How to create an excellent company culture: 5 lessons from great companies

It is perhaps surprising that many companies do not really understand the real meaning of “company culture.” A great company culture can transform an average or mediocre company into a top performer in its category. So, what does creating a company culture mean? Company culture embraces the attitudes, values, beliefs and standards that define the purpose and goals of the company. Company culture in marketing agencies is embodied in the values and vision of the founders and the employees. A great company culture can lead to business growth by positively impacting upon the company’s levels of productivity and profit. Given the importance of a great company culture there is a related question that springs to mind, how do you create a great company culture?

Below are five lessons for creating a great company culture from five of the world’s best companies.

1. Only hiring people who fit the culture

Undoubtedly, the employees represent the image of the company. Employees can easily create a negative impression of the company in the eyes of the public.  A single bad hire can affect the entire company and possibly the entire chain of the company. Zappos is best known for adopting a culture that ensures the people hired are precisely the right ones. When recruiting, the managers mostly focus on the person’s fit to the organization’s culture. New employees are well compensated if they decide to quit early if the feel that they are unfit for the job. As a result employees are always happy with what they are doing and feel that they ‘fit in’ at the company. This has greatly contributed to the great recognition and productivity of the company.

2. Ensuring that staff know the mission and values

Before making the decision to employ a new member of staff you should ask them the following question, “Exactly why do you want to work for this company?” Their answer will tell you whether they really know what the company stands for. For example, Facebook has ensured that their employees share the same goals; to connect people everywhere and ensure the world is open. An employee who is committed to the mission and values of the company will remain happy, loyal and productive. 

3. Being open to good suggestions from all staff

Employees feel most appreciated when they know that their voices can be heard. A ‘Senior-Management-versus-the-Staff’ mentality is not conducive to a positive company culture. As founder or managing director you should engage your staff in meaningful debates that may yield better decisions; this will not only make them feel appreciated, it will also heighten their morale as well. Google execute this strategy well. Google openly publicised the fact that Google News Tools were created by a scientist in the company rather than being the result of a management initiative. This openness to employee suggestions is one of the reasons why Google is still dominant in the marketplace.

4. Creating teamwork – all staff must know that you are a team

It will be necessary to have a few boundaries between the senior management and junior employees but you must always acknowledge that you are one team and not a collection of individuals. This inclusive approach will elevate the employees’ motivation and improve their productivity. Apple has created and maintained a team-based approach as part of their company culture and this contributed to their continued success.

5. Open communication for a better company design

A culture that freely allows for communication is proven to be conducive for organisational growth. Every employee wishes for a working environment where they are not denied the freedom to air their grievances or raise their opinions. Building a good company design together with your staff will mean that the culture of the company becomes more entrenched and is projected externally to the public. The Virgin Group has been very successful in building a culture strong enough and flexible enough to appeal to its 50,000 employees in over 400 companies worldwide.

A good company culture should also include rules, processes and procedures designed to benefit the company and the employees and should be consistent with the mission and values of the company. 

Milestone Advisory are non-executive directors. We support the shareholders and boards of SME businesses across the UK, Europe and US to achieve long-term growth and value. We would be happy to help you achieve your growth targets. Give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation.

Image Credit: themojocompany.com

How do you attract the right clients?

In the early years of any agency there is understandably a strong emphasis placed on the need for customer acquisition. This is sensible given that clients are the financial lifeblood of agencies.  However, within a few years those agencies that go onto to become successful have usually identified the type for client that is a good fit for the agency’s values and services. Although it might sound counterintuitive, sometimes as a managing director, the best decision to make is to let go of clients who are not only problematic, but do not subscribe to your philosophy. The reality is that clients who do not appreciate the kind of value you bring to the table are not worth the time or the stress, no matter how well they may be paying you. It is important to remember that your brand is bigger than any individual client. After that project is completed, you will still have a company to run and a reputation to keep. Your reputation is likely to be tarnished by working with a client who forces you to compromise your values or ethos. So, how do you avoid any potential disasters and attract the right clients?

