What would you do if your business suddenly loses 50% of its revenue? How do you strategize to salvage what can be salvaged versus pioneering into new revenue streams? Do you learn any lessons from the larger implications of the disaster? If so, how do you apply them?
These are exactly the kinds of questions faced by Barkley, a Kansas City full-service ad agency. A little over two years ago, Barkley lost its biggest client. Revenue would soon drop by half.
Especially for an ad agency, when something like that occurs the instinctual reaction is to do everything possible to retain that client. Perhaps the agency can realign its approach to satisfy the clients renewed expectations. Perhaps the relationship can be repaired. Perhaps the agency can reconstitute the creative team for a more effective product, and thus convince the client to stay. Perhaps the agency needs to do a better job communicating the long-term plan to the client.
As CEO of Barkley, Jeff King made some smart decisions to navigate the disaster in the most profitable manner possible. Rather than investing resources in trying to salvage this one large client, King elected to go on the offensive (Turning Loss into Opportunity Kansas City Business Journal, 1/4/131/10/13, pp. 1112):
The first decision we had to make was whether to defend or not because we were invited to defend the business. It was not an emotional decision; it was a very pragmatic decision, which was that we had a window of time. We could have spent all our time and energy and resources trying to defend, or we could we could spend the same energy and resources trying to replace revenue through other means. (p. 12)
One of Kings strategies was to focus more heavily on Barkleys remaining client base. King knew if Barkley continued to produce great work for them, business would naturally expand. Additional elements of his plan involved strategic acquisitions and new-client infrastructure enhancement. King elaborates on the transition the company had to execute to ensure success:
Overnight, our business changed from one where we needed people who were really good at shepherding big clients to one that had to get really aggressive at winning business, and those arent necessarily the same skill sets. (p. 12)
Although not an easy ride, these tough decisions paid off. Today, with 250 employees, Barkley has $36.7 million in revenue, and no single client represents more than 8% of that. Two things stand out to me loud and clear about this approach:
1Barkley regrouped and retooled its workforce to navigate a changed business landscape. The company did what needed to be done to be successful in its new world. Thats what successful businesses do.
2Barkley embraced a larger diversification of its client base. This diversification ensured the company would never be blindsided by this problem again.
Situations such as Barkleys remind us of an important truth. As business leaders, even in the worst of times we may find the seedbed for the best successif we are willing to search for it. King reflects:
Sometimes an event that you think is the worst thing thats ever happened to your business turns out to be the best thing. We never would have known that. (p. 12)
Thats a lesson for us all. As business leaders, our job is not to wallow and whine in misery when things go wrong. Rather, our job is to capitalize on the hidden opportunities.
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