"To win in the marketplace you must first win in the workplace."
Doug Conant, former Campbell Soup CEO
Marketplace performance isn’t just a function of various sales and marketing strategies; it is fundamentally rooted in an agency’s operational ecosystem where output is created.
Doug Conant clearly understood this, and his quote distinctly captures the often-overlooked relationship between internal operations and external success.
When organisations cultivate environments where employees feel valued, they unlock significant benefits: streamlined processes, reduced duplication, clear ownership through R.A.S.C.I., and automated low-value tasks. This, in turn, fuels collaboration and builds a foundation for lasting profitability.
This perspective challenges the traditional P&L obsessed approach that treats employee satisfaction and operational excellence as cost centres rather than recognising them as engines of value creation.
It also sheds a light on 'Operation Debt¹' an important topic, rarely discussed.
Operational debt is the accumulated cost of band-aid decisions made at the expense of long-term operational health, and in most instances, it is a ticking time bomb.
The most serious aspect of this form of debt is that it manifests in decision making that feels strategic, but in reality, is a series of short sighted, temporary in nature, decisions that often require future workarounds, bypassing best practice and creating capability gaps. Worst still, they reduce an agency’s ability to scale up efficiently.
After 30+ years in the industry, my observations is the businesses that consistently outperform their peers are not necessarily the ones with the most innovative strategies or the most prestigious client rosters, the most successful ones are those that have mastered the discipline of minimising their operational debt.
Operational debt can accumulate in four key areas that quietly undermine efficiency and performance. Process debt builds when organisations prioritise expediency over optimisation, reinventing the wheel with bespoke processes that drain resources and produce inconsistent outcomes rather than standardising best practices at scale.
Technology debt is another common issue, where despite the push toward technology convergence, many businesses still operate with fragmented, standalone systems. These require manual workarounds that not only reduce efficiency but also consume valuable human capital.
Talent and decision debt present equally serious challenges. Talent debt arises when organisations fail to build capability systematically, relying heavily on a handful of high performers who become indispensable knowledge keepers. When these individuals inevitably move on, they leave behind capability gaps that take months or even years to close.
Decision debt, meanwhile, is rooted in weak governance. Without clear decision rights or a structured RASCI framework, organisations risk falling into decision paralysis or inconsistent decision-making, both of which slow progress and amplify inefficiencies.
The insidious nature of operational debt lies in its gradual accumulation rarely appearing as a crisis until it significantly impacts performance. Like financial debt, the longer it remains unaddressed, the more "interest" compounds in the form of inefficiency, frustration, and missed opportunity.
While identifying the categories of operational debt is the crucial first step, quantifying its impact requires a more systematic approach. By measuring operational debt burden through specific diagnostic indicators, an agency can prioritise where to focus its improvement efforts and build a compelling business case for the necessary investments in operational excellence.
To determine if your agency is carrying operational debt, here are five diagnostic questions to consider:
- Knowledge Gaps: How many of your processes exist as tribal knowledge rather than documented best practice workflows?
- Value Allocation: What percentage of your team's time is spent on value creating solutions versus high frequency, low value administrative tasks?
- Dependency Risk: How many critical functions in your organisation depend on a single person's knowledge or relationships?
- Role Ambiguity: How often do your hear people ask, 'Is this my job?' because of inconsistent role definitions and overlapping responsibilities?
- Recurring Problems: How frequently do the same operational issues appear on your leadership team agenda?
If each diagnostic question is graded out of 10, with 10 equalling worst, and 1 the best, you can visualise your operational debt. The good news is that unlike financial debt, operational debt can be paid down quite quickly, however, its takes commitment.
There are three simple steps to reducing operation debt. Firstly, catalogue operational debt across the business; this will present the task in front of you.
Next, look for opportunities to consolidate debt through standardisation and simplification. This often means eliminating unnecessary variation in processes, rationalising technology stacks, and clarifying decision rights.
Finally, implement a disciplined approach to debt reduction that becomes part of your operational rhythm. This means putting in place future reviews to ensure best practice is refreshed.
In an industry obsessed with the next shiny object, the unsexy work of operational excellence often goes unheralded. Yet in a business where margins are under constant pressure and talent is the only real asset, operating efficiently creates a sustainable competitive advantage no competitor can easily replicate.
The agencies that will thrive in the next decade will be the ones that have mastered operational excellence and made operation debt reduction a core competency.
Geoff Clarke: Chief Operating Officer IPG Mediabrands Australia