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Continued from Connectivity. Full table of contents below.

MegaTrend Four: Transparency

On October 25, 2004, the board of directors of financial services conglomerate Marsh & McLennan announced “significant reforms to the business model… which will be rooted in transparency.” The controversy on the payments its Marsh insurance brokerage arm was making to insurers, unbeknownst to its clients, resulted in a settlement of $850 million to policyholders. While this tale relates to another MegaTrend—that of Governance—the result is greater transparency. Transparency to clients, to the market, to regulators, and often even to competitors.

Transparency is in fact one of the most powerful trends across all of business and society, hardly just professional services. One of the early catch-cries of the digital revolution was “information wants to be free.” In a world of email and the Internet, it’s certainly very easy for it to escape. The Internal Memos website claims to be the Internet’s largest collection of corporate documents and internal communication, providing a home for any company documents that may have been liberated by disgruntled employees. Clients and competitors can login and have a peek if they wish. At a broader social level, the presence of cameras—often video cameras—in many mobile phones today means that incidents, accidents, and misbehavior can be seen by all, whether or not a television crew is there to capture the moment.

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Continued from #2 Governance. Full table of contents below.

MegaTrend Three: Connectivity

As we bustle about with Blackberries, mobile phones, WiFi laptops, and for the novelty seekers sometimes an entire armful of devices, we can now consider ourselves connected. Aside from when they’re out hiking in vast expanses, airplanes are for most businesspeople the last space where they’re more than minutes from a broadband connection. Not for much longer.

For knowledge workers, most of whose daily working material can be zipped about the globe in seconds, this is indeed a different world from when phone, letter, and fax were the primary ways of communicating. Certainly the first implication is clients’ expectation of faster responses. But it goes far beyond this. For example instant messaging, which allows you to see whether your counterpart is present and to rapidly exchange brief missives, is the antithesis of ponderous, formal communication. Thirty-six percent of over 400 professionals who participated in a webcast I did last year indicated they use instant messaging with their clients. This is just the beginning. These new forms of interaction start to change the entire client-professional relationship. The use of informal, highly interactive communication throughout a professional engagement means that clients feel they are part of the process. Increasingly, they are. Professional work is becoming visible, and the path towards client participation has begun.

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Continued from #1 – Client Sophistication. Full table of contents below.

MegaTrend Two: Governance

The cowboy days are over. In the space of a couple of years at the beginning of the century, the business world shifted dramatically. Enron, WorldCom, Arthur Andersen, and similar debacles in other parts of the world, such as Parmalat in Italy and HIH in Australia, demonstrated to the investing public that companies weren’t to be trusted. Ever-ready with voter-friendly legislation, US Congress swiftly enacted the Sarbanes-Oxley bill, which put strict measures in place on public companies and their auditors to ensure strong governance.

The rise of governance as a key driver in business impacts professional services firms across the board. The first driver is in how clients deal with their professional services providers. Sarbanes-Oxley specifically legislates how audit firms can and cannot work with their clients. However in a world in which regulators, investors, and media commentators are keenly seeking potential transgressions, few companies are prepared to test the boundaries.

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Continued from Introduction. Full table of contents below.

MegaTrend One: Client Sophistication

What do you prefer? A sophisticated client, or an unsophisticated one? It’s an interesting issue to debate with professionals. Some say they like unsophisticated clients, because, as they usually express a little more euphemistically, they can take advantage of them (for a little while, anyway). Others prefer sophisticated clients, as they know what to expect, they know how to work effectively with professionals, the professionals can learn from their clients (as they must to keep ahead!), and usually the opportunities are far larger.

Irrespective of what professionals want, the reality is that professional services clients are becoming increasingly sophisticated. The rubes off the street that you can awe into silence and charge like a wounded bull without protest are rather thin on the ground these days.

The drive to greater client sophistication has in turn been created by other broad shifts in the business environment. The most powerful is the ever-increasing pressure on corporations to reduce costs. Whenever business conditions turn down, the edict goes out to cut expenses. In order to cut supplier costs, companies need to understand what they’re buying. In 1992 DuPont established its “DuPont Legal Model”, which consolidated its legal suppliers from 350 to 35, and established clear processes for how its law firms would work for the corporation. This program established a precedent that has been copied by many other companies, and is highly innovative in how aligns the objectives of the company and its service providers. However the initiative was initially driven by the then-chairman’s drive to cut $1 billion from DuPont’s costs.

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