Valuing value

“Addiction is a pathological attachment to something attractive in the short term, but destructive over time. Recovery is about looking where we’re going and choosing a path that can last.”

Dr. Chris Johnstone, addiction specialist

Located on a rocky hillside and nestled deep in the rugged oak forest of Southwestern Pennsylvania, some ninety minutes' drive from Pittsburgh, is Fallingwater. Designed in 1935 by Frank Lloyd Wright, the house is positioned over the Bear Run falls in a stacked grouping of cantilevered concrete terraces. The effect is such that although the house rises more than thirty feet above the falls, the horizontal lines and low ceilings create a sense of quiet, calm, organic refuge. With the square footage of the outdoor terraces almost equalling that of its interior, the outdoors is brought into and integrated with the indoor living spaces. It’s a building fully at one with its natural surroundings, a thing of unrivalled vision and environmental empathy. Critics raved after Fallingwater opened in 1938, with Time magazine calling it Wright's "most beautiful job" in a cover story on the architect. To this day it remains the most famous private residence in America. 

The story of its origin is rather lovely. I was first told this many years ago by Tim Williams founder of Ignition Consulting, and I have never forgotten it. And apart from being catnip for those who work best under pressure, it’s freighted, I would argue, with lessons for the marketing community. After receiving the commission, Wright procrastinated for nine months until he was forced to draw up the complete plans while his patron was driving the 140 miles from Milwaukee to Taliesin. It took Wright who often claimed, “I just shake the buildings out of my sleeves” just two hours to create. The first drawings of Fallingwater - floor plans, perspective, and section were, according to the official Fallingwater website, essentially the last. Wright’s architect’s fee for designing one of the world’s greatest pieces of modern architecture was, in today’s money, $251,564.

Had an agency been running Wright’s architectural practice it would probaby have charged the client $500 for the two hours’ work, and the cost of a pad of paper and a few pencils. Because once upon a time our ‘industry’ decided that charging for the time it took to make something was the game to be in. Because taking longer to do something was deemed more valuable than the time saved by using someone with experience to get the job done.

Wander a bit more outside the cloisters of adand and the self-harm of clinging onto that legacy model becomes quickly evident. I mean, there is not a Michelin-starred restaurant on this planet that invites diners to ask how long it will take to prepare the meal, what the cost of the ingredients is, where the ingredients are sourced from, whether it is the executive chef or the sous chef who will be preparing the food, and then allows diners to haggle over the details and final cost. They just charge whatever they think diners are prepared to pay for the experience. Otherwise known as the price.

The problem is that client procurement has completely and definitively and for ever more won the cost game. Agency fees and margin are under relentless pressure.  That’s hardly hardly surprising. When procurement departments have their people systematically re-qualify to keep pace with business, market, and technological change and we don’t systematically train any of our people in anything it’s just not a fair fight. And as ever more pressure is put on our margins (coupled with a balloning list of deliverables) two things happen.

 First, we become ever less equipped to deliver the real, transformative value we should be delivering (and monetising it) to clients. The job becomes simple - Just Ship The Work - thus securing our role as a low margin asset production business. A role in which our (often formidable) consultative capabilities are practically given away for free, and clients, for their part, miss out on the true value we could add.

The second thing that happens is that agencies look to gambling - sorry, pitching - to solve the problem.  I know we like to say that we’re “at our best” when we’re in pitch mode. I know I have spouted that propaganda line myself plenty of times. Sure, the compressed timeline can feel like a reprieve from slow-motion mission drift and the seemingly never-ending drip-feeding of feedback. And sure, working without being overloaded with too much deep knowledge or expectation of extensive category best practice competence can feel liberating. And sure, it’s great to requisition from across existing accounts the energies and talents of the agency’s very best and finest. It’s one helluva dopamine rush for sure. 

Except that - the epic high notwithstanding - we repeatedly give away high-value thinking for free, throw everything plus the kitchen sink at the opportunity, and deliberately and consciously burn out our already over-stretched people. We do all this knowing full well that we are unlikely to recoup our pitch costs in year one (obviously we have no visibility on years two and three). Well, we say “pitch costs” but the fact of the matter is that the cost of all that unbilled work is ultimately paid for by our own people working unpaid overtime. Only an addict would describe any of this as “us at our best” or “the best part of the job”.

