How to Build Culture in an Agency w/ Jonathan Anderstrom of Creed

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Jonathan Anderstrom is the president of Creed Interactive, a web development and design company based in St Pauls, Minneapolis. In this episode, we talk about the importance of setting company values, how to hire A-players, how to balance time in the office with time outside of the office for teams, and the value of having a beautifully designed office.

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Transcription

You’re listening to the 10X Your Agency Podcast Your Agency podcast where every Wednesday for the next 12 weeks, you’ll be learning strategies on how to scale up your agency and grow your client base from successful agency owners who’ve been there, done it and built a highly successful agency. You’ll learn how they attract clients, what their biggest causes of client churn were and what their challenges were at different stages of building their agency. My name is Marcus Taylor and I’ll be your host.

Marcus: Hey guys welcome to another episode of the 10X Your Agency Podcast. Today Iím joined by a very special guest, Jonathan Anderstrom, who’s the president of Creed Interactive. Today Iím going to be talking to Jonathan about how to set company values, how to hire A players, the pros and cons of allowing a team to work remotely as well as some of the effects that Jonathan saw after investing in an amazing office for the Creed Interactive team. Jonathan, it’s a huge pleasure having you here on the show, how are you doing?

Jonathan: Hey, good morning Marcus, going great. It’s a cold and snowy morning here in Minnesota in the United States.

Marcus: Not much better here in Oxford in England to be honest.

Jonathan: [laughs]

Marcus: So to kick things off, I was wondering if you could just tell us a little bit about what Creed Interactive is and perhaps what makes you different as an agency?

Jonathan: Certainly. Creed Interactive is a web development and design shop here based in St. Paul Minnesota. What makes us different is that we are able to go very deep on the technology side with our great user experience and staying on brand and on message along the way. So we are a great blend of design and technology.

Marcus: Awesome. First things first, I saw that a couple of months ago, you guys just moved into an amazing new office in St. Paul. First of all, congratulations on that. I was just wondering, what differences have you noticed since upgrading the agency’s work environment?

Jonathan: Yes thank you. Well, the differences have been primarily just focused on our team. One of the things that we’ve done is, ranked our team, our clients, our work and our growth in order. And we’ve done that to really decide where to focus. So we’ve decided to put our team first and a part of that is creating a great working environment for them. So I’ve been a part of some very large [inaudible02:13] agencies in the past that have used their workspace as a new business tool to try to land large clients and my experience has shown me that the clients donít really care where you are. It can portray an image but what we found much more important is the actual working conditions for our employees. So some of the larger agencies that have these beautiful conference rooms and then all of their employees would be in tiny cubicles in the basement and it just doesnít make any sense. So what we’ve decided to do is to really invest in our team by giving them a beautiful wonderful workspace to work in. And so we actually purchased part of a building in lower town St. Paul next to a new minor league baseball stadium. So it’s kind of a trendy part of town. And we renovated it completely with this in mind, keeping the employees first. How they can work, how they can collaborate, how they can come together and how they can produce the best work.

Marcus: And what kind of things have the teamÖhave you noticed anything in terms of productivity or anything kind of tangible as a result of that change?

Jonathan: Yes, I think the biggest thing that I’ve seen is the pride in which our team members have talked to their friends and family about their work. There’s a real sense of identity with having the space be theirs. And so it hasnít been uncommon for employees to bring in their friends and family on the evenings on the weekends to give them private tours and I think the respect that theyíve gotten from their loved ones has been at a different level. So with that pride of ownership within the team, what I’ve noticed is that, the work has elevated too. I’ve heard of things around the office like, we are leveling up a notch here and that the old way of doing things isnít good enough anymore; we need to match our processes or our work product with our space. Those types of things, I think, gives management the opportunity to set the bar high and the opportunity for the team members to meet the challenge. So it’s been a very positive thing across the board.

Marcus: And so despite having this amazing new office, I noticed from your website that theÖI believe the team works remotely three days a week.

Jonathan: That’s correct.

Marcus: I was just wondering, what’s the thinking behind clearly investing quite a lot in having this amazing office and then having the team spend the majority of their working time outside of the office.

