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“Why are we losing proposals to competitors?”
One of my clients, a senior executive at a highly respected
United States-based professional service firm, asked
me this question not too long ago. “Sure, we’ve
premium priced our services. But we think we serve our
clients better than anybody else.”
What did I tell him? That his clients’ expectations
had simply evolved to a point where attributes like
customization, responsiveness, and accuracy were “givens.”
His firm – like so many others – had, without
realizing it, always taken the “mile-wide, inch-deep”
approach to understanding itself vis à vis its
market. He had come away reading too much into some
information and not enough into the rest, and trying
to make decisions on range of services, competitive
distinctions and innovation from that lightweight stance.
Starting right then, we began to work together to help
his firm master its marketplace.
“Master a marketplace? Are you telling me that
my firm can manage the movements of its market –
that we can dictate our future achievement of competitive
success? Impossible!” some may say. Yes, the marketplace
is “bigger” than any one business entity
that exists within it. But professional service firms
can move beyond their understandable marketplace nearsightedness.
They can enact more deeply strategic initiatives to
influence their business arena and their own competitive
trajectory within it. They can move beyond their all-too-random
acts of marketing to deliberately work on mastering
their marketplace.
A move in this direction requires three building blocks
that, together, form a compelling market-driven infrastructure
for professional service firms to compete more effectively,
as Marketplace Masters.
Looking Out.
Looking out means using research on clients, competitors,
and markets to look outside of professional or internal
organizational confines to detect market shifts and
opportunities. Put another way, looking out is the ability
to pull up out of the day-to-day operating challenges
and take a hard look at what’s coming down the
pike.
So many firms are ultra-sensitive to near-term opportunities
and dangers that they respond too quickly—without
enough due consideration—to take advantage of something
that looks promising or to take evasive action to avoid
damage. What happens? Over time, they hit a pothole
they could have avoided—or they derail completely.
They may have short-term victories, but they don’t
build up a foundation on which they can last over the
long-term. They’re vulnerable to the vagaries
of the market.
What does “due consideration” mean? It
means having a reliable sounding board against which
to evaluate new opportunities or threats. It means having
a reliable body of research about the market on which
to base judgment. It means having an early look at client,
competitor, and marketplace shifts. A disappointingly
low percentage of professional service firms even have
a formal market research budget. Yet firms that conduct
formal market research reported that they were significantly
more effective in attracting and retaining clients.
Market research must play a more prominent role in
professional firms’ marketing programs than it
has to date; firms that embrace this notion will enjoy
the rewards of a loyal and growing client base.
Digging Deeper.
I believe that the professional service sector, whose
very foundation is based on intellectual capital, has
yet to apply its collective brainpower to truly dig
into its marketplace. Put simply, Digging Deeper means
doing the targeted organizational and analytical work
it takes to compete more effectively. My research findings
show that despite the availability (and increasing affordability)
of powerful software applications, few firms conduct
formal data mining to discover the unmet needs of clients
and prospects. Digging Deeper means capturing, organizing,
and mining valuable client data to the point that one
can discern past and potential client and marketplace
patterns.
There is also evidence that most professional service
firms take the easy way out on efforts to differentiate
themselves, avoiding the more successful—but harder—initiatives.
Digging Deeper means going beyond image-based positioning
and branding campaigns to become truly different from
competitors. My research also suggests that there is
a discernable lack of sophistication among professional
service firms about the notion of aligning competitive
strategies with a firm’s culture (a phenomena
which sometimes results in the scenarios I described
at the top of the chapter).
Digging Deeper means managing a culture to achieve
a strategic, market-focused goal. What’s more,
there is evidence that most professional firms have
yet to adopt the internal management structures that
support their effectively driving towards a competitive
goal: account planning, and formal post-implementation
measurement of marketing, selling and relationship management
initiatives.
Digging Deeper means using account planning and measurement
to increase a firm’s ability to fine-tune its
business focus, and marketing, business development
and service delivery strategies. Tomorrow’s effective
competitors will dig deeper to gain a pre-emptive marketplace
advantage.