While some of the claims for the scale and immediacy of its impact are overblown or simply wild guesses, the AI train (driverless of course) is hurtling towards us. We can fiddle around with Midjourney all we want and tell ourselves we’re living in the future, but the implications of AI doing in seconds what took us hours/days/weeks are likely to be profound. It’s going to decimate (or at least significantly disrupt) the legacy money-for-time model. The fact is that we’re wanging on about how AI can enhance our strategic, creative, and production processes - but why is nobody asking what our time-based financial model will look like in a world in which we can do lots of that stuff in seconds? Or just straight up automate it? We tell ourselves that we’re the special lucky ones and are safe from AI-induced obsolescence because unlike everybody else we’re really, truly, extra creative, forgetting that 99% of marketing communications was always some flavour of slop and that behind the great and/or award-winning stuff many (most?) agencies have a sizeable long tail of it.

The fact is that the more that AI gets integrated into agencies’ businesses and processes - and clients will ensure they do - the more those same clients will demand that the time saving is reflected in reduced fees. All this makes me think of a scene in James Cameron’s Aliens in which a group of hardened space marines are plummeting to the planet’s surface to rescue folk from the ol’ xenomorphs. As the dropship falls the grizzled captain barks his orders and asks “Any questions?” Obviously he doesn’t want any, but convinced that the mission is doomed, a less than enthusiastic marine (played by Bill Paxton) asks “Yeah. How do I get out of this chicken shit outfit?!” 

Why are agencies not channeling their inner Private Hudson and wanting to get the fuck out of this meatgrinder of insanity? Why are they applying so little of their much-trumpeted creativity to their own business? Agency people aren’t idiots. They know that there’s a world of difference between price and cost. They’re not so naive as to believe that the price of a Birkin bag (you can pick up a Himalaya Birkin 25 for around $200,000) actually reflects the eighteen hours it takes to craft one. And Les Binet et al long ago alerted us to the power of advertising to reduce price elasticity, and the disproprtionate effect that pricing has on company profitability. So why can’t they admit that while they have a business model, what they don’t have is a commercial model (I’m indebted to Caroline Johnson to opening my eyes to the difference)? 

We can talk about creativity (whatever that is) and changing culture (whatever that is) and all that jazz as much and for as long as we want, but when most agencies are expending precisely zero per cent of their time working out how to transition out of this dysfunctional and doomed way of working to something that is higher value, more profitable, and on a human level more sustainable, it begins to feel like we’re like the addict who refuses to acknowledge that they’re killing themselves. And meanwhile as Willy Loman in Death of the Salesman says, “the woods are burning”.

When I left agency life I made a promise to myself that I would would place a value on the value I create for client organisations.  And thus value myself. Thirty years of brand and communications strategy experience means I work fast and decisively. I’ve seen more brands, more opportunities to be seized, more problems to be solved, more briefs, more work, more pitches, more presentations, more ideas than most. I’ve had more client conversations, met more different kinds of clients, worked with a more kinds of businesses, sat in more meetings, endured more conference calls, grappled with more feedback, done more presentations, sat through more research, talked to more consumers than most. And with divining the regularities and patterns, the recurring challenges, the repeated mistakes, comes knowledge, and dare I say it, a form of wisdom. Phil Adams articulates it better (of course):

“We have a deeper understanding of brands, what they are for, how they work, how they relate to corporate culture and, most importantly, how to make them charming, disarming and therefore tolerable interruptions to people’s lives. We have a deeper knowledge of what it takes to have branded ideas serve valuable commercial purpose. And this is far more difficult than understanding the nuts, bolts and nuances of a new digital platform… We will be quicker to spot a crap idea which is in danger of putting down roots. And we will be more ruthless with the necessary mercy-killing so that creative attention can be diverted to more productive matters. Conversely we will have a more educated nose for that little acorn idea whose potential would go unrecognised by less experienced eyes, including those of its authors. Young idea farmers have a lot to learn from their elders about the cultivation, nurture and stewardship of creativity.” 

