The newest episode of Chats with Chip featured a conversation with Joe Thornley, the CEO of Thornley Fallis Communications. Chip and Joe discussed the business side of communications, as well as how the changing landscape of digital transformation and workplace trends affects the communications industry.
After introductions and some background on how Joe established Thornley Fallis, Chip opened up the conversation to discuss the business side of communication. Specifically, Chip asked Joe how he approached P&L statements and how his approach is different than those of prior agencies with which he worked. According to Joe, having a third-party analyzing these statements fails to convey the stories behind the numbers.
In his analysis of P&L at his own business, he considers, “where can we get the best impact from the investments that we make and how will that get us to a point where the business will be healthier tomorrow than it was yesterday. That’s quite different from looking at how did we perform this month, simply as a snapshot, and demanding that there always be a particular margin.”
Chip then asked Joe about the kind of changes he’s seen during the two decades since his business’ origin. Joe cites digital transformation as a major influence on the changes he has experienced. He discussed his company’s creation of an online presence, including establishing social media accounts, podcasts, and a blog, in the early days of digital media.
Around 2011, however, these digital channels had become crowded with other businesses, which diminished the success and visibility these tactics had previously afforded businesses. “A lot of mid-sized agencies started to get themselves squeezed. We started to get ourselves squeezed because we had become a mid-sized independent agency,” said Joe. “That caused us to refocus again.”
Thornley Fallis refocused by expanding to create apps. Additionally, Thornley Fallis changed their approach to the traditional workplace. Joe explained that his company was redesigned to include a smaller team of core employees and a larger network of partners who work on an assignment basis. Chip and Joe agreed that having this broader community, rather than a robust internal network, is the future of the industry.
In their considerations of the industry’s future and how it will continue to change, Chip asked Joe how these changes will affect the incoming workforce of young professionals. Joe acknowledges that it’s unlikely for companies in this industry to retain young professionals and to build their career in a single environment.
Instead of focusing on retaining these people long-term, Joe advises to mentor and train young employees and to build a strong relationship with them. “That is what, as we’re assembling teams, we really need to do, which is build up that social capital with people who are going to be moving around and not view people as long term employees and definitely not judge the success of our company on the basis of how long people have stayed with us,” said Joe.
Chip and Joe wrapped up their conversation by discussing additional innovations Joe has introduced to enhance his workplace and its employees’ experience. Check out the recording and the full transcript to learn more about these innovations, as well as additional insight on the development of the business side of the communication industry.
Please review the audio before quoting to confirm accuracy of this unverified transcript.
|Chip Griffin:||Hi. This is Chip Griffin and my guest today is Joe Thornley. He is the CEO of Thornley Fallis Communications based up in Canada. Welcome Joe.|
|Joe Thornley:||Chip, how are you today?|
|Chip Griffin:||I’m doing quite well. It’s a beautiful, sunny day here in New Hampshire, a little bit warm for this time of year and it’s always nice to see that particularly as the snow melts. Hopefully the same is happening up where you live.|
|Joe Thornley:||It is. It’s the season of hope. Everything is about to get green.|
|Chip Griffin:||Excellent. Well, speaking of green, one of the things that wanted to talk about today is the business side of communications. It’s an area that I’m sure you can appreciate. Many communicators don’t like to talk about quite as much, we always like to talk about the strategy tactics, the cool new tools, messaging, all that sort of thing. When it comes to communications, whether you’re in-house in a corporation or you’re at an agency or you have your own agency or consultancy, the business side of things is important. Understanding finances, understanding marketing and selling your own services, etc. Before we jump into some of that though, I thought it would be interesting to hear the story of how Thornley Fallis came to be. I know as an entrepreneur myself, I’m always interested in hearing those founding stories and I’m sure my listeners are as well. Thornley Fallis … how did it come into being and when did it come into being?|
|Joe Thornley:||Terry and I founded it in 1995. We were both at other agencies. I started first, he joined me a couple months later. That was really important because I was in Ottawa. My wife was a public servant so I’m stuck in Ottawa. Terry was in Toronto and if you’re a Canadian, Toronto is where the business community is and if you want to build an agency first lesson is go where the business is.
