The innovation fallacy
by Gau Narayanan. Let me start with an admission. Not quite in Steve-Balmer style but I do love our industry. And we have reasons to be positive. What we do for the brands and businesses that we serve is remarkable. Which is why this piece may appear to be a swipe at the industry yet it isn’t. It’s a request to take a long hard, honest look at ourselves in the mirror. As an industry that prides itself on being one step ahead when advising our clients, how well and how often do we apply this to our own business?
I hear and see a lot about how ad agencies have changed. Globally, and especially in the media locally, over the past couple of months or so. Instead, let’s look at some companies around the world we all admire that may help me make my point around innovation. For me, there are three fundamentals that allow these companies to be genuinely different.
1. The operating system — how they navigate the world
In April 2017, Tesla’s market cap exceeded Ford and GM’s, despite having a fraction of their revenues and that it is making a loss. The market is clearly betting on the future and Tesla’s ability to understand people and its ability to pivot. A large part of its success is due Elon Musk, a software engineer, having set up a car company. He doesn’t approach the automotive industry by the same rules; he doesn’t think the same as the C-suite of his rivals do. As a software engineer, he has set up a company with a completely different mindset and paradigm.
In our world, there are some phenomenal advertising agencies but I’m not aware of one that wasn’t started by an ad exec. I see potential paradigm-shifting thinking through the rise of Deloitte Digital and Accenture Digital, and the many media owners, from the Wall Street Journal and BuzzFeed to Quartz to HuffPo and our own 24.com, that are investing in content capabilities — who will come at it differently. These are all examples of horizontal integration, rather than coming from a radically different paradigm.
The closest example I see is the duopoly that are Facebook and YouTube. These two software companies understand their audiences; they want to monetise these audiences for themselves and on behalf of the brands. They are able to disrupt the advertising agency model using data, technology and an unrivalled understanding of consumer behaviour. That’s a different operating system.
This doesn’t mean Droga 5, Adam and Eve DDB, RGA, Colenzo BBDO, aren’t great companies run by great people who are unable to innovate — it just means their ability to look at the business differently is hindered by what they’ve already learned.
2. The algorithm — their ability to learn
We pretend, or think, we’re data driven. Many of us are, to an extent, but it’s relative. If any of us were seriously exposed to the way data drives decisions at NetFlix, AirBnb, Amazon, Alibaba, fivethirtyeight.com (the company whose US election predictions have been astonishingly accurate), Google and Facebook etc… we may develop a different view. Again, this isn’t really a criticism because the money invested by these companies in computational power, training, analytical tools, IT infrastructure, talent and AI is beyond the market cap of agencies, networks and maybe even holding companies.
But, if you start out as an advertising company, your primary view on investing ahead of the curve will not be through a data warehouse, or AI; it’ll be in people and partners to help you master a new technology or a new platform. Again, the world of software engineering teaches you to think about data differently, to think about research differently, to think about A-B testing differently. We embrace some of these principles we see in Silicon Valley some of the time but we don’t come close to using data the way these leading companies do.
3. The source code — the operational instructions
To look at how operations can truly be disrupted, look inside an Alibaba warehouse and judge our ability to organise the way we work against it. Or look at the rate of change in a car assembly plant since the 1950s.
And for us?
The way we work has been the way we’ve worked.
The copywriter plus art director pairing.
How the client briefs the agency and receives the work.
The time taken and the process of campaign development.
We claim we have revolutionised this but has it changed from Don Draper’s day?
Maybe I’m being harsh, but the reality of change doesn’t really reflect the rhetoric.
When a brief comes in, we should be surrounding that problem with the right people — ethnographers; researchers; anthropologists; category experts (aka clients); planners; media planners; analytics teams; economists — and. Importantly, the people we want to sell to (aka consumers or humans). We should look at how they currently buy or don’t buy. We should expose them to our strategic logic to see if it’s true and compelling. We should understand their journeys online and in the real world. We should understand them better as people and where they are in the buying cycle and their user journeys.
Again, the best agencies do this. Often in times of crisis (account in trouble) or opportunity (pitch), we subvert the process, but it is for a limited period. And after we put out the fire, or win the business, we tend to go back to a business-as-usual mentality.
Because it’s the tried-and-tested way.
We are creatures of habit.
It’s the way we’re paid.
It’s what we and our clients know.
But that isn’t good enough, is it? This is the kind of thinking that will get us to faster horses.
As in my introduction, this isn’t a swipe at what we do. Innovation isn’t easy; many industries are struggling with this. But, unless we admit that we are only enacting incremental innovation, we are kidding ourselves.
I don’t have the answers of how to disrupt ourselves before we become irrelevant but maybe asking yourself the following questions may give you a sense of the viability of the company you work at:
- Do you see or work with people who are outside advertising?
- Has the process and speed of developing work changed at all?
- Do you involve different thinkers to help you solve problems and do you test your work in interesting ways with people/potential consumers?
- How important is data in your company?
- Is technology a fundamental part of your company’s strategy?
The good news is that we have time to change: we are a simple business that has relied on powerful ideas, ideologies and people. Helpfully, too, no one has really worked this out yet but people are starting to experiment. And maybe there’s an Elon reading this article may can help this industry look at innovation through a different lens.
Gautham “Gau” Narayanan is regional director at BBDO Africa and managing director of Net#work BBDO. He joined Net#work BBDO at the end of 2014 after 13 years at AMV BBDO London, and has helped the BBDO agencies across Africa land several new business wins, focuses on talent development across the four BBDO offices and runs BBDO’s regional accounts.
“Motive” is a by-invitation-only column on MarkLives.com. Contributors are picked by the editors but generally don’t form part of our regular columnist lineup, unless the topic is off-column.