Efficient Positions

Frameworks for competitive strategy, the psychology of money, and business models of the future

Hello, fellow traveler. Every week (or so!), this dispatch helps you make better creative and strategic decisions. Sometimes that means essays. Sometimes that means resources. Last time it was a framework for making content decisions. This time it’s a framework on basic competitive strategy for agencies. It’s born of my experience helping to lead my former agency, but I think you’ll find it useful for any brand. Anyway, hello, it’s good to see you. -Steve

Gif by Arunas Kacinskas

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So most agencies know how to get work done.

This is called operations.

But most agencies don’t know how to approach the market.

This is called positioning.

You need both to create a competitive strategy. 

Operations is how you do the things you do. Positioning is what things you offer, to whom, and why. 

The latter captures attention and converts it to work. 

The former captures that work and converts it to profit.

Doing operations well is called efficiency.

Agencies compete to be more efficient since, by their nature, services businesses are lower margin (your product is highly paid people).

The more efficiently an agency provides those services, the larger their margin. Do a nickel’s of work for a dime’s worth of pay. That’s how you keep the carnival going.

At the end of the day efficiency (+/- some other stuff!) is measured in profit: did you make more money than you spent?

Efficient operations is one half of competitive strategy

To increase your profit you can always do things like:

• Pay your workers less

• Charge your clients more

• Reduce your operating expenses

• All of the above

This is why agencies overwork staff, hire freelancers in remote cities with lower day rates, try to win awards to get famous, specialize in work few others can do, or go fully remote and stop buying snacks for the kitchen. 

If an agency based their strategy solely on the efficiency of its operations, their choices would look like this: