Control Risk? At What Cost?

engine

Chris Denny is Founder and President of The Engine Is Red, an integrated creative agency which Chris claims functions more like a startup than like a traditional agency. The company provides a variety of services—branding, campaign work, and a lot of interactive and digital work—but it has eliminated the classic methods agencies use to try to control the risks and variables inherent in creative work—timesheets, project plans, change orders, scopes of work, contracts, and retainers.

The result?

Changing the way business is done changes results . . . Chris found that when his clients and agency were freed from old marketing paradigms, interactive creative collaboration resulted in bolder, more innovative work with less risk.

Chris says,

What does it take to produce risky and exciting and high-quality ideas? We’ve learned a lot about the sense of community and culture, the security and safety to explore dangerous things.

In this interview, Chris offers a number of operational insights he has discovered over the years. He believes that relationships are key to the quality of work produced . . . it’s not just a matter of talent.

The major cause of poor client relationships? Rigidity. Big ideas only break through when there is freedom and a trust in flexibility, when the client and agency representatives can sit down and hash things out from the beginning.

He says,

Find the right balance of predictability and safety, of freedom and autonomy, and focus on trust and empowerment. When things go wrong, be an educator and an encourager, not a critic – The more people as leaders focus on that, the more teams thrive and the more clients thrive. It makes all the difference.

At times, hashing things out does not produce expected results. One client wanted to expand its business of repurposing older buildings. In working with the company’s full leadership team, The Engine is Red discovered that a great barrier to “adaptive re-use” is not that people need to be informed about it . . . the real problem is that it is difficult to quickly estimate renovation costs. The company didn’t need a marketing campaign—it needed a tool. The Engine is Red worked with the company’s estimating team to prototype a product and ended up building a mobile application that fully specs cost, size, and occupancy of an adaptive reuse project—in under a minute.

The whole process of examining a campaign, pivoting to a product, and launching that product was completed in 10 weeks . . . on time and on budget—and all done with the original paperwork.

And why put an agency in Minneapolis? This was an early decision for the company, based on locating where there was a wealth of creative talent. Chris describes Minneapolis as “one of the most vibrant creative cultures in the country right now.”

Chris can be contacted on The Engine Is Red on Twitter, Facebook, or Instagram, on the company’s website at:  theengineisred.com,, or by email at: chris@theengineisred.com. He encourages listeners to stop in The Engine is Red’s studios, either in Sonoma County or in Minneapolis.

ROB: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I am joined today by Chris Denny, Founder and President of The Engine Is Red based in Santa Rosa, California and Minneapolis, Minnesota. Welcome, Chris.

CHRIS: Hey, thanks for having me.

ROB: Great to have you here. Why don’t you kick it off by telling us a little bit about The Engine Is Red and what makes The Engine great?

CHRIS: Sure, happy to. We’re an integrated creative agency based here in the West Coast, but we also have offices, a studio, in Minneapolis. We have a non-traditional backstory, which I can walk you through a little bit today, but in the end we function more like a startup than we do a traditional agency. That’s really been an exciting journey for us and for our clients.

While a lot of our craft is very common and traditional – branding, campaign work, a lot of interactive and digital work – our ethos is a little bit different. We’re outsiders. We’re not birthed from the agency world; we’re from the startup world.

And we’re fully independent, so we’ve had the freedom over the last few years to break the rules and venture off course, take a step back and really question if all the necessary evils of the advertising world are really necessary.

From that, we’ve really gotten to change some things up. We’ve done away with timesheets and change orders and scopes of work and contracts and retainers. It’s really birthed a new form of client relationship that’s been wildly exciting. It really frees up our clients to pursue bigger and bolder work with less risk. Even our most traditional Fortune 100 clients are really pursuing these bold and interesting ideas that they normally wouldn’t.

It also gives our clients the freedom to navigate their world. As an ex-marketer on the brand side myself, we’re pretty empathetic to realizing that they’re in a constant state of chaos, of changing demands and budgets and timelines and stakeholders. We give them the tools to ride those waves with skill as opposed to white-knuckling through it.