We got together in 1995 and we had both come out of a large holding company agency. What we were looking for was the opportunity to do more that we could define ourselves without having to respond to the spreadsheet folks back in New York. I know that sounds odd for somebody who wanted to run his own business, decrying the spreadsheet folks, but I just found that the running of a PR business was, for me, something that was quite tactile and our principle asset is people. Very often when looking at utilization rates and the sales on a spreadsheet you miss the real story of what’s going on.
We set it up so that we could have more self determination. We also set it up as corporate communicators. Both of us came out of government. We’d had stints in government. We took for granted the fact that we were getting appointments with CEOs and C-Suite officers. We didn’t realize how naïve we were. We did have access to those folks and so they were quite welcoming of us to work with them on their communications challenges. Having said that, having come out of government, both of us had an aversion to government relations. There just was something that sat uneasy with us about trading on our relationships with people who had the public trust.
On the other hand, trading on relationships with people who were either playing with their own money or at the head of publicly traded corporations. We saw that as being different, so we were driven in the direction of communications for corporations. We stayed away from government relations and have to this day never done government relations. Then, of course, and I’m sure we’ll chat a bit more about it, once we got going, the world in 1995 is a whole lot different than the world in 2017. We have gone through several transformations of the basic business. It is nothing like what we started out in 1995.
|Chip Griffin:||I do want to talk about that transformation, but first I wanted to zero in on something you said and that was when you were talking about the spreadsheet folks. I think that as someone who has run my own business but also worked within larger enterprises, there’s a giant difference between looking at a P&L that you directly control and a P&L that you are sending on to some remote place for it to be analyzed, as you say, just by looking at the numbers, not understanding the full story. I wonder if you could talk a little bit more about that difference and how what you’re doing today with a P&L is different that what it was when you were in-house.|
|Joe Thornley:||Sure, absolutely. When I was part of a holding company, I knew that I had to achieve certain results because I was being assessed on my success on the basis of what I produced on the numbers. On the other hand I looked at the mix of people I had. Some of whom were new to the business and had great prospects, others who were well established. Some people who’d been well established were having a bit of a rough go. Others who were pursuing a new opportunity in a new sector, whatever the case was. There was a story all the time, which wasn’t really captured in the numbers.
Of course, it’s my money on the line because as the owner of a business I’m the financier. I watch the P&L very closely but now when I have discussions with the folks who are running the company about the P&L it’s more in terms of where can we get the best impact from the investments that we make and how will that get us to a point where the business will be healthier tomorrow than it was yesterday. That’s quite different from looking at how did we perform this month, simply as a snapshot, and always demanding that there always be a particular margin, which is what I found that I had when I was part of a holding company. I was fitting into somebody else’s set of resources and expectations.
|Chip Griffin:||It’s sort of like the difference you see in the business world generally between public companies and privately held ones, right? The public companies are always managing to those quarterly reports and what the analyst are going to look at which may or may not give you the best long term business decisions. I think what we’re able to do as entrepreneurs is be able to take a look and develop that relationship between the numbers and the reality in order to figure out what risks are worth taking, what costs are worth cutting. How is it that we can best grow this business into the end result that we want?
The thing is, in addition to the numbers we’ve talked about how there’s been a transformation over the last couple of decades and certainly that’s something that we’ve seen again from that tactical and strategic standpoint. The way we’re communicating now over Skype is not something that we would have done back in 1995. We didn’t have podcasts. We didn’t have blogs. There was no Twitter. I think that the business environment has changed as well, at least here in the US and I’m sure probably in Canada as well, the way agencies work and partner with their clients, I think, is different now than it was before. Maybe you could talk just a little bit about some of those transformations that you’ve seen in the two decades that you’ve been at the helm.
|Joe Thornley:||It seems to me that my entire working life has been driven by digital transformation. When I think about the impact on the public relations field, I think of us very often as I think of the one time corner grocer or the corner drug store or the corner soda shop. None of which you find around anymore because the world changed and the big box economy and the mall economy eliminated them. For me, our business has been driven by transformation as more and more communication went online. The big change was around the time that we founded the firm in ’95 with the World Wide Web, with the first web browsers, with the first websites. For us, we started in a world where we were looking at an established environment that hadn’t changed a great deal but we immediately started to change. Happily, I’ve always been fascinated with technology so we tried to ride that change.
