Daily Research News Online - The Born-Again Desk Researcher

How fast is it growing?
Turnover nearly doubled in 4 years
between the two MBOs – £21m in the
year to March 2000, £40m year to
March 2004. Rose only 10% last year
but looking very good so far in 2004.
How's it growing?
Mostly organic – only two smallish
acquisitions in last 4 years, MRC in
Ireland and the strategic agency
Market Dynamics.
Which bits of it are growing fastest?
Big increases in public sector research
spending haven’t hurt – MORI is wellplaced to benefit from this. But private sector business is doing well too, especially in CSR (Corporate Social Responsibility), online research and via the Qualitative Hothouse unit –
‘interesting and innovative work about
which we probably haven’t shouted
enough’.

Secret of their Success
‘Focusing on the knitting ... and
spotting opportunities for growth,
plus having the right people in place
to make the most of them’. The last is most crucial – and therefore having an HR dept that knows what the company is trying to do – MORI’s HR Director sits on the Board and is in tune with its plans.
The Headaches:
Getting the people issue right is a real
challenge at three levels – finding
them; training them well; fitting them into the organisation. If the last of
these is done badly, it will lead to
dissatisfied staff, even if the first two
are done well. Complacency is a big potential headache in any fast-growing organisation

– people just assuming it will continue
– there is none in MORI.
‘Handling the exit from the previous
financial ownership was a headache
... a big challenge to ensure we
minimised the disruption caused by
the transaction’.
The Future:
Venture Capital arrangements can
dictate how far ahead you plan –
MORI’s has a 3-5 year timescale
– one of the prices to pay is having to
provide a good return for the VCs.
2004 looks very good so far.
‘The industry doesn’t seem to be able
to decide how fast it grew in 2003,
but we sense it’s growing faster now’

Thanks to: Brian Gosschalk, CEO, MORI

It’s June - and more to the point it’s June 2004 - and good times seem to be returning for most in the research industry. Some companies, however, have been growing all century and they’re in bullish mood now. We talked to some rapidly growing UK agencies, of various sizes, about the pluses and minuses of being on MR’s fast track.

The six are not intended as a representative sample, and they are not necessarily the fastest growing of all. They are simply six very different companies we thought interesting and whom we’ve seen in the press – ours and other people’s - quite a lot of late.

Steve Hales
Joint MD, Synovate UK

"We have renewed energy and vigour as a result of being part of a big company which is recognised - self respect and kudos"

Brian Gosschalk
CEO, MORI
"The industry doesn't seem to be able to decide how fast it grew in 2003, but we sense it's growing faster now"

Clare Bruce
MD, Nunwood
"Finding the right people and resisting the temptation to grab anybody... we have learned from earlier painful mistakes"

Simon Everard
CEO, Kadence
"Since we started in 1992, we have twice had to halt growth, review and change processes and in some cases staff"

Jem Fawcus
Joint MD, Firefish
"The industry as a whole seems to be moving out of the doldrums a bit, but the past four years have been pretty good to us and we hope 2004 will be the same"

Pete Comley
MD, Virtual Surveys
"Re recruitment - we're still mainly growing with people we know and have avoided the big recruitment companies"

We spoke to:

article from MRWho Issue 20

These agencies are used to growth, to the extent that when they ‘only’ add 10% to their turnover in a year they feel the need to explain it - see the panel for MORI. At the other end of the scale, Nunwood added 130% to its turnover in the year 2000-2001.

Growth can take even keen industry observers (like ourselves) by surprise. We started off looking for two small, two medium-sized and two large companies, but both the ‘small companies’ we had in mind are rapidly headed out of the sample cell – one turned over about £2m last year and the other hopes to do so this year. Nevertheless, a good range of sizes are represented.

The six include online agencies, b2b specialists, qual and quant, and as above large and small, but they all have one thing in common, all regarding themselves as ‘people’ agencies requiring a very particular kind of employee. We knew they’d say this, of course, and with MRWho being a ‘people and skills supplement’ we separated out HR headaches anyway, but all six started talking early on about the challenge of finding good people, and it’s probably considered the single biggest factor in success. All report difficulties with recruitment of suitable staff, but they have generally managed in the end. There’s no quick answer, although of course we try to do our bit with MrWeb and we’ve spared you some of the nice things they said about the site, modest as we are.

All six are positive about the immediate future, sensing an upturn in the industry generally despite having missed out on most or all of the downturn themselves. Only one mentioned pessimism about MR in the longer term [see Virtual Surveys panel].

