What can we do to make our industry luckier?

We have probably spent quite long enough trying to make this industry leaner and more efficient. We should try to make it jammier instead.
By and large, our clients all bar employees from social networking sites; agencies don't. This is a small but telling detail – for it reveals something that we temperamentally understand which many businesses do not.

This is not a post about Facebook, you'll be glad to hear. It is, instead, a post about how the world works. About how we can inadvertently make it slightly better. And about how, in their endless, dogged pursuit of a false efficiency, organisations can be rendered slightly useless. And stupid. (Remember that the word 'dogged' is derived from the word 'dog' meaning 'energetic and stupid' – there should also be a word 'catted' meaning lazy and devious; I would love to be described as exhibiting 'catted determination').

Anyhow, this deterministic belief in false efficiency is very simple; it comes from the belief that improvement comes from the elimination of apparent waste.

There is a problem with this approach. It fails to pay any tribute to luck. If you dedicate your life to eliminating waste, you will undoubtedly succeed in a grubby kind of way. But, along with waste, you will be eliminating perhaps 90% of something far more important – your chances of getting really lucky. If you clamp down on frog-kissing, you don't have much chance of finding a prince. This may explain why actuaries very rarely become rock stars.

The point is simple. If you look at all the really important breakthroughs made in any field, what you will find is that the unplanned, unintended or fortuitous connection plays just as great a role as the planned, the processed and the organised. This is why, fairly early on, Microsoft placed white-boards along the corridors on the Redmond campus; for they found that the accidental meetings which took place in hallways were in fact more productive than the scheduled ones which happened in meeting rooms.

It raises a question. Why do we spend ages trying to perfect our processes and to refine our formal ways of working while spending almost no effort at all asking how we could get luckier. Or asking what we are doing that may be killing our luck.

There is a whole scientific literature on this subject. One book, called Serendipity, makes the point that most scientific advance comes not through the dogged and meticulous pursuit of a solution, but through a kind of inspired opportunism in response to a lucky connection. Another, called A Perfect Mess details how a messy desk and the accidental juxtaposition of two apparently unrelated papers led to a Nobel prize.

At a more mundane level, this explains why agencies produce better work faster when working on a pitch than in the real world – the very disorder of the process allows for more lucky breaks. This is why, in all honesty, great advertising is almost as likely to come from a creative factory tour as from a creative brief (sorry planners, but you know it's true).

Where does Facebook come into all this? Russell Davies complains that there is no shared purpose in Facebook. I agree. Yet I think that's exactly the point. Facebook is about nothing if it is not about serendipity, coincidence, the happy accident, the shared admission – quite simply it's all about increasing one's chances of becoming the lucky victim of a happy accident.

The Theory of Weak Ties, a landmark sociology paper of the 1970s provides backing for this. What this suggests (and it is largely borne out by experience) is that one's peripheral contacts and vague acquaintances are more likely to be the agents of the major events in one's life than one's closest friends. It is your wider circle of friends who supply you with your luck. One's close friends, being more similar, are relatively irrelevant to one's fortunes.

Professor Richard Wiseman inadvertently demonstrated this when he sought to replicate the famous six-degrees-of-separation experiment in which volunteers were asked to forward a letter to a named, addressed individual otherwise unknown to them. Twenty of his hundred or so volunteers were unable to participate as “they simply did not know anyone who could help them in this task”. Fascinatingly almost all of these people had, on a prior questionnaire, stated that they believed themselves to be exceptionally unlucky in life. The degree to which you are open to the possibilities of random connections, he believes, disproportionately effects your real and perceived fortunes.

In other words your openness to the possibilities of random and apparently purposeless connections in many ways determines your success. Life really is what happens to you while you're busy making other plans.

So what does this mean for us?

First, don't ban access to anything. You simply never know. Interestingly, Goldman Sachs, the one Investment Bank which seems to have a clue as to what it's doing, does not ban Facebook access. Since its alumni network is perhaps the world's most powerful entity, this may not be altogether silly.

(I adopt a similar approach to conference attendance and speaking. A few times a year, diceman-style, I attend a seemingly random and semi-relevant event not specifically connected to what I do. These are invariably the best ones, and from them come the most interesting chance meetings.)

But there are a few more serious points here. Are we trying too hard to mimic our clients obsession with efficiency (not effectiveness, which is something different) when we should be making the case for chance? Is payment by the hour making us too focussed? Too dogged when we should be catted? How healthy is it to allocate people 100% to one client? Should we share briefs or problems more widely than we do? And should we make a bit more time for nothing in particular.

This last point reminds me of Henry Ford's reaction to a consultant who questioned why he paid $50,000 a year to someone who spent most of his time with his feet on his desk. “Because a few years ago that man came up with something that saved me $2,000,000,” he replied. “And when he had that idea his feet were exactly where they are now.” A man so obsessed with efficiency that he purposely weakened car-parts that never broke nonetheless understood that some wasted time isn't wasted at all.

The Nintendo wife-o-meter

Not a title to endear me to WACL, but it raises an important question nonetheless: does your brand need a Clause 4 moment?

