BGBS 046 Tim Williams | Ignition Group | Stand for Something and Get Paid for It
Tim Williams is the founder and managing director of Ignition Consulting Group, noted author of several books, the latest being Positioning for Professionals: How Professional Knowledge Firms Can Differentiate Their Way to Success, and international speaker for business organizations worldwide. His popular blog Propulsion is regularly featured on LinkedIn Today, and he has been interviewed and quoted by The New York Times, The Wall Street Journal, Huffington Post, and so many more.
Although Tim is very insightful and respected in the business world, we learn that he developed many other talents throughout his younger life as well. Tim used to compose his own music as a child on his piano with his dad’s 8-track recorder, ran his own radio station for the kids of the neighborhood to hear, and had a deep interest in visual arts. Later in life, he learned vital lessons about pricing and strategic positioning, though you can still find him immersed in the Silverado soundtrack at full decibels while driving into Moab Valley. In the end, Tim teaches us that you can actually increase trust by being honest about what you don’t do, encouraging us to ask, how can we all say no today?
In this episode, you’ll learn…
- Tim had his own radio station covering local news as an eight year old and printed his own newspaper, while having interests in photography and music
- As Tim was deciding to piece all his passions together, he decided to declare himself as a music major when he went to college and had his sights set on life as a film composer
- Living in Southern Utah, Tim most identified with Western film music scores and would listen to them driving through places like Moab Valley
- Tim started out playing trombone, but also played piano. He would compose his own pieces using his father’s early version of an eight track recorder
- When Tim started interviewing for jobs, he still didn’t know if he wanted to go to the account side or creative side, but luckily he got a job as a writer and account exec at Marsteller
- Tim spent time working at Salt Lake City, but originally felt it was a culture shock and ended up moving to Houston in under a year
- After partnering up, Tim decided to start his own agency back in Salt Lake City called Williams and Rockwood, which attracted attention beyond state borders and across the country, with clients such as CBS and NPR
- Branding is more the experience the brand delivers, than the product itself.
- Price based on the value you create for your clients, not on the cost you incur inside your firms
- As a business strategy, you can’t serve every kind of client. You can be excellent at something, but you can’t be excellent at everything.
- Successful agencies have walked away from charging for inputs and instead charge for outputs. These firms reward productivity instead of busyness as a culture.
[12:36] This is one discipline that incorporates almost all of my interests: writing, music, broadcasting, the visual arts. All of that is just kind of wrapped into one and in the ad business.
[36:48] Visit any website at random of an agency or a law firm or an accounting firm, you’ll see those words, “full service,” most of all. That is not a strategy. It’s the absence of a strategy. It’s saying we do everything for everybody.
[47:34] In most businesses, if you improve your pricing by just 1%, which is completely doable, you’ll improve your margins by more than 10%.
[52:19] The successful agency doesn’t do timesheets, doesn’t equate activities and efforts with value.
Tim Williams 0:02
I remember, oh, after the first month or so that I was, in my job, I had a great boss, a great mentor gentleman named Ted France who, who really just taught me the whole business. I followed and copied everything he did. And he was a great teacher. But one day he said, a damn. On our lunch break. Why don’t I take you down to Brooks Brothers? And let’s buy you a nice pinstripe suit and some conservative ties, and a few white shirts because this was this was the late 70s. And I I think the suit I had was a light blue kind of, you know, very 70s looking suit, but just did not fit in, in the conservative business culture of New York. So I kind of had to remake my image. It was that point I bought the book. How to what is it how to dress for success?
Marc Gutman 0:59
casting from Boulder, Colorado. This is the baby got backstory Podcast, where we dive into the story behind the story of today’s most inspiring storytellers, creators and entrepreneurs. I like big backstories and I cannot lie. I am your host, Marc Gutman, Marc Gutman, and on today’s episode of Baby got backstory. We are talking to Tim Williams, who is on a mission to help professional service firms escape the tyranny of an unfocused business model. Okay, okay, here is my regular plea for ratings and reviews over at Apple podcasts and Spotify. Apple and Spotify are the two giants in the industry. And they use these ratings as part of their algorithms. And this determines the rating on their charts and we want to climb those charts, we want to go up those charts we want to improve on those charts, we are already doing well. But we can always do better.
Those ratings help us to build an audience that an audience, a community, which then helps us to continue to produce this show. Please, if you haven’t rated or reviewed this over at one of those platforms, whichever one you’re listening on, and you think we are worthy of a strong rating, please go ahead and do so I would appreciate it. So so much. Tim Williams is a globally recognized expert in the areas of business and pricing strategy. Tim is a noted author, international speaker and presenter for business organizations worldwide. Based on his expertise in positioning and pricing, Tim has been interviewed by news gathering organizations including the economist, Wall Street Journal, New York Times, Bloomberg News, The Guardian, Toronto Globe and Mail. The Australian Financial Review in numerous business publications ranging from Europe to Asia. Suffice to say Tim Williams, is a big deal. Tim is the author of two books, take a stand for your brand and positioning for professionals. And as a consultant to professional service firms, Tim has worked with hundreds of organizations, ranging from mid size independence to multinational networks and global holding companies.
