Act Like a Semiconductor Company (Agency Scale Tip #10)

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Imagine running a semiconductor company. The annual conference on semiconductors is coming to Las Vegas soon and you’ve got to be ready to present an update on your business to the audience of thousands of potential buyers.?

You reach out to your team and ask, “what do we got?” They excitedly tell you that they’ve been working on a new chip that increases the frames per second (FPS) in video games by 20% over their last chip, bringing gamers an incredible 50 FPS!

You give your keynote on the morning of the first day of the conference. The crowd is impressed by your new chip’s power. Your stock jumps 20%.

The next speaker is from your biggest competitor. She notes that her company is proudly unveiling a chip that can deliver 500 FPS - 10 times what your chip can do. This is all because of her company’s investment in advanced nanotechnology, against which they have spent $10 billion in the last five years (and talked about it very publicly).? When her presentation ends, your stock drops by 80%.

You go back to your engineering team and ask “How could this have happened?” The CTO responds: “I guess we were so focused on improving our own product, we didn’t bother to pay attention to what the competition was doing.” You, and your entire leadership team are fired.

In the world of semiconductors - or virtually any other product-based industry - this sort of surprise almost never happens. Manufacturers are constantly looking for any competitive intelligence to determine what the competition is working on so that they can pivot to build products that keep up with their competitors’ innovation.?

Now let’s apply this to the agency world. What do you know about the ten agencies against which you compete the most? For example, do you know:

• Whether they are building any software or have improved their existing software?
• What services they offer?
• Whether they have developed proprietary methodologies?
• Whether they’ve changed their pricing or contractual terms?
• Whether they’ve made any key hires that indicate a focus on a new service offering, vertical, or geography?
• Whether they’ve won or lost major clients?
• Whether they are hiring or laying off staff?
• Whether they are launching or leaving specific geographies?
• Whether they are in the market to sell themselves or to acquire smaller companies?
• Whether they have raised financing?
• What sort of perks they offer to retain their staff?
• Whether they offer a total or partial work-from-home option?
• What their employee satisfaction ratings are on Glassdoor?
• What their marketing and sales strategy is?
• Which conferences they are presenting at and/or sponsoring?

Most agencies know almost none of this about the competition. They assume that simply doing good work for clients is enough to scale their agency. I’m not against looking inward and trying to do things better and better. But doing that while ignoring what the competition is up to will only get you so far.

And I fully admit that it is much harder to create apples-to-apples comparisons of service offerings as compared to product offerings. A computer chip has certain quantifiable properties; speed, energy usage, processing power, etc. When two semiconductor companies announce their new products, there is often a clear winner and loser.?

In the agency world, however, many differences are subtle and qualitative, which makes it harder for clients to differentiate and easier for agencies to avoid doing competitive research. But there are ways to quantify the qualitative and there are still many highly quantitative differences you need to track (home-grown software, proprietary methodologies, pricing, contractual terms, service offerings, geographic coverage, employee perks, etc).

Scaling an agency requires continuous improvement. Some of this is accomplished by tweaking what you are already doing, and some is done by looking at what the competition is doing and copying it.? To be great and scale, you must do both.

Next Week: Be Three Years Ahead of Your Clients