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Re-engineering a Professional Business

post # 67 — May 3, 2006 — a Strategy post

When doing strategy work with professional businesses, I sometimes ask the people in the firm (senior and junior) to choose the four or five key things they would work on changing if they became their firm’s czar or czarina. Among the possibilities:

  1. The range of services (more or fewer)
  2. How we compensate people
  3. Which clients / market segments we serve
  4. Ownership structures (Equity v. Partnership, etc.)
  5. What we train people in
  6. How we are organized
  7. Financial controls/measures
  8. Performance appraisal criteria
  9. Degree of specialization of people
  10. How we decide investments
  11. Use of technology
  12. Degree of worldwide integration
  13. Change way we staff projects
  14. Disseminate knowledge and skills around the practice
  15. Use of paraprofessionals
  16. Approach to dealing with underperformers
  17. Who we hire
  18. Number/location of offices
  19. Approaches to R&D
  20. How we market ourselves
  21. How we train and coach
  22. How we choose managers and other practice leaders
  23. How we gather market intelligence about what clients want
  24. How we price services
  25. What we invest in
  26. Use of Methodologies ratherthan treating each assignment as unique
  27. Retirement policies
  28. How we do quality assurance
  29. How we use support staff
  30. Management of overheads
  31. How we hire

This is obviously not a complete list.

But if you were concerned about strategic strength (and not just short-term profit gains) which 5 would you pick to focus on?

8 Comments

Brian Sommer said:

David –

While the list is good and you’ll no doubt get a variety of responses, I beleive a little clarity could help the respondents.

I’ve some highly dysfunctional professional services firms, some truly great ones and a number in between. The top 5 priorities vary greatly from each of these three firm types and for solid business reasons. Obviously, the more broken the firm is, the more likely they’ll need a czar/czarina to focus on those matters that bring a level of trouble-free operations to the company. These firms need things like PSA software, standard processes, improvements in how and who gets staffed, etc. In other words, they have a number of gaps to close just to be operational and modestly profitable.

Firms that are already functional are looking for improvements that make them operationally excellent. They don’t just want a process or system, they want to be first quartile and ahead of their peers in most/all categories.

The best run service firms are looking for ways to transform their firms and to outpace future competitors. These companies want the vision to make big successful changes that will work in the global services economy that is currently redefining itself.

This last group of firms is a small club today. These companies already have global delivery models, they’ve correctly allocated their workforce in high-cost and low cost countries. They’re ready to move to the next leve o competition in services and they’ll smoke the folks still struggling just to operate a service firm.

So, my vote for the top 5 is a variable answer. However, eventually every service firm will likely need to get through that entire list (and then some) if it wants to remain vibrant, relevant and profitable.

posted on May 3, 2006

David (Maister) said:

Brian, your astute analysis hits the nail on the head.

As you point out, some things are basics (you choose to pick out PSA software, standard processes, improvements in how and who gets staffed). You then correctly point out that other areas are more truly transformational.

But it still leaves open two key questions in my mind. First, do we agree what the truly transformational things are, and (b) do you need to wait until the basics are done before you work on them?

For example, I could make a case that revolutions in (i) how top managers are selected and held accounatble, (ii) new approaches to embedding a quality mentality, and (iii) better listening to clients are so potentially powerful that they would be transformational, but also good places to start.

Or am I being too generic and trying to fit evry situation into one box?

posted on May 4, 2006

Clive Griffiths said:

David

Firstly, thanks for your comment on my blog.

I’ve been thinking about your question some more overnight. Its one of those great questions that puts you on the spot.

“What if I was the czar?”

So, rather than sit on the fence …

As I already said over on my blog, I’m not surprised that only three things on the list are client focused. If I were limited to this list – with my business developer mindset – I’d start by picking those!

1. Which clients / market segments we serve.

2. How we market ourselves.

3. How we gather market intelligence.

Then I’d choose:

4. How we train and coach

5. What we invest in.

I’m not suggesting these are ‘right’ – just what I would choose from the list given my bias!

My own strategic change list would be around:

1. Strengthening relationships with my best people, best clients and best alliances.

2. Communicating clearly the process by which I will make my key decisions. (It’s a mystery in lots of firms.)

3. Sorting out the turf wars that everyone knows exists, but think are too difficult.

4. Developing listening and engagement skills across the leadership team..

5. Differentiating our client experiences by how we act (not just what we deliver).

I think a lot of the other ‘stuff’ would naturally fall out from these five things.

Let’s see …

posted on May 4, 2006

Bruce MacEwen said:

I tend to approach questions like this from the premise that “it all comes down to people,” certainly in a sophisticated professional service firm environment. (We can debate whether they’re all as sophisticated as they think they are, but that’s a separate conversation!)

So I would nominate:

2, because in the long run incentives really really matter, and you get the behavior you pay for;

4, because it’s a corollary of 2, in a way, and also has the immense value of showing people whether the firm trusts them enough to give them a real stake

8, because this communicates as clearly and formally as possible what behaviors the firm values, and

22, because it delivers an unmistakable message about the type of people whom the firm deems worthy of rising to the top.

posted on May 5, 2006

David (Maister) said:

Now we’ve got a debate going. Clive (the consultant) wants to emphasize (start with) the client things, and Bruce (the law-trained economist) wants to emphasize the pay / ownership / performance management things.

Anyone else want to join in on this reconciling this split opinion or divided view?

posted on May 5, 2006

Lisa Mather said:

Hi David

The debate is an interesting one and clearly there’s never going to be a ‘one size fits all’ answer here. The problem I have with what both Bruce and Clive are saying is that neither of them have communicated a compelling logic for favouring their orientation (eg client) over another (eg people). Instead, they both seem to be saying that clients or people is their area of expertise/ interest and analysing from that basis, which is fine as far as it goes. However, it doesn’t really help a manager trying to work out which levers are the right ones for her to focus on. Kind regards, Lisa Mather

posted on May 10, 2006

Clive Griffiths said:

Interesting comments, but only a few choices!

Bruce approached it from “it all comes down to people’. My focus was clients and selling.

Is there a debate to be had? Can there be, without a context?

Brian points out, “I’ve some highly dysfunctional professional services firms, some truly great ones and a number in between. The top 5 priorities vary greatly from each of these three firm types and for solid business reasons.”

I think this is why there is no “compelling logic” to our choices – sorry Lisa.

To “really help a manager trying to work out which levers are the right ones for her to focus on” perhaps we need a context.

Let’s start again by asking our prospective czar or czarina, “What solid business reasons for change do you have?”

posted on May 12, 2006

David (Maister) said:

Well, yes, it does always depend on individual circumstances, but I beelieve there is merit in thinking about the “outside in” versus “inside out” approach.

Here’s a theory: if everyone in the business needs to be doing the SAME thing (ie the firm is going to make a big bet on market positioning, focused products, etc.) then understanding the markets and clients are key to figure out where to place the bet.

However, in many professional businesses there is a wide variety of service offerings, differing by prcatice, location, industry and even by partner. In such an environment, thee key strategic challemge is to get the individual partners energized and acting strategically, letting them only subsequently identify the submarkets that make sense for them. In the latter case, good internal processes become logically prior.

Another way of thinking about outside-in versus inside-out is to speculate that he marketplave can tell you WHAT to do (what is needed) but only internal strategy can devise HOW -a creative way to make it happen. And you could speculate that in the real world the essence of competitive differentiation is not usually spotting different opportunities, but having a superior ability to design an organization that can respond to them.

I wrote a chapter called THE ADAPTIVE FIRM in my book TRUE PROFESSIONALISM aout this.

posted on May 12, 2006