Marketing complexity is creating a crisis for digital agencies. As an agency learns to sell well, they grow quickly – the 10-person studio becomes a 50-, 75-, 100-person shop – and then trouble hits. They’re selling and strategizing better and faster than they can deliver. A mind-numbing chaos sets in. Everything’s an emergency with its own set of meetings, yet nothing gets done. Staffers disengage and start leaving, clients drift from enchantment to disappointment; and the agency’s culture erodes with every night of overwork.

For agency owners, this deflation is often deeply personal. They can remember the day when their business was small, agile and powerful. “How did it die?” they ask. 

Having worked through this crisis with several dozen agencies, I see five fundamental failures that happen as a matter of course.

Failure to ensure understanding. When the agency was small, everyone knew everything: what the client needed, why it was needed, etc. It didn’t require active managing, because everyone was in the same room, or on the same client, and the gossip chain filled in the blanks pretty efficiently. As the agency grows, conversations naturally balkanize, and understanding only happens through concerted effort and method. Often information shifts to written forms or into systems, neither of which ensure true understanding as well as a conversation.

Failure to establish priority. In a small shop priority is easy. There’s less going on, and the boss’ non-verbal cues signal to everyone else what the correct focus is. Growth means giving multiple people – account people, project managers, specialist leads – the right to determine priority. The result: a bunch of top priorities that no one can agree on, followed by confusion, unfocused work, thrashing and noise.

Failure to empower team members. Along the way, the boss also stops trusting team members as much. They are ridiculously talented but somehow don’t seem worth taking the same chances on. That’s probably because they’re being told, directed, and “managed” rather than being empowered, challenged, and mentored. That takes productivity down 40% or more, as the heart goes out of the enterprise. Work quality drops, and staff go passive.

Failure to institutionalize feedback. In a small agency, the indicators stare you in the face. Founders know the “burn” on every project. Burnout shows in staffers’ eyes. And client dissatisfaction is picked up almost telepathically. With growth it’s not so easy. The numbers and feedback that were visceral need to become numerical and universally watched. Hard conversations don’t happen naturally, so they need to be instigated, the curtain pulled back. Top managers are driving so fast they don’t have time to look at the gas gauge or check the oil. They’ll see top-line sales, margin and cash flow, but those only reveal that there are challenges. The real feedback mechanisms are team members and clients. Enable, share data, listen and learn. 

Failure to professionalize management. An agency is harder to manage than most businesses. The independent-thinking knowledge workers agencies employ are among the most averse to traditional management techniques. Typically, agency management teams lack significant professional managerial training. And well-trained managers that parachute in from outside the agency biz are often ill-equipped to deal with this very unusual sort of organization. The cost of Ad hoc (often primitive) managerial practice is poor morale and under-performing teams. 

The next frontier for digital agencies is the art of management. Digital agencies do one of the hardest things in business. They create marketing experiences and systems that span the bounds of art and technology. To do it, they rely on talented people who don’t fit the corporate mold. Managed optimally, these people can make an agency evermore creative and powerful as it grows.