It’s no coincidence that St. Luke’s Communications is named after the patron saint of artists. A five-year-old advertising agency in London’s historic Bloomsbury district, St. Luke’s is full of free spirits who delight in breaking rules—both as they create advertising and run their organization. Given the firm’s deep tilt toward the unconventional, perhaps the real miracles of St. Luke’s are that the agency makes so much money and wins so many awards, even though it refuses to enter contests. Since breaking away from the U.S. ad agency Chiat/Day in 1995, St. Luke’s has repeatedly taken on traditional advertising agencies to become one of the most talked about agencies in the United Kingdom. The firm, with 115 employees, has seen its pretax profits increase eightfold in three years; in 1999, St. Luke’s won 25 % more new business than any other U.K. agency. Its client list includes British Telecom, Sky Television, and the Body Shop, and the firm has undertaken a host of projects for the British government. The increase in business corresponds in part to the recognition St. Luke’s has received from its peers. Within a year of its inception, it was named runner-up agency of the year in Britain. The following year, it won the title. In its fourth year, 1999, St. Luke’s was short listed for the world title. In the opinion of chairman and cofounder Andy Law, the success of St. Luke’s is driven by the firm’s determination to continuously reinvent itself in a world populated by dot-coms and mega-ad agencies. The agency’s goal is to revolutionize the way business is done and, in the process, provide a credible alternative to the capitalism of both the old economy and the new. St. Luke’s pursues its goal by carefully managing a paradox: it pushes its people to take enormous risks, but it has built a working environment that feels as safe to its employees as, say, a small-town bank in the 1950s. The paradox is at the heart of the company and plays itself out in myriad ways every day. For instance, the firm requires employees to publicly evaluate their work once a month—that’s scary. But the agency rarely fires people—that’s safe. Indeed, it invites all employees to share their personal stories in the supportive environments of company get-togethers and outings. When employees sign on, they contractually agree to do the job at St. Luke’s that best suits them—often as determined in reviews by other employees. That sounds daunting—and it is—but there is a company counselor to help with the emotional fallout of constantly doing new work. Taken together, the conflicting hard and soft aspects of St. Luke’s create a high-octane environment where creativity flourishes. The St. Luke’s approach to business is underscored by the firm’s unique organizational structure. The company has no bosses and is entirely owned by employees. Perhaps it’s not surprising, then, that St. Luke’s boasts an unusually high level of staff loyalty. Although 10 % of its people have moved on, only 1 % have gone to competitors; the others have left because of career changes or for lifestyle reasons. A turnover rate of 25 % is typical for ad agencies, according to figures from industry recruitment specialists. Although he is loath to say so, the leader behind the St. Luke’s approach is Law himself. The adopted child of a Church of England minister, Law grew up in Battersea, South London, when it was an inner-city, working-class area. He studied classics at the University of Bristol and had a brief career in commodities trading before moving into advertising. In 1990, he joined the maverick firm Chiat/Day as senior vice president in business development. Soft-spoken and given to lofty discourse, Law resembles an introspective Oxford don more than the typical colorful advertising executive. In a recent interview at the St. Luke’s London offices, he discussed the “old-fashioned” practices of dot-com businesses and explored the links between fear, safety, and creativity. Business is filled with stories of unconventional companies slowly but surely becoming conventional. So far, St. Luke’s has stayed untamed. Why? Because we want to start a revolution. We’re fundamentally convinced that there is a connection between co-ownership, creativity, collaboration, and competitive advantage. Many people here have given up untold riches and power to pursue this experiment—and we’re all committed to it, even though we have had spectacular offers to join conventional companies and make conventional personal profits. I just can’t imagine us going down that road, because for all of us, St. Luke’s is new economy whereas all other ad agencies are old. St. Luke’s is a manifestation of a fundamental shift that is going on deep within society—namely, a quest for meaning in life that cuts deeper than the kind of wild profitability promised in a dot-com. Personally, I’m very ambitious to be an example of a major alternative way of doing business. I want us to experiment with the capitalistic formula and come up with a new way to pursue the profit motive and succeed in the marketplace. I want St. Luke’s to do it in a way that is progressive and modern—and that adds value to people’s lives. The waste of human resources is a huge issue in business right now, particularly for the majority of dot-coms, which are such unhappy places to work. They’re so old-fashioned. They’re still set up along the model established by Henry Ford. Dot-coms old-fashioned? What do you mean? Dot-coms are terribly traditional. They’re owned and managed absolutely conventionally, and rather than redefine business, they