“The only way to ensure you don’t lose money is to charge by the hour,” K said.

J took notes. K had built a profitable software development firm and had a roster of global enterprise clients. Proof that the hourly billing model worked.

“You have to be ruthless about qualifying prospects. We only work with companies that can spend at least $250,000 a year,” said L.

J took notes. L ran an innovation and design practice with multiple million-dollar contracts.

“If you want to be good, you have to pay top dollar for talent. We use recruiters and hire the best, get them what they need, and get out of their way,” said M.

J took notes. M was the founder of a fast-growing marketing agency that was expanding headcount and regularly featured in industry publications.

Back with the members of own agency, J brimmed with excitement. “We’re going to be switching some things up here,” he remarked.

His leadership team threw side glances at each other. Another round of J’s “inspired” ideas, usually coming after a conference or meet-up with agency owner peers.

The graveyard of advice faithfully applied but eventually abandoned was quite crowded. The previous year, J rolled out a four-day work week after hearing that it was going well for a few other agencies. While employees were initially delighted, the change was poorly implemented and clients were not notified, leading to all kinds of challenges. After a quarter, J reviewed the agency’s finances and believed the extra day off was too costly. He reversed course and went back to a 5-day work week.

This time around, it looked like J was bent on going pure hourly, only saying yes to clients who could spend $250k and up, and “leveling up” talent through expensive recruiters. The leadership team tried to lay out the pros and cons of each move, hoping J would understand the tradeoffs and pitfalls and take a more nuanced approach.

“I don’t get why you all are so negative about these initiatives. The agencies I spoke to are incredibly successful and killing it,” he remarked. “Let’s not fall behind and get these things going.”

When J left the room, the leadership team let out a sigh. They knew how things would play out, but they did as they were told.

==

Years later, when members of the leadership team had long left J’s agency and were working different jobs, one of the members passed along an article about the cargo cult phenomenon.

Cargo cult was a term used by anthropologists to explain the behavior of indigenous Melanesians on whose islands the United States military had built airbases during World War II. The Melanesians observed cargo filled with food, supplies, and arms being dropped on these airbases. When the Americans abandoned the airbases, religious cult leaders emerged from the Melanesian population, promising that they could summon cargo to drop again by engaging in rituals, often imitations of dress and movements they had observed of the American soldiers.

The term cargo cult has been applied as a metaphor to describe behavior where one blindly imitates practices without understanding the underlying principles or how things really work.

The former members of the leadership team had a chuckle thinking about how spot on “cargo cult” described J and his attempts to emulate his successful peers.

==

Despite the setbacks and mishaps, J kept experimenting, seeking out advice and applying them to his agency. He continued to drive his team crazy at times, and he experienced a fair amount of turnover from all the changes.

But slowly, J began to see for himself that what worked for other agencies were often at odds or not a good fit for his own agency. Through sheer repetition, he began to distinguish applicable advice from ones that could be ignored.

Whenever another agency owner peer shared something that was working for them. J took the time to dig further and to understand the conditions that made something work for the other firm.

Surprisingly, in most cases, what others bragged about were based on scant evidence and anecdotes rather than hard data. Their various initiatives “felt good” and “seemed to be working” but it was hard to say whether or not things really impacted the business.

And on a longer time horizon, J noticed that most agency owners silently sunsetted or rolled back many of these supposedly game-changing ideas.

“I just need to focus on running my own business and operate from first principles,” J told himself.

He ultimately defined what he felt were the most important levers in his business: taking care of clients, putting together the best team, and having a maniacal focus on executing and controlling costs.

J’s focus and persistence paid off.

He grew his agency consistently for the next 5 years and ultimately exited to a buyer at a very favorable multiple.