The first big change for us came in 2001 and the dot com became the dot bomb. People who had been trying to develop business, which we had been. We were working in an area with a lot of startups and if we’d been successful in developing that business then we’d begin to [inaudible 00:09:20] that success because in 2001 we started to have a whole lot of bad receivables. We went from having clients to having bad debts. We went from a situation of health to a situation with a really bad balance sheet overnight. That was really quite harsh for us.
Right up until that point we’d been growing constantly with a constant stream of profits. The first time that you have to manage through a sustained period of loss can be a really scary thing. There are times when you come home and you feel like you’re on a ship that just won’t respond to changes in the rudder … be calmed. You really have to have faith in whatever vision that you have at that stage. That was a huge change and that was a change that caused us to be much more serious as business people.
The next change really came for us a couple of years later with RSS feeds. I remember going to a counselors’ academy conference in Phoenix. I think it was about 2003/2004 and sitting in the sun with a bunch of other agency heads and Jovani Rodriguez was there. Jovani was giving a presentation to the agency folks about digital communications. He asked the assembled, about 40 agency heads from all across North America, and how many of you are familiar with RSS feeds. I stuck up my hand, looked around and realized I was one of about three. That was the point at which I realized there was something quite interesting going on and that if I pursued that I could be at the vanguard of a change that I saw coming.
We moved our agency pretty quickly into social and you, yourself were there when Shel Holtz started the FIR Podcast with Nevell. We took note. Terry Fallis and David Jones started the Inside PR podcast. We all had blogs. We started video podcast and became quite adept at that. The great thing about that was that the margins were incredibly good. A lot of people were intimidated by the digital aspects. They had the communication chops but the technology wasn’t necessarily something they had.
We streamed along through that. Social Media became content marketing. It added on a number of other things … analytics. Then, around 2011 the bottom dropped out of that. Everybody was on Social Media. It had become commoditized. We really found that our margins were being squeezed. The other thing that was happening was that … and you may or may not feel this in the United States but for people outside of the United States, the relentless march of consolidation by the holding companies, along with digital, created an environment where you either had to be very big or very niche. A lot of mid sized agencies started to get themselves squeezed. We started to get ourselves squeezed because we had become a mid sized independent agency.
That caused us to refocus again. More recently the changes in the media environment have caught up to us as newsrooms and traditional media have just been collapsing in Canada. We’ve always been a couple of years behind the US in that. We were sheltered from that early on. Right now we’re sitting in a situation where we have newsrooms that are probably 50% the size that they were three years ago in Canada. It’s been brutal. It’s been quick. It has pulled the rug out from underneath the traditional business. If you were to ask me today what kind of company I run, I’d tell you we run a public engagement company.
We have moved into developing apps. We’ve developed several apps. Some have been commercial successes, others haven’t. What we have developed is apps so that we can go after particular niches. We work hard with public institutions that need to engage with the public in a way that they can develop ongoing relationships that are trusted. That brings into play a whole lot of other things. That has become our growth area. We still do all of the other things and we’re still quite good at it but we don’t have the margins that we once did in those other areas. Our growth has driven us in this newer way. It’s been constant change Chip, since 1995.
|Chip Griffin:||I would really echo what you said with regard to the changes in digital over the past five years or so. There was that period of time where it was high margin work. It was exciting work. I think that in addition to lots of people getting into the game and it becoming more commoditized, I think the other challenge is that a lot of folks came into this space and promised the sun, the moon and the stars to clients and then weren’t able to deliver. That then made people much more skeptical than they needed to be of digital. It’s a question of using it properly and having proper expectations. I think that somewhere around that same 2011 timeframe that you mentioned a lot of that began to change.|
|Joe Thornley:||It sure did. The other thing that has really happened to us as traditional media people have come out into the communications side of things, a lot of them have been on partial payments. Some of them have been on early retirement and a lot of them have operated as sole practitioners and flooded the market place. That along with millennials has caused us, as with lots of other agencies, to rethink our approach to the workplace. We still have an office because we really feel a need for that when you want creativity, you want people to be looking across at one another and seeing one another.