Image is Everything

This cannot be stressed enough. How the general public, including your potential clients view you is very important. People make snap judgments based on what they see and hear. That is why you must take the time to create the right image for your brand. From your web-design to the copy in it; your social media and employee profiles; your portfolio and even how you handle disputes all goes into showing the world how you want to be perceived. You will need to be able to communicate a difference that makes you stand out.

If the appropriate image is projected, this will help potential clients to self select themselves. It will filter out the wrong kind of client while attracting those that believe in what you stand for; those that respect your quality of work as well as the ethics involved. The quality of your brand image determines the quality of clients you attract and how much you can realistically charge them. Based on what they see, they already expect a price that matches that level of professionalism and sophistication. Be bold, disrupt and have a point of view.

Be an Industry Resource

Information is power. Commit to using Content Marketing to promote your agency to prospective clients. Publish new blog content on a regular basis. You can help your potential clients feel more empowered by providing them with valuable content and insights on a regular basis. Discover your potential customers’ problems and offer solutions in your content. Your content should address the needs of a narrowly defined customer; include case studies, free industry reports and video posts. Doing so will instill trust in your potential clients. They will learn to come to you as a resource and eventually, a solution to their industry related problems. You will attract clients who are interested in becoming the best; clients who know that you are the best and that they should trust you to do your job for their own benefit. Only produce content that reinforces what you want people to think about you.

Be Relationship-Based

Build great customer relationship offline and online. Significantly relationships developed online are having more impact on future purchasing decisions because millennials now wield more power in businesses. The kind of relationship you have with the people who interact with your brand online says a lot about how you treat your clients. You need to be helpful, respectful and precise. These are all attributes that attract clients who hold these values in high regard. Don’t just chase the projects. 

Deliver on Your Promises

This is true in every business. When you consistently deliver on your promises you will find that great clients will be more than happy to refer you to businesses of the same calibre. Attracting the right clients is the result positioning your company appropriately and conducting your business in a manner that is consistent with your values. Once business owners recognise your brand and everything you stand for you will receive more requests from them.

Milestone Advisory works as non-execs to help agency owners build long term sustainable growth and business value. Give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation.

Image credit:  www.startupmmywebsite.com

5 Lessons for CEOs from Sir Martin Sorrell

There are few in the Marketing, Advertising and PR sector that could plausibly lay claim to having made as much of an impact on the industry as Sir Martin Sorrell. Born on 14th February 1945, after Cambridge and Harvard he started his working career at Glenndinning Associates as a consultant in 1970. Next he moved onto the sports agent, Mark McCormack and then James Gulliver Associates before moving to Saatchi & Saatchi in 1975. At Saatchi and Saatchi he was referred to as ‘the third brother” and he rose to the position of Group Finance Director. In 1986 he joined Wire and Plastic Products as full time chief executive a year after borrowing £250,000 and investing in the small company in Folkestone. He was then forty years old. He has been CEO of WPP since 1986, and under his leadership WPP has grown to become the world’s largest advertising and marketing services group. By 2013 WPP was employing over 170,000 people in over 110 countries and had revenues of £10.4 billion. His career offers some great lessons for CEOs or Managing Directors intent on growing their companies.

Play the Long Game

There is a lot to be said for longevity; without doubt Sir Martin’s long tenure in as CEO has been fundamental to WPP’s success.  He first experienced the benefits of an acquisition led expansion while at Saatchi & Saatchi and his plan for WPP was to build a marketing services group using the same strategy. He started acquiring below the line agencies. He knew that success would not come overnight. Building services businesses takes time: be prepared and be patient.

Surprise Your Competition

After acquiring a number of below the line agencies Sorrell surprised the agency world with a successful hostile takeover of J. Walter Thompson in 1987. The deal was worth $566 million. Two years later he repeated the feat when WPP bought Ogilvy and Mather for $825 million. Two of advertising’s most established and prestigious names were now part of the WPP group.  He followed this up with more acquisitions including Young and Rubicam in 2000 and AKQA Digital in 2012.

Be Persistent

In a corporate sense Sorrell has come ‘back from the dead’ a couple of times. In 1991 as the world headed into recession WPP’s purchase of Ogilvy & Mather could have been viewed as expensive. The same could be said after the Young and Rubicam purchase, as the world plunged into the recession of 2001.  Marketing is one of the first industries hit in any recession so an acquisition led expansion strategy can appear risky at those times. Sorrell’s emotional attachment to WPP is well documented and in those testing times, it wasn’t his Economics degree from Cambridge or his Harvard MBA that saw him through it was his sheer persistence and determination.

Keep Focused on the Vision

Sorrell had a vision for WPP in 1986 and remained committed to it. He followed his father’s advice which had been to “find a job that you enjoy doing” and to remember that “no matter how dark the clouds are, [you must] have no fear.” There were many challenges and plenty of dark clouds but Sir Martin always came out the other side. 

Work Ethic

Even though Sorrell is now seventy years old he still travels a lot and works at a tremendous pace. His rapid reaction time is legendary and he somehow finds the time to answer emails within a few minutes of receiving them. He returns phone calls and respond to notes and messages. He reads monthly reports summarising the performance of all companies in the group and stays in touch with his managers.

Milestone Advisory supports the shareholders and boards of SME businesses across the UK, Europe and US to achieve long term growth and value. Are you planning or executing an agency merger? We would be happy to help you achieve your growth targets. Give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation. 

Should You Change Your Leadership Style to Achieve Growth

Leadership styles are just as unique as the people who employ them. Everybody knows that, but when it comes to leadership styles, it also varies according to the situation the leader is facing. Effective leadership does not mean one leadership style for all eventualities. In fact, being able to change your leadership style to fit the situation you are dealing with will enable you to respond more quickly to both threats and opportunities. If you can identify the leadership style that you are using you will be able to maximise your chances for success and long-term achievement.

Most people develop their leadership styles by taking training, mentoring, and gaining experience they need to effectively manage their teams. On a daily basis, a leader's style should be adapted to the situation at hand; this approach will enable you to take the greatest advantage of all your available resources, tools, and methods to engineer a positive outcome.

Participative Leadership

The desire to avoid conflict and establish consensus among team members are two good reasons to choose participative leadership methods. If you want to develop personal relationships, show caring for the feelings of others and motivate them by encouraging involvement, the participative leadership style is the best to use. This style is also excellent when you want to empower employees by encouraging group decision-making. This method also tends to improve employee morale, job satisfaction, and reduces employee absenteeism and attrition.

Transformational Leadership

If you think you should try something new in order to ensure your company's continuing success, transformational leadership methodologies might be what you need. For example, if your team needs to try other problem solving methods, conducting exercises and workshops might be just what you need to promote innovative thinking. Innovative thinking can lead to the solving of issues relating to customer satisfaction, defects in products and process delays. A transformational leadership style will enable you to present your employees with a clearer vision of where the company is going and helps them to see past their objections. This approach also helps to establish you as a good example, which can transform an organisation and lead to long term prosperity.

Transactional Leadership

Transactional leadership methods focus on the accomplishment of daily goals. This approach enables your subordinates to get their work done more efficiently. The process of establishing realistic goals, assigning the most qualified personnel and allocating sufficient funding creates a stable environment. With a transactional leadership style you give clear directions that your team can follow and as a result create an environment conducive to growth and development.

Autocratic Leadership

There are occasions when it will be important to adopt an autocratic leadership style. Autocratic leadership is appropriate during emergencies and crises; it is a leadership style that ensures tasks are completed safely and efficiently. Even if you would prefer to use other methods in such situations, the autocratic form is often the best since you don't usually have the time to follow other leadership styles.