As you’ll hear, he began his career on Madison Avenue, working for major multinational advertising agencies, and later served as president and CEO of several mid sized independent firms. Tim knows this space. And as the leader of the ignition Consulting Group, Tim now advises the leaders and managers of professional service firms on the development and execution of positioning and pricing strategies. And this is his story, as well as some practical positioning and pricing insights.
Tim, thank you very much for joining us on the show today. Let’s hop right into it. Can you go ahead and give me a little background on who is Tim Williams?
Tim Williams 4:03
Wow, where to start the current iteration if Tim Williams is my role as a consultant, running a small but focused consultancy, that focuses on the ad agency space. So primarily marketing communications firms, which is a pretty narrow niche if you think about it, but also other types of marketing firms, PR firms, digital agencies, and to some extent, I get dragged into the rest of the professional service world law firms, accounting firms and so forth.
That’s not my sweet spot. But enough of what I do is relevant to other areas of professional service that I do some work in that area as well. I so how’s that for a start?
Marc Gutman 4:55
Yeah, that’s perfect. That’s that’s that’s excellent. And you know, you you started that By saying the current iteration of Tim Williams, let’s talk about the early iteration of Tim Williams. What were you like, as a young child? Were you interested in these types of topics like marketing and advertising as a? Let’s say, like an eight year old? Tim Williams?
Tim Williams 5:14
Yeah, absolutely. I had my own radio station as an eight year old and would drag kids from the neighborhood and, and printed my own little newspaper, photography and music buff. And in my formative years, I was always thinking, how could I take these bits and pieces of things that I love, and, and make a living at it? So my, my answer by the time I got to high school was to be a professional musician. I was heavily involved in, in music and in band and jazz band. And so I decided to declare a music major when I went to college and and had my sights set on life as a film composer.
But I quickly learned in my freshman year of college, that that was going to be a difficult way to make a living there were like 10 really well known film composers, that would be hard thing to break into. So I decided, alright, I’ll keep music as a hobby. And which I do to this day, and I will do something a little more commercial. And that’s when advertising caught my eye.
Marc Gutman 6:36
And before we get into the advertising space, so like, what was your radio show as a kid? What did that cover?
Who were you emulating?
Tim Williams 6:44
Local news. I would go hang out, I grew up in a small town, just a suburb of Salt Lake City, Utah. And we had a radio station like every small town does. And I would go up and just sit on the floor of this radio station. for the better part of the day in my summers. And listen and watch and kind, kind guy who ran the place jack Tranter took me under his wing. He gives me all his old records and the promotional things that he got sent by, by musicians and artists, and I’d take them home and repurpose it all for my for my own. For my own show. I just, I just loved it.
Marc Gutman 7:29
Yeah, and in addition, I can imagine, you know, when you get all the swag and all like the Promote promo items, like, yeah, that’s certainly an attractive, attractive bit of the business. But what else did you love about it? I mean, what was compelling? What, when you saw that were What were you dreaming about? And thinking about?
Tim Williams 7:44
Well, I was, I like the music part. But I’ve always been fascinated with the, just the whole world of mass communications, the the ability to get get the word out to lots of people in a in a mass audience in a mass kind of way. And, and so that, you know, that’s kind of part of what drew me to it, I just felt like that would that would be an important job and important thing to be involved in to, to be part of the industry that reports the news, and just keeps people aware of things that they should know about. Yeah, that’s about as close as I can get to an answer, I think.
Marc Gutman 8:30
That’s a good answer. And as you were an upcoming musician, what instrument were you playing?
Tim Williams 8:34
Well, I started out playing trombone, and that that worked fine in, in jazz band, and, you know, orchestras and so forth, but also also piano, my mother started me on piano at a pretty early age. And I immediately started, like, a lot of people do composing my own pieces.
And like my, my dad, who was kind of an audio file, he had a early, you know, eight track recorder and I would do my own eight track recordings with orchestration of just me on on on piano, mostly laying down multiple tracks. But you know, really having a lot of fun, just with early versions of that technology, which is way way better and easier now, isn’t it?
Marc Gutman 9:28
Sure isn’t like almost anyone can be a composer now and it will at least have the tools to be a composer. It still takes
Tim Williams 9:34
Yeah, that’s right. Exactly. Yeah.
Marc Gutman 9:36
Did you have a favorite film composer someone or a favorite film score that you were like, always either mimicking or replicating or looked up to at that time when you thought it would be a composer?
Tim Williams 9:48
Well, I’d have to say the early westerns, Elmer Bernstein, The Magnificent Seven. You know that that the whole the whole Western soundtrack, john Which is probably my largest playlist on on Apple Music is really what got me going I and I’m a Western kid, you know, born and raised in, in Utah and, and just identify with, with all of the themes and the imagery that that comes along with that, you know, Southern Utah is where most of the a lot of the Western films were made the john wayne films and and it just does something to me to be in that environment and and here Western film scores to this day I spend maybe half my life in in Moab and southern Utah, which if you been is kind of the epicenter of Red Rock country, Arches National Park and others.
And when we, when we my wife and I drive in to Moab Valley, there’s usually something like, you know, the Silverado soundtrack playing, you know, full decibels and in our car, because it still has that same effect on me.
