By Robert Craven, MD at The Directors’ Centre
If it wasn’t true you would think that someone had made it up. However, the story I am going to tell you gets recounted to me every single week of the year. It is a scenario that is played out all over the world, again and again, with depressing regularity.
The place is a professional service firm. I won’t name names (not ever, rest assured!).
I get invited to lunch by the new(-ish) spritely, young(-ish) partner or partner-in-waiting or new business development partner. Essentially it is the youngest person who has been offered the keys to the executive toilet… They are referred to (by their seniors) as “The new guard”, “The wave of the future”.
Because of their age and their enthusiasm they can see what is happening to the industry (law, accounting, architecture, engineering): Clients –
• no longer equate the five star, city centre trappings with a five star service
• are aware of other highly competitive offering
• talk to each other online and offline about how good your practice is
• no longer believe the empty vacuous promises in your advertisements
• can buy most of your services in the form of a commodity via a Google search.
At its simplest, the PSF is faced with three market challenges:
• more demanding and increasingly price sensitive clients
• increasing complexity of services
• difficulty in scaling progressively more niche offerings.
Meanwhile, the practice, on the other hand:
• maintains a ludicrous overhead cost
• is often run to maintain the partners’ pension fund above all else
• has few, if any, commercially-minded business leaders
• is in an industry where constant mergers (and occasional insolvencies) sustain the partners’ appetite and greed but do little to improve the client’s lot
• talks little, if at all, about basics of business such as the client experience, delighting clients, or moving into the 21st Century. Did I forget staff satisfaction or career development?
This is just the tip of the iceberg.
Most practices suffer severe ‘five-year-itis’. They are running on five-year-old assumptions about what clients want and need, what competitors are doing, how much to charge and what is really going on.
The new kid on the block can see it. The writing is on the wall. Something has to give. Decisions need to be taken, bold ones, not half-measures, Action needs to be taken and now. However, life is not so simple.
The politics of the partners meeting now kicks into play. Senior partners are disproportionately more interested in defending their department and its headcount than working for the good of the whole practice.
The more senior a partner is, the more conservative they are. After all, “it wasn’t like this in my day… When you’ve been through as many recessions as I have”, etc., etc.
More significantly, the most senior partners will be the oldest. With retirement (or early retirement) in sight, the last thing they want to do is have the boat rocked. It simply isn’t in their interests (emotionally or financially) to dismantle the machine that has looked after them so well for so many years.
In a token attempt to buck the downward trend in profits, they will employ some people in marketing/business development/account management. They won’t be given too much authority because fee-earners think they themselves must be seen to be more intelligent, worthy and grown-up.
A business that is haemorrhaging cash needs a serious injection of new clients. Marketing/business development/account management will clearly be major influences on future success. It beggars belief that this is not given the full respect it requires in terms of budget, authority, responsibility and respect. It requires a partner level responsibility from a full-time professional.
The days of amateurs playing at business are over. Just because you are a great professional (in whatever field) doesn’t mean you are a great business person. Which dumb rule book says that twenty years in law (or whatever) equips you to manage a team of 400 people including responsibility for budgets, profitability, marketing, HR, CPD as well as running your own department? This is just cloud cuckoo land. Some professions have understood this better than others.
Those working for you in marketing, business development and in account management know their place in every sense of the word. They know what the clients really think but they also know that the ‘powers that be’ are too thick-skinned to really listen. “Small wins” they say, “just keep pushing, little by little.”
Likewise our protagonist, proudly showing of his new partner status is probably emasculated by the seniors under the auspices of “don’t rock the boat” or “just let it be till he retires” or “you’ll understand what’s going on one day”.
The new partner is damned if they kick-off shouting, “Wake up everyone, smell the coffee, the emperor (= senior partner) is wearing no clothes.”
And they are damned if they say nothing and just watch the practice slowly eating away at itself in a desperate bid to understand why things aren’t like they were.
But maybe there is a third way…