X3M Ideas: Surviving 10 Years Means There is Something We are Doing Differently and it’s Working – Steve Babaeko, CEO/Chief Creative Officer

With nearly 10 years of remarkable operations in an industry that is characterised by many challenges chief among which is stiff competition, X3M Ideas has been able to rise through the storm to become one of the leading advertising agencies in Africa.

And what is more impressive? The agency has established a foothold in other African markets, especially the southern African market where it oversees further operations.

CEO and Chief Creative Officer of the agency, Steve Babaeko who is also the President Association of Advertising Agencies of Nigeria (AAAN) says though he is grateful for attaining the 10-year milestone, his team is fired up for more success as they focus on the next chapter.

In this interview with Melvin Udosen at his Ikeja office recently, Babaeko talked about X3M Ideas’ journey and plans for the future. Excerpt:

 

Once again, congratulations on attaining the 10-year milestone. How has the journey been?

It’s been a rollercoaster. It has been exciting as it is daunting. But generally, it’s been something to be thankful for. Many companies started 10 years ago like we did but haven’t been able to make it this far.

We have a lot to be thankful for. We are thankful to our clients, for continuously trusting us to do great work over the years. And we can’t forget our team who make us tick with sheer hard work and dedication.

What are the inspirations behind starting X3M Ideas?

The inspiration was borne out of a burning desire to do things differently. At the time I decided to start the company, I was working in a fantastic agency, 141 which is now known as Nitro 121. I had begun to realise, with all the challenges encountered in the advertising business, that there were indeed unique and better ways the business could be carried out, per the changing times.

I had just turned 40 at the time, and I challenged myself to leave a kind of legacy I could be extremely proud of. By the time I approached 41, I was fully ready to embark on the journey of adopting a more cutting-edge approach to advertising. That was why we set up X3M Ideas at the time and the rest, as they say, is history.

 

What are the emotions that describe how far X3M Ideas has come?

The journey has been extremely overwhelming that sometimes I can’t describe any emotion. I am just grateful that we are here. Most of the time you never really know how far you can go unless you start the journey. I compare this journey to reaching a mountain top despite all the challenges that threatened to derail the mission. I only reflect now and give gratitude to God for how far he has brought us. I have experienced shock, confusion, delirium, and any emotions you can think of during this journey.

You had expectations when you started X3M Ideas, 10 years after, do you believe you have met those expectations?

Absolutely. I think we have overshot most of the milestones we set for ourselves when we started. As a matter of fact, we shot through the milestones we set for ourselves for the first five years in just three years. For instance, we wanted to build a recognisable name and we achieved that within the first year. We also wanted to have a purpose-built office that is tailored to our young, diverse team of millennials and generation Zs and we achieved that in the first three years.

Our dream was to also have outposts and branches outside Nigeria, and in the first four years, that had become a reality. But as we all know, there is always room for improvement. That is why we have already set a new five-year plan for ourselves. We had that session last year where we set new stretch targets for us to meet. In another five years, we’ll review how well we’ve done in meeting these new targets.

 

You said that within the first few years of your operation you had met some of the targets you set for yourself. But in those first years in the same period, some companies closed shop. What are some of the factors that were responsible for your achievements?

I would say there was a God factor if I am to answer that like a Nigerian businessman. While that cannot be ruled out, I will say our dedicated team is the heart of our success. When you are starting a business, the type of team you assemble will determine how far you can go. I have seen many companies fold up because the team either is not motivated, driven or lacks a sense of purpose.

I am grateful that we have a team of young people who are self-motivated and inspired to do great work. Our team has done a lot to drive us to where we are today. I can’t, of course, dismiss the impact of our clients because, without them, we’d have no business. Our clients have been super supportive and wonderful. Between these dynamics, you have the recipe for the kind of success we have accomplished.

What is the major challenge you have faced in the past 10 years of operations?

There are a lot of challenges but a major one would be inadequate infrastructure. The lack of infrastructure has been one huge challenge. For instance, if we set up this kind of business in a country like Croatia which is not necessarily a first-world country, we might not need this kind of structure that we have invested in because we would be spoilt for choice as to where to establish the business. And then, you wouldn’t need to invest in a generator for power supply.

For us to enjoy smooth operations today, we have two big generators, with one serving as a backup to the other. This is our first line of power supply while electricity from power distribution companies is a backup, which should not be. The rising cost of diesel and incessant power grid collapse are other dynamics to these challenges we face. There is no doubt that these impact significantly on our cost outlay and for a small business outfit like us, this puts unnecessary pressure on the business.

