Wednesday, September 14, 2005

Dealing With Tim Dyson's Dark Predictions

About a month ago, without naming any names, Tim Dyson predicted the imminent demise of some of our PR industry peers:

“I fully expect to see one or maybe two firms crash out in the next few months. The firms won't be small fry, they'll be businesses that have been around a while and have taken steps to build up internationally. Their demise will be a result of two equal and opposite forces: a drive in one direction to go global while at the same time being driven in the other direction to be more local. These are tough pressures for medium sized businesses to take on at the best of times. The agencies I see being at risk are ones that became too dependent on one or two clients and equally a handful of their staff.”
Dyson is writing about 2 different evils, it is important to note: first is “over-extension” otherwise known by moms everywhere as “biting off more than you can chew.” That’s not always a bad thing - if revenues support it, mistakes of over-extension can be overcome by slowing down, cutting costs, and/or just gutting it out until the new offices or initiatives can be integrated and start making their own contributions.

The second evil, more onerous, and one that I’ve written about time and again, is “over-reliance.” As Dyson noted in a (somewhat defensive) follow-up post,

“one lesson we should all have learned when the bubble burst was to make sure no one client or staff member could bring an agency down.”
Amen, brother.

I can tell you from first-hand experience that our San Francisco office is already benefiting from the early fractures predicted by Dyson. For the last few months we’ve suffered from a talent shortage, but lately we’ve seen a flood of resumes come over the transom, from talented people who currently work at exactly the types of firms that Dyson described: mid-to-large-sized, independent PR firms with a few-too-many international offices and an over-reliance on 1 or 2 big accounts to pay for that unwieldy infrastructure.

What are these candidates telling us?

“I love it that you are small but growing fast – that is the kind of environment I am looking for; I want to be able to make a difference!”

Now, we’re not exactly a boutique – we’re in the top 50 nationwide among independent firms, with 2 offices, over 60 staffers and 50-odd accounts, etc. etc. But compared to the Big Guys, yea, we’re small-fry. And we’re new – although many of us have worked together for years, our brand is just 2+ years old. The superstar who runs our SF office came to us 6 years ago as an Account Exec. Try to get that type of career opportunity at one of the big, established firms!

Okay, I am rambling. Here’s the point of this post: Dyson’s right. A new wave of shit is inching its way toward the fan, because a handful of important agencies refused to learn the lessons of the Dot-Bomb. To be successful in the future, for the long-term, agency leaders must FOCUS & DIVERSIFY.

Do a few things well, in the geographies you know best. Diversify your risk factors: if you’re in a position where the loss of any one client would force you to fire a single person, you’ve over-extended yourself. Keep costs down. Invest in differentiation, not pushpins for the world map. Attract and retain talent but remember that no one should be irreplaceable.

You don’t have to be invincible, but you must be invulnerable. If you can’t afford to lose, you’re already a loser.

Did I get that right, Tim?

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