Many economists are speculating about where productivity will come from in the future, now that technological productivity gains have petered out.   Based on our work over the last five years with 60+ agencies, there is a simple answer: your people.  Measures of annual productivity growth in the economy tend to be in the 0.4-1.x% per year.  Yet, we’ve seen one-time productivity changes of 30-100% in agencies that empower their teams.  And our initial (anecdotal) data suggests that gains continue (albeit in single digits) in the years that follow, as teams further improve their velocity and quality.

We outline a few of the key moves needed from our article published on March 30, 2016 in Campaign Live’s US edition in Agency survival depends on liberating talent.

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The agency business today looks like an episode of “Survivor.” Client procurement is assaulting fees, while consumers are changing faster than agency capabilities can keep up. The more challenging advertising becomes, the more survival comes down to unleashing the abilities of our people. The new differentiator will be enlightened management.

Many, if not most, agencies won’t make the grade. Their management practices impede people’s productivity and growth. Instead of the autonomy and concentration their creativity requires, talented people are bombarded with interruptions and context shifts from account to account, meetings and status check-ins. The squandering of talent is most obvious in the reality of, “Real work only happens after 6:00.”

Hectic environments also mean that skills grow more slowly. Cognitive research confirms that distraction and multi-tasking retard the development of high-cognition activities. The chaos is hardest on the younger people who form the core of agency productivity and do the heaviest lifting to get work produced. They represent the future of our business and yet end up working the hardest and learning the slowest.

So increasingly agency talent now heads for the exits. Consider the findings of the 2015 Campaign US survey, where 70% of agency people graded their shops as no better than satisfactory, with half reporting low or very low morale. Results skewed worse for the more junior among them. Respondents seemed to agree that management was the most significant problem. A full 70% of people at low-graded agencies said they were actively looking to leave.

Where will they go? Many will be drawn to lean startups and product shops where collaborative management empowers teams to break performance barriers routinely. It’s not that agencies can’t work that way; it’s that only a few truly do, and the rest treat it as the exception rather than the rule.

At an industry conference last month, an agency exec touted a “boot camp” method whereby 20 staffers were stationed in a large condo for two weeks to focus on one client – a work environment devoid of email, competing project demands, interruptions, and management. He said they had produced “two years’ worth of work” in just two weeks.

Today’s talent is far more capable than most agencies are of managing it.  The best agencies, the ones that will survive and prosper, increasingly separate themselves by giving great people this kind of focus — not just for a few weeks, but every day. They’ll be magnets for talent because they operate on a team philosophy that elevates creativity, productivity and morale. They’ll also out-price and out-deliver the old-school agencies, because people working collectively outperform people working in hierarchies by more than 50%.

How are they different?

They keep managers to a minimum.

Managers cost a lot, and promoting people to manager often robs key talent from the teams, reducing their productivity. Agencies with a manager-to-team ratio of 1:5 or higher field teams that feel more empowered and advance ideas and skills faster. I’ve seen 120-person agencies with 1:12 ratios outperform industry norms by miles on every measure, but most shops of scale have 1:3 or even 1:2 ratios. The bigger the agency, the more onerous the management.

They minimize the activity of managing

Level of managerial involvement is inversely correlated to team productivity and morale. In fact, given the right information and autonomy, agency teams can largely manage themselves. That’s the real lesson of the bootcamp; managers got out of the way of the work, and the team went faster. Much faster.

They create focus time

Dedicating people to fewer accounts and teams frees them up to operate at peak efficiency. This virtually eliminates the cost of context switching – the reality that even a few seconds of distraction can derail a creative person for a half hour – by giving teams significant focus periods.

It’s time for a leadership revolution in advertising. Agencies need to recognize they’re really in the people business, and liberating talent is the new competitive advantage. The greatest performers will be the agencies that learn to treat people as the new technology, and empower teams to create and activate the kind of marketing that can only come from the focused energy of a self-managing group. Nothing is more important to make advertising work and prove its worth.