Marc Gutman 11:03
And I can imagine and next time I go to Southern Utah, I’m gonna do that because I as you’re speaking and talking and describing that it really took me to a place of thinking I know how majestic and and how just vibrant that landscape is. And I can, I can see you as a young young boy being you know, Hey, there, this is where the moon, this is not where movies are made.
This is where westerns happen, you know, and I think that there’s something something really, really neat about that. And it is it’s not like a movie set. It’s real. Yeah, that’s the real thing. Yeah. And so you mentioned, you were in college, and before you kind of jumped into advertising, like, what were your interest in college? What do you think you were going to do at that point?
Tim Williams 11:44
Well, I think like a lot of us, I probably had two or three majors. By the time I was through my first first year, first couple years, political science was one of them. not related at all, to what I ended up doing, I thought maybe maybe business school, I should just continue and get an MBA. My brother was a law professor and had lots of family members who had followed that path. But honestly, none of that motivated me. I thought the money part of that might be nice, but wow, what a boring life to be an attorney. You know, I just thought that doesn’t exercise any of the creative interests that I have. So I, when I took my first course advertising 101, I thought this is it that I finally found it, this is it. This is one, one discipline that incorporates almost all of my interest, writing, music, broadcasting, the visual arts, you know, all of that is just kind of wrapped into one and in the ad business.
Marc Gutman 12:51
Yeah. And so you that light goes off and, and touches you and you get excited. And but as you just outlined, there is a lot of there are a lot of facets to the ad business, there’s a lot of different things, and some of them seem very complimentary, and some of them are kind of far apart. You know, like, how did you then say, I want to do this? Or was it more? Hey, I just need to get there?
Tim Williams 13:14
Well, I, I think it’s that fork in the road that a lot of people in in the advertising marketing space face, especially in school, which is all right. Do I want to go business side or, or creative side? I mean, that’s the essential choice. And not everybody can do both things. I kind of felt like I could I had interest in going in both directions. And so I thought, well, I’ll get a holistic education. I’ll, at least in this space, also learn about media or learn about PR and so that I can be as well rounded as I can. But But still I faced that same fork when I graduated and sent my resume rather presumptively presumptuously to the top 25 agencies in New York, and said, Hey, I’m going to, I’m going to leave my homeland here.
I’m going to the big city, if I want to, if I want a career, if I want to have a serious career in advertising, I’ve got to go to New York. So when I started applying for jobs and interviewing for jobs, I still didn’t know Do I want to go account side or creative side because I felt like I could do either either job as a writer or as a account exact. And fortunately, I landed at a place that allowed me to do both both things. My first job was at an agency called marsteller. And its sister agency Burson marsteller, which is, you know, it is now a marsteller is not a name that it’s known now, but it was one of the top 20 agencies at the time. It was purchased by young and Rubicam while I was working there and great place to start, but they had this system they called copyright. Contact, which allowed account people who have who had the ability and to also write to write their own copy for the clients they worked on. So that was pretty unusual was really lucky for me. So I was able to do both things, at least for the first few years of my career.
Marc Gutman 15:19
Okay, and what was that? Like? I mean, a kid from Utah out New York City, and you’re working at this cool agency? Yeah. What was that like for you?
Tim Williams 15:28
Well, you know, I, I’d lived other places, part of that haven’t spent my head and spend my whole life in Utah, we lived in Europe, when I was a kid, my dad worked for the US government. And you know, so I had seen the world I traveled the US and a lot of Europe. So it’s not like I was completely wet behind the ears. But it was still quite quite an adjustment. I was a young married, we had an eight month old son, which made me kind of an anomaly. Just that I mean, all my other friends of a similar age were, were certainly single and couldn’t imagine being married with a child.
So it was a it was a, it was a one of the smartest decisions I ever made. Because I learned so much. I mean, I just soaked it all up as a sponge. And, to this day, I’ve always felt like I could easily go back and, and do that all over again. And fortunately, I I kind of don’t have to, because a lot of the a lot of the work I do in my consulting business is in fact, in New York, and I I’ve ended up working with a lot of the agencies that that that I, you know, dealt with and wanted to work for when I was a young man.
Marc Gutman 16:44
Yeah, and what was what was hard about it? I mean, you know, you certainly shared the the exciting side of it, but what was heard about being in that business at that time, and what you were seeing?
Tim Williams 16:54
Well, there was just a lot that a Western kid doesn’t know about the whole Ivy League scene, you know, I felt like I was pretty culturally current. And that, you know, I would fit in pretty well. But I, but I remember, oh, after the first month or so that I was, in my job, I had a great boss, a great mentor gentleman named Ted France, who, who really just taught me the whole business.
I followed and copied everything he did. And he was a great teacher. But one day, he said, Hey, Tim, on our lunch break, why don’t I take you down to Brooks Brothers, and let’s buy you a nice pinstripe suit and some conservative dyes and a and a few white shirts, because this was, this was the late 70s. And I think the suit I had was a light blue, kind of, you know, very 70s looking suit, but just did not fit in, in the conservative business culture of New York. So I kind of had to remake my image. It was that point I bought the book, How to what is it How to Dress for Success and learned, you know, all the apparel I should be wearing in metropolitan business centers.
Marc Gutman 18:11
And so where did your career go from there?
Tim Williams 18:15
I, at that point, I had, I’d been at marsteller for about four years, and I got word that my mother had died. And my my, my father said, Hey, I’m thinking about selling or moving out of the family home? And how would you would you be interested in coming back and, you know, taking over the house, and you know, you could have a career here. And I really fought the idea. I really wrestled with it for quite some time. But then I thought, Wow, it’s going to be forever before we get in the house living in New York on a starting salary as a young married. I mean, we had no discretionary income whatsoever. So I thought, okay, that’s probably not such a bad idea. So we went back, I got a job still in the business with one of the really good agencies in Salt Lake City. And that lasted about less than a year, it was complete total culture shock for me, I thought, Wow, that was that was really a bad decision.
I mean, Salt Lake is a fine place to live. But I’m not going to learn and develop and advance the way I want to hear. So I contacted a few headhunters I met in New York and said, I just get me back to New York about as fast as you can. And they asked me which agencies I’d like to work for. And I told him honestly, Ogilvy and Mather would be at the top of my list. So I get a call back saying we’ve got a perfect job for you. It’ll be great. They said, but it’s not in New York. It’s in Houston. About Houston. Wow, that’s never been on my considered set. But it was a good fit for me. I went and interviewed for the job, and most I moved my little family to Houston where I work for Ogilvy. And that was a, that was a great experience.
Because Ogilvy, they consider themselves the Teaching Hospital of ad agencies. And, and so, you know, you’re always learning a great agency with a great reputation. And I was there, at the early days of the, you know, technology boom, and the personal computer. I mean, we, we went and pitched this account that that was formed by a couple of guys from Texas Instruments, and it was a computer brand called compact. Everybody knows compact. There were they had six employees, and we weren’t sure we wanted it because it looked like maybe kind of a risky thing. We didn’t know if it was for real. But we, we won this little account. And a year later, they made the cover of Businessweek is the fastest growing business and you know, the history of the Fortune 500. So that was a really interesting wild ride to be in on the early days of tech, because I was the account supervisor on that business.
Marc Gutman 21:11
Yeah. And where was it, you know, maybe give a little more color about what it was like to be in the ad business in Houston. I mean, to your point, not really, on most people’s radar, then are probably on now. I mean, it’s, you know, it and it’s a huge, you know, commercial center. And so it makes a lot of sense. But, I mean, was there a part of you that kind of felt like, oh, like, I’m kind of, I’m kind of grown down to the miners are employing, you know, different kind of ball here.
Tim Williams 21:35
I certainly would have felt that way if it hadn’t been overly made either. I that that’s really the only reason I did it. And Houston, you know, as you say, it’s a big city. It’s the fourth biggest city in America. Most people don’t know that. It’s a sprawling metropolis and and for Rocky Mountain kid, it’s not a great place to live, you know, it’s flat, it’s hot, it’s humid. There’s not a lot of outdoor recreation. I mean, I, I think, you know, for me, people like me, it’s kind of a tough place to live. But it’s a dynamic Business Center. From an advertising standpoint, at the time it was it was it was an outpost for multinational agencies. I mean, many multinationals had offices there, mostly because of the oil business. And our largest account with Shell, you know, probably the largest account within all of Ogilvy was shell and it was run out of Houston. So it was an interesting mix of New York professionalism and Texan faultiness. So it was okay, you know, it was it was a it was a good experience. I enjoyed it.
Marc Gutman 22:41
And when you put it like that sounds like potentially, it was quite a bit of fun.
Tim Williams 22:44
Yeah, it was fun. You know, Texans are fun people. And And so, as I say they a lot of the half the office were transplanted New Yorkers. So there was that half of the culture and the other half were kind of local grown Texans in it culturally. It was it was a lot of fun. You know, they they knew how to take care of their clients, yet. We did it in a professional way. That makes sense.
Marc Gutman 23:14
Absolutely. Yeah. And I get the the appeal of Ogilvy I mean even today, I mean, I think it’s, you know, the, the gold standard, it’s an agency, I’m always, you know, just intrigued in, in fact, by and following, and yeah, holding really high regard. And so, why did that come to an end? What happened?
Tim Williams 23:31
Well, I didn’t, we didn’t exactly love living in Houston. I thought the career experience was was great, but we really missed the West, we missed the mountains. And I had in the back of my mind, like a lot of people, my entrepreneurial streak where I felt like some at some point in my career, I do want to start my own firm I want to partner up with someone and and and just give give it a shot. And I thought I’ll salt lakes probably the place to do it at the time, you know, still not a big ad center not not thought of in that way. And I thought so that’s that’s extra challenging. Could we could we establish an agency in a place like salt lake city that that could do world class work and gain a top reputation that that was the challenge.
So I moved back and and partnered with a guy named Scott Rockwood and we formed the agency Williams and Rockwood and had lots of early successes, our goal from from the start was let’s do the kind of work that would attract the attention not just of clients in you know, in our own state borders, but but well beyond California and New York. I mean, could we do that? And we did. I mean we succeeded in one of our early clients was CBS and entertainment out of La CBS News in New York. NPR, based out of Washington that was largely pro bono, but what the heck I mean, it helps burn as your reputation. Mrs. Fields cookies based in Utah, but certainly considered a national kind of a brand. And we were featured in Communication Arts as and the one show in New York, the one club invited us to put on our own show at the one club and hosted a special soiree, we got quite a bit of attention in the trade press and ad week and Ad Age and so forth.