As CEO, you will be best placed to recognise your own leadership style from those discussed above and to assess in practical terms the potential for the other leadership styles. To answer the question posed in this blog post title: yes, you should change your leadership style to achieve growth. Your objective should be to become a leader who is capable of using different leadership styles in different situations because this is the path to success. In the words of Carla Dodds,

“As a leader it is important to have the flexibility to adjust your style to the audience you are leading. “ – Carla Dodds

Milestone Advisory supports the shareholders and boards of SME businesses across the UK, Europe and US to achieve long-term growth and value. Are you contemplating a change in leadership style as you grow your agency? We would be happy to help you achieve your growth targets. Give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation. 

Why Do Some Agency Mergers Fail?

Merger and Acquisition activity is relatively commonplace in the Marketing sector. Senior Management often plan mergers to create larger entities and deliver greater efficiencies. The rationale being that combining two or more companies with complementary skill sets and talented teams will achieve critical mass and better perform in the marketplace. The corporate money men who initiate these mergers and acquisitions attach great value to size and believe that to be the path to greater profits. From a strategic perspective, this makes perfect sense and yet not all of these agency mergers succeed. Why is that? We’ve identified six possible reasons below.

1.       The Merger Becomes a Takeover

There are some scenarios where one of the companies to be merged is clearly the dominant partner. Often in this case the larger dominates and the smaller business gets smothered. This was the scenario recreated so realistically in the final season of AMC’s Mad Men when McCann Erickson acquired Sterling, Cooper & Partners. People are every agency’s greatest asset. Lack of real consideration for all staff is a major cause of mergers failing to deliver forecasted growth and or efficiencies.

2.       No Trust

Mergers are times of uncertainty for all concerned; a successful merger can be achieved if all parties are in agreement and pulling in the right direction. Unfortunately this is not always the case. One company’s management may not know, like or trust the management of the other company. There is a lot at stake for all concerned and in some circumstances a mutual distrust can scupper any real chances of a smooth transition to the new entity. Strong and effective leadership is needed as well as the ability to create a high performing team from the management team that emerges.

3.       No Clearly Defined Vision

If a merger is to be successful the newly formed management team must define and then clearly articulate the corporate vision for the new company. This must be bigger than a drive for efficiency or scale.  This new vision has the potential to re-engage and re-enthuse staff members but it must be compelling. The management team for the new entity must create the culture that can deliver the vision. For more on vision click here.

4.       New Role Definitions Not Communicated Quickly Enough

What roles will everyone play in the new entity? This needs to be planned out carefully. Will it be possible to allocate everyone a new role commensurate with their experience and expectations? Probably not. Will there be some staff that will now be surplus to requirements? Probably. There are an awful lot of human variables to contend with during a merger. Take too long to communicate everyone’s new role and responsibilities and you will find that the most talented leave. To read more on how to retain top talent click here. Senior management will need to know how things will shape up for them and how they will be remunerated, taking into account equity stakes, bonuses and other considerations. The rank and file employees will want to know that they have a future and that there are opportunities for career advancement.

5.       Poor Leadership

A merger is a testing time for leaders and they must deploy the correct leadership style. The primary objective of a leader during a merger is to create a new culture consistent with the new company vision and then to rally staff around the new vision and goals. It is essential that a leader is able to communicate effectively with staff and that any required personnel changes are handled sensitively and quickly. Creating a new high performing management team should be the leader’s priority.

6.       Benefits don’t emerge

Agency mergers are often instigated because it makes sense for the both parties. On occasion, these benefits don’t emerge. Access to new clients proves difficult due to silos or protectionism, perceived synergies in skill-sets aren’t really there or there’s a clash of cultures. The way to minimize some of these is through doing your homework, understand what due diligence requirements may be needed and what questions you need answering.  Quite often, a strategic or working relationship during the courting period, in the years or months before a merger can open your eyes to the benefits and risks you may walk in to.

