Joi Ito, director of MIT's Media Lab recently spoke at a Dentsu thing in New York that I couldn't go to, but heard a lot of good things about, so I looked up some of his talks.
One of them referenced two models, talking about propensity to risk-taking in business. (His original graphs are here, I've just re-scribbled them below.) They're a nice shorthand for the things that have preoccupied me in the first year or so of a new business, trying to define new ways of working, and new kinds of business models in communications that prioritise cultural value.
The first - the Traditional Sales Model - refers to bigger companies with established revenue streams, profit and production modes.
In the context of communications, this translates (to my mind) to medium-to-large advertising or design agencies who've been operating for at least two or three years. They might not classify themselves as Sales Companies, but they are: their business model is predicated on selling a certain product, made and delivered in a certain way, by certain people. The driving focus of these businesses, and much of their spend goes into "new business", by which they mean large accounts: one of an established agency's most significant costs - often running into the tens of thousands per quarter - will be pitching for three of four pieces of business a year.
This model militates against innovation, or any kind of new approach, in terms of - more modestly - the type or size of business you might pitch for, or - more adventurously - the nature and form of your business model itself, the work you make, and/or how money is spent, and earned in trying these things.
Simply put, the bigger and more established your business is, the greater the potential downside of any risk or trial, and the smaller the potential upside. It takes so much to divert attention and funds from the known way of doing things that it will literally - fiscally - never be worth trying something really new.
The second, Venture Investing model, is based on trial and error. Investors typically float numerous projects, constantly assessing the potential in each, culling those that show little promise, and responsively backing those with growing potential until one or a few of them take off. It's almost all upside with this model, as risk is inherent, and managed, not a negative.
Dentsu London's business model is not something I'd anticipated being a big part of my job on the strstegic and creative side of the business. But I've realised more and more that this stuff is at the heart of it, because it's the context that allows interesting forms of creative work to happen. Or not.
The question in this area that I get most of all, is how have we been able to experiment with our work, on any kind of project, but particularly those that didn't at the outset involve a client or an outside budget.
Projects like these are inexpensive and with a purpose - either for communicating what we're about, exploring ways of working that we can apply to other areas, or in the case of Suwappu, substantial new long-term revenue streams for the agency. They're essential efforts, made for less than the average agency's entertainment or traditional PR budget alone.
We've chosen to prioritise the work, and the way we make it and this is one of the ways we do so. Not because it's fun (although it often is) but because it makes business sense. It doesn't if you're working with preconceived ideas about starting a creative business in this market, and if those are based on the tradtitional advertising agency model, but that's exactly what we've tried to avoid.