Our team typically is really good at producing big work really fast. For some of our clients, they can tackle these opportunities that happen to come up really, really quickly.

ROB: I think you’re in an interesting geography as well. Up there in Santa Rosa, you’re kind of up in wine country, just outside of – you mentioned startups – you’re outside of startup central in the San Francisco Bay Area, and then you’re also in Minneapolis. Talk to me a little bit about the geography of the agency and how that came to be.

CHRIS: I think for us, we made the decision even in our founding years that we can always video conference a client or fly to a client, but we’re going to build our studios not where the clients are, but where the creatives are.

The North Bay is a really interesting place. I’m not sure how much time you get to spend out here in the Bay Area, but there’s a ton of us from the kind of “recovering” startup and tech world that have chosen to go north of the bridge because of the lifestyle, from outdoor and activity to the music and the food to the wine and beer. It’s not a bad thing.

But yeah, we focus on what locations are the world’s best creatives wanting to live. North Bay was a great destination for the West Coast, and then taking a look at Minneapolis, it’s really one of the greatest and most vibrant creative cultures in the country right now. It’s definitely a different breed than New York and LA, but you have these incredibly bright and determined and talented creatives pushing themselves, but also creating a culture that really helps the work break through.

So both of our locations are based on where the creatives are, and our clients happen to be all over the place.

ROB: That’s pretty interesting. I’ve been out to the Bay Area – about once or twice a year I get out there, but probably not as much up to the North Bay. I can certainly see why people would want to pursue a different pace and also be a little bit closer to some of the beautiful things about northern California.

I have not, however, been to Minneapolis. I would love to even hear a little bit more. I have people in MarTech who are rolling up to Minneapolis and they’re like, “This place is agency central,” and that’s your second office. What is going on there that makes it so interesting, compelling, and vibrant, do you think?

CHRIS: I think it started almost generations ago when you go back to the Campbell Mithun days, the rise of Carmichael Lynch, and this notion of a northern independent agency. And then, obviously, Fallon and Periscope and so many great, great agencies from very large agencies to incredible little independent and niche shops.

They’ve done a phenomenal job of embedding themselves within the culture of their community. The connections between education, whether that’s the U of M or even portfolio schools, there’s a great pipeline there. Creatives are a part of the community and of the economy all the way through.

But you’re also seeing this deeply personal northern sense of people and place. The creatives there are far less ego-driven. They are kind and outgoing and trusting, but they’re also really, really driven.

Lately, I would say for the last 5 to 10 years, Minneapolis is going through a rebirth. There’s really cool new experiences and buildings and community rising up out of the city. Rebirths of different neighborhoods and niches and industries.

And then on the other side, there’s great brands there. We have this legacy of consumer packaged goods where some of these exciting ideas, whether it’s Target or Best Buy or Sleep Number or General Mills, innovators like Medtronic and others, there’s this really neat little world that’s just slightly to itself, but it’s exciting.

ROB: You mentioned a lot of the changes that you made from the traditional models that people may be used to, may expect from marketers and marketing agencies. Which of those were relatively easy to cast off, and which of those were perhaps the hardest? How did you get through and push through and still make those changes?

CHRIS: We knew from Day 1 that the world didn’t need another traditional agency. We didn’t really need to build that. We set off to break the rules, even – it’s been 10 years now – even in those early days.

But I think one of the mistakes we made, and one of the things that I’ve definitely learned, is in the beginning we really looked at what now seems to be very minor tweaks. We were making these small iterations on the traditional model and adjusting pricing and terms. I feel like every agency has strived to create their own unique, creative process and discovery work.

While those were fruitful – I don’t want to be ungrateful – it wasn’t till we started asking the big questions and really examining these sacred cows that we found breakthrough. I think no matter where in the ad or creative world you are, client or agency or designer or founder, it’s okay to admit that trying to structure creativity to the point of a client engagement is a really unique and interesting task.

