It began as a hush-hush challenge to executives at Fallon Worldwide headquarters in Minneapolis. The feisty agency, which recently had been purchased by global advertising giant Publicis Groupe SA, was in the middle of an identity crisis, a soul-searching effort that actually had begun more than a year before the acquisition but now had reached a fever pitch. How should the agency reposition itself to meet the complex requirements of both a global economy and more-demanding clients? How could it leverage its reputation for creativity to move beyond traditional lines of business? And could a bunch of insurgents find happiness inside a vast conglomerate?

"One of my greatest fears was that our people would think we sold out," says Pat Fallon, the agency's chairman and cofounder. "People were worried that we would become more corporate and less like the home they knew. And if people feel as if a bond has been broken, then everything is up for grabs."

It's a familiar dilemma for independent companies in all kinds of industries. Talented people love the opportunity to work in small, high-energy settings. But can those shops survive without the reach and resources of a big-company patron? Clients love the originality of small companies on a mission. Yet they also want economies of scale and a global footprint.

"It was a time of uncertainty," concedes Anne Bologna, planning director of Fallon's Minneapolis office. "There was this sense that we no longer had the freedom to be entrepreneurs." So in April 2000, three months after the agency was acquired, Bologna drafted a five-page manifesto calling for breakthrough ideas. The goal? "To unlock the entrepreneurial hostages within the agency," she says.

Though intended for high-level managers and a select group of next-generation leaders, word of the manifesto quickly spread throughout Fallon. Bologna's call to action hit at just the right moment, creating a grassroots buzz and gearing up employees for the official business that would follow several weeks later at a companywide meeting.

At the off-site, Bologna's pitch for new ideas was transformed from the subject of hallway chatter into a full-blown company initiative. Rob White, the copresident of Fallon Minneapolis, concluded the meeting with a more official version of Bologna's challenge. His door was open, he said, to anyone with new ideas. "People wanted proof that the soul of the company wasn't going to change," White says. "We had to show them that the acquisition was a strategic move to help us achieve very ambitious goals that we probably couldn't achieve on our own."

More than a year later, substantial changes have been felt throughout Fallon. The agency launched Fallonet, an intranet that elegantly captures the company's quirky humor. The interactive consulting group is now a full-fledged division of Fallon. And the flagship office has been moved and redesigned to bring about a new way of working, grouping people by brand rather than by discipline.

The effects on Fallon's work have been noteworthy as well. The agency has not only won numerous awards, but it has also continued to push marketing boundaries. A case in point: the celebrated BMW films, available only on BMW's film Web site. Directed by an A-list of Hollywood innovators such as Ang Lee and Guy Ritchie, the short films are riveting escapes that leverage one of the great promises of the Internet: to bring customers closer to the brand.