What’s A Professional Firm?
post # 257 — December 8, 2006 — a General, Strategy post
I just received an email from Atta-ur Rehman in Pakistan, who writes:
Many times in your podcasts you refer to “Professional Firms”. I’ve not been able to understand what exactly you mean by the term. Aren’t all businesses like professional firms? Could you please clarify it for me or refer to me some definition that you might already have on your website?
Great question, Atta. I had a stronger opinion twenty years ago what the term meant, but nowadays Iâ€™m not so sure.
Of course, many years ago, the term â€œprofessionâ€ or â€œprofessionalâ€ had a sociological, cultural or class meaning — there were only a certain number of â€˜learnedâ€™ professions (medicine, the law, the religious ministry). A lot of effort went into defending membership in this privileged group — doctors, lawyers and priests were special (they claimed) but everyone else was in BUSINESS (Yuck!) or were a lesser breed (nurses, for example).
Part of their claim was that they had a superior commitment to service instead of commerce, but very few people believe that any more. Nevertheless, a great deal of time and money has been spent by other industries trying to get recognized as â€˜realâ€™ professions.
When I began my work in the early eighties, I used the term â€œprofessional service firmâ€ to mean businesses that (mostly) gave advice — not only law, medicine and priests, but including consulting, accounting, advertising, public relations, engineering, executive search, financial advisors of all kinds.
The central thing that these industries have in common is that (in principle) they do CUSTOMIZED work — they do not sell the result of standardized processes. They hire â€œknowledge workersâ€ (although not everybody thinks thatâ€™s synonymous with professional workers) to apply education and training to create different outcomes for different clients.
However, even this definition gets â€œfuzzy.â€ What happens when so-called professional firms start taking a process-intensive approach and create customized outputs with a standard process? At the commodity end of many professions, it doesnâ€™t take an advanced degree to produce really valuable outputs — just some good systems, databases, training and a high-school degree. Is that still a professional service?
Then comes the challenge that you hint at, Atta. Many of us think that being a professional has nothing to do with what degrees you have, what industry you are in, or what position you hold. Maybe the REAL meaning of professionalism is close to what the priests, doctors and lawyers were SUPPOSED to have, except that it applies to ALL of us in all industries: a moral commitment to be of service and to run our organizations to high standards based on unwavering values.
Viewed this way, maybe Atta is right. Arenâ€™t ALL industries like professional firms? Does the term professional business mean anything anymore? Does it mean anything to say some people are to be categorized as professionals and some as something else?
What do the rest of you think? Have we outlived the usefulness of â€œprofessional service firmâ€ or â€œprofessional businessâ€ as a helpful categorization?
Having been in a professional firm and now a corporate, they are very different animals. That said, a fund manager (where I have also worked) has a bit of both about it, so it’s hard to draw the line.
I often ponder the non professional service firms – builders etc – it seems to me that they should be able to manage themselves on similar lines, but it doesn’t happen in my experience.
posted on December 8, 2006