exist to enrich a tiny few. How they do it—who they use—really doesn’t matter. People don’t count. The business model is simply one of mass production: create standardized products and services that can be distributed at low cost to as many customers as possible. But look at the mind-numbing casualness with which the dot-coms treat their human resources. You see the fallout every day. Employees are burned out, alienated, and disillusioned. A gold rush produces far more losers than winners. In this respect, Henry Ford was certainly right: a business that is in the business of making only money is a poor kind of business. Your theory is that managing differently enhances creativity. And indeed, the extraordinary creativity of St. Luke’s has been acknowledged by clients and competitors alike. Where does it come from? We find people who can embrace risk. When I interview people who want to work here, I ask them to describe the biggest personal risks they’ve ever taken. If they start getting flushed and short of breath as they tell their stories, I really start listening. It’s not so much what they say as how they say it. I want to feel that people have reached something dangerous in themselves—that they’ve been to amazing places and been quite frightened. We all have places like that inside us, and at St. Luke’s, you have to be able to access them easily. That’s why—despite the popular picture of us as being quite safe—I think St. Luke’s is the most frightening place on the planet. At other firms, people can hide. They can hold back. But here, we repeatedly ask people to go where they have never been. Our employees must take nothing for granted; they must peel away all the levels of their personalities to become who they really are. That’s frightening. It’s terrifying to have no pretenses about yourself, yet that’s what gives you the psychological resources to question all the rules. So overall, I would say that what accounts for our creativity is that we constantly go deeper into ourselves than other people do. We are not afraid to mock and provoke because we always want to get at the uncompromising truth. We’re confrontational in our approach, and we constantly touch raw nerves. Take our UK campaign for the Swedish furniture retailer IKEA. Instead of having IKEA make a bunch of ads that said, “Oh, we love the English” or “We have nice, inexpensive furniture,” we did an ad campaign in which IKEA basically accused the British of lacking a sense of style. We were deliberately provocative, and we chose British culture as our battleground. Another example of our confrontational creativity is a campaign we’re running for HSBC, the world’s biggest retail bank. It advises customers that financial institutions often give misleading advice. In one ad, we explain that the mortgage with the lowest rate is not always the cheapest. Such honesty is new in financial advertising. A campaign for another client conjured up images of men’s femininity, a daring subject in Britain. Most daring of all, perhaps, was a campaign for the British government aimed at getting more people into employment. Historically, advertising that was aimed at the unemployed simply advised them on the various subsidies and schemes they could apply for. But we wanted to make unemployment an issue for the employed as well—to make it a shared responsibility rather than a specific problem. Using hidden cameras, we found employers and the unemployed who were prepared to say what they really thought. We caught people’s conflicting emotions about unemployment—a taboo subject—on film. Our creativity has an urgency and an anger and a playfulness about it that come straight out of the heart of St. Luke’s. You say you ask employees to go where they have never been. Can you give an example? Right now, I have a 35-year-old former company director. In a normal ad agency, he would be head of a department of, say, 30 people. Here he’s working with a smaller team and has a co-owner—an equal—working with him. He’s wrestling desperately with the fact that he has been criticized by a 25-year-old for the way he behaves. He has a decision to make: he can learn to live with the criticism or he can leave. If he stays, he has to confront some authoritarian parts of himself. This is what the element of fright is all about at St. Luke’s. You are constantly forced to evaluate not only how you perform but also who you are. People tell you exactly what they think of you. It can be a very harsh experience. Individuals who are used to hiding behind power—or talent—have trouble getting used to it. Where do you find your creative risk takers? Finding talent is our biggest challenge. We go to head-hunters, we invite candidates to apply, and we advertise. As a result, we receive up to 100 applications a week. But we still have a bad name in London about recruiting because we take so damn long hiring people. We could double the size of the agency right now if we took all the business opportunities we were offered and just hired arms and legs to do the work. But the catch is, we only hire people who genuinely understand that they’ve got to take risks, and we don’t take on any new business unless it can be serviced by people we trust. Getting hired here is grueling. On average, applicants go through seven interviews, and the interviewers ask intimate, probing questions that are intended to take interviewees right to the edge. For instance, when we ask about personal risk, we expect people to talk about something substantial—leaving their wives or nearly drowning. We often ask: “What has