As in previous years’ consultancy surveys, we’re showing the leaders and laggards in terms of growth of UK fee-income and efficiency in terms of UK fee-income per head employed. Since we don’t have access to profitability, this is the nearest we can get to looking at performance of design businesses in the Top 100. For me, this is more interesting than looking at the main league table since it reveals something of the psyche of these businesses.
This year, instead of showing the top ten in terms of percentage growth, I have shown the top ten in terms of absolute growth over the year as there have been some stunning performances among the bigger players.
There are two basic types of consultancy in the Top 100: those which are part of bigger public limited companies which are under shareholder pressure to show growth each year; and the rest which are private and independent. On the face of it, we would expect to see the former outperforming the latter, but, interestingly, this is not always the case.
WPP Group seems to have a mixed bag in terms of growth year on year. Enterprise IG and BDG McColl have both performed well during the past two years and Coley Porter Bell seems to be getting its house in order again after last year’s spectacular drop in fee-income. Addison, on the other hand, has shown only mediocre growth and Scott Stern Associates appears to be in a downward spiral with two consecutive years of diminishing revenue.
Omnicom’s Interbrand Newell and Sorrell continues to show strong growth, despite staff defections, whereas Fishburn Hedges has shown lacklustre growth for the past two years.
Interpublic’s Coleman Planet has grown consistently over the past two years, in stark contrast to stablemate Diefenbach Elkins, which saw a 25 per cent collapse in revenue this year.
This year, Conran Design Group, owned by French conglomerate Havas Advertising Group, saw a spectacular drop in growth from 133 per cent last year to a modest 10 per cent this year.
We don’t have prior year comparatives for Landor Associates, owned by Young & Rubicam, but I suspect that Landor’s European leadership problems over the past year have had a big impact on fee-income growth. I would expect to see healthy growth next year under the new leadership.
Holmes & Marchant is part of the plc bearing the same name, and its growth has been extremely modest over the past few years. This is in stark contrast to publicly-quoted Fitch, which has grown by 26 per cent and 39 per cent over the past two years.
Hence it is a really mixed bag as far as the above subsidiaries are concerned. It all goes to show that being part of something bigger, with all the benefits of sharing clients and systems, does not necessarily lead to success. The key to this is inspired leadership and motivated staff.
It is fascinating to look at the privately owned consultancies and ask what is motivating them to grow or what is causing them to stagnate.
The outstanding success of Imagination, The Brand Union, Jones Knowles Ritchie, Revolution and The Partners deserves highlighting. I suspect that leadership and motivation are not in short supply in their offices.
It is interesting to note that many of the top performers also appear in Design Week’s list of the top 50 most creative businesses (DW 26 June 1998): The Partners topped the list; Interbrand Newell and Sorrell came fourth; Fitch was 13th; The Brand Union was 18th; Imagination was 26th; JKR came 48th.
This correlation between product quality and financial success should come as no surprise. An obsessive focus on quality will nearly always lead to financial success, but not vice versa.
Looking more carefully at the independent consultancies, it is possible to identify three sorts of businesses: those which appear to be drifting (growth less than 10 per cent in each of last two years); the roller coasters, which, after strong growth last year, have seen little or no growth this year; and the steady eddies, which have seen growth of between 10 and 40 per cent over the past two years.
Growth undoubtedly brings with it the problems of success, be it client reliance, cramped working conditions, stretched financial systems, creaking technology or cash flow problems. Undoubtedly, the best way of avoiding some of these problems is to grow at a healthy rate (say 10-15 per cent above inflation) and to ensure that support systems keep pace.