Are agencies "commonizing the costs and privatizing the profits"?
In his article 'Tragedy of the Commons' in 1968, Garrett Hardin argued that because us silly humans are by nature rather selfish and self-serving beings that we will still engage in professional behaviour which has short term benefit to us individually even if we are aware that there is a risk of longer term poverty, pain or suffering to others.
His smart illustration of this can be found on Wikipedia here (as well as in his full article here), he tells of a peasant farmer using common land for grazing....
"Central to Hardin's article is a hypothetical example of herders sharing a common parcel of land, on which they are all entitled to let their cows graze. In Hardin's view, it is in each herder's interest to put as many cows as possible onto the land, even if the commons are damaged as a result. The herder receives all of the benefits from the additional cows, while the damage to the commons is shared by the entire group. If all herders make this individually rational decision, however, the commons are destroyed and all herders suffer." Source: Wikipedia
Philip Holden and Nick Wilde on pleasewalkonthegrass.com also cleverly use Hardin's illustration here to highlight the selfish behaviours that brought down the banking system (and these behaviours are hopefully still being flushed out of the finance sector). The public finance bail outs were examples of commonizing cost, spreading the pain, yet as customers and tax payers we of course havent enjoyed any of the direct benefits of the large rewards offered to banking professionals over the years. Unless of course you own that Porsche dealership up the road...
Rather a long intro, my point is thus. I've thought before and ruminated on blogs that this is a danger facing the communications agencies. Every time in a competitive pitch an agency lowers their fees (to points that are now unsustainable), this creates a pain not just for the winning agency but it spreads the pain, commonizing the long term costs (by commoditizing agencies' offerings) yet it is only the winning agency that gets to reap any profits that might eventually exist. In the process, competing agencies have lowered the bar a fraction further.
Whilst this itself is nothing new, and a well debated issue at that (see my earlier post on this issue here), so using Hardin's model the solution is to either have more independent, external control, for example a body like the IAA or AAR who set benchmarks for costs and control competitive pitches to protect value, or the other route is for all the participants (agencies) to work together for the common good, like the peasant farmers with herds grazing on the common land, agreeing between themselves just how much each individual agency can take from the common land without causing a detrimental impact on others' business models.
If you've been to any of the big media or advertising conferences over the last few years you will no doubt have noticed that the heads of the agencies are happy to all gather on panels to bemoan the struggles of running tight margin businesses. Among them (and their agencies) they often state the need for better integration and collaboration of disciplines among and within agencies, so much so that collaboration seems to be the new buzz word. Indeed it does sound rather good doesn't it, everyone working together for the common good (notably the client's business success). However, to my knowledge, in every single scenario where these agency heads we're asked to share their vision of a more integrated and collaborative agency model, they all flatly refused to share any ideas or their plans.
The irony makes your teeth hurt....
They can't share their plans for building a more collaborative agency model in case someone nicks their ideas and (god forbid) sells it to a client before them.
While it goes on like this, with agencies building these fences around their innovation, then all we are still doing is looking for the individualistic advantage, the quick buck that a collaboration agenda will give us, under-mining all that good intention. Further hindering our ability to work for a common good and limiting the successful growth of the industry. Undoubtedly, if agencies become less protectionist and more open source with their IP, they will all share the rewards.
Now is the time for agencies en masse to show to their clients en masse the value that they deliver by collaborating fully. If we collaborate on the approach, we can share in the spoils. In order to do that, its good to think of us all in place of Hardin's shepherds. We can either put up more fences to protect our grazing areas making our innovation and business growth stunted or we can find new ways to work together that protect the value in our business for tomorrow rather than blindly over-grazing it today.
The next time you head to a conference or have cause to chat to an agency CEO, ask them what they are doing to promote a culture of collaboration. See if they'll share it with you...
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