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SPECIAL REPORT
2 | JULY 2016
A lesson in innovative
management from a tech
innovation agency
A global tech
firm growing
fast, with a big
heart and big
ambitions
BUSINESS
JULY 2016 | 3
1. Big vision
L
oft was founded, by a former
web developer Nick Nettleton,
in London in 2007, as an
ambitious web development
agency. Mr Nettleton is now
Chairman in a fast-growing company,
which in 2015 was repositioned as a
technology innovation firm and has been
taken to new  unprecedented  heights by
Nettleton and the charismatic CEO he
brought in almost two years ago, Jono
Marcus. I had the honour of watching
a presentation by Mr Marcus while he
was visiting Dubai on business in April.
His and Nettleton’s company is a new
model for business success, built around
distributed authority and a permissionless
innovation culture. Producing stunning
technology  prototyping work, as well as
large scale and highly complex bespoke web
development products.
The business has doubled in size this
financial year, making strong profits, big
revenues and with a staff happiness rating
each month of 9 out of 10. All this in a year
when the global economy has been tough
and the business has been implementing an
innovative new business model. I attempt
to find out how this is all possible from
Marcus and some of Loft’s staff.
Marcus minimises Loft’s sharp growth over
the last year or so, saying the Chairman
wanted: “Loft to be the greatest tech agency
in the world” and that “we had a pretty
good hunch of how to start more radically
delivering on that dream, with the help of
a  genius family of technologists”. There is
of course far more to it than that, including
a revolutionary exploding of the agency
model and Marcus’ own  enthusiasm for
creating a new way to run a business,
centred around small focused teams and a
blurring of hierarchy, redefining the way to
achieve commercial and creative success.
When Marcus spoke to the gathered
ensemble of Dubai creatives and business
people last month, he conveyed command,
charm, warmth and integrity. Speaking
to him in person you get the impression
of a slightly more introspective character,
who is very demanding of himself and
deeply cares about his staff, determined
to achieve a ground-breaking collective
mission with Loft Digital. He says modestly
when I compliment him on Loft’s success,
that much of the praise must sit with the
hardworking and “genius” technologists in
Loft, as well as the company’s Chairman
who “imbues his good morals into the
business, which makes everything easier
when you are trying to achieve big things”.
Marcus explains: “We wish to prove that you
can deliver stunning digital products that
will open up access to services, resource and
opportunity for the many. We want to show
you can use imaginative web engineering to
make life dramatically easier for everyone,
not just the few. We are trying to build an
egalitarian company in terms of what we
produce and crucially in how we operate”.
So, you could say there is more at stake for
Nettleton, Marcus and the highly motivated
Loft team, with this big vision, than simply
maintaining a profitable business model.
One of Loft’s staff comments that, while
the company’s clear mission is not essential
to delivering great web technology, it is
certainly: “Good for morale and ensures
we are all heading in the same direction,
towards something meaningful. It also
helps that we all contributed to the
formulation of the company mission”.
2. Strong and innovative
structures for growth
Marcus argues that much of the commercial
success in the past year is down to creating
an internal infrastructure to support rapid
growth, whilst at the same time single-
mindedly expanding globally, first into
Czech Republic, then into Berlin and
now Dubai. He says part of that internal
growth infrastructure was put in place by
implementing a twist on the alternative
management model called Holacracy.
According to Marcus, every technologist
in Loft can “offer business and society in-
credible things, but traditionally-structured
organisations often don’t and won’t listen to
them”. He says: “Other organisations value
coders for their coding alone; at Loft, we
value them for their general problem solv-
ing potential and amazing minds, which are
more on the money and can provide more
transformation insight than your average
McKinsey suit”. Marcus has little time for
“pen pushers” or those not in a rush to get
things happening on the ground.
Perhaps this explains why Loft has over 20
very T-shaped technologists on its books
and will only employ project managers
who are former hands-on developers.
What is more, they keep this “project
management” layer very slim. In fact, more
often employing a new job role invented by
the company called Engineering Product
SPECIAL REPORT
4 | JULY 2016
Owners. These are developers, at all levels
of seniority, who will take on the planning
and client liaison capacity on a project.
Loft doesn’t want  account handlers, or as
Marcus calls them “room fillers, all but the
very finest of them”. He say project mangers
or account handlers, who haven’t been de-
velopers themselves, tend to understand less
about the complex web projects undertaken
in the business than the technologists doing
them, which is something Loft wont toler-
ate: “That is of no use to us or our clients, it
just creates confusion, misunderstanding
and wastes money that can be invested in
more tech development”.
Marcus also has strong ideas in terms of
team sizes, believing that tech innovation
projects are far better served by 3-5
dedicated team members, than tens or
hundreds. He says Loft is built around 3-5
technologist teams on every project, never
more. Explaining: “Why do the biggest
digital transformation companies so often
underwhelm and disappoint? It is because
they don’t know how to work at scale. They
put thirty men on a big complex project,
which would be better served by three
passionate technologists who get to know
the client, sector, system and ambition really
well. Small teams who know they wont be
rotated on to another project before they
have achieved their idea of success on the
current one”. Loft thinks small, in order to
achieve big. I then ask Marcus, why growth
is such an important part of Loft’s long-term
strategy in that case. He responds: “We want
our teams to stay small, focused and to keep
it personal, in every sense; so teams of 3-5
will always be perfect. But we want to grow
in the talent sense, so that we have more
options as to who the best three people
are for any given project. Options when
it comes to platform capability, coding-
languages or relevant experience to inform
technology decisions is key for providing
the best solutions”.
A witness to this, has been one of Loft’s
clients Thomas Spencer – CEO of Spence
App – who has based himself in the
company offices for the last few months:
“It is great to see how the team encourages
everyone to challenge assumptions, own
projects and drive ideas. This is done
through small confident crack units on
projects, a weekly firm wide Developer
Senate, the Circles and daily project team
catch-ups. So progress happens at light-
speed. Iterative improvements are a daily
occurrence within Loft HQ. It has been
great to see and sometimes take part in”.
