TL;DR

• We're live with a new playbook to help agency leaders build a referral system that works. Thanks to GoDaddy for sponsoring, this playbook is free!
• The 4Q Agency Pulse Survey is closed, but we'll share the results with every Delphi member, regardless of participation status! This is a one-time thing for everyone to see what Delphi is all about. Sign up and get the results.
• There’s been a strong undercurrent of “wtf do we do next?” throughout the agency space this year.
• It's causing too many leaders to get stuck in a wait-and-see holding pattern.
• You can't just jump 100% into strategy, though.
• The amount of resources spent on strategy work should grow along with agency size.
• Once you're at a spot to work on strategy, you have to be cautious about how you spend your resources. Value experimentation over research.
• How much to allocate to investments can be tough, and using McKinsey's three-horizon model can be a helpful guide.
• Horizon 1 - core business, 50% of your focus.
• Horizon 2 - near-term bets, 30-40% of your focus.
• Horizon 3 - long-term bets, 10-20% of your focus.
• Balance your efforts and resources among the three appropriately, and use this in your 2026 planning to get out of this holding pattern funk.

FREE PLAYBOOK: From Random to Repeatable

Referrals are the key driver of agency growth.

Unfortunately, it’s rare to come across an agency that has systematized referrals into a predictable channel. When demand is high, referrals seem to flow in almost magically. When demand wanes, they dry up, leaving agency teams to quickly backfill the sales pipeline.

This playbook goes deep into how agencies can systematize referrals and grow more reliably, and thanks to GoDaddy, it's free for our newsletter subscribers!

The Fourth Quarter Survey is Closed

Since this is the first one, we'll share the results with the Delphi membership list, regardless of participation status.

This won't happen again, so if you're interested in seeing what this whole Delphi thing's about, sign up now and get the 4Q results next week.

Stuck in a Holding Pattern

There’s been a strong undercurrent of “wtf do we do next?” throughout the agency space this year.

I’ve spoken about this at a few events, but the summary is that AI is forcing agency leaders to rethink how they add value.

But too many leaders have become stuck in a kind of permanent holding pattern.

Everyone seems like they’re waiting for something to click (or the next shoe to drop) before committing, and this is contributing majorly to the anemic pipelines many firms are experiencing.

So, for today’s newsletter, I want to dig into this so you have some better ammo for your 2026 planning.

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Time Spent on Strategy

First up, the amount of time you should devote to strategy changes as your agency grows.

Small shops just don’t have the luxury, need, or resources to spend a bunch of time developing grand strategies.

It’s more valuable for the leaders at a Studio (<10 FTE) agency to spend their time growing into an unoptimized 25 FTE shop than it is to spend a year designing the perfect growth strategy, only for the market to shift, and then have to do it all over again.

It’s easier to adjust when you have resources.

We have a new piece in the works all about agency structure, and one of the sections details exactly how roles shift as agencies grow. The summary of that section is that strategy work isn’t something worthwhile until you’re in the Medium (25-49 FTE) cohort or larger. There are just too many other things that take priority when you’re smaller than that.

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Research vs. Experiments

So, you’re a shop that’s already large enough to devote time to strategy work. What do you do first?

As someone who’s spent the last 15ish years in some form of research capacity, the answer isn't spending a ton of time and money on extensive market studies.

They have their place, but most agencies can get away with a quick secondary research scan that hits the major points as long as it gives them directionality. The goal isn’t to achieve perfect clarity, but to check and pivot often enough and be directionally correct enough times that you make the right call more often than you don’t.

You know what provides quick, actionable insights?

Experimentation.

If only a framework existed for how a shop could allocate resources to experimentation without going overboard.

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Three Horizons

Enter the three horizons model.

Ol’ McKinsey did some good work with this one (we’ll ignore all the bad shit they do for now).

This model is a great way to think about resource allocation in a shifting environment.

It consists of three components: Horizon 1, 2, and 3.

H1 is your core business. This is what’s currently sustaining you and where you’ll draw resources from to invest in the other two horizons. For most agencies, this is the bulk of work and revenue: executing client projects, refining current offerings, and improving operational efficiency in the here and now. H1 should remain the largest focus in terms of resources, since it’s what’s keeping the company going (often around 50% of your efforts in a healthy agency).

H2 consists of your emerging opportunities. These are the reachable new growth areas (AI consulting, anyone?) that you’re experimenting with that are delivering some revenue, maybe some profit, but aren’t commercially viable as core businesses yet. Think of launching a new service line, expanding into a new market segment, or adopting an up-and-coming technology for client work. H2 projects often drive your growth in the next 2–3+ years. They require some investment and risk, but they have a reasonably clear path to profitability if executed well. In an effective agency strategy, a significant chunk of effort (~30-40%) goes here, because these are your future cash cows that will keep you competitive as the industry evolves.

H3 is where your future bets live. This is where it’s too easy to spend an inordinate amount of time and resources. Most agency leaders want to live on the cutting edge of putting tech to work, and this makes the H3 area way too attractive. Resist it. This is where long-term bets live that might not pay off for 3-5 years, if ever. This is where things like piloting an entirely new business model, R&D on cutting-edge tech, or speculative projects in nascent markets live. These initiatives are high-risk, high-reward and typically small investments now (perhaps 10-20% of resources) with the potential to become H2 or H1 items down the road.

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Right-sized Bets, Experimentation & Pivoting

Using the Three Horizons allows you to balance your focus: you’re sustaining and optimizing what works today (H1), while steadily building what’s next (H2), and exploring what could secure your future (H3).

Agencies that balance this correctly have infinitely more real-world data on what’s working in the market than those that don’t, and this flows right into how they position themselves:

Right-sized bets, experimentation, and pivoting.

As you head off to your annual strategy retreats (you’re doing that right?), keep this framework in mind. Identify your H1, H2, and H3 segments and how much you’re investing in each.

Hope this helps you rebalance a bit and get out of the holding pattern so many leaders are stuck in.

-Nick

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P.S. Don’t forget, Delphi results go out next week! Make sure you’re signed up to get em.