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Andy Macaulay is only half joking when he says the ultimate goal of his ad agency is world domination. Seated next to him in a boardroom in Zig's ultracasual offices in Toronto's entertainment district, Macaulay's partners, Lorraine Tao and Elspeth Lynn, roll their eyes at his boast—but they don't contradict him. They, too, think it's possible. After all, look how far they've come, just the three of them, since they started the agency in 1999.

Today they employ more than 70 people, 30 of whom are on the creative side. Their client list includes the likes of Molson, Ikea, Best Buy, Virgin Mobile and Unilever. Zig was behind last summer's ubiquitous Molson ads in which Daily Show correspondent Jason Jones is tied up and expelled from the country by angry Canucks when he expresses doubts about Canadians' devotion to beer.

The agency's best ads have a fun, pop-feminist sensibility. In the early days, the partners' calling card was a piece of pro bono work: a television ad in which a horny teenager named Cam offers to examine women's breasts for them—if they're too lazy or ill-informed to do the cancer-screening exam themselves. "Put your breasts in my hands," he exhorts. ("We had to make sure he was cute, a little innocent, because otherwise it would have seemed creepy," Lynn says.) For Special K, Zig's creation showed average guys bemoaning their average bodies as if they were self-abasing women. "I just have to accept," one whines, "that I have my mother's thighs."

In June, Zig won a gold medal at the Cannes Lions International Advertising Festival for its Blair Witch Project-style footage on the Internet promoting Scream TV, a cable channel specializing in horror programming.

And before the three partners left for home, their peers from around the globe had named the once-little Canadian shop the world's third-best media agency. Zig had become world class, if not—at least not yet—a world-beater.

It's a risk-filled time for Zig, nonetheless. In the advertising business, where small size and street cred go hand in hand, growth carries a stigma: Little equals good and edgy, or so the theory goes. "The bigger you become, the more boring you get," says Frank Palmer, CEO of the Vancouver-based agency DDB Canada, as if reciting an industry truism. "The award shows are dominated by the small agencies."

Such is the fear of size that when Canada's most admired agency, Taxi, grew to over 150 staffers last year, its legendary founder, Paul Lavoie, subdivided the firm into Taxi I and Taxi II. His goal was to produce two lean, edgy agencies rather than risk being saddled with a bloated, complacent one. At the time, Lavoie likened growth to the spread of cancer cells.

Alan Middleton, a former president and CEO of the global ad agency J. Walter Thompson Co., and now a professor at the Schulich School of Business, echoes the conventional wisdom: "You expand, you get bigger clients. But the bigger brands are often less accepting of risk, and so the quality of the work declines. You begin to lose traction, to lose what made you unique in the first place." Middleton believes Zig's recent work for Molson is a case in point: The ads, he says, were "unimaginative" and "not up to par."

The tasks involved in managing a thriving business usually differ radically from what needs to be done to get a new one off the ground. Over the past three years, as Zig attracted major accounts like Unilever, Best Buy and Molson, the change in how work was distributed had become more and more of a problem for its partners. Lynn, an art director by training, and Tao, a copywriter, found they had less time to do the creative work that had initially attracted them to the profession. Instead, they had to devote an increasing number of their working hours to hiring and managing the staff, and also to keeping clients satisfied. Even more frustrating was the fact that every day they had to review the campaigns created and conceived by others.

"I don't know exactly when it happened, but as we got bigger, Lorraine and I had less and less time to work together," says Lynn. "We started noticing the happiness level going down," Tao adds.
Lynn completes the thought: "We'd carve out little projects to work on together just to be able to do it again, and we'd inevitably only be able to get to them after hours."

What they needed was a top-notch director—someone who could handle Lynn and Tao's managerial load. But until last year, Zig simply couldn't afford to hire such a person: Creative directors at Zig-level agencies can earn in excess of $250,000. In the spring of 2006, however, the firm landed the Virgin Mobile account, which one industry insider says is worth between $5 million and $7 million a year.

Lynn and Tao wasted no time in approaching Martin Beauvais, who, at the time, was executive VP and creative director in the Montreal office of BBDO, an international advertising powerhouse. If he would agree to run Zig's creative department, they would happily cede their management responsibilities to him and return to the creative trenches. Essentially, Beauvais would become the bosses' boss.

In the annals of Canadian advertising, Zig is the first agency to make this unorthodox move—this zag—and the industry is eagerly watching the experiment unfold, assessing such a novel method of coping with growth.

It's hard to believe that immigrant seamstresses and tailors once sweated out their six-day workweeks in this low-rise, rose-brick factory in downtown Toronto. Little trace of them remains here, near the corner of John and Richmond Streets. The garment district has become club-land, and walk-up tenements have been replaced by towering glass condos.