And I thought, wow, you know, this is kind of what I had envisioned. And we did that for 10 years. And another similarly minded agency in town, had the idea that we should merge and kind of get a little more critical mass and attract bigger clients. So we, we we merged. And it was at that point that I decided to do that the next thing that I was certainly on my mental list, which I didn’t plan, but, but the timing just turned out to be right. For me to sell my interest in the agency once it was once the merger was completed, and all the partners were in place, and the accounts were stabilized. That’s when I made the decision to start my current business ignition Consulting Group.
Marc Gutman 26:31
Was it hard to leave that agency that you found it? I mean, you could hear the tempo in your voice. I mean, you’re proud of it. and rightfully so. And there is some excitement in your voice that I’ve heard is you were reliving that. Sure. Yeah. Like, like, like that must have been difficult.
Tim Williams 26:47
It was difficult, made easier by the fact that the the merger, like a lot of businesses that they get together, and it appears to be a good match from a business standpoint, and from a client conflict standpoint, and good, you know, good synergy from a business standpoint, that but the cultural piece of it was just difficult. You know, I meet so many agencies and agency principals that have had similar experiences where that the culture is one culture, when you put two cultures together, one kind of has to dominate. And there was a that that was difficult. So that made it easier for me to to make the decision, it didn’t feel like the same place that my partner and I had had worked so hard to establish. And the ACS is still in business to this day, they changed their names called called Richter seven. So still still going. And all the original partners have moved on, was was a while ago.
So that made it easier for me to to make this decision to hang out a shingle. Start a consulting business. I’ve always had an academic streak. My, my siblings are all have advanced degrees, many of them have PhDs. And so I was the black sheep in the family, you know, the ad guy, that that the one person without the PhD and but I knew I like to write and speak and present and teach. And I thought, here’s a chance to do it. The the scariest part was I was, I was fairly young, at least as consultancies go. I mean, you look at a lot of people who, who move into the consulting business, they’re often in their late 50s, early 60s, kind of a, you know, pre retirement thing that they they want to do for a while before they you know, until they turn late 60s or 70s. I was I was 48. And, you know, had still kids at home.
So that was that was a little risky, especially to say I’m going to focus exclusively on the agency space, I’m not going to work client side. I’m going to just do what I think I know best. And that’s the market that I feel like I know, and what’s the worst that could happen? You know, worse it could happen is after a year, I can’t pay my bills. And so therefore, I will go look for a partnership and in another agency or I could always move back to New York or elsewhere. I wasn’t worried about that.
Marc Gutman 29:27
What was the trajectory of that of that business? I mean, did you have a client waiting for you? I mean, did you literally hang a shingle and just kind of wait by the phone? I mean, would that look like for you? Yeah,
Tim Williams 29:37
I did not have a client waiting for me. But you know, I felt like I’d work pretty hard to establish a good reputation. So there were agencies in in the Mountain West in the region and elsewhere who knew who I was. We belong to an agency one of these independent agency networks. which is now called magnet where I met lots of agency principals throughout North America and Europe and other places that all belong to this network and they become friends. And that’s who were a lot of my early clients were were the agencies who knew me, and who I had a relationship with. So that that really helped to have that. That that business, those relationships materialize within the first couple of weeks of me kind of announcing what I was doing. So that that definitely helped.
Marc Gutman 30:37
This episode brought to you by wildstory. Wait, isn’t that your company? It is. And without the generous support of wildstory, this show would not be possible. A brand isn’t a logo, or a tagline, or even your product. A brand is a person’s gut feeling about a product service or company. It’s what people say about you, when you’re not in the room. Wildstory helps progressive founders and savvy marketers build purpose driven brands that connect their business goals with the customers they want to serve. So that both the business and the customer needs are met. This results in crazy, happy, loyal customers that purchase again and again. And this is great for business. If that sounds like something you and your team might want to learn more about, reach out @ www.wildstory.com. And we’d be happy to tell you more. Now back to our show.
Well, today, front and center on your website, it says stand for something and get paid for it. So first of all, kudos to someone who is a professional positioning, that’s great positioning. But that idea and I love that idea. I mean, it really resonates with me, and I think it resonates with a lot of people. But was that a formed idea at that early time? I mean, is that what you were going out and trying to talk to these agencies about
Tim Williams 32:04
the first half of it was the stand for a half the get paid for it came later? I’ll I’ll explain. So I knew that the primary thing I wanted to do for agencies was help them with their positioning strategy with their business strategy, because it’s one of the great ironies in our business, that these professional service firms agencies that are in the business of helping their clients develop a distinctive brand, and focus strategy are, you know, really poor at doing it for themselves. I mean, it’s the it’s the example of the dentist with bad teeth, you know, it’s agencies just a lack, for the most part, lack the discipline to and objectivity, quite honestly, to do it for themselves.