Jonathan: Absolutely. 10 years ago, I was at a conference where Jason Fried who is the founder of 37 signals and their company’s written Basecamp and Highrise and some other products. He was in town speaking and one of the topics that he discussed just briefly was the idea of what he called REM Work. So REM work, he correlated it to REM sleep which is rapid eye moments sleep where all of your deep rest comes from. And he argued that work is the same way. That deep work is much more productive and lasting than highly interrupted light work. So what we’ve done is we’ve taken that concept and we’ve structured our weeks around having times where our team members can have deep work and this is multifaceted not the least of which is that we build really complicated back-end web applications and it takes a lot of deep thinking to create those. So we’ve really focused on having passive communication on Monday, Wednesday, Friday and those are the task-oriented days where our entire team works remotely. So it’s not that you can’t collaborate that you can’t contact one another but it’s done in a passive way. So it’s done via either e-mail or in Jira or via Slack messenger tool. And each team member has the opportunity to block off sections of time to focus dedicated on tasks. So most people have experienced being highly productive in the evenings, late at nights, on a weekend when there’s no interruptions. And we’ve tried to build that into our everyday work environment. The thing that needs to happen to make that work is collaboration days. So on Tuesdays and Thursdays we really have those be as tied to collaborative days as possible. So our office is designed for high collaboration and we really use those days to have our [inaudible06:31] meetings or status meetings come along one side, one another to overcome roadblocks and plow through any obstacles together as a team in efforts so that the following day, or days, dedicated tasks can be assigned and completed when we’re all working remotely. Another advantage of that is on a day like today in Minnesota here we got six inches of snow yesterday and the roads are icy and everyone can get an extra couple hours of working and by not battling the roads and the traffic into the office today.

Marcus: Really fascinating. What was it that led you to three days? I’m particularly interested in the structure of Tuesday and Thursday. Was there sort of some playing around with trying to find the kind of the right balance or did you start off with three days and have kind of stuck with it? What was the approach to get to that point?

Jonathan: We’ve had 10 years to tinker with the formula. We’re still tinkering with it today. So we started off completely virtual in what we found is that people got to isolated; roadblocks would pop-up and without having the face-to-face communication, it was difficult to really have one put their finger on what the exact issue was that was creating a roadblock. And so we started off with one day a week and realized that wasn’t enough and then we went to two. That worked better. Recently we’ve tried going to two and a half days and what we found is that that actually half-day doesn’t help at all. So now we’re ratcheting back down to two days again and I think what we found is the Tuesdays and Thursdays you know Mondays are really great day to lay out the foundation of the week and we actually have created a whole agency model where all work assignments happen on the Friday before the Monday on two week iterations toÖso that on Monday is really kind of a framing up day, we’re getting all the foundational elements laid for the week and then identifying what risk factors or roadblocks or potentials. So then on Tuesday we can tackle those in person. Wednesday we can respond to the tasks assigned and then Thursday again is another chance to check in. So it’s been done very methodically and massaged over time but we feel like this current formula works very well for our team.

Marcus: Go it. And how do you prevent the work remotely policy being abused?

Jonathan: To answer your question twofold: one is that each team member is given work assignments with time estimates and they’re tracked against that. And so we track each person’s time. I think every agency hates entering time as a necessary evil. But since we have to do it, and most do, we really use that as an opportunity to track progress. And to be completely transparent we have had individuals that have not been able to handle that level of freedom and autonomy and they’re no longer with our organization. So but by and large most people love the policy even those that are hesitant at first to work remotely end up really embracing it. And that leads me to my second point is the way that we hire. One of our core tenets is to build a tight-knit and talented team and a part of that is hiring very talented self-initiators that value autonomy and control and really enjoy the ability to be a self-starter. So when we’re looking to hire those types of people it blends very well into our model.

Marcus: Interesting that leads me on to my next question which is one of the things that I think really stands out about Creed Interactive is, you have this list of 20 beliefs on your website that kind of formed your creed. And so this lists things such as you know we believe employees of uncommonÖI believe in employees of uncommon heart and intellect to things like, we believe that to think outside the box you need to think outside the office. How has creating this list of beliefs and sharing this list not only internally within the team but externally on your website how has this helped you and the team?