Embedding Innovation.
That is, deliberately incorporating support of innovation
into a firm’s practices and policies. As a whole,
the professional service sector relies too heavily on
technology-based “knowledge management”
and promotion-based “thought leadership”
as platforms on which to develop new services. My findings
uncovered little evidence of, support for, or implementation
of, other formal innovation initiatives.
I believe innovation must be institutionalized as a
critical element in every professional firm’s
strategy. This involves three competencies. First, building
an R&D framework, which means recognizing those
services that are rapidly becoming commodities, and
then programmatically steering internal efforts to build
new services. A second competency is how firms use technology
not to enable a new service to be conceived but as a
basis for a new service. A third competency is how firms
use incentives or rewards to stimulate professionals
to innovate in alignment with the firm’s strategy.
Some firms already excel at one or more of these; those
are the firms around which I’ve written case studies
to explore what they do and how they do it. No firm,
to my knowledge, excels at all three. But it is possible,
and at any rate, it is a goal worth striving for. Even
moderate improvements in all competencies will result
in a more robust competitive position and future success.
None of these practices are new. And, while requiring
a focused, organized effort, none are particularly hard
to do. So what is the disconnect? Why aren’t more
professional service firms much better at looking out,
digging deeper, and embedding innovation? Why isn’t
a market-driven infrastructure a requisite for doing
business?
The answer is twofold: Most maturing professional firms
have long since established a pace that is linked to
whatever opportunities or challenges the market is currently
serving up. In their founding days, they never did create
an explicit market-driven infrastructure (they didn’t
have to). What’s more, they’re not at all
sure that it will help their situation; investing the
time and resources necessary seems too dangerous.
Additionally, any new change effort—be it an
organizational or cultural overhaul, or a simple improvement
in research practices—can seem daunting. Firms
fear the paralysis that comes from biting off more than
they can chew. (Picture a python that has just swallowed
its dinner whole; the thing isn’t going to move
for weeks.) At the starting point, any initiative looks
big and potentially menacing.
The fact is that all firms can learn to look out, dig
deeper, and embed innovation—without too much
pain. What’s more, if they tackle and succeed
at only one of the three, the other two will follow
more naturally. There is no need to swallow this initiative
whole. Taking baby steps—albeit deliberate ones—is
appropriate, though the ultimate positive result (competitive
gains) will be felt firm-wide, and on a large scale,
over the long term.
A firm can say “Let’s focus on improving
our measurement of marketing and business development
programs.” This initiative is quite defined and,
while not insignificant, it’s doable. And the
rewards will be profound. Not only will the firm improve
in the selected area, but also the step will create
a ripple effect that can catalyze other market-driven
reforms within the firm. Once a professional service
firm chooses to compete with one of these practices,
the interface between that and other practices can become
more seamless.
For another example, let’s say a firm decides
to compete more strategically by improving how it looks
out. One of the things it decides is to do more research
on clients. After it’s developed an infrastructure
to do this, it would follow that the firm might next
be able to do data mining more effectively (“We’ve
captured so much information on clients, we now want
to organize it and use it.”). Next could be account
planning (“Now that we can easily manipulate our
externally-focused client data, we can build a road
map for growing our services with those clients that
are our best strategic assets.”). Another example
is a firm that decides it will dig deeper to be different
from competitors. To do so, it decides to build an infrastructure
that supports the creation of certain technological
capabilities. This is of course also “embedding
innovation.”
And so on. Firms can integrate their efforts in all
three areas, so that the progress made in one area is
felt by the others, and can be used by the others. If
firms tackle and succeed at only one of the three building
blocks of marketplace mastery, the other two will follow
more naturally.
When a market-driven infrastructure is built-in, small
changes can equal great gains. And for professional
service firms, this notion can—and should—look
very compelling, considering the alternatives.
Suzanne Lowe
is President of Expertise Marketing (www.expertisemarketing.com)
and author of Marketplace Masters: How Law firms Compete
to Win (www.marketplacemasters.com
– Greenwood Press: Spring 2004).
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