So I thought, this is where I’m going. This is where I think agencies need help. So I made the decision, actually, about the same time I started the business to write a book. So I went to work on a book, which is a heck of a lot of work, people who’ve written books know that. And I published take a stand for your brand, in the early years of my business, and that was a real catalyst to to help me get more more interested prospects. writing the book helped catalyze, for me, the my own process, my own thought process and a framework for helping agencies with their positioning strategy.
Five years later, I wrote a second book called positioning for professionals, which is on the same theme. It just takes what I learned in five subsequent years and and, you know, puts it into kind of a second iteration. So that’s the Stanford piece to get paid for a piece that came later. Because what I half of what I do is teach positioning strategy to professionals. The other half of what I now do is teach pricing strategy to professionals. And I would have never imagined that I would be teaching pricing. I haven’t taken a single class in accounting.
I’m not drawn to the idea of a career in accounting, or finance, necessarily. But I met a gentleman named Ron Baker, who is an accountant, a CPA, who had written some books about what’s called value based pricing for professional firms. And basically, he’s on a mission to bury the billable hour and to show how billing by the hour is, is a wildly suboptimal way of capturing the value you create for your clients. And when I met Ron, he just turned my world upside down when it came to the pricing because I was deeply ingrained as most agency professionals are in the hourly rate. hourly billing, you know, cost accounting based on hourly rates and utilization rates and all of that nonsense, which I now believe is nonsense. So he showed me the way and completely changed my paradigm. And so half of what I do is now helping help change the paradigm of mostly agencies, including the the, the multinationals now, on a better way to price our services and capture the value they create for their clients.
Marc Gutman 35:29
And so let’s, you know, let’s not assume anything, and let’s clarify, and thank you so much for breaking up that the very clear positioning statement to to two areas that I’d love to kind of shift and talk about, and the first being positioning like, what is it? I mean, you’re talking positioning positioning strategy, I want to make sure everyone’s really clear on Yeah, what it is and what it isn’t. And why does it matter?
Tim Williams 35:52
Yeah. Well, it’s a, it’s a business strategy. It’s deciding what you are and what you’re not. And it’s, it’s the what you’re not, is the hard part. I, you know, there are a lot of good models and frameworks for business strategy, the one that I that I teach, basically, is the idea that you and we all agree with, with this, just, it’s just a sensible thing to say, look, you can’t stand for everything, and you can’t serve every kind of client, you can be excellent in something, but you can’t be excellent in everything. So the agencies and other businesses that go out there and say, this will sound familiar, we’re a full service integrated marketing communications firm serving a wide range of clients, that that’s the default, so called positioning strategy for most professional firms. You’ll just visit any website at random of an agency or a law firm or an accounting firm, you’ll see those words full service, most of all, that is not a strategy.
It’s the absence of a strategy. It’s, it’s saying, we do everything for everybody. And so what what’s needed is some apply some critical thinking to say, Okay, let’s back up here. Who really is your market? Is everybody your market? Or do you have expertise in certain categories? and business segments? And, and what are those, also your service offering, you can’t be best in class and everything, but you, you can be best in class in some things. So let’s define what those things are. And then let’s talk about your method, your your methods, and you know, your your, your purpose and things to get deep. But the four things I teach are what who way? And why. So the what is what are your competencies where you can be best in class, the Who? What are the markets in which you have deep expertise? The way is, how do you deliver that in a in a unique way? And then finally, why is your purpose? Which is the the most difficult of all those four questions. So every business needs to think through those four questions to have a memorable differentiating positioning strategy.
Marc Gutman 38:11
And how does a firm or an agency know where to draw the line? I mean, I think that a real common problem that I see and and i know i personally even suffer from it is, you know, you start narrow. And then in this crazy world of marketing and branding, and communications, you just start to bleed slowly or quickly into other areas, you start to touch other areas, you start to think, Oh my gosh, if I don’t deliver the next step in the process, my beloved client is going to go to my competitor, and then they’re going to wine them and dine them and take them over. And to be honest, I even feel like I’ve had that happen a couple times. Not every time but you know, you’re, I’m talking for personal experience. So like, how do you know where to draw that line? And how to be broad enough, but certainly not too broad?
Tim Williams 39:02
Yeah, great, great question. Because I think it’s human nature to diversify. It’s true, actually, that most businesses start fairly narrow. And over time, they take on client requests and start offering services that they never intended. It’s like barnacles on a ship that you know, you never intended for. You look back and say, Wow, I actually didn’t. That was not intentional growth, or I mean, at least not intentional and intentional business strategy was quite unintentional. We just go to a client meeting and they say, Hey, can you do our event the big event we’ve got planned and you say, you give a halting Yes. And then you go back and meet with your partners and say, Hey, guys, can we can we do events and and so you scramble and try and figure it out?
Well, that’s so that’s human nature because we want to play Our clients, especially on the front lines of client service, what you have to do is just be clear about the areas that that that you want to become your core strategy and those that you don’t, my experience is that it actually increases client trust and respect to tell them you don’t do something like, No, actually, we we don’t, we’re not in the events business. But we will have, we’re happy to hook you up with someone who could do a good job for you, that increase increases clients respect for you to say that, that you don’t do that, because they know that the things you are doing doing for them, that you have some competence and deep expertise in drawing, drawing the line is, is the hard part of strategic development, deciding what not to do. So that’s, that’s a matter of getting a small multidisciplinary group of senior executives, you know, in the firm together.
