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Spotco, a Successful Small Business Turnaround Story

Founded in 1996, SpotCo (www.spotnyc.com) is a hot New York boutique ad agency. It does cutting-edge print and broadcast advertising for Broadway productions like Rent, Oprah Winfrey’s The Color Purple, Drowsy Chaperone, and The History Boys (2006 Tony Award for Best Play) as well as television clients like ESPN, MTV, and TBS. But by 2005, SpotCo had hit a roadblock.

Seat-of-the-pants management, which worked when SpotCo had a handful of employees, became splintered as the company grew to 40-plus employees. Structure, leadership development, and soul-searching were needed to successfully guide SpotCo and its owner through the adaptive transition.

The firm’s owner, Drew Hodges, along with his staff, was frustrated. The company was still growing, but all decisions had to go to the top. There were few department heads. Employee reviews were done inconsistently from department to department. Minor disagreements often grew into nasty arguments, particularly between the creatives and the businesspeople. There was nothing that looked like a team. Hodges, involved deeply in creative work, knew he had to “kick himself upstairs” and focus on running the company—but had no idea how to do that.

Unable to resolve the company’s growing pains, Hodges brought in Marty Linsky, a top leadership development expert with Cambridge Leadership Associates (CLA). He was impressed by the theory and examples of adaptive leadership described in a book Linsky had co-authored, Leadership on the Line. Thanks to collaboration among Hodges, his management team, and CLA, SpotCo today has a real management structure in place that can support substantial growth. Hodges no longer has to be involved in every decision or mediate every dispute among his crew of impassioned creatives and salespeople.

Here are the steps Linsky took to bring about Spotco’s turnaround. First, he conducted in-depth interviews with six key managers at the firm. As a neutral, skilled outsider he was able to solicit candid assessments of the company’s problems. He also spent a good deal of time personally coaching Hodges in leadership skills. Changing people’s behavior is always a tough challenge; people become used to their comfortable rut. Linsky then reported his candid, anonymous—and revelatory—findings back to Hodges.

Next, Linsky set up regular company meetings for Spotco’s department heads, along with Hodges and his two top executives. The meetings proved productive almost immediately, rapidly morphing from gripe forums to leadership sessions, where collective decisions got made.

Hodges, a strong personality, learned to listen more, talk less, and give his people more room to make their views known. Items that used to result in heated discussions were handled dispassionately and efficiently. Today, everyone pulls together for the common good of the company, instead of fighting turf wars. There are many leaders instead of just one creative “genius” running everything.

Linsky says the company’s success resulted from looking at the nature of the problems SpotCo faced through the lens of ideas about how organizations get “stuck” -- and then applying proven strategies to get SpotCo “unstuck.”

Hodges has benefited personally as well as professionally. Work is more fun now that he has given up the roles of parent and peacemaker. Instead, he sends problems back to the groups for them to work out and resolve on their own.

“We now work together with one clear vision,” says Hodges. With routine matters handled much more easily, the company’s leadership can focus on strategic questions, such as whether to establish a major branch in the West.
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