Bigger agencies tend to grow by acquisition as well as organically. All are adamant that organic growth is very important, but the acquisitive Synovate believe that growth by acquisition can be just as healthy provided it is actively and properly managed. Acquisition brings its own headaches, such as suddenly finding that two parts of your group are pitching for the same business - but it can open up exciting new possibilities more rapidly than almost any organic growth.

nunwood

Kadence

Firefish

Virtual Surveys

Is there a downside to a fast-growing agency from a potential client’s point of view? Well, rapid progress on the turnover or employment front can of course be a very good sign – dynamism, energy, commercial acumen and good knowledge of specialist areas are, we believe, hallmarks of all six of these agencies – but there is a more doubtful view. ‘If an agency’s growing too fast, that sometimes puts me off’ said one client respondent to our ‘Blue Chip’ survey published last year. ‘There are changes of personnel, new systems, perhaps a lack of attention to detail – you don’t know for sure what you’re getting’.

Sure enough, the small and medium-sized agencies in our minisample all mentioned the difficulties of getting systems in place to maintain quality and efficiency without losing some of the better aspects of being ‘small’ – creativity, spontaneity, good communication, not to say a sufficient degree of control for the boss or bosses. There’s general agreement that you do need a system, however much you ‘empower’ more junior employees. We thought we might hear a bit more about giving teams independence – a deliberately anarchic approach to business growth, but we’re either ahead of our time or just plain naïve. Basically it’s not yet a problem for the incorrigibly feudal MrWeb Ltd.

However, the challenge of growing beyond the point where the MD can keep an eye on absolutely everything is one that these companies have risen to – there are of course very successful agencies who deliberately stay small but they’re not the focus of this article. Our six are not naturally defensive types, and the client views mentioned above do not meet with much agreement. ‘I would say that with us they are getting at least what they would have got before’ says Synovate’s Steve Hales, ‘and it is up to us to try and ensure they get more, ie add to the sum of the parts, not take away. They can rely on a baseline of good quality without knowing exactly what extra they will get’. So rapid growth can actually improve quality? Indeed, and in more ways than one. ‘As smaller companies’ continues Hales, 'we may sometimes have been guilty of offering what we had instead of precisely meeting requirements, and as a larger group we’re less likely to be restricted like that’. Synovate have also made a specific commitment not to standardise their products to an extent where one size fits all, a frequently bemoaned trait of the biggest companies.

Adding staff very rapidly can, of course, backfire, and it’s interesting that only one of our six (Kadence) spontaneously mentioned a period where turnover grew significantly ‘without increasing overall staff numbers’. Both Kadence and Nunwood own up to mistakes in the past on this issue. ‘Since we started in 1992 we have twice had to halt growth, review and change processes and in some cases staff’ says Simon Everard. Clare Bruce says Nunwood have ‘learned from earlier painful mistakes, and are extremely careful to pick people who will fit into our quite distinct culture’ – however, there is no particular evidence of periods of retrenchment in the graph of Nunwood’s meteoric rise.

One of the most unfortunate but frequent pitfalls of growing fast is the loss of all one’s spare time, whether you’re in a large or small company. ‘At a personal level’ says MORI’s Brian Gosschalk, ‘handling the exit from the previous financial ownership was a headache – a bloody nine month migraine in fact’. In the longer term he is more content – although not complacent, as he’s keen to point out.

Besides, it can’t all be hard work running a fast-growing business, because Firefish’s Jem Fawcus, when we asked about plans for the future, said ‘Mainly I am hoping for a long, hot summer’. And he wouldn’t be saying that if he was only going to be looking at it from behind his desk, would he?

How fast is it growing?
Global organic growth in 2003 of 5.9% on a constant currency basis, plus growth from the acquisition of ISIS, TRBI, Censydiam and other key companies across the globe and within the UK.
How's it growing?
Both by acquisition and organically. You do need organic growth otherwise morale is bad.
Which bits of it are growing fastest?
Automotive, telcos, technology
generally seeing extraordinary growth.

Acquisition can also mean rapid growth in new areas – eg acquiring TRBI who are big in brand and ad tracking, whereas previously we were 90% ad hoc.

Secret of their Success
‘We have renewed energy and vigour as a result of being part of a big company which is recognised – selfrespect and kudos’. Then there’s personal blood, sweat and tears … ‘And the leveraging of our expertise across the globe – finding the particular successes of our colleagues in one country or another and seeing how - and if they can be adapted to develop best practice for other markets’. Plus dynamism of top management – Adrian Chedore spent 32 weeks of 2003 on international travel and uses visits to meet people and involve them.
The Headaches:
Convincing UK people that they are part of the grand plan and are not being squashed into a blueprint.

There is no blueprint! Another big headache is communication between parts of the group – making sure each knows what the others are doing, avoiding two parts of the company pitching for the same job, for example. ‘We’re getting the management structure and account teams in place to ensure this doesn’t happen.’
The Future:
Have a 3-year plan for the UK – ‘but it will change tomorrow!’ Acquisition in particular can throw you in a new direction. Aim to be in the top three agencies by 2005. Things are much better than 12 months ago – UK agencies then were engaged in mostly tactical work, now it’s strategic again.

Thanks to: Steve Hales, Joint Managing Director of Synovate UK