3. Staff empowerment
Loft seems to have a healthy lack of fear
for the biggest players like IBM Interactive
or Sapient Nitro and Marcus says with
a twinkle in his eye, that the “giants”
often “charge the earth, for making very
little technological progress, whilst making
some very pretty Powerpoint presentations
along the way”. It seems, in Loft, you are
expected to be a person who tangibly
makes technological progress happen or
very directly inspires it. This is an action-
orientated company. You must be both a
thinker and a do-er. This perhaps explains
why the Loft team is impressing so many
clients, from big established companies with
tech challenges to bold startups with big
ideas, with their hands-on, let’s get started
attitude. Clients who are tired of spending
money on paperwork and are enthused by
the firm’s energy.
Loft’s distributed authority model involves
their technologists working in different
specialism “Circles”, with absolute authority
in those Circles to make decisions, spend
money and make big changes. Marcus
relays how he once got in trouble from the
marketing Circle for getting a mosaic made
for the office wall, as it was their area of
authority, not his - “they made clear to me
BUSINESS
JULY 2016 | 5
that they felt I had trodden on their toes
and they were quite right too – as my areas
are Strategic Growth, Finance and Values
and Vision - I was treading on their toes.
They have absolute authority on marketing
matters. The system relies on respecting
that Circle’s spheres of authority if you want
rapid progress”. One of Loft’s developers
adds: “The Circles have allowed change
to happen quicker and the company to
develop fast; and, I mean incredibly fast!”.
The staff at Loft seem to feel that the Circles
have allowed them to become part of the
construction of a company success story,
since their implementation over a year ago.
Loft team members complete an anony-
mous online Happiness Index each month
and resolve “Tensions” in a Monthly Gover-
nance Meeting. Tensions in the agency can
be anything from difficulty in meeting dead-
lines, to not enough fresh air in the office,
to a group of developers feeling over-tired.
Nothing is off-limits. “Sometimes hearing
tensions in the Governance Meetings can
be a bummer”, says Marcus, “But, I have to
take that on the chin each month, because
it is the only way to keep improving. It is
down to the Flat Management Circle to re-
solve one or all of the tensions raised each
month with the relevant other Circles. It is
down to me to hear them, not solve them.
No one holds back”.
He describes that the staff’s tensions
raised  are “without exception, nothing an
upper management level could successfully
predict or impose solutions to, from above”.
The fact is, Marcus seems to admire and
deeply respect his staff, so it seems to be
his default position to not dismiss their
opinions, concerns or ideas. That such an
approach is leading to immediate business
success and strong performance from the
staff rewards that boldness. One of Loft’s
developers shines some light on this when
he says: “Both Circles, and quickly resolving
Tensions in the business, teeter on the ability
of the Loft Family members to take on more
responsibility and stretch themselves.   So
each one of us knows they really matter
for driving things forward in the business.
Creating time for each individual to offer as
much as possible to the business model, is
not easy of course. So it can add pressure
on individuals to offer more on two fronts –
both as technologists and as people. But, the
company has improved beyond recognition
for us since the Loft version of Holacracy
– and it is down to our decisions on the
ground being implemented at speed. We
know we are determining in some ways the
direction of the whole company.”
Loft’s technologists also have 20%  time,
whereby they can use a portion of their
working day on personal projects that
will advance their skills or push them into
new experimental technology areas. Marcus
describes successfully  cementing this
time for the developers, and not following
Google’s example and abandoning it when
it became tougher to police, as the hardest
implementation in his time at Loft:
“Innovation time is my Obamacare, it has
been messy to  implement and tough to
see through and has had a lot of external
“Innovation time
is my Obamacare,
it has been messy
to implement and tough
to see through and has
had a lot of external
cynics, but it benefits
many in the team, so
we will never stop
working hard, to make
innovation time work
hard for us”.
SPECIAL REPORT
6 | JULY 2016
cynics, but it benefits many in the team, so
we will never stop working hard, to make
innovation time work hard for us”.
Hearing this, I thought maybe it had been
a disaster, but then Marcus reels off a list of
over five exciting products created during
personal innovation time in the last year,
including a whole new industry framework
for developers. This is clearly a team with
incredibly high standards for what success
means and what is worth celebrating. One
of the team explains: “We do have high
standards, and personal innovation time
gets us to push ourselves further and bring
more ideas to the table and often goes on
to benefit client work. There has to be
that facility to try out new things, without
pressure, if you want the most inventive
developers”.
Marcus describes Loft as a broad church
that welcomes everyone, he tells me
with a broad smile, that this includes: “a
women who learned to code on a crammer
course originally, and wants to make a
big charitable difference in the world; to a
self-taught coding Brony (fan of My Little
Pony); to a developer whose main source
of entertainment as a child was chasing
rats, until they got too big and chased him
back!”. Marcus is clearly fond of all Loft’s
staff and feels part of Loft’s success is in its
appreciation of their quirks and making all
team members feel valued for who they are.
Marcus says one of the biggest challenges
in the last year or so has been the soaring
salary demands of developers, which he
adds does not relate to quality improvement
in the industry. He says: “At Loft we have
the best developers in the world, and we
pay fairly for their talent and try and reward
them with challenging work and the ability
to make change within the organisation.
But I am asked to meet candidates with
stupendous salary expectations, who aren’t
a patch on those already in the Loft Family.
Plus, they often lack the maturity and self-
drive to flourish in a distributed authority
model company like ours”.
He believes the move into foreign markets
has been central  to the success in Loft’s
business objective of sustainable growth
and has given them access to developers
they may not have  discovered otherwise,
with the hard coding skills that in his words:
“Allow you to quickly gain respect amongst
the current Loft Family, who are the best of
the best”. What you notice is that Marcus
and the Loft staff talk about their colleagues
as Family; and they are equally verbose
about people that are based in the Czech or
Berlin office, as they are about the person
sat next to them.
The staff also talk about the flexible
working hours culture and the proactive
payrise policy, which runs roughshod over
traditional company policies of yearly
payrises and intensive performance review
processes. Marcus dismisses performance
reviews as “patronising and agenda driven”,
preferring what Loft staff call  “career
planning”, which is more about mentorship
and  fulfilling your own personal career
goals in service of the company mission. He
says: “Who am I to tell someone where they
should improve. Any one of my colleagues
could tell me where I should improve
and I would probably go home and cry.
