David Maister - Professional Business, Professional Life
David’s ResourcesAbout David
NEW! Browse my materials by topic of interest:StrategyManagingClient RelationsCareersGeneral

Passion, People and Principles

Relationships: What’s the Problem?

post # 443 — October 3, 2007 — a Client Relations, Strategy and the Fat Smoker post

Almost every firm (and individual professional) I know SAYS (and has said for a long time) that they want to build their strategy on having deep and broad relationships with key clients.

But the percentage of firms that have pulled this off is (in my experience) relatively small. I explore this in part in STRATEGY AND THE FAT SMOKER where I explore the fact that while firms say they want romance, too many firms still act in a transactional “let’s win this one” mode.

But there’s more that needs to be said. It’s not enough to argue that relationships are a good thing, or even prove that they are economic. We must understand why they are difficult to pull off.

Here’s a preliminary list of some of the possible barriers:

  1. Many clients, in fact, don’t want relationships. They prefer to buy on a transaction-by-transaction basis.
  2. Too many providers are not really trying to build a relationship, they’re just trying to sell more product and services — and clients can tell
  3. Firms or individuals are too short-term focused, overinvesting in short-term sales opportunities and underinvesting in long-term relationship-building: it’s a time allocation problem
  4. Senior professionals just don’t have the time to invest in relationships: it’s a time problem
  5. Senior professionals are actually not that interested in clients: it’s an attitude problem
  6. Individuals are not skilled in earning clients’ trust: it’s a skill problem
  7. Internal barriers in firms — for example, excessive “silos” mean no incentive to create opportunities for colleagues to provide additional services to “your” clients: it’s a structural problem
  8. Lead professionals see it as too risky to introduce their colleagues — they worry that their own PERSONAL relationships would be threatened by any attempt to turn the relationship with a client into an INSTITUTIONAL relationship: it’s a quality or cultural problem
  9. Firms are not discriminating enough in selecting which client relationships actually have a chance at succeeding: they try to develop relationships with too many clients — they should focus more effort on fewer, carefully selected opportunities: it’s a focus problem

What would you add to the list? What do you think is the most common explanation of why most firms’ relationship strategies fail to succeed as often as they hope?


Bryan I. Schwartz said:

The biggest obstacle is a systemic one that is not aligned with strategy: origination credit. Perhaps the dumbest measurement in the history of professional service firms is deeply imbedded into the culture of law firms. The reason makes sense on the surface: service firms need to continuously get good and better clients becasue despite relationship building, clients merge, are sold or are liquidated. You don’t want a bunch of porch dogs so you want to incentify the hunters. This measurement is so counter-productive to collaboration and institutionalization of clients it is laughable. By far this is the biggest alignment obstacle I face. I cannot seem to rid our firm of this distraction because the market demands that it stay part of our instituion despite our attempts to minimize or marginalize its importance within compensation systems. Nobody will believe that we decrease its importance no matter how much we communicate that and back it up with action.

posted on October 3, 2007

Carl Singer said:

I imagine we need to look at this from two perspectives — service provider (seller?) and service recipient (buyer?)

You’ll note I said service, not commodity or transaction — so perhaps I’ve already biased my viewpoint.

About 5 years ago I built and co-taught the Outsourcing Decision course at IBM’s Advanced Business Institute. As part of this 3-day course (meant for an audience of perspective buyers) I brought in a “pair” — a corporate CIO and his or her IBM Account Executive. No dummy, I of course chose customers who gave us a high customer satisfaction rating — a common thread among the half dozen or so “pairs” (course was taught many times) that I brought in was their relationship. Not just social, I know your kids names — but professional — I know your needs and worries; where you’ve been and where you’re going.

Two examples stick out —

One was a customer whose business had taken a significant downturn — the account exec went through many, many hoops and downsized the existing contract.

The second was, I thought, a classic: The CIO starts off by telling the class how IBM had inadvertantly botched a backup and wreaked havoc. — At this point the account execs who were in the class accompanying their prospects started squirming in their seats wondering why in heck I had invited this speaker — The CIO continued that his account exec took ownership of the problem and harnessed myriad resources, parachuting in experts, etc. — the cavalry came to the rescue — and the problem was fixed. And the relationship cemented as he felt that the account exec was truly a member of his (the CIO’s) team..

In an market (outsourcing) where the greatest competitor is “no decision” or “no outsourcing” (i.e., do nothing) as opposed to another vendor — relationships are very important.

Perhaps less so in other domains but even there, the relationship may be the tie-breaker among competitors or make you the “call first” provider. In the late 1960’s I had a summer internship at Republic Steel in Cleveland (go Indians!) and the various steel companies essentially carried inventory for the big 3 auto manufacturers who allocated initial purchases among the steel companies then filled shortfalls based on responsiveness. This “shortfall” business had a strong relationship component.

Remember the tired old joke about the two guys in the woods being chased by a bear — and the one stops to tie his shoes. The other guy says “you can’t outrun the bear, so why are you tying your shoes” — the reply — “so I can outrun you!”

posted on October 3, 2007

Joe Leverich said:

There is NO single one reason we are challenged by building or improving relationships. Some of the ones I can think of you may not have listed are: WE don’t listen to our clients, our priorities are not the clients, we are not willing to risk in a relationship resulting in a lot of “yes,” where posisbly we needed to learn how to discuss a matter and object.

We have not learned how to ask open ended questions and determine the clients goals – we have our goals – offer them a certain service because we know they need. In reality they want more and different services – FIRST.

We think TRUST is forever earned and in reality it is earned by our words and actions – every moment!

Because we do not analyze the clients – issues – listen and then engage them in discussion of what they want and are willing to spend to solve it we will continue to be frustrated with theoretical ideas of building relationships.

posted on October 3, 2007

Stuart Cross said:

David, I would add rewards and measures. In my experience, whilst professional service firms talk about relationships, they actually reward high utilisation, strong recovery rates and sales growth no matter where it comes from. If that is how success is measured for individuals, then it is not too surprising that developing long-term, trust-based relationships comes some way down the list of priorities.

posted on October 3, 2007

Scot Herrick said:

The amount of reorganizations in a given amount of time for either the firm or client organization. 3% unemployment, but 75% internal organizational churn. One is not in a role long enough to develop the relationship.

And both the previous comments are good ones.

posted on October 3, 2007

David J. Bilinsky said:

David: You once said that lawyer’s are terrified of a personal relationship. I think that is quite true..It is one thing to say that lawyers should reach out and seek strong relationships with their clients..it is an entirely different matter to put it into practice.

Lawyers have been forming relationships with clients for decades, if not centuries…but today the context has changed. Today, courtesy of the Internet, email, the Blackberry – time horizons are shortened…the expectation time between inquiry and response is shortened…the nature of the relationship has changed. New communication skills are required. Lawyers must be able to adapt to this new scenario.

My feeling is that law firms need to listen to the new voices. The nature of business hasn’t changed..but the way it is conducted has. If law firms and lawyers need to build new relationships..they must do so in ways that the clients understand. And the clients today speak in a way that is different and not necessarily understandable to the prior generations.

The ones who may best benefit from this shift are the younger firms – the ones who are able to relate and attract the new clients. There is tremendous opportunity in the vibrant new technology sectors being created by young minds. The challenge is for law firms to speak to these emerging areas and clients and bring the strength of their experience to the richness and creativity of the new bright minds. Therein lies the opportunity to forge new personal relationships and to grow with the new industry. I sense that here lies untapped potential and energy. And creativity. And growth not only of law firms, but of the law itself. The challenge is for lawyers to break out of their traditional way of thinking and embrace the models of their new clients. And grow. I can only imagine the results!

posted on October 4, 2007

David (Maister) said:

David, I’m intrigued by your comment. Can you help me understand some of the “new” specifics that are relationship-building in this new age. If busisness is conducted in a new way, as you say, then what relationship-building approaches are is newly important? What old approaches are less critical?

Can you help us all understand with some examples? remember, I’m 60 and probably have a lot of learning (and perhaps even letting go) to do!

posted on October 4, 2007

Steve Ferrara said:

This probelm is rooted in a few things:

We are continually trying to do more with less which has resulted in a reduction in overall service quality to clients. Conversely, most clients are doing more with less as well and don’t have the time they used to to develop relationships. You really need to work hard to make it worth their while to spend time with you.

The increasing use of electronic communications is deteriorating the personal relationships with clients as it’s too easy to work through email which dimindhes the personal relationships which are key to seccessfully servicing clients.

posted on October 4, 2007

David J. Bilinsky said:


Interesting questions! Ok…my thoughts on the new specifics.

One: Clients, especially but not exclusively, the high tech-enabled ones, are comfortable communicating via blogs, wiki’s and social networking sites. They collaborate via the web. Their relationships are not limited by any geographic, time or distance zones; increasingly the world is their oyster and they are comfortable treating it as such.

Two: Clients are using such tools as audio and visual podcasts and virtual worlds to craft their message and reach out to those who are interested in their products and services. The traditional cost limits imposed by print, TV and other mass media do not apply to internet-based methods.

For example, The Coa-Cola Company has launched the Virtual Thirst Promo in Second Life. This is an example of the use of virtual worlds and social networking to promote a product. Why would Coke wish to go into these areas? After all, how can someone drink a virtual Coke; and even if someone’s avatar did, how does it benefit the Coca-Cola Company? The answer is, I believe, that Coke follows their customers. How many lawyers are doing the same? How many lawyers would say “Why would I wish, or need, to be in a virtual world?”. To this I would say: how do you meet your client’s needs if you don’t understand what they are doing and why? And more importantly, you are not curious enough about what they are doing and its effect on their strategic long-term intentions.

Three: How many lawyers craft blogs, use wiki’s or podcasts or extranets to reach out to clients? How many are comfortable with such methods? How many bar associations and law society’s ethics and marketing rules would limit or compromise a lawyer’s ability to adapt and use these methods?

Four: The approaches that are less-critical today, in my opinion, would be highlighted, by an example: There are law firms today that receive an email and draft a response that is prepared on their firm’s formal letterhead, then PDF’d and attached to an email that is sent by way of reply, stating “Please see attached”. This to me shows a too-strong attachment to the traditional ways of communicating and fails to follow the learnings of Marshall McLuhan who said “Tomorrow is our permanent address”.

posted on October 7, 2007

David J. Bilinsky said:


Further to my prior post, there is a good blog post by Bob Warfield on SmoothSpan Blog, (a blod devoted to ‘radical technology innovation with equally radical business model innovation’). The post is:

What is a Social Network, Anyway? (Hint: It’s Not Geocities!)

and is dated Oct 4, 2007. It speaks to how social networks are different and how they allow people to create relationships online.


David J. Bilinsky

posted on October 7, 2007

ashutosh wakankar said:

Incentivization, as some of the earlier ones have mentioned is at the heart of it…i am not sure how many firms actually celbrate a higher share of wallet and high client satisfaction over the ‘next new deal’….in a high growtgh market (like India), the temptation to run after every new opportunity is so high that no one wants to tradeoff–the current clients are in any case locked in and will find it very hard to go out (in some industries) so resisting temptation/adrenaline is another barrier in my opinion…

posted on October 12, 2007