And first of all, convincing that group that that narrow is is better than than broad and that narrow is not the same as small, I mean, that that we really have to fight that one because we feel like narrow fills, niches and small and we’re never going to be big, but the reverse is true. I mean, Starbucks is pretty narrow, right coffee, and they’re on every street corner in the world, they’re not a full service restaurant, you know, just take, serving all all sorts of different meals in different forms. So narrow is not the same as small, that I find that the primary hurdle is psychological, that most of the time, the reason we give into these requests to do something is that we just we just don’t have it accepted that that actually we’d be better off saying no than saying yes.
Marc Gutman 41:56
So I was recently told Matt that recently, but you know, within the last year told that branding is not a discipline, it’s not a positioning, what’s your thought on that?
Tim Williams 42:07
I think branding is one of the most overused words and in business, I think we we, we throw it around, and it when meaning lots of different things. A graphic design firm would i would interpret branding as the look and feel of the brand. You know, it’s not only its logo and its mark, but its packaging and its building and its trucks. And you know that that’s that’s branding, but but the argument is that branding goes much deeper than that, it it’s just as much or more in the experience that brand delivers, then then the product acts itself. I mean, David Ogilvy used to say that a brand is someone’s idea of your product, you know, a brand is the idea in the mind of the of the customer of your product.
So I do think that the the central question around branding, or the first question to ask about it is, is about what your business strategy is those four questions? Have you decided on a on a target market? You know, who’s your customer? What, what are you going to feature as core products and services? You have to do that? First? It’s not because otherwise the the branding exercise will be will be superficial, it’ll it’ll just be a band aid, when you haven’t really done the hard work of developing and defining the positioning strategy. Am I answering your question?
Marc Gutman 43:31
Yeah, totally. Yeah, that was great. And let’s talk a little bit about the second half, they get paid for it. So why is pricing so hard? Like, right, like it really is. I mean, it’s one of these things I look back in my career, I probably literally today at lunch, I was having lunch with someone who owns a software development firm, but same same idea. And he was talking about, like the conversation was, how hard it is to deal and maneuver around pricing. And so like why why is it so difficult?
Tim Williams 44:03
Well, most of us have never studied it. You know, I do I do seminars with rooms full of CEOs, CFOs, in some cases from large, global multinational communications firms. And I asked how many here have ever read a book on pricing and not a single hand goes up? Because we don’t, it’s just not on our radar screen. We we think, well, we need to know how to run, read a balance sheet and an income statement. We need to understand basic cost accounting to run a business. But none of us have ever studied pricing, which is not an accounting, right. It’s and that’s that’s what in the end kind of attracted me to it. It’s not the science of counting your costs. It’s the art of making judgments about the value you produce. And these are two completely different disciplines. If you look at Large client organizations, they have a finance department and a chief financial officer.
They also have a pricing department and a chief pricing officer. These are separate disciplines with separate skill sets in, in most professional firms, that gets conflated. We conflate, you know, cost and price. And we have our finance people doing the pricing, and they’re the worst people to be doing the pricing, you price based on the value you’re creating for your clients, not the cost you incur inside your firms. So this is a matter of dragging professional firms kicking and screaming into what is essentially a pricing revolution. Over the last 20 years, there’s been a global pricing revolution in in among marketers, they have, they have developed a lot of really innovative interesting ways of pricing their products and services. And you see new new methodologies invented every other every other week. But professional firms are stuck in this old dusty bill by the hour paradigm that actually dates all the way back to the Industrial Revolution. They just haven’t ever pulled their heads out of the sand to see to even look at what pricing is about.
Marc Gutman 46:18
And and why is that important, though? Like what what are they missing? And how does that change once they start to, you know, follow this idea of value based pricing?
Tim Williams 46:28
Well, it if you look at the revenue and profit margins of the agency business over the last 40 years as a business, not only a steady decline, but a freefall agencies used to make 30% margins back in the days of Don Draper madman. If you fast forward to the next decade, those margins dropped to 25 and then 20, and then 15. And today, the average global agency profit margin is below 9%.
So there’s, there’s a real economic imperative for this, this, I guess, if we just keep going in the current cost plus bill by the hour framework, you’ll eventually will have agencies that generate no profit or negative profit, because that’s, that’s what’s been happening. So it’s, it’s an absolute necessity to look at a better pricing model, plus all the interesting research around the what’s called the power of the 1%. In in, in most businesses, though, if you improve your pricing by just 1%, which is completely doable, you’ll improve your margins by more than 10%. In some businesses, it’s 20, or 30, or 40%. So it’s definitely worth the time and attention of both entrepreneurs and managers to improve their pricing.
Marc Gutman 47:59
Yeah, and so I’ve been on this journey of trying to follow value based pricing, I think of it a lot like yoga, you know, it’s like a practice. It’s not, it is something that I’ve like mastered. It’s something I’m working towards and getting better and no, it’s it’s difficult. It’s challenging. And there’s a lot of different reasons why I mean, it’s weird. I say weird, but maybe it’s not it’s, it’s in conflict for me to charge, you know, a big company a lot more in a smaller company, a lot less for essentially the same service. You know, that’s a little bit in conflict. I tried to do it. But also, you know, why do you think it is so difficult, you know, so it’s easy to talk about, it’s easy to understand the philosophy and the the idea of value based pricing, but rise, it’s so difficult to put into practice? And what do you recommend to firms that are that are trying but maybe struggling a little bit?
