Download the complete White Paper: The Seven MegaTrends of Professional Services
Continued from Responding to Mega Trends – Evolve your business models. Full table of contents below.
Developing and implementing robust strategies
Professionals tend to focus on their domain of expertise rather than developing and implementing strategies for their firms. Yet in the face of powerful driving trends, it is clear that traditional approaches to providing professional services are under threat. Professionals need to become effective strategists, by setting and implementing strategies that go beyond simply their selection of practice areas and office locations.
One of the key issues for professionals is their positioning. There are four core professional services models, as illustrated in Figure 1. This is created by examining two key aspects to how firms create value for clients. On the one hand, firms can deliver their services either as a black-box, or using knowledge-based approaches, as described in the previous section. The other dimension is that of the firm’s domain of expertise, which can either be content, or the actual process of creating knowledge. Mapping these two dimensions against each other yields four core professional services models:
- Ask the expert. The history and tradition of professional services is centered on humble clients asking experts for their wisdom and advice. The professional has deep knowledge in a specific area of content, and delivers his or her advice as a black-box service. This model certainly has a future, but this is not where the demand lies.
- Creative ideas. In this domain, a company knows how to come up with great ideas, yet just delivers its brilliant ideas to its clients once they’re done. This is how the advertising industry, for example, has traditionally worked. Again, this model is becoming harder to sustain, and many professionals in this space are starting to shift their approaches.
- Outcome facilitation. A rapidly growing field is that of assisting clients to come up with the answers for themselves. Many design and innovation firms have build expertise in the processes of creating great ideas, and apply these from within their client organizations. Professionals in many other fields are starting to work with their clients in this way.
- Collaborative solutions. The professionals that have deep content expertise, yet deliver that using knowledge-based approaches, are essentially collaborating with their clients to create solutions. While this is by no means the only way to position yourself as a professional, this is where the market is shifting, not least by client demand.
This framework of professional services models is useful for professionals who want to understand their current market positioning relative to clients, where they want to be positioned, and to establish what steps need to be taken to shift the firm. It is particularly valuable as a focus for discussion by partners or senior executives on firm directions.
The list of professional services MegaTrends in this paper comes together in the most powerful and pervasive of the seven MegaTrends: Commoditization. Professional services firms must grapple with and confront this demon head-on, taking a structured approach to creating specific strategies. The first step sounds simple, but is not that easy: identify the services you provide that are being (or could be) commoditized.
The key challenge is that professionals will almost always deny that what they do is becoming a commodity. Denial does not change reality. Do any of your current direct competitors have a lower cost base than your firm? Are competitors implementing technologies that will enable them to provide similar services more efficiently? Is it possible for someone overseas to provide similar services? Can your services be “modularized” into simpler—and more price-sensitive—components? If the answer to any of these questions is yes—or even maybe—then you are in danger of being commoditized.
When you have an idea of the service elements that can be commoditized, across the firm, across your major clients, and across each practice area of your firm, the next step is to decide what to do about it. Your strategic choices include using technology to make the service more efficient, outsourcing the service, and dropping the service line altogether. Another choice is to ignore what’s happening, and do nothing. In this case it will be sooner rather than later before your business feels the pain far beyond these specific danger points.
The two frameworks for professional services strategy briefly discussed here—firm positioning and dealing with commoditization—provide a taste of the kinds of thinking that professionals need to engage in, both collectively and individually. Responding to rapid change requires far more than an annual strategic plan. It needs ongoing strategic thought, followed by decisive action.
Toward the future
Despite the fervent wishes of some professionals, the business environment is far from static. The seven MegaTrends described in this paper are changing how business is done, not least in how clients expect to be serviced. Ignore them at your peril. Recognize and respond to them, and you can turn the MegaTrends into massive opportunities for your business.
Table of contents
Responding to the MegaTrends
Developing and Implementing robust strategies