We work really hard to look at the important indicators of success in achieving client objectives of being productive rather than worrying about where someone is at a particular moment. Our workforce has become much more distributed in their efforts and it has allowed us then also to reach out to people who work with us as partners instead of being full time. We, like others, had to reinvent our approach to the actual company. With a much smaller core team and then a larger network of people that work with us on an assignment by assignment basis.
|Chip Griffin:||That certainly has become far more common in today’s communications world overall. It’s something that’s been facilitated by this digital transformation we talked about because not only has the environment in which we’re working changed in as far as how we communicate but it’s also how we all interact with each other. No longer do we need to have robust internal networks where you share documents. There are services like Dropbox that do that quite nicely. There are video and audio conferencing apps.
There are all sorts of collaboration tools that make it … While it’s not a replacement for being together in person … Like you, I still believe that that’s an important component of creativity as well as growth, but it does make it a lot easier to have a more creative structure, which then I think, goes also to your point from back in 2001 when you had to make some tough decisions, it makes some of those tough decisions perhaps a little bit easier. It’s never easy when you’re dealing with people. It’s one of the challenges with communications is that we don’t have a lot of costs to cut in a downturn. It generally is the human factor that comes in. I think having that sort of network approach does allow you to more flexibly both ramp up and ramp down as needed.
|Joe Thornley:||Yeah, I think you’re absolutely right. Networks are the future for our industry in the short term. I think the industry in the long term is doomed in its current definition. I think that we will all be using our skills, focusing on relationships with other people. The very change in the way that people obtain their information and interact with one another has caused a total change in what we do. Before I recorded this with you, it’s about noon today and I was up at about 5:00 sitting at my desk and I have spent my whole morning staring at the analytics of a website looking at the people who are coming to it, how they’re engaging and looking at our communications and the selection of channels based on the experience that they were actually having.
There are people in our firm that spend a lot of time still doing pitches, but I have not done a pitch in five years. I started out doing that 100% of the time. It’s not because I’ve become more senior, it’s because I can make a living not being a developer or a coder but making a living understanding how people are interacting with one another in a digital environment and how that effects our relationships with one another. It’s a totally different world and I think that is where the future is. Where people absolutely have to be seeing themselves more as social scientists than as publicists.
|Chip Griffin:||As you think about that what does that mean with the new workforce? I think we oftentimes talk about millennials and they get to some extent, I think, a bad rap. To some extent they get fair criticism for some of the habits they bring to the workplace. How do you, as you think about both the future of communications but also how it is that you utilize networks and maybe more work from home opportunities. How does that play out with the younger portion of the workforce and is that an effective way to manage, mentor and retain them?|
|Joe Thornley:||I think that with younger people I’ve had the experience in the last couple of years where … and it’s happened more than once … Where a young person shows up, a relatively young person, shows up at my office and says, “Good news” One literally once said, “Good news,” and I said, “What’s that?” And she said, “I’ve got a new job. I’m going client side.” As I began to appear crest fallen, she looked at me and then she started to explain that she had joined us and she had a five year career path and that it involved some agency work, some client side work and then she also wanted to do some not for profit for the public good.
She had this slotted out but what I was hearing was that she was extending her education about the industry into her working life in a way that I hadn’t. I had left school and then I thought now I’m going to do interesting things. Then, of course to be fair to her, I realized I moved around a lot when I was young but I had forgotten about that because I am trying always to get people and have them build a career with me. I think the opportunity for us to grab young people and have them build a career in one environment is very, very low at this time.
The approach that we take is to try and provide people with a real learning experience to assess how quickly they can move along and then keep them right on the edge of their capabilities. Mentor the heck out of them and hope that we can get two or three years and that they’ll say really good things about us when they leave, which will feed the pipeline and then hopefully we will get them on the rebound. We have one person right now who is on her third rebound with our company. She came to us after a stint in government. Then she went out, worked for a public agency then she came back. She went out and worked for a large corporation, global corporation and now she’s back. That to me is what, as we’re assembling teams we really need to do, which is build up that social capital with people who are going to be moving around and not view people as long term employees and definitely not judge the success of our company on the basis of how long people have stayed with us.
|Chip Griffin:||Particular in the communications’ industry where relationships are so important, I think we all need to look at our firms and former employees as a true alumni network. They are folks, as you’ve noted who you can bring back into the fold and certainly I’ve done that over the years where I’ve brought back past employees to my various companies at different times. I’ve carried them as I’ve moved through different companies over the years. Also, it’s an opportunity, particularly if you’re an agency and someone goes client side, there is now an opportunity to pitch that business. Not that you would pitch it because you don’t pitch but someone else I’m sure could aptly pitch that business and win it.