And unfortunately, we are in the service business where clients are not usually convinced when you increase charges. Even when APCON established the AISOP bill to protect the industry, there were complaints from the client organisations about increment. It is not easy, the margin that advertisers have to take is quite small but what can you really do? If you want to survive, there are two options; either you acquire more business to boost revenue or reduce cost.

For us, we have approached this challenge from both ends. But you have to be careful when you reduce costs to make sure that your team is still well-remunerated and motivated.

Earlier, you talked about having a lot of millennials and generations Zs in your team, what do you think about incorporating the alphas into the team?

The generation alphas are still very young. They are still coming up and I don’t think most of them are of working age yet. After the generation Zs, they are next in line and at some point, you will have to hire them. But you see, whatever name you call them, it does not matter to me what generation you’re from, I come to the conversation of competency with an open mind.

I take my time to understand the strengths, interests, and challenges of all generations and give them room to thrive. When the time comes for the alphas to fully enter the job market, it wouldn’t be a problem getting them on board. We will evaluate them according to their strengths and hire the best hands.

We saw how Covid-19 affected businesses across the globe. How did the pandemic affect your business strategy or planning?

The pandemic was a very difficult time for everybody. At the time, I told my team it was not a period to wait for businesses or clients to send us briefs before we could work. We needed to reevaluate our strategies as the challenges we faced at the time were not something that any agency could claim to have prior experience on. The last time anything like that happened was in 1917.

What we did was to scan the whole environment to look at how we could provide value, as the supply chain had been severely disrupted. So instead of just waiting for clients, we went to them with suggestions that suited their businesses. It was a huge relief to see that most of our efforts paid off and that all our clients survived the storm.

How would you assess the creative industry today?

It is common to hear comments comparing how advertising was done in the past to how it is today. But whatever way one looks at it, the creative industry is making giant strides. There have been significant improvements – in advertising, music, movie industry and so on and we are getting recognised for it.

My team just came back from Dubai where they won three awards. We have won the Lisbon advertising Award, we have been shortlisted at the New York advertising festival, and we have gone to the main stage of Cannes to talk about the importance of telling authentic African stories as X3M Ideas. Many other agencies have recorded significant strides, too. I don’t think if we are not doing something right we will be getting all these international recognitions. I am bold to say that our level of creativity is advancing in the right direction despite the challenges that creatives face.

If you relate that with the African creative industry, would you still share the same opinion post-COVID-19?

Definitely. But, don’t forget that it’s not easy to navigate your way through Africa and that makes it difficult sometimes to know what’s happening across the continent. For example, it is easier for our people to go to London or France than in some African countries. We have about 1.2 billion people in Africa yet we don’t even relate with each other well.

Nigeria, today, is still by far the biggest creative industry in Africa. The country boasts the biggest GDP on the continent, closely followed by South Africa and others. This can be attributed to its largely youthful population. There is a whole lot of creativity happening in the country but I can tell you the rest of Africa is following very closely. So, if I wanted to assess the entire continent I would say creativity is witnessing a significant rise there.

Specifically, what are the biggest changes you have witnessed over the last decade in the industry?

Number one is a change in confidence. Before now, as an industry, we used to be timid. We did not have the confidence to stake our position and plant our flag on the global stage. Sure, we did well on the local scene, but not many of us were bold enough to command the world stage then. The first time any Nigerian agency dared to go outside Nigeria to set up shop would probably be Insight when they branched out into Ghana but beyond that, we have been a little reticent. But lately, things have turned around for the better. X3M Ideas, for example, operates in almost six markets in Africa.

This means that we are getting bolder and more confident in sharing our expertise with the rest of the continent and by extension with the rest of the world. Interestingly, the world is now paying attention to what is going on in Nigeria and Africa generally. I project that in the next five years there will be more collaboration between global players and African agencies.

In 2018, X3M Ideas announced its expansion into Southern Africa, how has the operation thrived?

The operation is doing fantastically well. The agency is going through a teething phase but the operations in Lusaka, Zambia are doing pretty well and I am proud of the work. They are gaining recognition for their work and they deserve it. We are also serving the Portuguese-speaking Mozambique market while doing some amazing work in Zimbabwe and Malawi. It’s just that the entire southern Africa hub is driven by our operations in Lusaka, but it is impressive what’s going on there.

As one who runs a firm with operations across different markets in Africa, what would you say are the similarities and challenges, because the economies of these countries are different.

The common thread you see running through these African markets with peculiar challenges is still structural issues. Apart from a country like South Africa which has a more sophisticated infrastructural layout, the rest of the other African markets are facing the same challenges we face in Nigeria. Now, the question is, how do we elevate our infrastructure to make business operations a little easier across the continent?