Often agencies and clients are staring at a cliff and knowing that they can and must create something not just amazing, but with intent and purpose and results. That’s a unique and interesting collaboration.

One of the big things that we learned along the way is that rarely is the difference between good work and great work the talent of the team. It’s the space between them that really changes the game. If you’re an agency trying to really break out or a client that’s trying to push forward, it’s not the people. It’s the way that they’re connected.

Once we started looking there and we started to ask big questions and to try bold hypotheses, that’s where the magic was. We focused on two key areas.

One was the client relationship and understanding, when a client relationship goes poorly, why? It turns out that it’s the rigidity. And I’m empathetic here; I’m an agency owner too. I look at the P&L. I get why we make these decisions. As an agency owner, in order to maintain your profitability as you’re heading into a very unknown creative process, your instinct is to control all the variables, right? To write very detailed project plans and lists of deliverables and scopes of work, or to leave that flexible and make a very finite retainer in which everything is the same and on contract. Then you create all these rules. We argue as adults about what constitutes a round of revision.

While I empathize with that, it turns out that those very things damage the creative. It’s the freedom and trust of flexibility that makes the big ideas break through. That’s where we found it.

So we’ve shed all of our retainers and contracts. We tore down the wall between agency and client. Instead of these big, cold pitch presentations where one team stands in front of another and asks if this could work, we all sit side by side. Our clients are in sketching and review meetings. They see the work early, often, and ugly.

And all of a sudden, they came up with great ideas. They engaged with the work. They helped us build. It’s allowed us to build things that we never could’ve built before.

Secondly, we focus on the creative process. What does it take to produce risky and exciting and high-quality ideas? We’ve learned a lot about the sense of community and culture, the security and safety to explore dangerous things. It’s been exciting.

I doubt we’re done. We’ll probably break more things, and we’ll explore some ideas that work and probably a few that won’t. But the big breakthrough is when we were able to have the confidence to question the very foundations of how agencies work.

ROB: Congratulations on that. I think you’re in the right part of the country to do that, for sure.

If we want to give a really full picture of the DNA of The Engine, what’s an example of some recent work or recent client engagement that you’re proud of, that paints a full picture of what you do and what it looks like when things go really well?

CHRIS: I can probably tell you one or two stories. One is from about a year ago. It’s one of my favorite clients. They are exceptional at what they do. They’re in a unique little niche. I can’t share too much on the client side, but they’re a major builder. They build skyscrapers and stadiums, hospitals and airports.

One of the areas that they’ve really focused on in the last few years is what we call adaptive reuse. They are just these incredible experts at helping their owners buy an old factory and turn it into a high-end apartment building, or an old mill and turn it into a modern office space.

I think from a DNA perspective, one of the things that really set this project off for success is they came to us with an opportunity, open-minded to the path. They knew they wanted to expand adaptive reuse, and then together we were able to explore what that might be.

As we dove into it, we started to realize that traditional tools like whitepapers and thought leadership and digital advertising and trade publications probably weren’t going to move the needle a ton. Working with their team – not just their marketing, but their full leadership team – we realized that one of the great barriers to adaptive reuse is that the early-adopting key stakeholders in the industry don’t know how to estimate it quickly.

If you’re a property investor, a private equity or a hedge fund, an architect, or a real estate broker, you can pretty quickly spec out the cost per square foot or occupancy of new construction really fast. It allows you to evaluate projects quickly. But adaptive reuse was a little harder. So instead of creating a campaign, we worked with their estimating team to start prototyping a product.

What we ended up building is a mobile application that allows people to, within less than a minute, fully spec out the cost and size and occupancy of an adaptive reuse product. What we set out to do as a campaign turned into a mobile application.

It’s been groundbreaking. We’re able to hand this out. We’ve established ourselves as an industry leader in it. We’re providing deep value to these folks by helping them do their jobs better. On the backend, we get to collect all the data, so we know all the projects people are looking at before they come to be.