And now I find that my experience, speed, taste, and decisiveness gets turbocharged in all many of ways by embracing and harnessing the powers of AI.  But the cost-based hours model provides no tangible upside for doing a job more quickly. 

So unlike many other agencies, consultancies, and freelancers I was clear that I would not price what I offered based on my hours. I had no interest in torpedoing my financial health - and I believed that my consultancy fees should be guided by the actual value I help create for clients. There’s nothing like equitable economic incentives to ensure your strategic partner delivers the very maxium number of strategic reps.

At that point and thanks to the ever-generous Tim Williams at Ignition Consulting, I was connected to Brian Kessman. Brian is the Founder and Principal Consultant of Lodestar Agency Consulting, a consulting firm that provides actionable organizational design and positioning strategy services to creative agencies who want to find their best “next” practices to grow smoothly in today’s rapidly-evolving business world.

Under Brian’s watchful and demanding mentorship, I undertook a truly intense and challenging training course / mental bootcamp on how to price and productise what I still love doing so much. The experience has left me feeling a bit like Luke Skywalker when he first experiences the potential of the Force: "You've taken your first step into a larger world" says Obi -Wan Kenobi to the young Skywalker. 

Because here’s the thing.  Starting not with measuring out how long it will take to ship a set of deliverables, but with an in-depth understanding of the scope of value a client organisation is seeking changes absolutely everything. After all what clients really want (and need and want more than ever) are outcomes, not just processes, deliverables, and assets. It tilts those formative and vital opening conversations decisively - what better condition are you seeking? How would your company be different as a result of this work? What harm would be alleviated? How much would you gain on the competition as a result? How would you most easily justify this investment? What is the scope of the impact (on customers, employees, vendors)? What will these results mean for your organization? What indicators will you use to assess our progress?

As with strategy then, so too with productisation and pricing - working backwards from the better future that is being sought is the best way to do stuff that is actually fit for purpose. I’d feel foolish for not thinking and working like this before, but then again the entrenched default mode of agencies has long been to work fowards from the estimated hours needed for shipping a set of assets to arrive at a cost. And it’s never too late to find a different way of being in the world.

Working backwards from this brings me to productisation. I’ve railed plenty of times against stultifying process and the imaginative tourniquet of paint by numbers template culture. That remains my position. But the fact is that even when we embrace the gift of chaos and liberated creative thinking, we do still have repeated problems to solve, repeated challenges to overcome, repeated outcomes required, repeated transformations sought, and we do still have repeatable approaches. We do not reverse the arrow of time to the moment just before the strategic Big Bang and invent the very nature of strategy from scratch each and every time. So to provide my clients with different ways they can buy my solutions, I have spent these past few months building out a menu of strategic solution sets that can be ‘picked and clicked’ together to build a customised programme that addresses their different needs and the different outcomes sought.

And so to pricing. Since as Tim Williams writes, “there is no such thing as absolute value” I provide the potential buyers of my work with pricing options reflecting the different combinations of programme elements. And because I price these programmes based not on the time I spend but on the value I deliver, I can promise my clients that I will never come back and ask them for more money just because I spent or needed more time. Say goodbye to the curse of ‘overburn’. And say goobye to the millstone of time-tracking (not that it was ever accurate anyway).

All of which is to say that I’ve chosen to work differently and focus my efforts not on my hours and activities but on what client organisations really want and buy, which is solutions to business problems. Exciting conversations about value as opposed to dreary conversations about time are where real relationships and partnerships - and transformations - are forged. 

I’m not going to argue that this is the one, true, and only way. Everyone needs to chosee their own adventure. And I will definitely not pretend that I can see into the future and know what will happen next. But what I do know is that there really didn’t seem much point advising client organisations to adapt, evolve, think different, embrace creativity, innovate, create meaningful and lasting value in the world, lean into the future, or grab a seat at the front of the bus while there still is one if I wasn’t going to do the same.