Another common but encouraging factor you’d find in these markets is the African passion for excellence. But apart from that, governments are different, tax regimes are different, currency and exchange rates are different, the laws governing businesses are different and you just have to navigate through all these in the best way possible. One thing I know is that in most of the countries in Africa if you obey the law, you will surmount any challenges.

Are there any plans to expand into new markets in the future?

Yes. I cannot specifically mention them now, but we have just gone into four new markets including one in the Middle East. We shall make a formal announcement soon because the whole plan is to create a strategy that will make our entrance into new markets in the Middle East and Africa as impactful as possible. I can tell you that we are on course.

Can you please shed more light on ‘Finding X’ and how the proposition has helped the business achieve success?

Every agency that is worth its salt will come up with a proprietary tool that will help them do their work better. Finding X, for us, is about finding something organic to help do better work for our clients.

It is simply a formula: X = AB+C. To find that X, you will have to look for the consumer insight, which is the A. This allows you to discover the intrinsic value of any brand, while X is just that unique thing about the brand which helps us create some kind of bond with the consumer. We have used this tool many times over and it has been the formula for some of the great campaigns we have created.

Why is education X3M Ideas’ most important CSR strategy? Considering all the good work you have done for schools and young Nigerians, why is education important to you?

Let’s take a look at Rwanda. What the country has done to recover from the genocide that threatened their existence is to focus on education. The president, Paul Kagame, knew what he needed to do. He needed to rebuild the entire education system to turn around the economic breakdown that the country went through. What he then did was create a knowledge-based economy and the country benefited greatly from it. If we are determined to make a significant impact, we just have to tow the path of countries like Rwanda.

We have to overhaul our entire educational sector and create a new country for young people. Our youth are already talented visionaries doing incredible things with minimal support so you can imagine the extent they would go to if more support is available to them. What we are doing in the area of education is selfless. And who knows, the next generation of people who will come into advertising to do amazing work that the world would celebrate might come from one of those schools.

By virtue of our investments in education, we are also encouraging other organisations to show similar support in transforming the country for the better. Leaving the government alone on this quest will not help us as a nation so for us, it is imperative to continue to give and we do not do this because we have so much money, but out of sacrifice to safeguard our future.

What are X3M Ideas’ plans for the next 10 years?

Every day when I wake up, the question I ask myself is, ‘what next?’

There is still so much to be done, we have not even scratched the surface yet. We are looking to put our flag in more countries on the continent. We want to be the first agency to create a truly indigenous African network. We are looking forward to doing all of that.

We want to embark on more purposeful collaborations and partnerships. We are not interested in affiliations that violate our values. We also have plans to become the first Nigerian agency to go public. We want to be able to do some IPO and maybe eventually end up on the stock market in Nigeria.

What one piece of advice would you give yourself if you could go back to 10 years ago?

I worry a lot. There are some people who when they get to where we are today would just relax but I don’t know how to do that. When I started 10 years ago I was worried sick about how things would turn out, so maybe I would tell myself to relax more and take it one calculated step at a time.

I keep challenging myself every day, though. That will never change.

I remember some time ago when you recounted the challenges you faced in trying to register your agency and you faced some very stiff resistance, would you say your efforts have paid off 10 years after?

For me, I live in a permanent state of dissatisfaction; not in a bad way, though. It’s just that no matter what I achieve today, I always believe I can achieve more. I just know that God gave us the grace to be able to scale some of those hurdles that were thrown our way. Not only did we eventually get registered and have been doing business since then but we have been doing it successfully for ten years. That is enough to be grateful for.

Recently you unveiled a new identity, can you tell us the creative idea behind the new logo?

I have seen many people trying to juxtapose the old logo with the new one and it amuses me. The old logo was a bold one which speaks to the spirit of the agency at the time we started operation. We knew we were fighting against all odds. We were pushing against major headwinds and we needed that kind of strong logo to demonstrate our resolve and determination for success.

But, having done that for 10 years I think we are more mature. And as you can see, the new logo is much more corporate and finer which represents the refinement that the company has gone through. Whereas the old logo had these sharp edges which depicted our doggedness in the face of fierce challenges, the new logo has a more rounded feel which represents the smooth relationship between us and our clients.

Also, the new touch of orange shows more calmness which is immediately evident the moment you walk through our office and interact with the team. A touch of the old red colour is still present and this continues to stand for our fierceness and boldness in combating every challenge that we go through in this business.