People know themselves, what they need
to do or what they need to learn to be
better. If they didn’t they wouldn’t make it
at Loft in the first place. These are bright
people. Ultimately, we aren’t interested in
fundamentally changing those in the Loft
Family, we are interested in giving them
opportunities, set on a level playing field.
We maintain standards by employing
people who always want to be learning”.
This is not to say the business doesn’t allow
criticism between staff, when I was talking
on the phone to Marcus, you could hear a
number of developers voices raised in the
break-out area that he was sat in. They were
passionately arguing about how a piece of
technology work should be broken down,
until a few more developers entered the
fray and after half an hour it eventually
dissolved into agreement and laughter. This
really amused Marcus who told me it was
an Italian, arguing with a Slovakian and a
Lithuanian about work on a British client.
He said that that was exactly what they were
after at Loft, a level of passionate conflict,
argument and debate to know that you are
working to create really great ideas and
true innovation, not mediocre work. He
advocates placing everything out-in-the-
open in the business.
The fact this approach is able to work so
effectively seems to because of the deep
trust and humour operating between
the technologists, able to fully express
themselves and given the opportunity to
see products through from concept to
delivery. Loft’s pioneering work in Engineer
Led projects, in an industry traditionally
obsessed with middle men, also seems to
imbue these technologists with a confidence
Jono Marcus, CEO and Nick Nettleton, Founder and Chairman
BUSINESS
JULY 2016 | 7
and  noisiness  you don’t often see in web
agencies.Thisconnectswiththetwomantras
heard repeatedly within Loft to “Always be
learning” and “Improve yourself”. These
encapsulate the staff’s freedom to take risks
and be bold in order to do things better
and demands of them a progressive growth
mindset when operating within the firm.
Marcus makes very clear that getting it
right involves taking a long-term view and
talks about only adding top-quality to your
existing team and being patient if you can’t
find that top-quality. He says that in what
has been a stellar  growth period for Loft,
his regrets have revolved around issues the
company hasn’t quite being able to crack
yet and interestingly making a hire that
did not work out, whose failure he believes
was foreseeable. Again this is clearly a man
who holds himself to very hard account. It
is perhaps no surprise then that one of Loft’s
staff expresses his appreciation that he has
seen the company always keeping its word
over the past couple of years and the C-Suite
being radically transparent about their
intentions.
One of the company’s senior technologists
concludes that: “We feel we can move the
company forward and make it a better
company for us to work in. Perhaps we
always felt well-placed to do that, but
in a traditional company setup, there is
not much you can do about it. But the
infrastructure and message within Loft over
the last year is that no one is better placed
than us to improve something. That if we
put our energy into making changes, within
our spheres of authority, we will get the
immediate rewards of creating day by day
the best place for developers to work”.
4. Commercial innovation
The  dilemma Loft Digital seems to
have cracked is how to do exciting and chal-
lenging work, whilst growing revenues and
profits. Part of this surely stems from what
they call the Traffic Light Model. It is a way
for the company to establish the overall cost
of a project, without reducing it to an hours
worked system. Marcus says: “Clients pay-
ing for hours worked was so pointless and
demeaning. The technologists at Loft are
providing intellectual brilliance, they are
not painting a wall. Hours worked doesn’t
help the client or the agency and creates the
wrong mindset in the team”.
He explains the Traffic Light Model, which
he invented, is a commercial twist connect-
ing a financial value to an existing way that
developers traditionally assess projects for
complexity, quality of finish and level of un-
certainty. What becomes clear is that despite
Marcus’ modesty about Loft’s amazing re-
cent rise, it is down to multiple new and in-
novative ways of doing things operationally
and commercially, categorically not a case of
good fortune.
This is combined with a pitch win rate of
over 80% in the last year, including Dubai-
based startup success story Washplus, who
are retaining Loft’s talent for 2016 and 2017.
This pitch-winning run can perhaps be
attributed to Marcus’s background in media
and creative agencies, bringing a rigour to
the pitch process, that web development
agencies sometimes lack. Marcus thinks it is
down to something a little simpler: “Clients
can tell we will deliver better work than
the people we are up against, even if
our presentation is sometimes rougher and
readier. We have technologists lead every
pitch, not client handlers. And what we
lack in smoothness and glad-handing, we
make up for in hands-on know-how and
inspiration”. New client Halim Boumadani,
CEO of Washplus says, “Jono spent some
time with me and inside my business here in
Dubai. It became clear from speaking to him
that Loft’s technologists would be hands-on
and really get close to my business. They
will provide real systems knowledge and
produce results fast”.
When I suggest to Marcus that Loft should
be a business case study for growth during a
period of incredible internal transformation,
Marcus says:  “we haven’t even made a
footprint in the sand yet, we are going to go
a lot further a lot faster! Then maybe we will
be worthy of a case study, someday. Until
then we are strapped in for an incredible
journey”.
Just when you thought Loft couldn’t do
anything else unique, I find out it keeps four
desks set aside to provide start-ups with an
initial home for their first six months. So far
it had been home to a start-up called Spence
App this year and now one called Thinking
Hat. Marcus says: “We take our inspiration
from 60s ad man Howard Luck Gossage,
who had an open door policy to anyone
who would enrich the cultural experience
and knowledge of his staff”.
When asked about whether the Loft model
could be copied by other tech firms, Marcus
gives a sideways answer, saying: “We are a
company that chooses to invest in developers
and technologists, not on administrative
staff, ‘Suits’ and C-Suite perks. If another
tech company is equally  committed to
that, then it would have a solid basis from
which to ‘do a Loft’. And of course, if it has
big ambitions, brilliant technologists and
moral integrity”. Marcus then describes
the importance of Founder Nick Nettleton
to the company’s DNA saying: “Nick is a
unique person, with a creative and inspiring
outlook on life. You might be able to mimic
some of things we have done operationally
and commercially at Loft in the last couple
of years, but much of the longer-term mood
music and the cultural foundations of Loft
come from him”.
What surprises me when talking about Loft
is how multi-layered their growth approach
is, including investing part of their profits
and time in charitable projects in India,
which they say will up-skill their staff and
connect them with real-world life and death
problems. This is complemented with what
a staff member calls  “unlimited personal
training budget” and even an agency-wide
personal performance coach, drawn from
the world of elite sport. Marcus argues that
all this focus on providing opportunities for
staff members is strategic. He says that to
grow, Loft needs its staff to learn new things
fast and to stay in the business for years, if
not decades, so every way must be found to
encourage and facilitate this.
5. Concrete longterm
strategy
Loft clearly has an unwavering strategic
plan, which Marcus comes back to again
and again, focussed on longterm growth,
balanced with tactical flexibility and team-
led permissionless progess. He is keen to
point out that tactical flexibility is provided
by having a “Chairman, in Nick Nettleton,
who believes wholeheartedly in what we
are trying to achieve and accepts that we
are bound to make mistakes along the way,
but that we are facing forward with our
chests puffed out. I never feel anything but
“we haven’t even made
a footprint in the sand
yet, we are going to go
a lot further a lot faster!
Then maybe we will be
worthy of a case study,
someday. Until then we
are strapped in for an
incredible journey”.
SPECIAL REPORT
8 | JULY 2016
supported in carrying out a rather radical
vision, which all of us in the company are
putting our backs into”. Marcus argues
showing flexibility is not possible if you,
or your staff, are always looking over the
shoulder and worrying about being judged.
He dismisses the very Google Campus-
esque Innovation Lab on Loft’s ground floor,
extensive use of Slack integrations, fuseball
and pool tables, the comically re-coded wifi
kettle and Loft’s individual staff anniversary
celebrations as the “cliche tech firm things
that people notice when they walk in”.
However, he says Loft’s success lies in the
things that aren’t so visible. The fact everyone
is listened to and how frequently versus other
companies the Loft staff attend tech meetups,
contribute heavily in the OpenSource
community and push themselves to master
cutting-edge techniques. He says: “What
grows Loft individuals, grows us as a
company too. Many companies try and hide
individual achievement under the collective
sum. That’s not always a good idea. Individual
breakthroughs and contributions are vital”.
This seems to sum up everything, from
Loft’s acclaimed prototyping projects, to its
revolutionary management approach – the
individual able to excel, through provision
of well-thought through lean structures
that allow people to push themselves as far as
they can.
Marcus underlines that fundamental
traditional business techniques have been
key too, such as incorporating planning
phases into contracts, bringing prices
closer to industry standards, sophisticated
commercial deals for clients that provide a
firmer footing for more exploratory work,
removing waste from the business in terms
of spend that did not ruthlessly align with
the overall growth strategy and allowing
staff to leave who may not have been able
to “keep up” or “didn’t have the metabolism
for change”. Change also means for Loft
employees always trying to use the most
cutting-edge methods – the agency has been
a leader for the industry in: cross-platform
mobile development with ReactNative;
Angular 2 usage; in-browser 3D rendering.
The staff put this tech leadership down to
the encouragement they receive to try new
things on projects and in Innovation Time.
Marcus explains that Loft’s longterm business
plan, composed almost two years ago, will
continue to provide a compass for decision
making for them over the next few years and
is full of very careful analysis and strategic
planning. This has allowed the company
to be tightly focused on what it wishes to
achieve and not to become distracted. One of
Loft’s senior staff explains: “Right now we feel
absolute consistency and certainty. A really
strong sense of direction. We are all very
clear what is expected of us and where the
company is going. In fact, we can all probably
recite the company mission in our sleep!”
Marcus elaborates, “Due to the clarity of our
strategy I have been able to say no a lot. No
to unambitious clients. No to working with
clients who aren’t good people. No to over-
investing in clients, who have uninspiring
dreams. No to every type of external
consultant or hired gun. No to small bits
and pieces of work, spreading us too thin.
No to continuing to build only on historic
companystrengthsandinsteadyestofinding
new more relevant ones. No to business that
distracts us from ruthless focus on a mission
for only more meaningful work, high quality
products and growing our developers
individual  talent bases in the longterm.
Even if less challenging stuff could  easily
provide income and keep some clients
happy – it is a no. This strength of purpose
and focus, is only possible, when the Board
can support a highly analytical roadmap to
longterm commercial and moral success,
which is transparently provided and fully
understood. If the Chairman and CEO are
not completely united on this planning and
what it means on the ground, especially the
tough decisions, you will go nowhere fast.”
6. Quality product
Towards the end of this call, Marcus makes
the point that we have hardly spoken about
what Loft produces. He spins the web cam
around the room where he is sat, to show a
drone; a developer scanning barcodes with
a phone for a new frictionless payment
app they have created to work in any shop
system anywhere; and another group of
technologists working on an app that will
change the way antiquities are recorded and
tracked around the world. He concludes:
“What we do is pretty cool. That is why
these tech geniuses, who apply their brains
and their code right here, deserve to be
in a growing and well-managed business.
And that is why we must build something
magnificent together. A Burj Khalifa! And it
will take time to get it right”.
What is clear is that with Marcus and
Nettleton at the holacratic helm, Loft
has a big heart, with big ambitions and is
determined to only work with clients and
partners who can match them on both
fronts. He says, “At Loft we don’t wish for
more clients, we simply wish for our current
clients and future ones to dream bigger
and let us fulfill those dreams for them by
building unbelievable tech products. We are
not in love with where we are at right now
as a company, we are in love with where we
are going. It is something very real, it’s a lot
of fun and it’s inspiring, we are all doing it
together and at the moment we are just on
the ground floor”.
Nettleton also reflects: “We’ve taken some
very bold decisions in the last year. We can’t
tell the developers and technologists to be
thinking in new ways about code if we aren’t
thinking in new ways about the business -
everyone needs to be in the same headspace.
Much of modern technical and business
progress is about trial and error at speed”.
He concludes: “In terms of our products,
we’re here to create amazing, empowering
technology to help build a more level
playing field; and I think right now we are
really succeeding because of bold decisions
we have made over the last few years”.
7. Strong fundamentals
From studying Loft’s success and speaking
to its management and staff I believe there
are some clear pointers for any business to
draw on, in order to achieve similar feats:
•	 Leadership - in this case from an in-
spiring and dynamic CEO and a for-
ward-thinking Founder / Chairman who
are mutually supportive and in perfect
alignment. A leadership who care deeply
about the company and its people.
•	 Implementation of a lean structure -
with a tight strategic focus on growth (in
every sense) and staff accountability and
entrepreneurship pushed to its end point
via a twist on Holacracy
•	 People retention - ability to keep the best
developers and technologists within Loft
during a rapid and unrelenting growth
phase 
•	 Adaptability - Nettleton brought Marcus
onboard nearly two years ago, precipitat-
ing a repositioning, dramatic restructur-
ing and up-skilling of the firm to meet
the changing needs of the web develop-
ment and technology market
•	 StaffEngagement-allLoftteammembers
seem to be totally prepared to go beyond
the call-of-duty out of belief in where the
company is going. Staff understand the
strategic goals and are brought into the
mission to build technology ‘that creates
a more level playing field in the world’.

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'A lesson in innovative management...'

  • 1. SPECIAL REPORT 2 | JULY 2016 A lesson in innovative management from a tech innovation agency A global tech firm growing fast, with a big heart and big ambitions
  • 2. BUSINESS JULY 2016 | 3 1. Big vision L oft was founded, by a former web developer Nick Nettleton, in London in 2007, as an ambitious web development agency. Mr Nettleton is now Chairman in a fast-growing company, which in 2015 was repositioned as a technology innovation firm and has been taken to new  unprecedented  heights by Nettleton and the charismatic CEO he brought in almost two years ago, Jono Marcus. I had the honour of watching a presentation by Mr Marcus while he was visiting Dubai on business in April. His and Nettleton’s company is a new model for business success, built around distributed authority and a permissionless innovation culture. Producing stunning technology  prototyping work, as well as large scale and highly complex bespoke web development products. The business has doubled in size this financial year, making strong profits, big revenues and with a staff happiness rating each month of 9 out of 10. All this in a year when the global economy has been tough and the business has been implementing an innovative new business model. I attempt to find out how this is all possible from Marcus and some of Loft’s staff. Marcus minimises Loft’s sharp growth over the last year or so, saying the Chairman wanted: “Loft to be the greatest tech agency in the world” and that “we had a pretty good hunch of how to start more radically delivering on that dream, with the help of a  genius family of technologists”. There is of course far more to it than that, including a revolutionary exploding of the agency model and Marcus’ own  enthusiasm for creating a new way to run a business, centred around small focused teams and a blurring of hierarchy, redefining the way to achieve commercial and creative success. When Marcus spoke to the gathered ensemble of Dubai creatives and business people last month, he conveyed command, charm, warmth and integrity. Speaking to him in person you get the impression of a slightly more introspective character, who is very demanding of himself and deeply cares about his staff, determined to achieve a ground-breaking collective mission with Loft Digital. He says modestly when I compliment him on Loft’s success, that much of the praise must sit with the hardworking and “genius” technologists in Loft, as well as the company’s Chairman who “imbues his good morals into the business, which makes everything easier when you are trying to achieve big things”. Marcus explains: “We wish to prove that you can deliver stunning digital products that will open up access to services, resource and opportunity for the many. We want to show you can use imaginative web engineering to make life dramatically easier for everyone, not just the few. We are trying to build an egalitarian company in terms of what we produce and crucially in how we operate”. So, you could say there is more at stake for Nettleton, Marcus and the highly motivated Loft team, with this big vision, than simply maintaining a profitable business model. One of Loft’s staff comments that, while the company’s clear mission is not essential to delivering great web technology, it is certainly: “Good for morale and ensures we are all heading in the same direction, towards something meaningful. It also helps that we all contributed to the formulation of the company mission”. 2. Strong and innovative structures for growth Marcus argues that much of the commercial success in the past year is down to creating an internal infrastructure to support rapid growth, whilst at the same time single- mindedly expanding globally, first into Czech Republic, then into Berlin and now Dubai. He says part of that internal growth infrastructure was put in place by implementing a twist on the alternative management model called Holacracy. According to Marcus, every technologist in Loft can “offer business and society in- credible things, but traditionally-structured organisations often don’t and won’t listen to them”. He says: “Other organisations value coders for their coding alone; at Loft, we value them for their general problem solv- ing potential and amazing minds, which are more on the money and can provide more transformation insight than your average McKinsey suit”. Marcus has little time for “pen pushers” or those not in a rush to get things happening on the ground. Perhaps this explains why Loft has over 20 very T-shaped technologists on its books and will only employ project managers who are former hands-on developers. What is more, they keep this “project management” layer very slim. In fact, more often employing a new job role invented by the company called Engineering Product
  • 3. SPECIAL REPORT 4 | JULY 2016 Owners. These are developers, at all levels of seniority, who will take on the planning and client liaison capacity on a project. Loft doesn’t want  account handlers, or as Marcus calls them “room fillers, all but the very finest of them”. He say project mangers or account handlers, who haven’t been de- velopers themselves, tend to understand less about the complex web projects undertaken in the business than the technologists doing them, which is something Loft wont toler- ate: “That is of no use to us or our clients, it just creates confusion, misunderstanding and wastes money that can be invested in more tech development”. Marcus also has strong ideas in terms of team sizes, believing that tech innovation projects are far better served by 3-5 dedicated team members, than tens or hundreds. He says Loft is built around 3-5 technologist teams on every project, never more. Explaining: “Why do the biggest digital transformation companies so often underwhelm and disappoint? It is because they don’t know how to work at scale. They put thirty men on a big complex project, which would be better served by three passionate technologists who get to know the client, sector, system and ambition really well. Small teams who know they wont be rotated on to another project before they have achieved their idea of success on the current one”. Loft thinks small, in order to achieve big. I then ask Marcus, why growth is such an important part of Loft’s long-term strategy in that case. He responds: “We want our teams to stay small, focused and to keep it personal, in every sense; so teams of 3-5 will always be perfect. But we want to grow in the talent sense, so that we have more options as to who the best three people are for any given project. Options when it comes to platform capability, coding- languages or relevant experience to inform technology decisions is key for providing the best solutions”. A witness to this, has been one of Loft’s clients Thomas Spencer – CEO of Spence App – who has based himself in the company offices for the last few months: “It is great to see how the team encourages everyone to challenge assumptions, own projects and drive ideas. This is done through small confident crack units on projects, a weekly firm wide Developer Senate, the Circles and daily project team catch-ups. So progress happens at light- speed. Iterative improvements are a daily occurrence within Loft HQ. It has been great to see and sometimes take part in”. 3. Staff empowerment Loft seems to have a healthy lack of fear for the biggest players like IBM Interactive or Sapient Nitro and Marcus says with a twinkle in his eye, that the “giants” often “charge the earth, for making very little technological progress, whilst making some very pretty Powerpoint presentations along the way”. It seems, in Loft, you are expected to be a person who tangibly makes technological progress happen or very directly inspires it. This is an action- orientated company. You must be both a thinker and a do-er. This perhaps explains why the Loft team is impressing so many clients, from big established companies with tech challenges to bold startups with big ideas, with their hands-on, let’s get started attitude. Clients who are tired of spending money on paperwork and are enthused by the firm’s energy. Loft’s distributed authority model involves their technologists working in different specialism “Circles”, with absolute authority in those Circles to make decisions, spend money and make big changes. Marcus relays how he once got in trouble from the marketing Circle for getting a mosaic made for the office wall, as it was their area of authority, not his - “they made clear to me
  • 4. BUSINESS JULY 2016 | 5 that they felt I had trodden on their toes and they were quite right too – as my areas are Strategic Growth, Finance and Values and Vision - I was treading on their toes. They have absolute authority on marketing matters. The system relies on respecting that Circle’s spheres of authority if you want rapid progress”. One of Loft’s developers adds: “The Circles have allowed change to happen quicker and the company to develop fast; and, I mean incredibly fast!”. The staff at Loft seem to feel that the Circles have allowed them to become part of the construction of a company success story, since their implementation over a year ago. Loft team members complete an anony- mous online Happiness Index each month and resolve “Tensions” in a Monthly Gover- nance Meeting. Tensions in the agency can be anything from difficulty in meeting dead- lines, to not enough fresh air in the office, to a group of developers feeling over-tired. Nothing is off-limits. “Sometimes hearing tensions in the Governance Meetings can be a bummer”, says Marcus, “But, I have to take that on the chin each month, because it is the only way to keep improving. It is down to the Flat Management Circle to re- solve one or all of the tensions raised each month with the relevant other Circles. It is down to me to hear them, not solve them. No one holds back”. He describes that the staff’s tensions raised  are “without exception, nothing an upper management level could successfully predict or impose solutions to, from above”. The fact is, Marcus seems to admire and deeply respect his staff, so it seems to be his default position to not dismiss their opinions, concerns or ideas. That such an approach is leading to immediate business success and strong performance from the staff rewards that boldness. One of Loft’s developers shines some light on this when he says: “Both Circles, and quickly resolving Tensions in the business, teeter on the ability of the Loft Family members to take on more responsibility and stretch themselves.   So each one of us knows they really matter for driving things forward in the business. Creating time for each individual to offer as much as possible to the business model, is not easy of course. So it can add pressure on individuals to offer more on two fronts – both as technologists and as people. But, the company has improved beyond recognition for us since the Loft version of Holacracy – and it is down to our decisions on the ground being implemented at speed. We know we are determining in some ways the direction of the whole company.” Loft’s technologists also have 20%  time, whereby they can use a portion of their working day on personal projects that will advance their skills or push them into new experimental technology areas. Marcus describes successfully  cementing this time for the developers, and not following Google’s example and abandoning it when it became tougher to police, as the hardest implementation in his time at Loft: “Innovation time is my Obamacare, it has been messy to  implement and tough to see through and has had a lot of external “Innovation time is my Obamacare, it has been messy to implement and tough to see through and has had a lot of external cynics, but it benefits many in the team, so we will never stop working hard, to make innovation time work hard for us”.
  • 5. SPECIAL REPORT 6 | JULY 2016 cynics, but it benefits many in the team, so we will never stop working hard, to make innovation time work hard for us”. Hearing this, I thought maybe it had been a disaster, but then Marcus reels off a list of over five exciting products created during personal innovation time in the last year, including a whole new industry framework for developers. This is clearly a team with incredibly high standards for what success means and what is worth celebrating. One of the team explains: “We do have high standards, and personal innovation time gets us to push ourselves further and bring more ideas to the table and often goes on to benefit client work. There has to be that facility to try out new things, without pressure, if you want the most inventive developers”. Marcus describes Loft as a broad church that welcomes everyone, he tells me with a broad smile, that this includes: “a women who learned to code on a crammer course originally, and wants to make a big charitable difference in the world; to a self-taught coding Brony (fan of My Little Pony); to a developer whose main source of entertainment as a child was chasing rats, until they got too big and chased him back!”. Marcus is clearly fond of all Loft’s staff and feels part of Loft’s success is in its appreciation of their quirks and making all team members feel valued for who they are. Marcus says one of the biggest challenges in the last year or so has been the soaring salary demands of developers, which he adds does not relate to quality improvement in the industry. He says: “At Loft we have the best developers in the world, and we pay fairly for their talent and try and reward them with challenging work and the ability to make change within the organisation. But I am asked to meet candidates with stupendous salary expectations, who aren’t a patch on those already in the Loft Family. Plus, they often lack the maturity and self- drive to flourish in a distributed authority model company like ours”. He believes the move into foreign markets has been central  to the success in Loft’s business objective of sustainable growth and has given them access to developers they may not have  discovered otherwise, with the hard coding skills that in his words: “Allow you to quickly gain respect amongst the current Loft Family, who are the best of the best”. What you notice is that Marcus and the Loft staff talk about their colleagues as Family; and they are equally verbose about people that are based in the Czech or Berlin office, as they are about the person sat next to them. The staff also talk about the flexible working hours culture and the proactive payrise policy, which runs roughshod over traditional company policies of yearly payrises and intensive performance review processes. Marcus dismisses performance reviews as “patronising and agenda driven”, preferring what Loft staff call  “career planning”, which is more about mentorship and  fulfilling your own personal career goals in service of the company mission. He says: “Who am I to tell someone where they should improve. Any one of my colleagues could tell me where I should improve and I would probably go home and cry. People know themselves, what they need to do or what they need to learn to be better. If they didn’t they wouldn’t make it at Loft in the first place. These are bright people. Ultimately, we aren’t interested in fundamentally changing those in the Loft Family, we are interested in giving them opportunities, set on a level playing field. We maintain standards by employing people who always want to be learning”. This is not to say the business doesn’t allow criticism between staff, when I was talking on the phone to Marcus, you could hear a number of developers voices raised in the break-out area that he was sat in. They were passionately arguing about how a piece of technology work should be broken down, until a few more developers entered the fray and after half an hour it eventually dissolved into agreement and laughter. This really amused Marcus who told me it was an Italian, arguing with a Slovakian and a Lithuanian about work on a British client. He said that that was exactly what they were after at Loft, a level of passionate conflict, argument and debate to know that you are working to create really great ideas and true innovation, not mediocre work. He advocates placing everything out-in-the- open in the business. The fact this approach is able to work so effectively seems to because of the deep trust and humour operating between the technologists, able to fully express themselves and given the opportunity to see products through from concept to delivery. Loft’s pioneering work in Engineer Led projects, in an industry traditionally obsessed with middle men, also seems to imbue these technologists with a confidence Jono Marcus, CEO and Nick Nettleton, Founder and Chairman
  • 6. BUSINESS JULY 2016 | 7 and  noisiness  you don’t often see in web agencies.Thisconnectswiththetwomantras heard repeatedly within Loft to “Always be learning” and “Improve yourself”. These encapsulate the staff’s freedom to take risks and be bold in order to do things better and demands of them a progressive growth mindset when operating within the firm. Marcus makes very clear that getting it right involves taking a long-term view and talks about only adding top-quality to your existing team and being patient if you can’t find that top-quality. He says that in what has been a stellar  growth period for Loft, his regrets have revolved around issues the company hasn’t quite being able to crack yet and interestingly making a hire that did not work out, whose failure he believes was foreseeable. Again this is clearly a man who holds himself to very hard account. It is perhaps no surprise then that one of Loft’s staff expresses his appreciation that he has seen the company always keeping its word over the past couple of years and the C-Suite being radically transparent about their intentions. One of the company’s senior technologists concludes that: “We feel we can move the company forward and make it a better company for us to work in. Perhaps we always felt well-placed to do that, but in a traditional company setup, there is not much you can do about it. But the infrastructure and message within Loft over the last year is that no one is better placed than us to improve something. That if we put our energy into making changes, within our spheres of authority, we will get the immediate rewards of creating day by day the best place for developers to work”. 4. Commercial innovation The  dilemma Loft Digital seems to have cracked is how to do exciting and chal- lenging work, whilst growing revenues and profits. Part of this surely stems from what they call the Traffic Light Model. It is a way for the company to establish the overall cost of a project, without reducing it to an hours worked system. Marcus says: “Clients pay- ing for hours worked was so pointless and demeaning. The technologists at Loft are providing intellectual brilliance, they are not painting a wall. Hours worked doesn’t help the client or the agency and creates the wrong mindset in the team”. He explains the Traffic Light Model, which he invented, is a commercial twist connect- ing a financial value to an existing way that developers traditionally assess projects for complexity, quality of finish and level of un- certainty. What becomes clear is that despite Marcus’ modesty about Loft’s amazing re- cent rise, it is down to multiple new and in- novative ways of doing things operationally and commercially, categorically not a case of good fortune. This is combined with a pitch win rate of over 80% in the last year, including Dubai- based startup success story Washplus, who are retaining Loft’s talent for 2016 and 2017. This pitch-winning run can perhaps be attributed to Marcus’s background in media and creative agencies, bringing a rigour to the pitch process, that web development agencies sometimes lack. Marcus thinks it is down to something a little simpler: “Clients can tell we will deliver better work than the people we are up against, even if our presentation is sometimes rougher and readier. We have technologists lead every pitch, not client handlers. And what we lack in smoothness and glad-handing, we make up for in hands-on know-how and inspiration”. New client Halim Boumadani, CEO of Washplus says, “Jono spent some time with me and inside my business here in Dubai. It became clear from speaking to him that Loft’s technologists would be hands-on and really get close to my business. They will provide real systems knowledge and produce results fast”. When I suggest to Marcus that Loft should be a business case study for growth during a period of incredible internal transformation, Marcus says:  “we haven’t even made a footprint in the sand yet, we are going to go a lot further a lot faster! Then maybe we will be worthy of a case study, someday. Until then we are strapped in for an incredible journey”. Just when you thought Loft couldn’t do anything else unique, I find out it keeps four desks set aside to provide start-ups with an initial home for their first six months. So far it had been home to a start-up called Spence App this year and now one called Thinking Hat. Marcus says: “We take our inspiration from 60s ad man Howard Luck Gossage, who had an open door policy to anyone who would enrich the cultural experience and knowledge of his staff”. When asked about whether the Loft model could be copied by other tech firms, Marcus gives a sideways answer, saying: “We are a company that chooses to invest in developers and technologists, not on administrative staff, ‘Suits’ and C-Suite perks. If another tech company is equally  committed to that, then it would have a solid basis from which to ‘do a Loft’. And of course, if it has big ambitions, brilliant technologists and moral integrity”. Marcus then describes the importance of Founder Nick Nettleton to the company’s DNA saying: “Nick is a unique person, with a creative and inspiring outlook on life. You might be able to mimic some of things we have done operationally and commercially at Loft in the last couple of years, but much of the longer-term mood music and the cultural foundations of Loft come from him”. What surprises me when talking about Loft is how multi-layered their growth approach is, including investing part of their profits and time in charitable projects in India, which they say will up-skill their staff and connect them with real-world life and death problems. This is complemented with what a staff member calls  “unlimited personal training budget” and even an agency-wide personal performance coach, drawn from the world of elite sport. Marcus argues that all this focus on providing opportunities for staff members is strategic. He says that to grow, Loft needs its staff to learn new things fast and to stay in the business for years, if not decades, so every way must be found to encourage and facilitate this. 5. Concrete longterm strategy Loft clearly has an unwavering strategic plan, which Marcus comes back to again and again, focussed on longterm growth, balanced with tactical flexibility and team- led permissionless progess. He is keen to point out that tactical flexibility is provided by having a “Chairman, in Nick Nettleton, who believes wholeheartedly in what we are trying to achieve and accepts that we are bound to make mistakes along the way, but that we are facing forward with our chests puffed out. I never feel anything but “we haven’t even made a footprint in the sand yet, we are going to go a lot further a lot faster! Then maybe we will be worthy of a case study, someday. Until then we are strapped in for an incredible journey”.
  • 7. SPECIAL REPORT 8 | JULY 2016 supported in carrying out a rather radical vision, which all of us in the company are putting our backs into”. Marcus argues showing flexibility is not possible if you, or your staff, are always looking over the shoulder and worrying about being judged. He dismisses the very Google Campus- esque Innovation Lab on Loft’s ground floor, extensive use of Slack integrations, fuseball and pool tables, the comically re-coded wifi kettle and Loft’s individual staff anniversary celebrations as the “cliche tech firm things that people notice when they walk in”. However, he says Loft’s success lies in the things that aren’t so visible. The fact everyone is listened to and how frequently versus other companies the Loft staff attend tech meetups, contribute heavily in the OpenSource community and push themselves to master cutting-edge techniques. He says: “What grows Loft individuals, grows us as a company too. Many companies try and hide individual achievement under the collective sum. That’s not always a good idea. Individual breakthroughs and contributions are vital”. This seems to sum up everything, from Loft’s acclaimed prototyping projects, to its revolutionary management approach – the individual able to excel, through provision of well-thought through lean structures that allow people to push themselves as far as they can. Marcus underlines that fundamental traditional business techniques have been key too, such as incorporating planning phases into contracts, bringing prices closer to industry standards, sophisticated commercial deals for clients that provide a firmer footing for more exploratory work, removing waste from the business in terms of spend that did not ruthlessly align with the overall growth strategy and allowing staff to leave who may not have been able to “keep up” or “didn’t have the metabolism for change”. Change also means for Loft employees always trying to use the most cutting-edge methods – the agency has been a leader for the industry in: cross-platform mobile development with ReactNative; Angular 2 usage; in-browser 3D rendering. The staff put this tech leadership down to the encouragement they receive to try new things on projects and in Innovation Time. Marcus explains that Loft’s longterm business plan, composed almost two years ago, will continue to provide a compass for decision making for them over the next few years and is full of very careful analysis and strategic planning. This has allowed the company to be tightly focused on what it wishes to achieve and not to become distracted. One of Loft’s senior staff explains: “Right now we feel absolute consistency and certainty. A really strong sense of direction. We are all very clear what is expected of us and where the company is going. In fact, we can all probably recite the company mission in our sleep!” Marcus elaborates, “Due to the clarity of our strategy I have been able to say no a lot. No to unambitious clients. No to working with clients who aren’t good people. No to over- investing in clients, who have uninspiring dreams. No to every type of external consultant or hired gun. No to small bits and pieces of work, spreading us too thin. No to continuing to build only on historic companystrengthsandinsteadyestofinding new more relevant ones. No to business that distracts us from ruthless focus on a mission for only more meaningful work, high quality products and growing our developers individual  talent bases in the longterm. Even if less challenging stuff could  easily provide income and keep some clients happy – it is a no. This strength of purpose and focus, is only possible, when the Board can support a highly analytical roadmap to longterm commercial and moral success, which is transparently provided and fully understood. If the Chairman and CEO are not completely united on this planning and what it means on the ground, especially the tough decisions, you will go nowhere fast.” 6. Quality product Towards the end of this call, Marcus makes the point that we have hardly spoken about what Loft produces. He spins the web cam around the room where he is sat, to show a drone; a developer scanning barcodes with a phone for a new frictionless payment app they have created to work in any shop system anywhere; and another group of technologists working on an app that will change the way antiquities are recorded and tracked around the world. He concludes: “What we do is pretty cool. That is why these tech geniuses, who apply their brains and their code right here, deserve to be in a growing and well-managed business. And that is why we must build something magnificent together. A Burj Khalifa! And it will take time to get it right”. What is clear is that with Marcus and Nettleton at the holacratic helm, Loft has a big heart, with big ambitions and is determined to only work with clients and partners who can match them on both fronts. He says, “At Loft we don’t wish for more clients, we simply wish for our current clients and future ones to dream bigger and let us fulfill those dreams for them by building unbelievable tech products. We are not in love with where we are at right now as a company, we are in love with where we are going. It is something very real, it’s a lot of fun and it’s inspiring, we are all doing it together and at the moment we are just on the ground floor”. Nettleton also reflects: “We’ve taken some very bold decisions in the last year. We can’t tell the developers and technologists to be thinking in new ways about code if we aren’t thinking in new ways about the business - everyone needs to be in the same headspace. Much of modern technical and business progress is about trial and error at speed”. He concludes: “In terms of our products, we’re here to create amazing, empowering technology to help build a more level playing field; and I think right now we are really succeeding because of bold decisions we have made over the last few years”. 7. Strong fundamentals From studying Loft’s success and speaking to its management and staff I believe there are some clear pointers for any business to draw on, in order to achieve similar feats: • Leadership - in this case from an in- spiring and dynamic CEO and a for- ward-thinking Founder / Chairman who are mutually supportive and in perfect alignment. A leadership who care deeply about the company and its people. • Implementation of a lean structure - with a tight strategic focus on growth (in every sense) and staff accountability and entrepreneurship pushed to its end point via a twist on Holacracy • People retention - ability to keep the best developers and technologists within Loft during a rapid and unrelenting growth phase  • Adaptability - Nettleton brought Marcus onboard nearly two years ago, precipitat- ing a repositioning, dramatic restructur- ing and up-skilling of the firm to meet the changing needs of the web develop- ment and technology market • StaffEngagement-allLoftteammembers seem to be totally prepared to go beyond the call-of-duty out of belief in where the company is going. Staff understand the strategic goals and are brought into the mission to build technology ‘that creates a more level playing field in the world’.