypothesis here is that looking to the start-up world may not provide the inspiration agencies seek. In fact, the inspiration may lie in sustainable blue chip businesses who do a good job of retaining not only their most critical employees but the knowledge they amass as they spend their time with the company likely going from department to department. Having worked with several significant brands/companies over the years you can spot these individuals—they've put in their time and deeply understand the culture, values and mission of the company. They've provided value over the years and been there through good and bad times.

Whenever I meet an Edelman collegue who has been with the firm over 5 or 10+ years—(and there are many) I always ask them the same question. What keeps you here? The answer is usually consistent:

The people

The culture

The work

Perhaps agencies need to look not to the Mark Zuckerbergs of the world but to the sustainable business models that have withstood the test of time and are smart enough to invest in and keep their "corporate memory" intact. It just might be that unless you build the next Facebook or Google, that start-up culture is overrated and today's "empty suit" is actually an empty hoodie.

Original Post: http://darmano.typepad.com/logic_emotion/2011/06/agency.html