made you most happy about your current job, and are you prepared to give that up at St. Luke’s?” Typically, candidates are questioned about whether they would work here for the same salaries they are earning elsewhere. At each step of the interview, we give people the option to back down. It’s the ones who say, “No! No! We want to keep going,” that we try to recruit. By the way, we take all our decisions on new hires by consensus. All interviewers have to agree on a candidate; it can’t be a majority vote. Once people are on board, how do you motivate them to unleash their creativity? We force everyone to live in the moment. Take one small but important example. Advertising companies show reels of commercials when they make pitches to prospective clients. The reels are samples of past work; they can be as old as you like. But nine times out of ten, we show reels from only the last three months. The oldest reel we would show—if, for instance, we needed to make a specific point—would be six months old. We would never show a seven-month-old reel, even if it was great work. This pushes people to the limits very fast. At the same time, we are constantly experimenting. You don’t get creative by staying in the same place. Indeed, there is a hunger, a lust, an impatience for movement in this company. That’s why we are opening an office in Stockholm this October. Why Stockholm? We didn’t analyze the market to see whether there was an opportunity there. But we analyzed ourselves and saw that we needed a bigger canvas for people to experiment on, and we needed a more diverse group of employees to produce more creative work. So we are going to Stockholm to set the creative process on fire by doing some intercultural experimentation. We are going to learn from people who were taught to think differently than we were and whose culture requires them to communicate in a different way. We are mixing the creative gene pool, if you like. We did work like this before when we created a campaign for IKEA in China using British and Scandinavian talent. One clear result of this movement within the company is that people at St. Luke’s are developing multiple skills. No one is just the copywriter or the TV producer. That means people can often be seen doing strange things. A strategic planner who normally does statistical diagnostics for us has just written a screenplay that will soon be aired. An internal team solicited screenplays for an in-house test project and his was the best. Nobody knew this guy had artistic talent because by conventional business standards, he was a numbers man. We also encourage creativity by literally destabilizing the workplace. When you come to work at St. Luke’s in the morning, you never know where you’re going to be sitting. There is completely open space here. It’s terribly destabilizing not to have your little desk or space where you can put your photographs up. It’s like going back to your house after being away and finding that somebody has moved your bathroom into the garage. But we decided collectively to do this because we want to defeat habit. Creativity is the defeat of habit by imposing originality and change. St. Luke’s is almost maniacal in its commitment to change. When we sign people on, we warn them in their contracts that their jobs, their job titles, their job descriptions—everything, in fact—will change. We ask them to commit themselves body and soul to change. We even ask them to agree to do whatever job other people in the organization think they would do best. Since the founding of St. Luke’s five years ago, about 25 % of our people have shifted from the jobs they were hired for. One employee who was struggling in client service became a copywriter. Another client service employee is now a strategic planner. The office manager has become a client service representative. St. Luke’s at a Glance Gross profit/income includes fees and commissions but excludes payments from clients for production, research, and other expenses that are passed along by the agency to clients at cost. Profit before tax is gross profit/income minus all employment and overhead costs. All 2000 figures are estimated. Creative people are famous for not wanting to be managed. Is that the case at St. Luke’s? To a degree. People scream out for individual mentoring, which has replaced conventional management in many ways. Nobody is embarrassed to ask anybody for help here, and I mentor constantly. I go out, almost like a TV evangelist, and remind people what St. Luke’s is all about. Of course, creative people, in particular, need to be brought along. They need to be encouraged and buoyed up. But I find that the main thing I need to do is remind people to give something up, to sacrifice something. I am constantly telling people that giving up the thing they’re attached to will take them to someplace far more interesting. Giving up something helps people create spaces in their minds that will allow them to take on new things. Holding onto things all the time makes people—and companies—afraid to change. St. Luke’s doesn’t enter awards competitions. So how do you measure your creativity? Mainly by gut. We get together on the last Friday of the month and review one another’s work publicly. But let me explain that our creativity is more than just the ads we produce—it is also the lives we are leading. So there is a lot to evaluate. Of course, we listen carefully to our clients—their feedback is essential. And we closely monitor the enormous amount of press comment on our work—the good and the bad. But mainly we test the collective