Jonathan: So we call these 20 beliefs our creedologies. And the reason we call that is because it’s kind of a fun thing to call it. And the reason that we’ve created these beliefs is that the word creed means a set of beliefs coming from some different large agencies which will remain unnamed. I saw some things that I both embraced and some things that I really felt like I could not be a part of in terms of pretty much blatant dishonesty with trying to win accounts or put in a good face towards a client. And invariably what would happen is that over time the veil would get pulled down and people would see the chaos behind the scenes and the dishonesty that occurred there. And I just chose to not be a part of that anymore. And so when we started Creed, we really wanted to stand for something. And that’s where these beliefs come from. And speaking with a retired business owner who’s been highly successful and has been a mentor to me, one of the things that he has really taught me is the importance of creating unwavering values within the organization. So these 20 beliefs on our website are somewhat light-hearted and fun but what they are is the representation of our four core beliefs. And we felt like rather than just handing somebody a handbook the first day and say, ìHere’s the beliefs.î And theyíre never touching them again, we needed to find fun and creative ways to interact with these values. So the four values that we have is number one that we are going to be a team that is wholehearted. That means being passionate about what we do. Number two, we’re looking for people that are serving others that are involved in non-profit organizations. That look outside themselves. Put the team before themselves. Number three, we’re looking for people that have excellence in their work and have higher degree of pride and work ownership of what they do. And number four, we look for people who are resourceful. We’re a lean team that looks for ways to do things efficiently and we are looking for team members that can do that.So that’s very straightforward to kind of [inaudible12:25] that through. Where it really hits home though is when you start making decisions based on those four values. And so we have those conversations all the time including in performance reviews. Every year when someone is up for a raise, we evaluate their performance against these four values and even list out examples and criteria on whether they get the raise or not based on how well they performed against them. So we really tried to figure out ways to instill these values within the organization even as simple as naming our four conference rooms after our values in our new space as well has really helped too. So the beliefs we’ve had some fun with kind of illustrating those but they really boil down to those four and everyone on our team should be able to say those with ease as we’ve really worked hard to try to drill that into everything that we do.

Marcus: Amazing. I think that’s such a powerful thing and you know there’s so manyÖI think of Simon Sinek had a great TED talk about you know the power of having a strong Why, like a reason for why the company exists and the values to back it up. So I think that that’s really amazing. One of the beliefs in your creed that I found particularly interesting was, it says, ìWe believe in moderation in the number of projects we take on but not in the way that we commit to them. I was wondering there’s some of these competing forces I was wondering how you balance not taking on too much extra work while still enabling the business to grow and develop and build its client base?

Jonathan: It’s been a challenge and we do believe in that. One of the things that we try to do at Creed is flip the stereotypical developer who’s locked in the basement and overwhelmed on its head by having team members that have an appropriate amount of workloads and are highly passionate in the work that they do and that business model has worked very well for us. How do we balance not taking on too much extra work? One of the things that we’ve adopted is a process that we call agency agile. And so what our team does is that we create work assignments for all our team members on two week iterations with a check-in at a midpoint. So every week you either new work assignments are happening or adjustments of work are getting allocated. The way that we’ve done that is we have a core team of individuals and then we have a group of contractors and freelancers as well. So in total, it’s about 20 full-time [inaudible14:50] employees but they’re spread out over, I think we have 14 full-time employees right now with two open positions that are being filled in the next week or two. And then we have the other four spots with that combination of dedicated contractors freelancers and project based contractors to spread out the workload. So on the backside of fulfilling of the work that we do that’s kind of how we manage that. On the front side, we have some very firm new business criteria. We’ve been very fortunate to grow between 10 and 50% every year for now coming up on 10 years in a row this year might be a bit lighter than that but as a part of that we’ve really figured out what it is that we’re looking for when a new client decides to join us. Because we’re privately held and don’t have any venture to capital and have no debt, we are only accountable to ourselves in terms of how fast we grow. So we’ve throttled our own growth on purpose to make sure that we are continuing to uphold all of our values. We really believe firmly that we do not want to waterdown our talent pool by trying to hire too quickly and we want to make sure that we are bringing on clients that are equally passionate about the work as we are. And so as a result of that we turn down at times more work than we actually take on in an effort to make sure that we’re living up to the values that we have. And that can be painful particularly if we’re missing any of our numbers from either a profit or sales standpoint. But again that points back to that we truly believe in these values that we’ve laid out and we’re willing to sacrifice growth or profits to live up to them. And I think in the long run that’s really what has made a successful. If you look beyond the quarter, beyond the year, over to now a decade of work, living those values is what has made Creed Creed and has helped us be successful.

