The Professional services leadership handbook (subtitled “How to lead a professional services firm in a new age of competitive disruption”) was published in 2017 and it has taken a while to read and digest the contents and write this review. Professional services leadership is an important topic and the book contains a huge amount of valuable information and ideas for managing partners and other leaders in the professions. It will also prove useful to those designing leadership and management development programmes.
The book is structured around a leadership triangle: Business, People and Clients (with self in the centre) and shows that there is a need to keep these elements balanced. Happily, the importance of emotional intelligence (EQ) for successful leaders gets an early mention. Visibility, adaptability, forward-thinking and celebrating success are amongst the qualities mentioned by those interviewed.
Professional service firms interviewed for case studies include: Allen & Overy, Arup, Bird & Bird, Birkett Long, Brachers, Buzzacott, Coffin Mew, Cripps, Dentons, EY, Farrer & Co, Fox Williams, Grant Thornton, GVA, Herbert Smith Freehills, Irwin Mitchell, KLegal, Kreston Reeves, Mills & Reeve, Moore Stephens, Mourant Ozannes, PwC, Reed Smith, RSM, Saffery Champness and Thomson Snell & Passmore.
Part One – Business leadership
“Creating a strategy is one of the most important tasks for a newly appointed leader”. There are echoes here of the book Rocket Fuel where successful businesses combine visionaries and integrators. The need to listen more than talk and to ask fundamental questions was stressed in the case studies.
I really like the bow-tie process for creating a strategy – it’s a useful addition to any strategy development tool kit:
- Analyse (decision grid, desk research, interviews, financial analysis)
- Consult (employee surveys, strategy development groups, off-site meetings)
- Decide (vision for the future – at least three years ahead, priorities, what we will and won’t do)
- Distil strategy into fundamental principles (one page plan)
- Cascade the strategy throughout the firm
- Implement (achieve buy-in internally, change processes, organisational design)
- Track and adapt (Financial KPIS, Clients KPIs, Employee KPIs, Annual reviews0
It was good to see evidence of the 4Ps of marketing (Place, Products, Price, Promotion) in the decision grid although I wasn’t clear where goal setting fitted in. There was, however, a useful interview discussion guide to examine client needs and market trends and a good five-step approach to effective law firm conferences:
- Breakout groups and consultations
- Plenary session
The example one page strategy plan was insightful too – simple and elegant.
The six ages of innovation are outlined (expansion into new markets, sector focus, integrating technology into service delivery, reducing the cost of service delivery though “unbundling”, solving problems in new ways by “rebundling” and the technology supported professional).
After a review of innovation at Allen & Overy, the authors present their innovation lifecycle:
- Phase Zero – Innovation strategy formulation
- Phase One – Ideation (like the sandbox references)
- Phase Two – Prioritise
- Phase Three – Prototype
- Phase Four – Test
- Phase Five – Scale
Performance – profitability
Using a fictionalised example of a private client department, the authors explore their model of the eight profit levers for professional services firms (organised around structure, time management and client management).
I was a little disappointed that there were only brief references to pricing – mentioning four types (hourly rate, fixed fee, success-based and blended – no mention of value pricing) but pleased to see that project management was recommended as a way to plug profit leakage across the client lifecycle. The authors also touch on the need to improve profitability through cultural change. They mention topics such as delegation and frank conversations with clients about pricing and scoping.
Part Two – Client leadership
With the authors being so expert in research, it’s no surprise that they urge leaders to challenge assumptions about clients and develop deeper knowledge and understanding about clients’ businesses. There is sensible advice to analyse clients and identify high priority segments. I particularly liked the comment “It is not uncommon for firms to over-service their largest clients but at the same time to cut prices by offering volume discounts to maintain a flow of work”.
The client portfolio assessment tool (considering revenue and profitability) looks similar to the Boston Consulting Groups (BCG) product portfolio model. Client relationship factors to consider include: profitable, long term, challenge, fresh and culture. Whilst I felt this oversimplified things I liked the questions to guide discussions about key clients.
I was also pleased to see a strong section on understanding the trends and issues in firm and client markets. The authors note that leading firms adopt an issues based approach rather than the service or sector led approaches adopted by so many. There were some interesting insights in the client feedback maturity curve (crown jewels, annual audit, integrators and client-centric).
There’s a chapter on fostering a client-focused culture in firms and segmentation (with personas) underpins the approach. The authors note: values of respect, client advocacy, relationship management programmes, spending time with clients, industry sector knowledge, cross-firm communication about client interests and leadership that celebrates strong client behaviours.
There’s a good section on client experience and client journey mapping examining the benefits of: deeper understanding of the needs of different client segments, greater focus on the moments that matter, articulated best practice, reducing inefficiency and evidence-based differentiation. The role of client champions is explored with particular reference to co-creation.
