Great post from Murat over on mobileinc asking “Can The Next Instagram/Hipstamatic/Klout/Angry Birds Be Born Within An Agency?” or, as he puts it, why hasn’t this happened already?

Our model has always been based on creating new businesses alongside our client ideas – a few years ago we launched Festival Annual, a user-generated book of photos from the British festival summer, and we’re developing ideas and collaborating with partenrs on various new ideas for digital services or disruptions to existing online business models.

Murat believes the reasons come down to clients themselves, and agency culture and makes some really great observations in the post. I was going to write that I would add the effects of the downturn to the list of reasons – many agencies had to lose large numbers of staff at the end of 2008 and through 2009, and felt like they were in a battle for survival, chasing every possible pitch. But then, it’s not as though the preceding years were chock full of innovation coming from agencies either.

The answer probably lies in asking the question: what’s your purpose in the world? For many agencies the purpose is to make money, and to show revenue growth in the short term. There’s nothing wrong with that, and in fact that’s what your shareholders might expect and what most of the staff might want if they see getting bought as the fastest and most likely route to a wealthy future. The need to show revenue growth year-on-year, in a tight advertising market, compels a certain approach to running your company, and taking big risks on how you deploy staff time doesn’t really fit that template.

That we’ve chosen a different route is not to say it’s a better one – it just fits us better. Our aim is for our pensions to come not from selling the business to one of the big marketing conglomerates, but to come from creating valuable digital businesses.

For us, what flows from choosing this route is a range of things, from taking less money out of the business now, to the design of our office space, to changing our recruitment profile. Each of the four people we’ve hired in the past six months has experience of starting a business venture. Some of the businesses have been startlingly successful (we now have Yin of the YinYang blog working on the team), and some haven’t yet launched. The point is not the success of otherwise of the ventures, but the learnings and approach to work that have come from the experience, and we believe this benefits our client work as well as giving us the right team to have a pop at creating a future digital hit.

The Activate team have created a terrific presentation on “Redefiners” and the opportunity to capture a share of the huge growth in media revenues that the intersection of tech and media will create. The presentation is on Slideshare and its worth reading the blog post introducing it from Anil Dash.

As we talk constantly to our clients about disruption, we were particularly interested in the idea that Redefiners are the successor to Disruptors. In the media/tech sector that they’re talking about, the Activate team talk about Redefiners being “natives” of the web/app era and really focused on providing a better customer experience. The opportunity is to pick off the most valuable customers from incumbents burdened by their legacy.

A passage of the presentation that especially resonated with us is urging incumbents to fight their legacy constraints by hacking their organisations to create virtual startups.

We’re working on several (as yet unannounced) projects where we are helping clients adopt an entrepreneurial mindset, using techniques like the minimum viable product as ways to test consumer appetite quickly, and create new routes to market. It’s easy to get clients excited by new ways of doing things when you show them quotes like this one from Venture Hacks: “The minimum viable product (MVP) is often an ad on Google. Or a PowerPoint slide. Or a dialog box. Or a landing page. You can often build it in a day or a week.”

Several of these projects are operating on the fringes of the client’s existing organization, and one of the biggest challenges is how and when to engage the rest of the business with the project. For digital product businesses, the answer may be to keep the two apart for as long as possible, as the new business may have the potential to eclipse the legacy business in a very short timeframe.

For consumer goods companies with physical products, the answer gets more complicated: one or two new product launches done in a disruptive or redefined way may have much more long term value as test cases for a new way of doing business than their short term cash value.

For this approach to work, its important that – contrary to the hacking mantra of ignoring everything that’s gone before – the virtual startup operation not only deeply understands the legacy business, but makes good calls on when to adopt existing structures (like sales and distribution), when to adapt them, and when to reject them and build something new.

As and when we get learnings we can share, we’ll post them here.

As part of our new website we’re going to be using this blog to share occasional thoughts on how we see the world changing. We pride ourselves on spotting opportunities and acting fast to leverage them – often we’re doing that for a client and so we can’t talk about what we’re doing until it’s live.

But sometimes we have strong views on subjects unrelated to current client work, and this is where we will share them.