Marcus: Interesting. And in terms of where the growth is coming from, where the clients are coming in at the top of the funnel, do you have a more kind of inbound sales focus or is it outbound sales? What’s the kind of process around driving those clients?

Jonathan: One of the most interesting things that we’ve experienced at Creed that’s been different from other agencies that I’ve been a part of, has been, that once our clients join us, they rarely leave. So we’ve had years of growth where our only sales or new business strategy has been not to lose any existing clients. And we’ve done that and we’ve grown 20 or 30% that year with no sales effort at all.

Marcus: Wow

Jonathan: And so the reason for that is a couple-fold. One is that, is the type of work that we’ve chosen to focus on. Rather than focusing on campaign driven work or work that is thrown away after a short time period, we’ve really focused on business critical types of things whether it be customer portals or e-commerce systems or internal intranets or things that help our clients be successful themselves. And what we found is that as we’ve helped our clients be successful they’ve been more than willing to invest more heavily in that success which has in turn made us successful as well. And has had kind of this flywheel effect where the more we’ve done that, the more budgets have grown. And so you know this year our largest client was a client the year before that and tripled their budgets as a result of some of the work that we had done. So we grew slightly this year without really having any huge sales focus at all. So I think again it points back to building these tight-knit relationships based on our values has allowed us to not have to turn and burn through clients quickly. We’re able to just have a much more approach to ourselves and our new business activities.

Marcus: Amazing and Iíll sort of take a stab that if the clients that are being retained for so long, then they must be happy and therefore more likely to be spreading word of mouth and recommending Creed to other companies, I’m guessing.

Jonathan: Yeah absolutely. And I think our best business strategy is when our clients leave their position and take a new job, they typically bring us with them to their new place and then we have two clients instead of one because we don’t lose the old one either. And so that has worked very well too. One of the things we have observed however, is that there is a lifecycle to every type of relationship and after a certain point of time it’s actually healthy for us to turn over the work on both sides. And so that has become an interesting dynamic when we’re turning over work that we are very emotionally invested in on both sides and have just recognized that it’s probably time to move on. So we’ve been able to do that with smiles on our faces and with firm handshakes and able to transition them well whether it’s just the wrong size fits any longer or our businesses have diverged in focus or whatever it may be. But you know after 5, 10 years of working together at times, it does make sense to depart. And that could be a healthy thing, that could be a good thing. And we’ve done that very methodically and intentionally in a planned transition time. And I think our clients appreciate that and our team does as well.

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Marcus: So just going back to the creed, I was wondering what was the process in how you created that? Were the team involved increasing those list of 20 beliefs or was that something that you led that approach? And is it something that is being shaped and changed over time or is it very much set out from the start?

Jonathan: All of these beliefs have been there from day one. How we’ve chosen to articulate them has changed over time slightly. So these beliefs have stemmed from my personal beliefs which when you boil that down comes down to my faith and it’s been very interesting because we have people of all different walks of life and faith and ethnicities and a very diverse group within our team. One of the things that we make it very clear in the hiring process is that these are our values that we hold to and if you’re going to join us, you need to hold to these as well. And what has been amazing and has been that from lots of different perspectives of life all of these individuals have signed up for these values and it’s given us a very common language to be able to speak to one another. In terms of how they are created, like I said it’s stemmed from my personal experiences and beliefs and we’ve iterated a few different times how we articulate those. One of the things that we did as we brought on a copywriter to help us express those and with the help of a seasoned very successful business person, in his mentoring, we spent an entire two years working on nothing but how to articulate our mission our values and our beliefs to our team and the marketplace and what we found is that through multiple iterations of how we express that and working together with him on that we’ve really shaped our business and our focus and our have said no to a lot of different opportunities in order to say yes to the things that we’re very passionate about and have become the best in our small sphere at what we’ve done in terms of focusing.

Marcus: So are there any beliefs that have come up in the past six months, 12 months that been on your mind or things that youíve thought maybe if it was a list of 21 we might add this or is it still kind of very much, you know, it’s the 20?