Tim Williams 48:47
Well, I think it’s definitely difficult for professional service providers, it’s not so difficult for manufacturers, and and others, I mean, they they have no problem charging different prices for the exact same thing to different customers. For us. We feel like that might be slightly on ethical. But it’s it’s not. I mean, it’s just it’s just capitalism. I mean, it’s just the way the marketplace works. And I think the reason is, because we’re tethered to the billable hour, we’ve come to most people only know the billable hour system, they’ve spent their entire careers in it. So they’ve come to equate a value and, and cost an effort on a one to one basis. So if I spend this much effort, it’s worth this much. So that’s the main reason we it’s it’s the wrong, it’s the wrong paradigm.
It’s the wrong theory of value. I mean, the labor theory of value was developed by Karl Marx, you know that that was the idea that that the amount of labor that went into something ought to determine its price and that I think I think we’d all agree that that’s a pretty outmoded paradigm. So I think it’s just, as I say, more psychological than anything, and it’s a journey for sure. It’s, I’m gonna say it took me two or three years to fully wrap my head around it and get comfortable with it. Because when I first heard about it, I thought it was insane.
Marc Gutman 50:22
And so you mentioned, agencies like in the model, like, you know, back in Mad Men days, and since then it’s at least, you know, from a revenue standpoint and margin standpoint, like steady decline, is the agency model as we know it? Is it? Is it dead or dying? Or what do you think it’s at right now?
Tim Williams 50:41
Yeah, there, as you probably know, there’s a two or three articles a week on on on that, with that kind of a headline, right, the agency model is, is dead, I certainly think that the the agency revenue model is dead. And that underlies, I think the health of our overall business model. If you think about a business model being composed of how how the firm creates value, how it delivers value, and how it captures value, those, to me are the three main elements of a business successful business model, the deliver value piece is your positioning strategy, your what your who the deliver value is the your your production model and your organizational structure. And the capture value piece is, is your cost structure and your and a revenue model.
And I would submit most agencies don’t have a revenue model. And that’s what’s that’s the thing that is most, in the most making the agency business model overall and the most dangerous because we don’t have a revenue model, we have a cost structure that masquerades as a revenue model. I mean, Tesla has a revenue model, Apple has a revenue model, they’ve got pricing professionals, they’ve got lots of different ways they price, they test and learn, we we add up our time and send the clients a bill. And that that just is unsustainable and it doesn’t align at all with the value that we create for our clients. We we create tremendous value that is money we just leave on the table.
Marc Gutman 52:13
Yeah, and so using that as the framework, what is the successful agency look like?
Tim Williams 52:19
The successful agency doesn’t do timesheets doesn’t equate activities and efforts with value though they are their inputs. So that at a basic level, we want to move away from obsessing about and charging for, and reconciling and analyzing and all the nonsense that most agencies do inputs, and instead direct our attention to the actual outputs themselves, the work product and the outcomes that we deliver on behalf of our clients. So the successful agencies are the ones that have walked away from obsessing about inputs and charging for inputs and instead have found ways lots of different ways to charge for the outputs. And in some cases, the outcomes and culturally, to work in an agency that is not looking at your utilization rate they you’re working instead of for, for a culture of accountability instead of a culture of utilization.
No, those firms don’t care if you look busy. They only look they only care if you’re producing results on behalf of your clients. I mean, they’re defining productivity as it in the right way, you know, productivity is not buisiness.
Marc Gutman 53:42
Tim, before I get to my final question, where can our listeners learn more about you? Where can they find out more about Tim Williams?
Tim Williams 53:51
Well, I, I do write quite a bit on LinkedIn to get a flavor for more of the ways I think in the work I do. I think LinkedIn is a good place to go with the articles that I write there. And the website Ignition Group comm also, that’s where I publish a blog. And that’s where Stanford something and get get paid for it is explained in a little more detail.
Marc Gutman 54:19
Thank you. We’ll make sure to link to all those resources in the show notes for easy connection to Tim Tim. So we come to a close here. If that young, eight year old radio Tim ran into you today, what do you think he’d say?
Tim Williams 54:33
I think the eight-year-old would be happy that this is that I followed that path and found a way to do something that I love and make a living at it. So that’s a that’s a great, great question.
Marc Gutman 54:58
That is Tim Williams of the Ignition Group. I am so fascinated by the topics of positioning and pricing in business. I find it is truly the difference between those businesses that are successful and those that are struggling to stay afloat. I feel like I need to go look at our positioning and pricing as soon as I stopped recording this podcast will be linking to all things Tim Williams in the show notes, so please make sure to check him out. And thank you again to Tim Williams and the Ignition Group. Well, that’s the show. Until next time, make sure to visit our website www.wildstory.com where you can subscribe to the show in iTunes, Stitcher or via RSS so you’ll never miss an episode. A lot big stories and I cannot lie to you other storytellers can’t deny