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Positioning_Professional_Service_Firms
| Positioning Professional Service Firms
Scottish inventor John Logie Baird gave the first public
demonstration of television in 1926 in Soho, London. Ten years
later there were only 100 TV sets in the world.
So, how does this relate to service firms? About a century after
Claude Hopkins wrote his marketing masterpiece, Scientific
Advertising, only a handful of professional firms understand and
practise proper positioning.
So, to help the situation a little bit, let us discuss in a few
words how service businesses scan better position themselves for
higher demand, recognition and compensation.
In terms of market positioning professional service businesses
fall into one of three distinct categories.
* Commodity type volume work
* Commercialised "one size fits all" approach
* Highly personalised premium work
COMMODITY VOLUME WORK
The mantra of this kind of business is tactically out-brawn the
competition with backbreaking hard work and bottomachingly low
prices, earning a living through sheer brute drudgery. This is
basically the Wal-Mart approach of providing professional
services.
This type of firms deal with a preponderance of customers
(definitely no clients), employing an army of trade barbarians
(people with great technical skills but as total lack of other
necessary skills) and churning out high volume of low margin
deliverables, such as workshops, websites, etc.
The typical examples of these businesses are web site developers
and seminar companies. These firms have rigid policies and
procedures to follow, and the idea is that they can hire
low-skilled underpaid "labourers" who have enough skills to
follow the procedure manual even with their eyes shut and
standing on their heads.
In these firms we cannot talk about careers. They offer jobs for
their people for short-term survival. Usually people take these
jobs as stop-gap measures, but do their best to move on as
quickly as humanly possible.
These firms specialise on solving very specific problems in very
specific ways. For example: You have a computer problem, so we
install a new IBM server. The solution to every problem is an
IBM server.
When you are an IBM partner and receive a kickback on your sales
from IBM, then the solution to everything happens to be the most
expensive IBM "box".
"In your specific case you need good old mercury filling" - says
your dentist, who also happens to be a shareholder in the local
mercury mine.
Fee sensitivity is very high in these firms and they are willing
to drop their prices in order to land any business. Remember the
motto is high volume work whatever it takes.
To compensate for low price though, these firms employ armies of
junior staff on their projects, and they can make up for their
low fees in asking for a low hourly rate for an army of people.
One of the problems these firms are facing is that tomorrow
someone else may be willing to do the same work cheaper, so the
commodity firm goes down is history as a perfect loser.
Commodity firms run on very high overheads, and often one way of
cutting overheads is cutting corners.
Since these firms operate like manufacturing plants, it is
vitally important to implement quality assurance and
productivity measurement processes. The value-added components
of these firms are their processes, procedures and internal
operating methods.
Most of these firms are operated and managed like large
corporations, and operate more as contractors than as
consultants. The personal touch is almost non-existent and the
emphasis is on churning out the next piece of work and moving on.
COMMERCIALISED "OUR UNIQUE APPROACH" TYPE WORK
These firms have extensive institutional experience at solving
certain types of problems. Individual talents are largely
ignored because everyone is expected to feed the firm’s
institutional competency.
These firms' engagements have less diagnosis and more
implementation of predictable, off-the-shelf solution. At this
level there is some collaboration with clients, but the work is
largely based on the "doing it for you" approach.
There is quite a bit of leverage. The senior “consultant”
(consultant? Gag me with a spoon!). The senior peddler just
enough grey on the temples comes and closes the deal, and then
an army of junior staff descends on the poor client to implement
the project and bump up billable time.
Due to repeatability and increased operational structure, the
major role shifts from senior professionals to junior staff and
temporary help. The firm uses senior staff to go out and hunt
for new business.
Skill-building is up to people' individual drive, and largely
left in their own hands. The firm' mission is to exploit the
skills these people have already acquired, and there is no
interest in helping them to build new skills. Senior talent is
used mainly for managing engagements and reinforcing policies
and procedures.
Since these firms deal with issues as problems to their
pre-packaged solutions, there is some compartmentalisation.
There is a clear hierarchical difference between the
implementers (junior staff) and business getters (senior staff).
In these firms there is an increasing pressure to provide career
opportunities for juniors, as opposed to merely giving them
jobs. However, juniors are still often treated by seniors as
necessary evils eating away the seniors' margins.
HIGHLY PERSONALISED PREMIUM WORK
These firms do not have well-defined approaches. They can be
regarded as "organised confusion" in which people of diverse
backgrounds and expertise perform a pretty broad range of work
in an unpredictable fashion. This firm' mantra is "How can we
deliver higher client value at higher fees using less of our
time, effort and resources?"
They stay on the cutting edge of their disciplines and walk into
every new assignment with a clean slate and an open mind. You
can recognise them because they ask a hell of a lot of questions.
The success of these firms is based on the unique knowledge base
of their people. They do not have "standard approaches".
Everything they do is "frontier" stuff, involving lots of
experimentations.
The use of junior staff is almost zero. Leverage is usually
achieved by using clients’ own implementing team, which also
becomes part of the knowledge transfer process. This way one
single consultant, co-ordinating the implementing team, can
achieve amazing results.
And here lies another difference. There is a huge difference in
focus between the first two and this type of firm. The first two
type of firms focus on tasks, activities and deliverables. For
example, we write 12 1000 page reports, we deliver 10 half day
workshops with 50-page student manuals.
Premium firms go for results and outcomes. For instance, we help
you to increase sales by as much as 20% in the next six months,
we help you to reduce talent turnover by up to 15% in the next
three months.
Can you see the difference? One firm can build you a website. It
is nice but useless. The other firm can help you to reduce the
cost of acquiring new business from the global market place.
That is something. Having a web site only for the sake of having
a web site is just as useful as putting a pimple on an
elephant’s arse. It makes no difference at all. At least not to
the elephant. Well, unless it is a small elephant and a huge
pimple, but now we are into zoology, so let us get back on track.
The other differentiating factor of these firms is that head
count is the bare minimum with minimum operating overheads and
maximum margins.
Talking about "frontier" work, clients are looking for the best
and most reputable firm. For the firm it is vitally important to
seek this pre-eminence by building the reputation of individuals.
Among the three type of professional service firms, this is the
only one that recognises that people build relationships, thus
do business with people, not with firms.
ON SUMMARY Now take some time and have a hard look at your firm.
Think about how you present your solutions and how you interact
with clients.
* Which type of firm is yours?
* How could you step up to the next highest level?
* Who do you have to become and what do you have to do to be
able to step up?
* What would be the pay-offs of stepping up?
* What are the investments you have to make in order to step up?
About the author:
Tom "Bald Dog" Varjan of Dynamic Innovations Squad helps
professional service businesses to build high trust client
relationships in which they can deliver higher value at higher
fees, using less of their time and effort. You can request his
e-booklet “Why Most Service Professionals Consistently and
Persistently Undercharge for Their Services” by emailing
booklet@di-squad.com
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