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Continued from #4 Transparency. Full table of contents below.

MegaTrend Five: Modularization

One of the most important, yet least visible, implications of the current phase of information technology is the ability to break down business processes and activities into their components. Web services is a standard for how computer applications—or parts of them—can be integrated. For example, Microsoft’s .NET framework, which it launched with its $200 million “one degree of separation” campaign to emphasize how it enables different organizations to mesh their business processes together, is founded on web services.

The implications for professional services firms are profound. Services can now easily be “unbundled,” or broken down into their components. This allows clients to pick and choose which of these elements they prefer to do themselves, if they have the resources and expertise available. They can then allocate the other elements to different service providers, based on which one can do the best job at the lowest price. Technology now makes it straightforward to integrate these different elements into a single business process that results in the desired outcome.

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Download the complete White Paper: The Seven MegaTrends of Professional Services

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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Download the complete White Paper: The Seven MegaTrends of Professional Services

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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David Maister, the über-guru of professional services, has embraced blogging and podcasting. In a revamp last week of his website, which has always provided extensive resources, he has launched a blog titled Passion, People and Principles. It is highly interactive, responding in depth to questions and conversations raised by clients and the professional services community. Not long before, he released an article Marketing is a Conversation, in which he advocates creating conversations and “salons” with clients, engaging in joint problem solving, setting up blogs, and replacing capability brochures with interactive spaces.

David has for a long time said that he focuses on the fundamentals of professional services, because that is still where the most difference can be made. He kindly suggests that in contrast my work deals with the “frontier topics”. He has been very supportive of my work, and gave me a nice blurb for the latest edition of my book Developing Knowledge-Based Client Relationships: “Dawson has pulled off the nigh-impossible: improved on what was already a terrific book. Even more than before, this is essential reading for professional service firms.”

I have immense respect for David’s work, and discussed his immensely successful personal strategic positioning in my book Living Networks. While David has always talked and written about listening to clients and great service, I think that he has shifted his approach in how he now strongly encourages collaboration and shared value creation with clients. In my latest book there is a subheading “Doing Great Work is Not Enough”. It’s far from enough, and true knowledge-based, collaborative relationships require an entirely different attitude. These are truly fundamentals of professional services.

Last week I chaired a conference on Strategic Law Firm Management organized by Ark Group. While there was disappointingly little on law firms’ high-level strategic positioning and how that may shift over coming years, there were a wealth of insights into more general management issues. Clearly, people and culture are at the heart of managing professional firms, while the competition for talent is growing ever more intense. Getting people and culture right is the single most important determinant of success. Other success factors will be driven by this.

Listening to the speakers reminded me of a framework I’ve been mulling over for a while, on how attracting, retaining, developing, and motivating great people is linked to attracting the most worthwhile work from the best clients. Clearly, these two highly desirable outcomes feed on each other, yet many firms do not explicitly link them in their strategies and activities. To my mind, building knowledge-based relationships is at the heart of being able to link client development and people development. In knowledge-based relationships you are able to learn most from clients, get the most interesting work, and attract the best clients. Providing “black-box” services to your clients disengages your ability to attract either great people or great client work. It is important to recognize that there is a very real difference between great clients and great client work. Many professional firms have outstanding clients, but often the work they do for them is mundane and unstimulating. It is getting great work that is more important for developing your people and capabilities than getting brand-name clients. Small clients can give you fantastic work.

The framework below shows the nature of great people and great client work, how these feed on each other, and what is required to link them. At the center of attracting both great people and great client work are a set of common values and behaviors. These are fundamental to both of these outcomes, and how they are linked. Leaders of professional firms need to consider what specific activities and initiatives will help to develop this cycle, which is at the heart of professional services strategy. Successfully engaging in this cycle will rapidly develop meaningful, recognized differentiation in highly competitive marketplaces.