pulse rate by showing our work to one another. It’s not unusual for someone to say, in front of everybody, “The last two or three things I’ve seen from you are of low quality.” That could be extremely demoralizing at other companies, but it works at St. Luke’s because the company is fundamentally safe. Although three people have been fired for not cooperating, no one has ever been fired for producing poor work. In cases of poor performance, the review system kicks in to repair worn out or broken parts. But I don’t think measuring the success of our creativity is as important as recording our successes and failures. Those we record in a catalog that we read each year on Shareholders’ Day. We’re particularly interested in our mistakes—why we turned down this client, for instance, or disagreed with that one. Keeping a record of mistakes helps us retain our memory. Many companies, especially dot-coms, have no collective memories. But ours is growing stronger all the time because of the records we keep and, of course, because of our low turnover. At most companies, there’s a lot of turnover at the younger end of the spectrum; the derring-do part of the company’s memory banks is constantly walking out. It’s the old guys who stay. So just as people with Alzheimer’s have an incredible memory for how things were a long time ago and a very poor ability to imagine the way things might be, those companies have forgotten how to envision the future. That spells disaster for moving forward. There seems to be a lot of latitude and self-determination at St. Luke’s. Would you say your employees are empowered? I don’t like the notion of empowerment. If you think about the word, it implies that someone has to empower someone else. So empowerment reinforces the very hierarchy it claims to replace. Another problem I have with empowerment is that without ownership, it amounts to little more than a tool that can generate enormous cynicism. There have been companies that have put empowerment schemes in place but then have pulled back after going through downturns. That leaves resentment and disenchantment—a sense of being put back on the leash. I don’t think of St. Luke’s as an exercise in empowerment. It is an exercise in responsibility through ownership. How does that sense of ownership manifest itself? Unlike other companies, St. Luke’s is legally owned by its 115 employees, not by outside shareholders. Other companies claim to be employee-owned, but they’re set up in such a way that the top guys get the biggest payoffs and the lower-downs get the crumbs. At St. Luke’s, we have no bonus system that varies according to grade. We have no bonus system—period. That means the woman who joined the company as office manager and junior assistant at the same time I did owns the same percentage of the company as I do. Shares are distributed equally at the end of the year, and I receive the same number of shares as every other co-owner. We really don’t have a hierarchy at St. Luke’s. If you came into the company cold, you wouldn’t know who did what. There are no signs or symbols in the offices. At most ad agencies, if a chairman, senior client, or politician comes to a meeting, the junior staff is hidden away while a gaggle of senior agency executives push to get in on the act. Not here. For instance, I’ve never met Sir John Browne, who came in for a meeting with the team recently. He’s the CEO of BP Amoco, one of our major clients. More telling, perhaps, is that nobody reports to David Abraham [a cofounder and Law’s partner] or to me. Neither of us can tell people what to do. In fact, we report to them. We have to tell everybody openly all the time what we’re doing. So St. Luke’s is run like a radical democracy. If a decision has to be taken on any issue, all the owners of the company are invited to step forward and join a team that will investigate the issue. Typically, eight or nine people step forward. But at St. Luke’s, as in most democracies, collaboration and inclusiveness have their limits. We operate on a trust mechanism that grants greater efficiency and direction: once the team makes a decision, the rest of the company abides by it, without a vote. There’s this immense trust in everybody. We all know that nobody will ever let anybody else down. That’s why we are absolutely fearless. You’ve described St. Luke’s in terms of paradoxes. It is an employee-owned company that does not think of its people as “empowered.” It is a terrifying company whose people are absolutely fearless. How do the paradoxes work out in everyday life? St. Luke’s is built on a radical seesawing between fear and safety. Both are institutionalized in our company, and both are needed for us to stay in a state of constant introspection. Of course, a state of constant introspection is not a very comfortable thing. But it is highly productive. It leads to the self-knowledge and awareness that culminate in our brand of confrontative, angry creativity. This self-knowledge is the DNA of a creative company in the creative age. Constant introspection leads to the self-knowledge and awareness that culminate in our brand of confrontative, angry creativity. That said, let me add one caveat. No company should try to transport our model to its organizations without first asking itself a difficult question: do we want to be a new sort of animal? If it doesn’t, it won’t get anything out of imitating us. How can people work effectively in a company that is built on a radical seesawing between fear and safety? Fear comes in many forms. The fears that we don’t have—but that