EDITORIAL: People power puts St Luke's in danger

If George Orwell was alive to update Animal Farm for the new millennium, chances are that he'd swap its rural setting for an urban one - to London WC1 and the offices of a pioneering agency with the unusual name of St Luke's. Its name is apposite because St Luke's has always gone about its business with an almost religious fervour and carried its idealism to a point at which it often appears smug. With its brand rooms, hot-desking and implacable opposition to any form of hierarchy, St Luke's was an antithesis to the mega-merger between TBWA and Chiat/Day which indirectly gave birth to it.

The fledgling operation eschewed corporateness, opting instead for a philosophy that was to be seen as open, creative and challenging. It regarded itself as the first agency to introduce democratic management on an unprecedented scale with all staffers having a voice on all key decisions. Those who thought its positioning arrogant kept their views quiet. After all, the business, HSBC, BT, BSkyB and Ikea included, which was won seemed to bear out the appeal of the agency's innovative and fresh thinking. In a business which for so long had been the victim of its own hidebound structures, here was an agency which appeared to be showing the way forward.

Now it seems that there's trouble in paradise. Reports emerge of serious cracks in the structure precipitated by a rift over future strategy which is dividing the joint managing directors, Phil Teer and Neil Henderson, and the agency's chairman, Andy Law. Just as Orwell wrote Animal Farm as a parable about communism's fundamental flaws, may he have seen similar faults in St Luke's where, according to one insider, "you can't change the breakfast cereal in the canteen without a company vote"?

Of course, it's easy to be wise with hindsight. Open and democratic government within an agency is bound to work well during an economic boom. But it's going to be less effective when times are tough and individuals expect to see their value and rewards directly reflecting the contribution they make. St Luke's was a bold experiment which is beginning to look simplistic and strained. By empowering its staff, it has allowed splits to occur and grow unchecked. What a cruel irony that an agency which bent over backward to banish politics is in danger of creating an environment in which it can flourish.