Milestone Advisory supports the shareholders and boards of SME businesses across the UK, Europe and US to achieve long term growth and value. Are you planning or executing an agency merger? We would be happy to help you achieve your growth targets. Give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation.

Image credit: AMC Networks 

Planning For Exit: How To Retain Your Talent

Organisational change, whether it is merger, acquisition, or any other form, is always a period of higher employee churn. Employees in the affected company start thinking about their career, especially about their future in the reshuffled company with new ownership and possibly a change in role. This is a period of uncertainty that naturally generates anxiety among the rank and file, and the onus lies squarely on the management to instill order and confidence.

These overachieving employees can justifiably take some of the credit for taking your company to where it is today. However, concerns pertaining to the new company culture, managerial control, redundancies, etc. can make them apprehensive and nervous about their careers and start looking at the different options available to them.

But is there a way of reliably mitigating this crisis of talent afflicting firms that are being acquired? Yes. Assuming that you have identified the key performers in your firm, there are certain helpful measures you can take to avert a mass exodus of top talent.

1. Leadership

The management team must provide the necessary leadership to manage the transition to the new entity. Without able leadership, none of the strategies mentioned below can be executed effectively. Leadership removes opaqueness from decision-making process, and encourages an atmosphere of trust where employees can express themselves without fear.

 2. Communication

Communicate early and clearly. It is always a given that murmurs about probable and impending changes in a company's management and organisational structure starts much before it is formally announced. Keeping such information under wraps for an unduly long period of time serves no purpose other than creating fear, uncertainty, and doubt among your employees.

The surest way to keep their confidence is by communicating forthcoming change in a clear language, at the earliest possible date. You should take care to devise your communication strategy in such a way that it not only lets employees know about the forthcoming changes, but also provides them the rationale for such decisions. The communication process should include discussion of the future road map or ‘vision’ for the company, the new goals and missions.  This will reassure your employees, and allow them to see their career aligned with the company's future.

3. Maintain Routine

Maintain the company's everyday routine. Every company has their own internal culture that employees get used to. This is not an idle process without any significance. These routine processes, be it monthly events, or team bonding sessions, are one of the most effective ways to reassure your staff that things are normal and going to stay normal. Any breakdown of such internal culture immediately signals that something is amiss, leading to unhelpful rumours. It should be the responsibility of management team to doubly reinforce such cultural markers within the company during a period of change.

4. Retention agreements

Typically, this is the go-to move most companies resort to when it comes to retaining their top talent. Unfortunately, a lot of these companies mindlessly focus on the monetary component to the detriment of other relevant factors. There is no doubt that your retention agreement must provide for an attractive monetary package but there are other important aspects. Focus also on promotions, re-definition of roles and responsibilities, new opportunities and personal development programmes. This will re-engage and motivate employees and put you in a strong position through the transitional period. Ideally start this process early and approach your employees individually. This will have the effect of making your top performers feel that they are valued, and that their interests will be taken care of going forward.

Milestone Advisory supports the shareholders and boards of SME businesses across the UK, Europe and US to achieve long term growth and value. If you’d like to meet for a coffee to discuss how we could help with your growth then please give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation. 

Business Growth: Is your Corporate Vision Big Enough?

Successful business leaders will tell you that having a clearly defined vision will help your business grow and that a corporate vision lies at the heart of any business. Unfortunately, some business leaders have not realised that having a vision is one of the greatest assets for improving the growth prospects of a company. In fact, if you are a business leader, one of the most important functions that you can perform is to identify and then communicate a clear vision. I am reminded of the words of the American motivational speaker, Les Brown.

“Most people fail in life not because they aim too high and miss, but because they aim too low and hit.” – Les Brown

We will return to this thought about aiming too low shortly but first let’s think about the benefits of a corporate vision.

What are the benefits of a clear corporate vision?