The film you will see when you click here shows Shigeru Miyamoto, the eminence grise behind the Nintendo Wii. This extraordinary man (he is predominantly a game designer, not a marketer) describes the thinking behind the creation of the Wii - an incredibly brave decision which involved (in BBH parlance) making a massive Zag where XBox and Sony had both Zigged.

His thinking ran as follows.

1) In Darwinian terms, if all three gaming platforms adopt the same strategy - that of pursuing ever greater graphical realism through increased processor power - it essentially creates an insane arms-race between the three contenders. This in turn will lead to an absurd market eco-system - rather like a prehistoric world only inhabited by three large, carnivorous dinosaurs with nothing to eat but each other.... and no mammals or other life forms of any kind. Platforms would become increasingly expensive, indeed prohibitively so for all but the most committed gamers.

2) In any case, Miyamoto felt the other two platforms were too fixated by the opinions of hard-core gamers and their preoccupation with power and graphics; in obsessing over this core market, they had overlooked the potential to grow the overall market for games via people who actually had jobs, children, lives, etc. The kind of people who would occasionally break from  gaming to visit the lavatory.

Through this he came up with the wife-o-meter - measuring each aspect of the Wii against the simple question: how much more likely would this be to encourage my wife to become a gamer? (To defuse the cries of sexism, I should point out that Mrs Miyamoto not a doormat - she is formerly a senior executive with Nintendo: it just happened that she was hitherto not into gaming; wife-0-meter is furthermore an inexact translation from the Japanese.)

In other words Miyamoto adopted a very simple approach to innovation: let's not obsess about enthusing an existing market - instead, let's create a new one.

It's a simple approach. One which says "To hell with your core target audience - you can usually afford to take them for granted anyway - and instead let's use innovation to look for business elsewhere."

It's an approach that has worked for brands as diverse as The Labour Party, Apple and Nike. And it's worked accidentally for hundreds more brands.

Apple? Surely not? Absolutely. It was called the iPod. Try this, if you don't believe me: go back to the day the iPod was launched and visit the mac online forums. The Mac fanatics hated this thing. "Just what the world needs, another music player" sneers one. "Steve has really lost it this time." whinges another. More heinous still, remember, iTunes even ran on a PC. This was, in a way, Jobs's Clause 4 moment.

The same applies to Nike. The brilliant Michael Tchao, GM of Nike's Techlab Group, came up against resistance from hardcore runners at the very idea of Nike+. Several even claimed that "If you listen to music, you're not a proper runner." Yet, as many times before, Nike has deliberately courted audiences which are miles away from their "core target audience" - the old, for instance.

On many more occasions, innovation has reached new and unintended audiences entirely by accident. I don't believe that easyJet's passenger base would be anything like as upmarket as it is had the Internet not been invented. Booking low-cost travel online is a wholly different experience - and vastly less demeaning - than using the phone. Yet even the farsighted Stelios resisted using the web for several years, claiming it was just for geeks.

Likewise the internet has taken the whole mail order proposition dramatically upmarket too. Nothing to do with conventional positioning - simply the emotional effect of using one channel rather than another.

Argos would be another example. Men traditionally are supposed to hate shopping. And yet Argos amazingly has as many male shoppers as female. Why? Because Argos uniquely offers offline shopping in a format that does not alienate men.

Why has no other retail brand attempted this? Why do my M&S corduroy trousers not simply contain a URL and a reference number if I wish to reorder them? Or allow me to order a second pair by text? I'll happily give you my money - just don't make me spend two hours in a bloody shop - probably in a queue behind someone from WACL wondering whether something is also available in a 12.

The fact is that innovation in the form of delivery, or in some other technology, can massively change the audience your brand or product appeals to. And so the idea of innovating with a core audience in mind may be a dreadful mistake: as if Tony Blair had decided to reinvent the Labour Party by first consulting the Mining Unions.

 One of our clients was a train company. Every time they performed research, they eliminated all rail-rejectors. I always thought these were the very people we should have been talking to.

The Post Office is perhaps the most guilty organisation in terms of focusing on one target audience to the exclusion of anyone else. "The People's Post Office" it calls itself, in a line reminiscent of Mao's China. Yet the people it has in mind don't seem to include people with a job, people with a car, people under sixty, people with footwear not lined with sheepskin. For God's sake, I am delighted to see lots of Post Offices serving the community, but could you just make 5% of outlets cater to people for whom time has a value. Maybe you could create special premium post offices for fat Welsh wankers in Jags where a first class stamp costs 1.50. I'll happily pay it. It can be a drive-through window, if you like. Just give me somewhere which stays open after 11am on Saturdays.

Please, for a second, just try ignoring your "core target audience."

A new remuneration model for agencies

Or why, had you paid Einstein by the letter, it's unlikely he would have come up with E=MC²

I have just been reading two things in close proximity and they set me thinking.

The first book is The Black Swan, a book by Nassim Nicholas Taleb, a chap who is now something or other at London Business School.