In Zig's shop, occupying two of the building's "loftified" floors, the furnishings are more reminiscent of a cozy living space than an office. On the lower level, a game of table-top soccer sits at the ready, while a black leather couch beckons to the weary or hung-over. The couch has a past: Lynn—a warm, quirky blonde with a penchant for va-va-voom clothes—and her former boyfriend, Rob Guenette, purchased it together back in the early 1990s. He went on to become president of the Toronto office of Taxi; she co-founded Zig, which, increasingly, is nipping at the hip heels of its larger rival.

Media profiles often characterize Lynn and Tao as two halves of one whole. (Maclean's treated them as a single person in its annual "100 Canadians to Watch" issue.) And, indeed, their personal attributes are complementary: Lynn is flamboyant, emotional, gregarious; Tao is understated, rational, laconic.

As a creative team, Lynn and Tao have worked together for a dozen years, after meeting at the Toronto office of the Leo Burnett agency. Following a stint at the now defunct global advertising firm Ammirati Puris, they joined Andy Macaulay—who had just transformed Geoffrey Roche into one of Toronto's top agencies—in starting Zig in 1999. "At Ammirati, there were the cars, the partners' benefits, but we exited that scene," Tao says. "It wasn't us."

Macaulay, who handles the agency's business side, describes
the early days at Zig: "We didn't have any firmed-up business, but we knew lots of people and took turns calling them up," he says. Over the past eight years, they have steadily taken on progressively larger clients. And every time they signed a big new contract, they'd go on a hiring binge.

The trio did some of the usual things small businesses do to retain an intimate feeling, even while growing. To keep the agency from breaking into squabbling, competitive departments—a problem that's often endemic at large, traditional agencies—employees, including the founders, shared a communal space. "We didn't want separate silos of activity," Macaulay says. They placed a lunch table for employees in the centre of one of their cubicle-filled floors. "The point," he says, "is that the designer is sitting next to a project manager who is sitting next to the media planner."

Not that it's always been smooth sailing. In 2001, when the fledgling agency could ill afford it, a major client, Look Communications, went into bankruptcy protection and stopped paying its bills. "I've always run this business very conservatively, from a financial point of view," Macaulay says, "so we got through it."

Even with some dips, Zig's business has grown in quantity and quality, winning awards and reaping international recognition. And all along, the firm has paid its bills. Good times, right? Well, yes and no.

In the early days, Zig's success was built on the je ne sais quoi of the Tao-Lynn partnership. But as the firm grew, they felt their creative energies being sapped. "Every half hour it's a different problem, and you can't really devote yourself to any one thing," Lynn says. "Also, you have to know how to keep people motivated. You have to be up every hour of the day."

While Lynn and Tao didn't enjoy being creative directors, 40-year-old Beauvais had filled these shoes—with some panache—for a decade. Zig's partners knew Beauvais, and they also knew that he wanted to move to Toronto, but only for the right job. "I'd had lots of Toronto offers," Beauvais says. "But Zig was different."

Part of the appeal was the challenge. As head of the creative department, he'd be supervising two of the firm's partners—Lynn as art director and Tao as copywriter. Beauvais was not offered any shares in the agency, but he liked Zig and wanted to work in Canada's advertising capital.

Still, being in charge of a 30-employee department that includes the company's owners can be tricky. "I know I'm the new kid on the block," he says. "My stress here is to maintain the quality of the work. I didn't come here to reform—the quality at Zig is good." When asked whether he ever criticizes Tao's and Lynn's work, Beauvais is exceedingly careful. "What they do is always so good. If they want advice, I give it, certainly." But what about when Lynn and Tao have an off-day, as even they must? Beauvais ducks the question.

He is, however, less circumspect about his management style with other members of the team: "They don't want me pussyfooting around," he says. "They want to know, 'Is it good or is it bad?' I don't honey-coat it." The same elements of the job that Lynn and Tao loathed, Beauvais relishes.

"I get in at 8, have a big cup of coffee, because I know it's going to be intense." At 9 o'clock, he reviews proposals from Zig's 10 art director/copywriter teams. "I want them to settle on their best ideas, not bring me a whole raft of them," he says, sipping on a massive Americano. "They need to do that work before we meet."

Frank Palmer, one of Vancouver's leading ad men, questions Zig's choice of Beauvais for the job. "I'm not sure they brought him in to be a creative powerhouse. If you look at the creative-director rankings in Strategy [while Beauvais was at BBDO], he was…quite a ways down." But that's the point. Zig didn't need a creative powerhouse. It needed
a manager with a proven track record.