Jonathan: One of the things that’s been on my mind very heavily lately has been how we give back. So the second value that I mentioned was serving others and a part of that has always been working with non-profits within our group through reduced [inaudible23:10] work, donations and pro bono work. And one of the things that really hit home for me this year is that I did some international travel to Haiti this year. Twice actually. And just seeing the need abroad and just the dramatic difference between the Western world and the developing world in terms of the quality of life has impacted me at a very deep level. And so one of the things that I’m continuing to wrestle with is how do we take what we’ve done and created here and use it for things beyond just what we are doing on the day to day basis. And so this year for our holiday cards, rather than giving our clients gifts what we’re doing is that we’re giving them a donation amount that they can donate to one of the three non-profits that we work with. And so we have a little microsite that they can go to. They can choose which of the three that they want to donate their funds to. And then we’re going to give them an opportunity to add their personal donations to these non-profits as well. And we did this last year as well. What we found is that it’s really created a spirit of giving back across both our employees and to our client base. And as we move forward, my desire is to formalize that in a way that we can really give some structure too and explain clearly. Today that’s being done very organically. And I think that’s good. I think all these values have started organically and then we’ve been able to put words to them afterwards. They are very authentic and built-in but I don’t want to rush that and create something artificial just for the sake of being cheeky or clever in how we articulate ourselves. So they are probably the one that we’re wrestling with right now and trying to figure out what to do with.

Marcus: Cool really really awesome. So what I want to do Jonathan is, in a second I want to go through a couple of quick five questions that I’ve put together. Before we go on to that though, it’s pretty clear that from looking at the quality of the case studies, the work and the culture that you’ve put together, you have very very high standards with the team and you know what you’ve put together here. I was wondering what are some of the things that you’ve done to ensure that you’re only hiring these kind of A players at Creed Interactive?

Jonathan: When we first started it was much more difficult than it is now because what we’ve done is we’ve created a pool of very talented individuals that work at a very high level and there’s a flywheel effect that happens where talented people in the market place want to work with other talented individuals. And when they see that we’ve been able to recruit a very high percentage of those recruits into our fold also friends of these individuals are much more inclined to join us when they hear from our team members how great it is to work with us. So early on it was done through heavy levels of recruiting. So I actually spent more time recruiting than I do at sales and I’m the only sales person here. So what we do is, we identify talented people in the workplace and then we’ll recruit them over multiple years or in the case of our creative director, he joined us a year and a half ago but I’d been recruiting him for 10 years prior to that. And finally the situation was such that it made sense for him to make the move. So it’s a huge investment for us but as I said earlier we really value our team. We feel like our team is what’s going to pour into our clients which will pour into our work which will pour into our growth. So we put as much energy as we can both into our existing team members and ensuring that our new ones are up to the task as well. And so our hiring process also lasts a long time. We’ve spent over six months at times in interviews going through hundreds of resumes to find the very best that we can find.

Marcus: Got it and being based in Minnesota what’s the talent pool like there, Is it quite competitive with lots of other agencies around? Or do you find that you attract people from kind of East Coast, West Coast? What’s the situation there?

Jonathan: Yes well it is below zero Fahrenheit here today. So to get people from the coast is difficult. However what we found in the Twin Cities market is a highly educated pool of individuals. And so there’s a great talent base here in the Twin Cities and it is highly competitive although most of our recruiting competition does not come from other agencies. If we’re paired with the agency to agency relationship our values and culture [inaudible27:41] that most every time. What we found the higher competition with is, startups that have product based companies. In some cases, some of the largest different technology firms. You know we compete with IBM. We compete with Google. We compete with Adobe. We compete with Microsoft for these individuals. And there’s actually a negative unemployment rate here. So there’s [sic] more positions than there are individuals which means that like I said earlier we are always recruiting. So it is a very difficult spot and it does actually limit our growth as our ability to recruit because we’ve decided that we’re not going to water down our talent pool. And as a result it forces us to be able to only grow at a certain rate.

Marcus: And what’s the main pitch for Creed Interactive to a prospective- someone that might be interested in or considering Google versus Creed Interactive? What’s the real kind of thing that that they are going get at Creed Interactive that they might not get at Google, in your opinion?