But, because of the iterative process, we were able to start with a question, examine a campaign, pivot to a product, and launch, all within 10 weeks and staying on budget. We didn’t have to issue a single change in paperwork. The freedom to explore the best idea allowed us to align to something we never saw coming on Day 1, and we were able to do it because the client was a part of it all the way through, and we could help guide them and adjust them and partner with them.

That was really exciting. It continues to be exciting; we’re doing a bigger rollout of it now. But it’s just a good example of how far and how big you can go when you don’t have to have all the answers on Day 1.

ROB: That sounds very exciting. It sounds much more like a creative exercise than purely a marketing exercise to really think through that biggest picture of what the entire initiative means and not just, “This is what we’re doing; let’s figure out how to talk about it.”

CHRIS: Yeah. I think one of the great things about so many of our clients is they recognize that just executing deliverables isn’t what we’re here to do. We’re here to change minds and behavior. Ultimately, if we accomplish our marketing plan but we haven’t moved the needle, then it doesn’t really matter.

When we focus on that consumer behavior and what matters to them and their drive, and we’re open-minded on how we get there, it opens big doors.

ROB: Wow, very exciting. How did you get into this in the first place? What led you to start the company?

CHRIS: My background is I’ve been a lifelong creative and entrepreneur. I was raised in a very entrepreneurial household, and that provided some really great and interesting early experiences.

I remember my dad as he was building his company – it was kind of a Partridge Family approach of us all-in. I was 8 years old, helping him manually, with the ledger, do payroll. I’m probably going to date myself here, but long before we had QuickBooks, we were doing withholdings with the Circular E. So I grew up in an environment where entrepreneurship was the norm, with a dad that really allowed me to be a part of that.

My passion quickly became creative. My college background is art and design. I remember it was my sophomore year of college, and I had to come out to my parents that I wanted to go to art school and share that. They were very supportive. My dad pulled me aside and said, “Hey, if you’re going to pursue art, I want you to get a business degree as well.”

Educationally, I had this academic background in two worlds. I’m a traditionally trained sculptor and I have a certificate in graphic design, and then also a degree in entrepreneurship. So I was able to ride both.

In the early years, I came up as a graphic designer. I freelanced for a number of agencies in the Midwest right out of college. And then Manifest Destiny, I moved out here and quickly joined a FinTech startup. That was just an incredible experience to join in the first few years of that, and to take it to over a billion dollars in revenue a year was an incredible whirlwind, and to take a look at, what does a new approach to team structure and scaling and collaboration look like?

But, in that, I got to hire agencies, which was really unique. As I rose in the ranks of marketing in the startup world, I got to sit in on these pitches and hire and manage these agencies and retainers. There was such potential in every one of our interactions. As a client, I fundamentally knew that without an agency, we couldn’t do the biggest ideas – that the internal team, as talented as we were, outside collaborators was what was going to get us there.

But the experience sucked. [laughs] Sorry, I’ll try to keep language clean here.

ROB: Oh, that’s fine.

CHRIS: Yeah, the experience was rough. Here we had an account manager and a creative director who were clearly passionate about our company and we were arguing over paperwork. Maybe it’s just me, but I don’t know very many marketers that have the exact amount of work to do every month. Some months we were fighting to fill the retainer and other months we were over.

So, what led us here is after that exit in 2008, we had fallen madly in love with the potential of agencies from the client side, but we hated the way that it worked. [laughs] We just wanted to say, “What if?” Who better to see if we can change things than a couple of young outsiders that live in the wrong town and have the wrong résumé?

ROB: There’s got to be a lot of what you’re doing where you really are being true to yourself and what you want to do. It would be very easy to imagine, being in the Bay Area, number one, and having been in a startup that did well – that’s a good starting point to go and build another company, another startup. If you’re going to raise money, you’re in a pretty good place to do that.