One year later, the arrangement appears to be working. "A management consultant advised us not to keep looking over Martin's shoulder," Lynn says. "And so we don't." But what if he makes a major decision they disagree with? Will this nice arrangement break down in tougher times? Either Zig's principals are blind to that possibility or they are just silently hoping, fingers crossed, that it will never happen.

Part of the challenge facing the trio is that there is so little precedent for the route they have taken, at least in advertising. Last year, Two Chefs on a Roll, a California-based catering company, brought in an outside manager to oversee the work of the owners and its staff of about 200. During the week, the imported manager runs the show, but every Friday, during a private meeting, the owners reassume their authority and run through all the decisions made during the week.

Zig, however, is not prepared to install this kind of check-and-balance arrangement on Beauvais or the team, says Lynn. "Our philosophy is to be careful about who you hire and then let them have all the room they need, really stay out of their hair."

For the rest of the creative department, this essentially means they have one overt boss and two covert ones. Copywriter Kevin Lynch says, "I report to Martin, but obviously with Elspeth and Lorraine's stake in the company, we're bouncing ideas back and forth with them, too." Beauvais seems content with the arrangement, for the time being. "I'm not looking at the long term—not five years, just the next two."

Beauvais may sound wary, but Schulich's Middleton insists such arrangements can succeed. "The person coming in has to recognize that he's surrounded by the owners. And the owners have to know that you don't bring in anyone good and tell them what to do all the time. It takes maturity all round. I think the most you can say about this sort of set-up is that sometimes it can work."

These are not very strong words: "sometimes" and "can." Zig's record, however, is reason for optimism. Apart from its recent wins at Cannes, the firm is making money—30% more than last year. The partners have parlayed that success into an expansion to Chicago, and already the new office has landed the major software company Extensis as a client. Hiring Beauvais has enabled Lynn and Tao to get back to doing the creative work they love—and at which they excel.

Sometimes, getting a demotion—even giving one to yourself —is a step in the right direction.

How to replace yourself

Managing growth isn't just an issue in advertising. After the heady start-up period, entrepreneurs have always struggled to cope with the daily grind of running the companies they've created. Dan Weinzweig of Searchlight Recruitment in Toronto is one of the country's top corporate headhunters. He's often brought in by business owners to find their successor. It isn't easy, he says, especially if you skip over any one of these six steps:

1. During the transition, agree on who's responsible for what. Saying "I'll do the long-term strategy and you look after the day-to-day stuff" doesn't cut it. Put as much as possible in writing. This is the biggest mistake owners make: assuming what they're saying is what the new recruit is hearing. Too often, it's not.

2. Determine the reporting lines. Will your successor report to you? To the board? To a senior management committee? Again, get it in writing. It's crucial to be clear right from the start. Otherwise, nasty politics can often ensue.

3. Be very clear about the kind of person you're looking for. Will the CEO be an administrator or a business builder? Is their job to transform the company? Even when you say what you want done, your successor may not agree.

4. Hire someone who has worked for an entrepreneur. If they've never worked with an owner-operator before, the culture shock may render them ineffective.

5. Probe for their real long-term goals. Try to find out if they're "a player or a stayer." Will they use your transition as a stepping stone in their own career path? They should be prepared to stay for at least three years, and you should be prepared to compensate them on that basis.

6. Remember, chemistry is everything. You can do everything right, but it will all collapse if the two of you aren't compatible. Says Weinzweig: "A Myers-Briggs test [which classifies personalities according to types] won't do it. In the end, being lucky can be as important as being prepared. For every 'willing succession' that works, a whole lot fail."—BOB RAMSAY

The essence of a great ad

Frank Palmer thinks 95% of North American television, radio and print advertising is crap, and he's got a theory about why. Palmer, who is CEO of the Vancouver-based agency DDB Canada, says trouble starts when clients try to fine-tune their ad by committee instead of trusting the agency they hired. "By the time you make the logo bigger and the type bigger and put all the price points in it, you've got an ad that's so uninteresting, nobody's going to read it."

According to Palmer, the best ads persuade, entertain and surprise. But, above all, they keep things simple and get right to the point. One example of this time-tested rule is Volkswagen's "Think small" campaign from the early 1960s. "People have to be curious about the product or service, but it's simplicity that makes all the difference," explains the 35-year advertising veteran.

Producing a strong ad may not be cheap, but small businesses can get their message out by enlisting a PR firm and using the Internet, which often yields more exposure than TV or radio—for free. Focus on word-of-mouth or guerrilla marketing, suggests Palmer. "Some of the best advertising campaigns go online or go on YouTube and get people talking about them, and there's been no spend."—NICK ROCKEL