Tony Douglas, founder of strategic communications company Essential Media Communications and co-creator of the ACTU’s ‘Your Rights at Work’ ads, tells how he built his company to $5 million revenue by making two key strategic decisions and a big mistake.
By Amanda Gome
Remember the controversial ad with the boss telling the young mother to come in on her rostered day off? Remember her turning to her two small worried kids on the couch and asking, “But who will look after the kids?”
Part of the ACTU’s ‘Your Rights at Work’ campaign, the ad was created by Tony Douglas (right), who runs the fast-growing strategic communications company Essential Media Communications.
EMC now has $5 million revenue, 23 staff and makes more than $500,000 profit a year but ploughs a lot back into IP, staff development and growth. Tony credits the company’s success to two key strategic decisions, one major mistake and one painful decision. He explains.
(If you have questions for Tony, email feedback@smartcompany.com.au. One reader already has his question answered below.)
Amanda Gome: When you started in 1997, what niche did you see?
Tony Douglas: We wanted to start a business doing strategic communications for clients based on solid research and knowledge of news and the media rather than hot air. And we wanted to execute that strategy no matter what was required, whether it was free media (coverage in newspapers) or paid advertising.
There must have been lots of competition…
There was. Then soon after we started there was a major industry shakeout. A lot of competitors were bought out or merged with multinationals that then closed their Melbourne offices. That gave us the chance to push hard into the Melbourne market and by 2000, revenue had grown to about $1 million.
What happened next?
It was very difficult. By 2000 we plateaued and could not break through the next growth barrier. We then decided to bring our market research inhouse. Research was the key part of our methadology so from there we became a communciations and research company.
We tried to employ some general managers to run EMC and leave us free to take it to the next step but they didn’t work out because the authority still rested with the owners who worked in the business. We were struggling to find the right business model forward.
So what did you do?
We realised that our senior people needed to have a very strong commercial focus; it wasn’t enough that they were good at their job. We needed people who could bring in work and manage projects, staff and client relationships as well as do their job. It is a complex mix of skills. We needed to measure performance in these areas. As a result one of the directors and owners left and that was very painful for everyone concerned.
What was your next big strategic move?
We had to make the decision about whether we stayed a Melbourne-focused company or expanded nationally. We took the plunge and that was the pathway to our success. We searched and found someone who had a great understanding of the news cycle and who had a desire to over-deliver for clients and develop extremely strong relationships with them.
This person ran a small business in Sydney and we offered him equity based on meeting certain targets. He had good connections, and we could see he had the capacity to grow and develop. He was also a cultural and ethical fit with us. Now we are looking at Brisbane, looking for the right person in Perth and we are already in Canberra. Looking back, we should have made the decision to expand nationally earlier.
What else did you do strategically?
We made sure we could offer five major service areas: research, strategic communciations, news management and PR, issues management and advertising. We could do everything from a brochure to major strategic campaigns.
What is your internal structure now?
We have two tiers. We realised that the equity holders have to be responsible for all decisions and so we are very hands-on. Then we have younger staff who are paid well, get trained and have the ability to fast-track themselves. We don’t have a general manager as we found it doesn’t work.
Hiring staff in your industry is very hard. How do you do it?
We do some advertising but we usually poach people, so we have seen them in action and have had favourable reports. We have also developed the reputation of the company as a place of choice to do fast-track learning. That means we are happy taking on younger people and training them and when they leave in three years’ time, they become our alumni working for larger organsiations such as corporates and government departments. They become an advertisement for us.
What are your favorite questions to ask when you hire?
We ask people to solve a communications problem. We look at the questions they ask us back so we can see how they think.
We also look at what motivates them. Are they interested and engaged in the issues of our clients? Do they have the necessary depth of knowledge? And are they reasonably outgoing people? Are they confident enough to make connections and build relationships?
We also very carefully check references and look at the types of environments they have been in previously. Have they worked in pressured environments and how have they performed?
What is your biggest regret?
Not understanding the complexities of growing and running a business and how good methodology needs to be backed with strong relationships with our clients. I also didn’t understand you don’t get ready-made staff and that the investment in their skills and development have major pay-offs for your business.
You create major strategic communications campaigns for the ACTU, lots of unions, Victorian Government, utilities, corporates and so on. What are the biggest mistakes organisations and corporates make in their communications with customers?
Running advertisements that are not properlty researched. Running campaigns that talk too much about themselves rather than focusing on the real needs of the customer. Failing to understand whether they are in a transactional or relationship business. Failing to identify the problem they are solving. Above all, communciations needs to personalise the message to connect. Once the connection is made then you generalise the proposition to the marketplace.
What other mistakes do corporates make?
They don’t have a clear selling proposition. Corporates complicate everything from complex instructions to complicated messages. Make sure you describe the problem you are solving in the same way as the people who have the problem see the problem.
Looking back, what would you have done differently?
Expanded nationally earlier. Also focused a lot more on staff development. We now make much better choices about the people we hire and are much better at training and development. We are also the only company in our industry that has a collective agreement with their staff. In a properly run business everyone feels they are getting something out of it, including stakeholders, staff, clients.
You have 23 staff. What are the hours like?
We work a 40–45 hour week. It’s hard and demanding with tight deadlines. But it is not like a legal partnership where you are required to work 60–70 hour weeks. It is quite manageable.
C Butler from Pyrmont writes: I am in the design industry and had the same problem as yoand thought I had successfully found a GM but they turned out to be a thief and derailed my business.fF months I was interested in your solution but wondered if to handle the next stage of your growth you will have to bring in a general manager. How else can you manage the staff?
Tony replies: Employ a very good bookkeeper who you absolutely trust who can manage the finances. Get hands on about the employment and training of staff. Make senior staff responsible for the commercial and success of their areas and for the effective management of staff. Meet weekly with those senior people with a set agenda focused on the key goals of the organisation. Make sure you meet monthly with your key clients/customers. Make sure you understand their evolving needs and that service delivery is good quality. Make them feel they ring you if they have a problem and it will be sorted. Set budgets and targets for the business in collaboration with senior staff and reward them for delivery.
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