1. Focus - A vision that is shared by all members of your business will help you collectively set goals that will drive forward. Business strategy can then be planned and evaluated because it has context and relevance when assessed against the vision. Distractions or non-core activities should be minimised as a result.

2. Motivation - A clear vision will motivate employees by stimulating their competitive spirit. In addition, teamwork and collaboration will be enhanced as employees work towards achieving a common goal. The most successful companies understand that the desire to be part of something significant is a big contributor to employee welfare and happiness. A clear vision will re-awaken their desire for achieving great things.

3. Performance - A strong vision will set a framework for better performance and goal setting, meaning that the business can be aligned and moving in one direction.  Performance of staff can now be aligned more closely contributing to business goals and accountability and responsibility be better measured and ingrained into the culture of the organisation.

Are you worried that you need more than a vision? Or that your vision may not be achieved? Take inspiration from two companies below that went onto great success once they defined their corporate vision.

1. Wells Fargo

Wells Fargo CEO, Dick Kovacevich re-wrote the company mission statement in 1994. The vision he defined can be summarised by the following sentence, “We want to satisfy our customers’ financial needs and help them succeed financially”.

Years later Kovacevich reported that the vision had helped the organisation focus more on helping their customers.  Kovacevich observed that each customer had different needs that they expected the organisation to meet.  Employees knew what was expected of them: to help the customer succeed financially. The result has been increased trust from customers and thus more business for the company.

2.  Nelson Books

Nelson Books is one of the trade book divisions of Thomas Nelson. When his boss suddenly resigned in July 2000 Michael Hyatt, who was then second in command, was handed the job. The division was the worst performing part of the company. Instead of focusing on a practical cost cutting strategy Michael took himself off to a private retreat and focused on creating a new corporate vision. The vision can be summarised by the following sentence, " Nelson Books is the world's largest, most respected provider of inspirational books." There was a lot more detail that accompanied this overarching statement. When he presented the new vision to his colleagues it had the desired effect.

Within eighteen months the company’s fortunes had turned around; during the next six years Nelson Books was consistently the fastest growing, most profitable division at Thomas Nelson. All of this happened because of a clear vision.

Consider your own corporate vision in the context of these two examples. Have you set your sights high enough? Does your corporate vision excite your colleagues and business partners? Are you aiming too low?  We would be happy to help you re-define your vision.

Milestone Advisory supports the shareholders and boards of SME businesses across the UK, Europe and US to achieve long term growth and value. Are you planning for agency growth in the next 1-3 years? We would be happy to help you achieve your growth targets. Give us a call on T +44 (0) 7810 604 970 or send us an email via miles@milestoneadvisory.co.uk. We look forward to starting the conversation. 

10 common mistakes agencies make again and again

I was chatting to an agency owner over dinner last week who had just taken some investment from a PE fund. I'd worked with him 2 years previous, helping to shape their growth strategy and market positioning and it was lovely to see them on an exciting new journey.

It got me reflecting on how success comes easier and quicker to some and not others, even when they appear very similar. Sure there are some obvious markers but it often comes down to an interesting mix of actions and behaviours.  Here's a brain dump and hopefully some useful advice to start considering:

1.      Can't let go - there is a founder mentality that it's easier and quicker to get things done yourself rather than risk empowering a more junior person to get things done. This is a really limiting behaviour and may be faster and easier in the short term but will mean you're unlikely to grow if you don't have time to focus on growth and the business. Yes you need good people you can trust but you have to empower them to take on responsibility, even if it means them making mistakes in the process

2.      No long term vision or strategy - Albert Einstein got it right here, 'You have to learn the rules of the game, then you have to play it better than anyone else'. Getting your ducks in a row and building a solid plan, market proposition and refining what your USPs and differentiators are the first step to a successful business

3.      No roadmap - what use is a strategy without a solid roadmap to get there? Business plans don't get read, so don't use them, instead develop something that lives and breathes with the business.