employees of nearly every other company have—are the fear of losing a job, the fear of not meeting targets, the fear of being treated poorly by a boss, whatever. No one at St. Luke’s is afraid of being made redundant or of failing to meet a productivity goal. In fact, no one loses sleep over the fact that we don’t have any targets at all. Indeed, one thing that makes us unique is the contract we sign whereby we all agree to outlaw fear, ego, and greed. That absolute insistence on respectable human behavior is one big thing that makes people fearless. If you add the high degree of trust we have between us, daily fear—the kind driven by indiscreet corridor conversations—vanishes. When your job is not at stake—when you know that people have contracted to treating you decently—then you can relax long enough to see beyond the short term. Imagine that a client walked out on us because the account manager wouldn’t go along with the client’s ideas. So what? We’ve got plenty of other clients, and we’ll find plenty more. Imagine that a client walked out on us because the account manager wouldn’t go along with the client’s ideas. So what? We’ve got plenty of other clients. I think it is this lack of fear that gives us the incredible freedom to be creative and to push the envelope. Not being afraid that someone is laughing at you helps you take genuine risks. I will give you an example. Last year, we did a campaign for a daily newspaper that we based on the real people in a newsroom. We overexperimented and the campaign fell flat. I don’t for a minute regret making that mistake. The only thing I ever fear is that we won’t go far enough. Of course, I’m not saying that being fearless in experimentation isn’t sometimes a frightening experience. It is. One of our creative directors said recently that working at St. Luke’s is like being on a roller coaster just at the moment when the car seems about to crash to the ground. An amusement park is safe—that’s an essential part of the experience—but the ride can be scary. And at St. Luke’s the ride gets bumpy because there is a limit to people’s ability to change. Even when you recruit people who are comfortable with enormous change, you can never predict when people will suddenly hit their transformation limit. At that point, St. Luke’s can become a terrifying place. How can you tell that someone has run up against the limits of change? There are different signs for different people. For some employees, a lot of anger begins to emerge. But in a place like St. Luke’s, where there are lots of pressures to be collegial, the main indicator that people are losing their desire to change is internalized fear, better known as paranoia. When I see that paranoia, it’s a sign there’s been too much change in the organization. The easy response for me would be to step back and start exercising conventional authority—to start telling individuals what to think and what to do. But I won’t do it. That would be a terrible mistake. I am painfully aware that when you are seriously committed to breaking the mold, employees will beg you for rules and regulations almost every day. But if you give it to them, you start to insulate them from life. How do you maintain perspective and a sense of humor in a company that is so self-reflective? We started by having a counselor keep an office here. We paid her fees, and employees could choose to work with her. But we had to develop the system to apply some solutions. Now we have developed the counselor concept into the counselor-trainer. This required a new hiring. We now have a guy working with us who diagnoses personal and general situations and prescribes remedies through training, talking, and interpersonal relations. Hiring a counselor was primarily a recognition of the problems of growth. As we expanded from a small office where everyone knew everyone else to a larger office, we began to see the problems that you see in society generally—from the petty thief and the bulimic to the liar. I tell you honestly, there are no politics in this office. But there is a huge bag of personal issues, because when you have an environment where people feel free to become themselves, it’s inevitable that a lot of them will share their problems with everybody all the time. But we also use whimsy and humor to blunt the edge. For instance, we have an artist in residence, and we’re just now discussing a painting of our headquarters. She’ll probably want to set up an easel outside, and I’ll say, “No, no, no, this isn’t our headquarters. The headquarters is in each of our heads; you must imagine it.” This is particularly true as we expand beyond the London office, which must never be seen as the head office or the mother ship—that would break the intracultural magic. So I hope that when visitors look at the final result, they will ask us, “Is that your headquarters? Where is it located?” And of course none of us will know because we won’t have been there! Finally, when it comes to the real turmoil that massive change and creativity stir up, I’ve found there is nothing you can do but try to lead by inspiring. For instance, I’ll go to the organization and say, “Look, folks, this company is designed to last 80, 100, 500 years, it doesn’t matter how long. The life span of this company might be infinity, but right now, we are living right at the beginning.” That gives a lot of people the confidence to change. Whereas they used to say, “Why change the company?” they now find themselves persuaded by the argument that the company isn’t even created yet. We have yet to invent St. Luke’s.