There’s a final chapter in this section on sales. The five client relationship management essentials are seen as: clients, partners, team, plan and rewards. There are insights into CRM processes: identify priority clients, delegate responsibility, support from an informed and co-ordinated team, plan of activity and link to performance and reward. A version of the Pace pipeline model (profile, positioning, prospecting, pursing and proposal) is used along with a version of the decision-making unit.
Part Three – People leadership
This starts with advice on fostering a commercial mind set and notes the importance of role models. There’s some solid, albeit basic, advice about aligning the firm’s strategy with people and a useful skills and capabilities diagnostic with references to T-shaped people (see http://kimtasso.com/future-marketing-manager-t-shaped-people-senior-promotions-management-vs-leadership/).
There’s interesting case studies and advice on increasing the commerciality of senior and junior staff and the supporting training programmes. Then the authors move onto motivating high-performing teams (commitment, trust, culture, responsibilities, decision-making, communication and co-ordination). There are nods to the differences in Millennials – who prioritise career and personal development above remuneration. It mentions that Grant Thornton has moved to a shared enterprise model for this reason. There’s advice too on getting the most from business services teams.
Continuous improvement and performance improvement and management are tackled. The final section on self-leadership leads into an interesting assessment of leadership potential (reach, culture, follower draw/purpose, horizon, driver and style). The diagram of the six routes to leadership in professional firms is insightful. Leadership development edges into brand me with questions about “what do you want to be known for?”. The leadership style mapper is helpful. There are comments about delegation and time management to avoid burnout – and the authors address the question of whether or not to retain client work.
It’s a really good book that’s based on a deep knowledge of professional partnerships and stuffed with great advice based on insight from many years’ experience of working with PSFs. It took me a while to read the book as it contains so much information. And so I fear that those who would gain most from the book – those in leadership positions in the professions – might not devote the time and attention that it deserves. Leaders in marketing, business development, human resources and any other services team in a professional services firm will find the book immensely valuable.
In many ways it reminded me of the book I wrote for property leaders back in 2009 called “Growing your property partnership – Plans, promotion and people” http://kimtasso.com/publications/growing-your-property-partnership/ Although I omitted sections on finance and technology as often property partnerships excel in these areas but lack the strategy, human resources and business development expertise.
Contents of Professional services leadership handbook
The book contains the following sections:
Part One – Business Leadership
Vision – how to create and implement a robust strategic plan
Innovation – how to reap the benefits of innovation in your firm
Performance – how to improve the profitability of client engagements
Part Two – Client leadership
Understanding – how to stay attuned to the changing needs of your clients and markets
Connecting – how to foster a client-focused culture in your firm
Sales – how to improve your firm’s client development success
Part Three – People leadership
Future-fit – how to foster a commercial mind set in your firm
Motivate and collaborate – how to create high-performing teams
Performance – how to establish a culture of continuous improvement
Part Four – Self leadership
Forward reflection – how to assess your leadership potential
Capability – how to develop the skills, competencies and experiences to be a successful leader
Balance – how to succeed as a leader without burning out
Interesting facts and statistics
There are lots of great nuggets throughout the book, including:
- PwC’s research on the legal sector is quoted: “Between 2010 and 2016 average profit margins for all but the top 10 UK law firms remained stagnant or had declined. The squeezed middle saw an average drop in margins from 27.2% to 23.1%” This is compared to the average annual 45% growth at technology-enabled companies such as Axiom.
- Research amongst CMOs at leading professional service firms in 2017 revealed only 12% had a formal process for testing or co-creating innovation ideas with clients. Just 14% had a designated budget for innovation projects. 36% design joined up propositions to package their services to clients in new ways.
- As a rule of thumb, professional service firms should aim for 40-50% of turnover being spent on professional salaries, 30% on overheads (including support staff salaries) with the rest as profit (20-30%).
- Top City law firms expect their lawyers to charge at least 1,600 hours per year with some Magic Circle and US firms having even higher targets – close to 2,000
- PwC lists 12 issues on its web site and shows how its expertise helps clients address these issues.
- Research amongst CMOs and head of BD in PSF shows 48% plan to create a client journey map within the next 12 months and 235 plan to develop a client charter that sets out the firm’s service promise to clients at different points on the client journey (Beddow, 2017)
- Less than a quarter (21%) of CMOs and heads of business development in PSFs directly measure and reward performance based on the quality of the client experience delivered
- Addleshaw Goddard launched its Client Development Centre in 2005 through which it collaborates with its clients to address some of the wider organisational challenges, not just legal probems, through the delivery of bespoke advice, consultancy and training
- The optimal blend of learning is referred to as the 70:20:10 approach for experiential learning, social learning and formal learning
- The more practice areas within a firm that a client uses, te lower their overall satisfaction score. Yet Heidi k Gardener has shown that the more cross-practice projects a lawyer works on , the higher the hourly rate achieved compared with peers working on single-practice proects.
Other strategy, leadership and change management books
Other strategy, leadership and change management books I have reviewed – not all of which are aimed at professional services – include: