Independent Influence: Duncan Channon’s culture of ‘guanxi’ hinges on trust and relationships

For those who are unfamiliar, guanxi is a Chinese term that roughly translate to “networks” or “connections.” In a business context, guanxi is used to describe the mutually beneficial relationships and connections that people develop over time in order to help them further their business or make a deal. In China, garnering guanxi goes far beyond surface-level conversations and organized happy hour networking events; in fact, developing trusting and personal connections with others is a core facet of it, which is why it’s often built via dinners, drinks and other outings outside of the professional realm.

When Duncan and Channon founded their agency 27 years ago, the two hadn’t yet learned about the concept of guanxi or what it entailed. Even so, they were set on building an agency that prioritized relationship building and trust, both internally and with clients.

“We were resolutely opposed to pomposity and anything that was too formal or otherwise alienating. That was our personality,” said Duncan. “We would always try to make friends with our clients. You realize [it] really works out better when you like each other and you trust each other. It makes it way easier to talk about difficult issues and get past bumps in the road.”

It wasn't until about 10 years in that they realized there might be a name for the kind of culture they were hoping to instill with the agency’s walls. During a trip to Shanghai, the two got dinner and drinks with a couple who lived there that told them about the ins and outs of guanxi, explaining that a sales call in China can sometimes takes three days of dinners, nights out and hangover commiseration before a sense of trust can finally be established and the two parties can actually sit down and talk business.

Over flaming shots at a bar in Shanghai, the pair decided that from that day on, they’d use the word ‘guanxi’ to describe what exactly they were trying to do at Duncan Channon.

“It was just an uproarious night, but ultimately fruitful. Like all things guanxi,” said Duncan.

Codifying culture

Once they were back in the states, Duncan said he and Parker “set about codifying” what guanxi would mean to them. After going through an exercise to define what they stood for and what their strengths were as an agency, he said that he considered their “remarkable" relationships with clients to be one of Duncan Channon’s selling points.

“We grew simply by one client telling another or one client leaving a previous firm and going to a new one and bringing us along,” he said. “It was always about these relationships. So we set about understanding that and codifying that.”

Part of that process involved building a tangible space where staffers and clients could go to relax, get to know one another and (hopefully) disconnect from the ad world for a bit. When the agency moved into a new building in San Francisco about 10 years ago, they discovered that there was a “circle of space” above their 14th floor offices that was accessible by both staircase and a “1930’s era elevator with an accordion gate.” The thousand-square-foot room appeared to be a former call center, complete with a drop ceiling, stained carpet and numerous phone jacks. After determining that the room would be too small to transform into additional office space, they instead decided to renovate it and turn it into the agency’s “temple of quanxi,” a fully-stocked penthouse bar dubbed The Tip where staff and clients are encouraged to come anytime to commune and collaborate.

Complete with a pressed tin ceiling and a porthole window in the door, Duncan said the agency ended up spending an exorbitant amount of money to jazz up its newfound watering hole.

“We spent more renovating that thousand square feet than we did the 10 or 12 thousand square feet on the 14th floor, but it turned out to be this wonderful gathering place.” he said. “It is our temple of guanxi, but it’s also like an architectural showcase.’

Since establishing The Tip a decade ago, the agency has since expanded it with the addition of a rooftop terrace and created a speaker series called ‘Toast of the Tip.’ Since launching the series, they’ve hosted nearly 100 different speakers, performers and special guests at The Tip, including Wonder Woman actress Lynda Carter, DMC of Run-DMC, restaurant designer Pat Kuleto and songwriter Richard Gottehrer.

While Duncan Channon isn’t particularly picky when it comes to who they invite to speak at The Tip - they’ve hosted everyone from a Hard Rock memorabilia curator to a doctor who gave a lecture on robot sex - they consider the speaker series to be an advertising-free zone. As Duncan puts it, you won’t be seeing anyone speaking about "how to improve your metrics" at The Tip anytime soon.

“We wanted something that would bespeak our creativity,” he said of the series. “We wanted to portray ourselves, as we thought we were, as this hotbed of creativity. So the initial stricture was not to have advertising people.”

Seeing results

Implementing a bar and speaker series at an ad agency isn’t exactly a novel idea, but both Duncan and Channon agree that The Tip has helped the shop walk the walk when it comes to expressing how their guanxi ethos plays out - and it doesn’t hurt that clients seem to like it too.

“Clients often request meetings at 4 pm cause they know full well where we’ll come afterwards,” said Channon, who said he’s been amazed at how much clients have actually embraced the concept of guanxi. In fact, Duncan said that someone at Esurance told them that the reason Duncan Channon won the business in 2009 (which it ended up losing nearly two years later when Allstate bought Esurance) was because of guanxi.

“It is amazing that people love it, but it’s real. How could it not be good for the creative, for the staff and for the clients to feel a greater degree of trust and relaxation? You don’t get great creative out of an uptight situation,” he said.

While Duncan Channon has yet to enjoy the kind of long-lasting, defining client relationship that some of its indie counterparts have experienced, like Wieden + Kennedy’s enduring partnership with Nike, its founders seem to think that they’ve managed to have a pretty good run with a number of different clients over the years. Since its founding, Duncan Channon has worked with Hard Rock International for a decade, Credo Mobile for more than 14 years and StubHub for six, only losing the latter when there was a chief marketing officer change at the company.

While there are many factors at play when it comes to why a brand chooses to stay with an agency for a certain length of time, both Channon and Duncan believe that guanxi has played a crucial role in securing some of the agency’s longer-lasting relationships. And sometimes it can even help them rebound from account losses: for example, Michael Lattig, former chief marketing officer of StubHub, has contacted Duncan Channon twice for new work since leaving his post as head marketer of the ticket exchange brand.

Aside from helping them forge trustworthy relationships with clients, the two believe that guanxi also encourages clients to create boundary-pushing work and take more risks since they can trust that the team at Duncan Channon has their best interest at heart.

For example, the agency was recently able to convince Hawaiian beer company Kona Brewing, an account it won four years ago, to let Duncan Channon build the brand a new website that tells visitors to leave the website and go outside. While the move surely fits in with the brand’s laid-back, tongue-in-cheek vibe, Channon admits that it’s a risk for any brand to create something that encourages people to stop engaging with their site.

“While our 'Dear Mainland' campaign that's all about telling people to put down the work and devices to connect with what matters has helped land Kona in the top ten of craft beer, it's still a challenge to get a brand to be open to steering people away from their website,” he said. “That was pretty much the definition of a trusting relationship.”

Independent Influence is supported by Choozle, an independent digital advertising platform.

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