This is a wonderful book, suggesting that all of us have a disproportionate (or, strictly-speaking, an over-proportionate) view of probability, one deformed by our overreliance on Gaussian bell curves as a measure of likelihood. We are too eager to believe we are living in a largely predictable world, one where the only deviations are standard ones.

This is simply delusion. Rather than being a kind of "Mediocristan", with outcomes distributed proportionately (rather like human height or weight), most things in life are very different: human wealth, fame, rewards (and their opposites) often belong to a place he calls Extremistan, where Gaussian rules do not apply. While no-one is 12-feet tall (height does follow the laws of Mediocristan) it is perfectly possible for two people's earnings to differ by a far larger factor than two or three. (It is possible, for instance, that J K Rowling earns more than every other British author combined. In statistical terms, the man who chose to publish Harry Potter will not make another significant business decision if he works until he is 20,000 years of age.) And with this disproportion also comes unpredictability -  a world where small actions can have massive effects.

Anyhow it's a good read. As is this post from Brian Millar's excellent blog.

Brian's post is a request for examples of actions or ideas of exceptional value that have gone largely unrewarded. Or, put another way, they are examples of simple, inexpensive activities that have, in retrospect, proven to be worth many millions of pounds to people other than their creators. (Never mind Tim Berners-Lee.... did you know that Raphael Ravenscroft’s solo on Jerry Rafferty’s Baker Street earned him a session rate of £100?)

These examples, too, it seems to me, belong to Extremistan. To the world of contagion and hard to predict succeses where cause and effect, effort and reward, are not so clearly connected. 

And they pose Extremistan's fundamental creative dilemmas:  1) That brilliant successes may not involve a huge amount of up-front effort and expense. 2) Therefore, In the absence of proven success, it is difficult to charge much for them. 3) By the time you realise they are successes, it's too late to renegotiate the sale.

The problem that advertising and marketing agencies now face is that much of what we do takes place in Extremistan - but we get paid in Mediocristan.

All our remuneration comes from a world where things are roughly proportionate. Where you spend ten pounds to earn back fifteen. Where effort and reward are sensibly linked. Where X% increase in media spend results in Y% increase in reach. Not a world where you spend twenty pounds on one hundred different things and hope one of them pays you back a thousandfold. Not one where a fifty-pound tweak to a website can double the site traffic* in minutes. Not one where a five minute "what if" can be worth a few million in incremental sales. 

Twenty years ago our business was probably more proportionate: attention was more something you bought rather than earned, and there wasn't as much of the extraordinary mathematics of viral contagion in evidence. Paris Hilton simply couldn't have become famous via the Reithian BBC.

Back then things weren't perfect. As Brian relates, after JWT had invented Mr Kipling for free, Rank then made them pitch for the advertising.

Equally, let's not forget that a lot of the value we create now still belongs in Mediocristan. Measuring and testing. Crafting creative work. Rigorous thinking. These are all activities where effort-in is roughly proportinate to value-out. It is impossible to be a creative organisation unless you can graft and craft.

My only issue is that this is now all we are paid for. And whereas much creative value depends on this kind of work, some of it doesn't.

Yet if we are only rewarded for the laborious application of creativity and not the opportunistic deployment of it we shall surely spend too much time on one and not enough on the other. The beautifully simple solution (the E=MC² moment) and the unexpected success needs to be incentivised too. Not "I see the single's at number one, Mr Hegarty - you must be very pleased."

What's needed is quite simple. It is a trade off between incentives so that agencies are as eager to work in the one world as they are in the other.

Here's how I might make it work.

You pay an agency a reduced hourly rate for time spent on the account. Enough to guarantee a small but utterly uninteresting profit.

The amount saved, plus 50%, is put aside every six months.

Every six months, the agency presents to a group including the marketing director, the COO, CEO or MD, and one or two external adjudicators.

They are pitching to get their profit back.

The agency presents nothing but added value. The successes it has generated that were unrewarded at the time. And the incremental ideas it has had which would be valuable to apply but which would make no money in execution.  

These are rarely ideas in answers to briefs - they could be solutions to problems the client didn't know he had (interestingly, Rumsfeld's "unknown unknowns" was a Taleb coinage). With each idea it explains what the value would be created by the idea - using no other measure than that of shareholder value.

And each idea is given a price - either a flat amount or a small share of the results. If there is a difference on price, the adjuicator's decision is final.

It is far from perfect, but it would encourage agencies once again to step out of their insanely constrained roles. It would create a forum for discussing ideas, rather than autistic crap like resourcing. It would naturally drive integration, as all disciplines would be continually mined for ideas. It would reward clients with reactive or unimaginiative agencies with a significant overhead reduction. And it would mean I would once again start to pay attention in the financial part of board meetings as (for once) the money we made might bear some relation to the value we delivered.

It would also promote board level discussion of marketing issues. And could turn agencies, in the longer term, into idea brokers. (Ordinary members of the public  have many valuable ideas - they need a place to go).

Tell me a better idea if you can. All I know is that rewarding value creates value; rewarding effort creates effort. We need a system that recognises that.