Agencies are routinely given various “Scopes of Work,” then dutifully proceed to fulfill their client’s requests. But what’s missing from this sequence of events? What should come before the SOW? Our answer: the SOV — Scope of Value …
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Effectiveness Orientation
Why are firms like advertising agencies routinely criticized by clients for lacking the tools and practices that would make them more efficient? The answer in large part is that there are no real economic incentives in place to make these things happen. And if there's one thing economists agree on, incentives matter.
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Take away timesheets, and most agency executives will proclaim the end of the world. But back when agencies were earning average profit margins of 30%, there were no agency timesheets. The fact is, time tracking isn't required for either pricing or resource management …
Answer this simple question: What is the value of three hours of your time spent on a client’s business? You can probably tell me what the cost of your time is (salary plus overhead), but assigning a value to the time is a much more subjective question …
What is the primary reason agencies don’t deliver more innovative solutions for their clients? Lack of talent? Lack of time? In my experience, the latter is much more of a factor than the former. Most successful agencies have some pretty smart people. What most agencies don’t have is a commitment to breakthrough work. They don’t have in place incentives that reward and encourage collaboration and innovative, interdisciplinary problem solving. In fact, most firms have clear disincentives for teamwork; which is a curious irony for an industry that sells “creativity” …
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Based on recent studies, the professional service firm spends over 10% of its time and energy recording, tracking, capturing, estimating, billing, and adjusting it’s time. In other words, feeding the “time machine” …