And number two – and I see this all the time on the technology provider side of things – I think it would be tempting to build your agency on local clients, on well-heeled, well-funded, venture-backed startups. But there’s something it seems in your DNA that has pulled you away from that in the process of being true to yourself and what you wanted to do.

CHRIS: Yeah, I would say that we’re just incredibly lucky. We were able to bootstrap the agency in the early years. We’re completely independent. We have no outside ownership. I owe no quarterly reports to a holding company, and we’re completely independent. It gives us as a leadership team the freedom to really decide who we are and who we want to work with. We have no mandate to grow whatsoever.

When we take on a new client, we can take a step back and say, “Is this us at our best? Are we going to bring this client the value that really makes sense here? Are we their best partner? And two, is this the environment and the collaboration we want to expose our team to?” It’s allowed us to be somewhat picky and intentional about who we collaborate with and the types of projects we work on.

As we’ve gone down that path, we’ve found that the affinity and the trends within our client base are not what we expected. We thought, like you, that we would mainly focus on technology, SaaS, and hardware products – and we do have some great startup clients. I don’t want to diminish that. They’re really great collaborators.

But, we found what really attracts us to a client is the culture of who they are, not the industry in which they live. We love to learn different industries, from bio-life sciences to cupcakes to women’s fashion to chardonnay. It’s incredibly exciting to learn.

When we find those marketers that are bold, that have drive, that know they want to break out from the traditional but they don’t know how, and who face challenges with internal politics and stakeholders but choose to push forward anyway – it’s brought us sets of clients nationwide that have been incredible, that have taught us so many things, that have become these lifelong partners – but are in so many weirdly different industries, from government to nonprofit, from tech to wine and food. It’s really all over the place, but we really love it.

ROB: Fantastic. I imagine you probably also benefit, to an extent – many people who are out there haven’t been through a down business cycle. You mentioned that the company you were in sold in ’08, so you were in the thick of things in ’07-’08. There were a lot of businesses that died. People don’t realize how bad it can be if you have built your entire company on the backs of funding and startups.

I think it would be interesting – what are some lessons you have learned along the way building The Engine Is Red that you would do differently if you were starting from scratch?

CHRIS: One point of clarification, just so that I remain honest here. The exit in 2008 was not a good one. [laughs] We went bankrupt. It was an amazing learning experience, but I walked away with a $3,000 severance check.

When we bootstrapped in the beginning, we had just come off that exact lesson you were talking about. While venture capital can create some momentum and open doors for you to scale quickly, capital has consequences. It’s really a different game.

So, things that we’ve learned. I think two of the biggest things that I learned, one is that we should have been asking bigger questions sooner. The real breakthrough happened for us in 2016, and that’s when we completely rebuilt the agency model. The hockey stick of momentum since then has been amazing, but I wish that I’d had the courage and the fortitude to ask those questions years earlier.

It’s so clear that clients are demanding a new way of working and that the demand and need for agencies is higher than ever before. I really wish that we had sped up the big questions, the big changes, and not been so iterative in those early years.

The second thing that I’ve learned as a leader is that people are inherently great. When things are going wrong, either on a client project or as you scale a team, look at the space between them.

Like we talked about in the creative process, client projects can go sideways all the time, and that’s okay. That’s a natural part of how our world works. But it’s tempting on the creative side to vilify the client, to say that “they’re difficult” or “oh, so-and-so.” In our Slack channels and other things, it’s easy to do that.

But no client wakes up in the morning wanting to be a bad client. None of them do. Their careers are on the line. They’re trusting you with their job performance, and they want to do great work.

And the same internally. If you’re starting to scale a department – and we’ve had these challenges over the years – and all of a sudden your culture starts to shift, or burnout starts to creep in, or chaos and stress ensues, it’s easy to start to evaluate people.

But what we’ve found is that, particularly if you’re somewhat particular on who you work with, it’s the space between them that matters. As a leader, learning that the way we set our teams up for success, the way that we align expectations, the freedom and autonomy we can give intelligent people, that’s where the breakthrough it.