4.      Retaining ownership - consider the benefits of incentive schemes and sharing ownership if it gets you to your vision quicker. Owning 100% of a small business is not necessarily better than owning less of a much larger business that others have helped you build and feel ownership in.

5.      Rear view mirror - many agencies don't plan for profit, it’s a consequence of doing work. This approach is really risky, especially if the economy turns or sales fall.  If you can plan for how much profit you'll make and adjust the plan along the way then you'll be able to plan investments in the business with some assurance

6.      Don't invest - if you don't invest in growth you won't get it.  Reinvest available profits to grow.

7.      I have the right people on the bus - I can't reinforce how important this one is.  You'll all no doubt have the same ethos, but are you really running your business in this way? Are you 'living' with the wrong people, working around them? Is each person the best you can get? Are you performance managing people who are failing?

8.      Unaligned operating model - businesses grow organically and so do the operations.  Unfortunately the strategy of the business sometimes outstrips the pace of the operating model and this leads to inefficient, poor structure and low margins.  I see this a lot.

9.      Poor sales & marketing capability- this can't be ad-hoc and needs to be an area for investment.  Sales needs to be sustainable and marketing needs to support sales.

10.  Get advice - Getting some regular external advice from a non-exec, especially around board meetings, means you'll generally make less mistakes and get to where you're going in less time.

This post was originally posted on TheDrum.com. Here's the link:

http://www.thedrum.com/opinion/2015/03/25/10-common-mistakes-agencies-make-again-and-again

R&D investment is only worthwhile when properly planned

Yesterday, the Financial Times ran a story with the punchy headline: “R&D spending has little effect on financial performance”.

However, when you look beyond the headline and dig into the research on the world's biggest companies conducted by Strategy&  - the consultancy formerly known as Booz & Co, you find a slightly more complex scenario.

The relevance to the digital economy is direct.  The Government included this sector in their 'catapult sectors', a broad brush term for technology and innovation clusters where UK businesses are encouraged to collaborate to turn R&D into new products and services.

After analysing 10 years of data the study determined that a company with a higher than normal R&D expenditure to its sector did not see a direct correlation in its financial performance.  What also lurks in the study is that larger companies spending at the lower end of the R&D expenditure scale within their sector actually saw a detrimental impact on performance.

For small businesses (who were not part of this study) I think we can draw a few useful conclusions:

•         Overall there is a slowdown in R&D spending among big business which could infer that they too are questioning the effectiveness of their investments or are simply becoming more savvy about their investments;

•         A more focused and considered approach to investing in R&D as a means to improve the value of your business is a good;

•         Before investing a penny in R&D consider what the objectives are and how these will benefit the business longer term.  Have a very clear plan as R&D is by nature speculative and can be a money pit if not managed properly. There are lots of unfinished projects out there!

•         Lots of agencies have bigger plans to spin off IP created but beware, you may be good at running an agency but do you possess the skills or the time to run a software or SAAS business?

•         R&D tax credits make it attractive to invest, once you navigate the qualifying restrictions (see previous blog);

•         Think about where real value could lie and how much investment you actually need. There are smart ways to invest in areas that are going to add commercial value. (As always, I’m happy to take readers’ questions on this!);

•         Appoint an investment committee, to give you an outside perspective on your R&D activity.

So, in short, the headline from the FT is a little misleading. R&D is good but requires a more focussed approach, a robust plan, some dedicated focus to prevent mothballing when client work increases and a clear set of objectives.

This post was originally posted on TheDrum.com. Here's the link:

http://www.thedrum.com/opinion/2014/10/29/rd-investment-only-worthwhile-when-properly-planned

Synergies are not enough for a successful agency acquisition

Synergies are not enough for a successful agency acquisition

What does ‘strategic fit’ mean for an agency acquirer?

If we want to create shareholder value through M&A the acquirer has to create higher returns than the premium paid for the target company, that much is obvious. Beyond the simple financial rationale for investing in a good business an acquirer and the target will often talk about the ‘strategic fit’ between the two organisations