Jonathan: Well Google is a little tougher one because they have figured a number of things out. But one of the things that we have to offer is a high level of autonomy and control within our group. So because we’re small and we work on large projects most of our competitors are multiple times our size when we’re pitching work. Each individual really has the opportunity to shape the technology solution, the process, the relationship, with the clients, the end product in a way that they would be unable to do in a larger organization. That combined with a flexible work environment and working with highly talented individuals, gives us an edge over most other organizations. Particularly Google as you mentioned you know or San Francisco we did have one of our individuals decide that they wanted to try out Silicon Valley and headed out there and was out there for two years. And what we found is that after two years they got burned out of the pace and the traffic and the cost of living of the valley and they actually came back to work with us again after that as a remote employee. So I do think that there is something to be said about having that level of autonomy flexibility and control that we give our team members. We trust them a lot and they also produce a lot. So it works well for everyone.

Marcus: Got it, I was speaking to someone the other day, actually from Minnesota, he mentioned also there’s this kind of Midwest work ethic which is also quite an attractive thing as well.

Jonathan: Yes absolutely. My grandfather was a dairy farmer and my dad grew up on a farm. And so when I was a boy I was up the country hauling wood and taking care of animals and tilling your ground. And a lot of other individuals out here are that way too. So when you apply that same farmer work ethic to technology it really shines through. And there are some incredibly hard workers here in the Midwest.

Marcus: Awesome. Okay Jonathan so I want to move on to the quick-fire questions. My first question for you is what’s your number one book recommendation for business owners?

Jonathan: I’d have to go with Jim Collins Good to Great. I know that Good to Great is a very popular one. But the hedgehog concept out of Jim Collins book has really helped us focus and has given us a lot of success and a lot of profits over the years.

Marcus: I had a feeling it might be when I heard the word flywheel come up quite a few times. I was like, I bet it’s going to be Good to Great. Cool. Second question, what’s your favorite tool right now?

Jonathan: Yes this is a pretty boring one being that we’re a remote team we use a tool called Harvest for time tracking and that really allows us to track our team’s productivity and identify any overages or red flags on team membersí performance or anything that we need to watch or change quickly. So I think Harvest has been the most impactful tool lately. Cool.

Marcus: Cool. Next question is what is one piece of advice that you’d give to an agency owner who is looking to grow their agency by an order of magnitude whether that six figures to seven figures, five figures to six figures etc?

Jonathan: Twofold. One would be, I guess I only get one piece right? So it would be to do excellent work. Growth for growth’s sake is not helpful. You can be more profitable at a smaller size if you’re doing great work and being efficient than you can at a larger size doing poor work and being inefficient. So the total annual revenue is less important than the excellence of work and the resourcefulness and efficiency that you have doing it.

Marcus: Great advice. You mentioned that your client churn rate was or is, is very low, what were some of the biggest causes of client churn, more so in the early days when you were growing Creed Interactive?

Jonathan: I would say most of the time that we worked ourselves out of a job where we were able to solve the problem, put in the tools that the client can manage themselves and then they were able to go off and running with that. Otherwise they kind of stayed and often times what would happen is we’d set them up to go and then they’d go for a couple of years and then they’d need something else and come back so that the churn was basically project completion.

Marcus: And what’s next for Creed Interactive.

Jonathan: One of the things that we’ve really spent the past year on is capacity building between our space, our processes and our management team. So 2017 looks like a year of growth for us and we have the infrastructure to be able to facilitate that. And so we’re really going to focus this next year on some of our core systems that we’ve been working on; some of the portals that we’ve been building, some of the customer relationship management tools. And one of the trends that we’ve identified is companies wanting to have much closer one on one interactions with their customers and using technology to do it. So we’re really going to focus on that this next year and focus on growing in that way?

Marcus: Amazing. Jonathan it’s been a huge pleasure having you here on the show. Some really fascinating insights around culture and how youíve grown can Creed Interactive to where it is today. If people want to learn a little bit more about Creed Interactive, what’s the best place for them to learn a bit more?

Jonathan: Creedinteractive.com.

Marcus: Awesome. Once again Jonathan, huge pleasure having you here and yes, we’ll see you soon.

Jonathan: Thank you Marcus.

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