Close-Up: Live Issue - Idealism to pragmatism: St Luke's first decade

Emma Barns charts St Luke's ten-year evolution from hot-desking communal experiment to run-of-the-mill ad agency.

Set up a decade ago as an uber-cool advertising Utopia, St Luke's was the most revolutionary and visionary agency of its day. Campaign's Agency of the Year in 1997, just two years after its launch, its lofty ideals have tempered over the years, leaving an understated, rather ordinary agency to celebrate its tenth birthday this week.

Launched on 18 October 1995 (St Luke's Day), the agency was named after the patron saint of doctors and artists. The St Luke's explanation for this - that advertising is about "curing problems through artistry" - gives an idea of its new-age ideals, which were in evidence from the start.

The agency's 35 original staff met at Chiat Day and emerged as partners after revolting against the agency's merger with TBWA. The co-founders, Andy Law and David Abraham, masterminded a deal with Omnicom, enabling St Luke's to set up as a standalone agency within Omnicom until a buyout was arranged nine months later.

Dave Buonaguidi, the creative director of Karmarama, and St Luke's first creative director, explains: "We'd pulled together a diverse group of very good people at Chiat Day. It seemed criminal to destroy something that had started to come to fruition."

Setting up in a converted toffee factory in Euston, with clients including Midland Bank and BBC Radio 1, the agency filled newspaper columns with the kind of philosophies and working practices more commonly seen in progressive communes in the 60s.

The most scrutinised aspect was its co-operative structure. In a set-up reminiscent of George Orwell's Animal Farm, all the staff were - and still are - equal owners.

Tom Knox, the joint managing director at Delaney Lund Knox Warren & Partners and a former employee at Chiat Day, says: "St Luke's exposed a lot of the traditional agencies as not caring enough about their employees. And it made them wake up to the fact that they had to think about the working environment."

But, as in Animal Farm, the dream was less than perfect. Stories emerged about meetings being called to decide what cereal to serve in the canteen.

And personal agendas began to bubble up. Buonaguidi says: "It started corrupting. There weren't any morals any more. Individuals became more important than the collective."

Witness the Andy Law debacle in 2003, in which the agency's chairman was dramatically ousted in a long-running dispute over the company's international strategy. The crisis saw St Luke's reach breaking point and a new, more pragmatic management took over. Led by the now joint managing directors Neil Henderson and Phil Teer, a board was introduced and all-agency votes on what colour toilet paper to buy came to an end.

Henderson says: "You can't run a company with votes in the cafe on every issue. But we had to learn."

Nonetheless, the unconventional structure did produce groundbreaking work. Henderson thinks that, alongside HHCL, St Luke's pioneered a collaborative way of working with clients. "There was a radical approach to clients in that we presented more than one route. We took the mystery out of the creative process and made clients part of it," Henderson explains.

And the work was good. Famous campaigns included the "chuck out the chintz" Ikea work and the Eric Cantona ads for Eurostar. Kate Stanners, Saatchi & Saatchi's executive creative director and a former St Luke's creative director, says: "The environment was invigorating. We were confident and arrogant and in new business we were brave enough not to have to win, which meant we always did."

She adds: "There's less opportunity for pioneering creative now. St Luke's is servicing longer relationships. It has also lost its braveness - it needs to win now."

It wasn't just the mindset that was different at the agency - the physical environment was alternative too. Clients had their own, tailored "brand rooms" and staff hot-desked. Clients loved this relaxed environment and the business rolled in. St Luke's picked up the BSkyB and BT accounts and secured places on the Coca-Cola and COI rosters. In the summer of 1997, the agency was so confident that it banned pitching because of concerns about its rapid growth.

At its peak in 2000, its MMS billings were £90 million (more than double 2004's billings).

However, the wince-inducing Channel 4 documentary about the agency in 1998 evidenced an inherent tension in the company's DNA. The hybrid of the communal experiment championed by Law, and the mainstream ad agency that Knox believes Abraham masterminded, didn't work in practice.

Buonaguidi is more blunt, accusing management of "spouting bollocks" like modern-day prophets. "We just needed to get on with the work," he says.

Clients slipped away and Law's and Stanners' departures in 2003 further destabilised the agency.

Henderson admits that ten years on, St Luke's is just an ad agency. He points to practices such as hot-desking, which continue the old ideals, but says: "Not many agencies get to this age without being bought and without changing. We are in a different situation now. We're at a more mature stage."

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