I think that we all need to be thinking about that side of the business of communications more, which means two things. One, it means developing good, positive, strong relations with your employees while they are in-house so that they continue to look at you favorably even when they’ve moved on. Secondly, is finding ways to stay in touch with that network particularly if you’ve got enough size that you have an alumni network that’s at least in the tens if not hundreds so that you’ve got something that you can pull together perhaps for an annual picnic. Something just to try to continue that dialog.
|Joe Thornley:||I think you’re absolutely right. One of the things that you mentioned along the way was the assumption that I don’t pitch. In fact, I spend 95% of my time on client work now. One of the things I realized in managing agencies, and you hear it all the time. What’s the problem with PR agencies is that you have truly skilled and talented communicators who you put in a management position for which they are not trained. They are not as successful as they want to be and things go south.
We have people who are running the business, which is not me. I’m still involved in setting the direction but on a day to day basis we have people who are a decade or two younger than me who are at a different point in their career who are running the business and only running it as much as they need to so that they can keep a hand in on the client side. Terry and I do very little running of the business. We spend virtually all of our time with clients, which means also with pitching.
That way we can take our ego out of the sense that we are defining the business. It helps us to keep the business more relevant and to keep it more nimble because it’s not bound by our own sense of what is normal or our own predispositions. It gives other people a chance for a period of time to try themselves out as managers. Again, we respect the fact that they didn’t get into PR to end up running HR or looking at spreadsheets. They got into it because they like communications or they like people. The management part of the firm is just a learning experience we can give to senior level people in the same way as we give learning experiences to junior level people.
|Chip Griffin:||I find that whole concept fascinating and to be honest with you I haven’t seen a lot of agencies that do it quite the way that you’re doing it. I think what you say makes absolute sense and it would be a good way for more agencies to operate and frankly maybe more do and I’m just not aware. It seems to me that so often you have folks who are at the highest levels of leadership within agencies who do very little client work. They may say they do but by that they mean usually we show up for our biggest clients, shake hands, wave at them and make them feel like we’re involved but they’re not on the regular conference calls. They’re not on the in-house meetings, all those kinds of things that are really critical to delivering on the promise that you make to your clients and prospects.|
|Joe Thornley:||For me, I look at it and if we really want to be innovative in where our business is going in a changing environment, that means we want to be constantly reinventing the services and the products. We have a product called 76 Engage that we developed for this online public engagement marketplace. I spend my time working with clients using that tool and running online engagement. The benefit that I and the company get out of that is that I’m on the line with the clients when they’re saying, “If only it could do this” or “How does it do that”. Out of that comes the next innovative idea for us to refine the product or as we have, to invent totally new products, which is what 76 Engage was two years ago.
I think that if I looked at spending my time as a senior person, managing other people there is a certain amount of comfort in that, but it wouldn’t help the business to move forward. I’d be driven back to those spreadsheet considerations and recruitment and HR. We can be truly innovative if we are working on the cutting edge of the business, which isn’t repeating itself. That’s where I think we gain an advantage to stay ahead of the rent man.
|Chip Griffin:||I think that’s a strong note to end on. I know that we could probably spend at least another hour or two talking about various issues here but, as listeners know, I have a hard and fast 30 minute rule because I want to respect the listeners time as well. Joe, before we part here though, can you share how folks can find you online?|
|Joe Thornley:||Sure. I’m on Twitter, Thornly. I’m “Thornley” pretty much everywhere. It’s pretty easy to find me there. People could listen to the Inside PR podcast that I do with Jenny Dietrich and Martin Waxman. It’s also an FIR podcast or Inside P2 which is about public engagement. It’s a newer podcast that I setup and I still have my blog. ProPR.ca because I’m a proud Canadian.|
|Chip Griffin:||Excellent. All those links will be in the notes here for this show. Joe, I appreciate you taking the time to be with us today. Again, my guest has been Joe Thornley of Thornley Fallis Communications.|
|Joe Thornley:||Thanks Chip.|