To find this right balance of predictability and safety, but also freedom and autonomy, and to focus on trust and empowerment, and when things go wrong, to be an educator and an encourager versus a critic – I think that the more we as leaders focus on that, the more our teams thrive, the more our clients thrive, and it makes all the difference.

ROB: I love that. I think so often when we’re talking about someone else, we’ll say, “I don’t understand” as a criticism or a complaint. I hear you talking about “I don’t understand” primarily being an opportunity. If you can say, “I don’t understand,” then you can realize that you don’t understand, and it’s an opportunity to understand the behavior and the human behind and not just say, “That’s not what I would do, so I’m mad about it.”

CHRIS: Right. Particularly us as agencies, we’re tasked with venturing into the new. That line of questioning and not understanding is the right path. If we focus on what we know, we’ll end up where we were.

So yeah, having the freedom to say, “This doesn’t make sense” or “What if we did this?” or “How could this go?” or “Why is this breaking through?” or “Do consumers really care about that?”, those crazy questions are the right questions. To give our team the confidence to not just ask that of each other, but to have that dialogue with the clients, is huge.

ROB: Right on. Chris, what are you excited about that’s coming up for The Engine Is Red or for marketing more broadly?

CHRIS: I think as an industry, this is really one of the best times in the history of the world to be a creative. We’re seeing this convergence of seismic shifts in technology, in media, in publishing and communications. The creations, the experiences, the stories we can tell now, the media, the targeting, the data, from machine learning to virtual reality, from self-publishing to LED technology and drones, what we can do, what we can build has never been this open. That’s thrilling and exciting.

We’re also seeing the rising value of design, storytelling, and creative – everything from architecture to fashion to culture. As a global community, high-quality creative is rising as a premium. That’s very exciting.

So as an industry, I’m stoked. I think that the opportunities and the advantages of being a creative today are exponential.

Then for us as an agency, I think we’re excited to share what we’ve learned. So many creatives I know have left the field due to burnout. I know so many clients that have horror stories of getting burned by agencies. For us to be able to, within our clients and our reach, as well as our partners and colleagues, just share and say “Hey, there’s a better way; we don’t have to do it this way” is an exciting opportunity for us.

Part of that is our expansion into Minneapolis. We’ve been in Minneapolis for a few years, but we just signed a new lease and made quite a few new hires, and we’ll be making a really major expansion into Minneapolis in the coming months and year. That’s exciting. I think that allows us to meet a lot of people we haven’t yet connected with and to engage a larger creative culture and really spread the word and see where this goes.

ROB: Congratulations on that. We will have to see some pictures when that expansion goes live in Minneapolis – which brings me to a question, Chris. When people want to find you and The Engine Is Red, where should they find you?

CHRIS: We’re in all the standard places that you would expect us to be. You can follow The Engine Is Red on Twitter, Facebook, or Instagram, or theengineisred.com, obviously. You’re welcome to stop in at either of our studios here in Sonoma County or our studio in Minneapolis. We’d love to have you. You’ll see us at lots of industry events as well.

But for sure connect with us online or digital. My personal email is just chris@theengineisred.com. We’re pretty much where you’d expect us to be.

ROB: Fantastic. Thank you for your time. Thank you for the lesson. Thank you for helping us think about sustainable cases of work and ways of working, and congratulations on the growth.

CHRIS: Yeah, thanks for having us. I appreciate it. I’ll send your encouragement to the team. If any parting words, just keep asking those big questions. There’s big ideas out there that have yet to be had.

 

ROB: Indeed. Thanks so much, Chris.

 

CHRIS: Thank you.

 

ROB: Take care.

Thank you for listening. The Marketing Agency Leadership Podcast is presented by Converge. Converge helps digital marketing agencies and brands automate their reporting so they can be more profitable, accurate, and responsive. To learn more about how Converge can automate your marketing reporting, email info@convergehq.com, or visit us on the web at convergehq.com.

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