Mike Cullen Leadership in Professional Services LSN Briefing 5P conference 3 September 2015 Page 1 Leadership in Professional Services
Professional Services in context: What we are • One of the most rapidly growing and profitable sectors • Major significance to the global economy • Accounting, Legal, Consulting, Architectural…… • USD 1.6 Trillion • 14 Million people Source: Oxford handbook on professional services firms 2015 Page 2 Leadership in Professional Services
Professional Services in context: What we do • Developing human capital • Creating innovative business services • Reshaping government institutions • Establishing and integrating rules in financial markets • Setting legal accounting and other professional standards • Custodians of the public trust ……….but are we drifting to another place? Page 3 Leadership in Professional Services
The changing world of professional services The changing world around us will have massive implications for PSF business and people • Regulatory challenges • Pricing / margin pressures • Demographic changes • Rising importance of BRIC and next-tier countries • Skills shortages due to misaligned talent pools • Contemporary challenges in the knowledge economy • Organisational models, ownership, governance challenges Page 4 Leadership in Professional Services
Changing client relationships: channel mix Service line strategies Revenue ($ billions) 62% 59% 46% 38% 19% 41% 54% 81% FY00 FY11 FY15 FY20 Channel 1 Channel 2 Page 5 Leadership in Professional Services
Changing client relationships: service mix Audit to non-audit mix Revenue ($ billions) 68% 58% 32% 42% FY11 FY15 FY20 Audit Other assurance Other service lines Page 6 Leadership in Professional Services
It will be very different …….. • Volatility of the top line • Fixed costs of the bottom line • Staff policy, premises policy • 35% of revenues from emerging markets • 50% plus personnel located in emerging markets • Emerging markets pricing • Professional mix inside PSF’s • Skill sets required to be successful • Ownership / partnership model / franchise model v globalisation ............................................. Its not the same but bigger!!! Page 7 Leadership in Professional Services
Where do we find sustainable differentiation? Distinctive Differentiated Unique people client experience Teaming, energy, enthusiasm, Added value courage to lead, relationships Commodity / Integrity, respect, doing the right thing hygiene Entry point Financial / technical skills Page 8 Leadership in Professional Services
From IQ to EQ Relationship based (How) Functional Emotional (What) Product / service driven Page 9 Leadership in Professional Services
From IQ to EQ • How do you grow but also dampen volatility? • How do you move from IQ to EQ? • What new skill sets do you need? • What do we need to change? Page 10 Leadership in Professional Services
Creating account-centric relationships Trusted business Client advisor strategies/initiatives Complex integrated solutions Buyer- based Single Solution Page 11 Leadership in Professional Services
Building an account management diagnostic 1. Do we hold an annual account planning team workshop where we refresh our account plan with new perspectives and opportunities? 1. Understand client 2. How well do we identify and understand the initiatives and program a client is driving to implement its business strategies and strategies and issues do we take an account-centric approach to align them with our service offering? 3. How well do we include the client in the account planning process? 2. Build high-impact 1. Have we developed a relationship map as well as individual client calendars for all key executives and buyers? Do our relationships cover all service lines? relationships 2. Are we advancing relationships within the C-Suite? 3. Invest in accounts for 1. Do we understand what the account spends on all service providers? success 2. Have we developed a business plan outlining resources needed to become the dominant service provider at the account? 3. Has leadership approved the plan and are we making progress securing these resources and investment 4. Develop longer-term 1. Do we revenue plan for all service lines? Do we effectively track wins, losses and pipeline? revenue plans 2. Do we have a longer- term revenue forecast that is aligned with the account’s total service spend and our investment plan? 3. Do we understand the client’s long term strategy and how we should be positioning ourselves relative to that strategy? 5. Develop well- 1. Do we have a rolling 90 day action plan? coordinated action 2. How well do we monitor execution? plans Page 12 Leadership in Professional Services
World class account leaders • Do we recognise this “Activity” as valid? • Do we give key people the time? • Do we develop - The skills (EQ) - The Knowledge (Sector and Service) • Do we value the new skills we will need? - Business Development - Negotiators - Modellers and pricing specialists - Project Managers ….. Can they progress to partnership? Page 13 Leadership in Professional Services
The Future • Where are we headed? • Are we in control? • What do clients think? Page 14 Leadership in Professional Services
Market Positioning within professional services Apply the body of Customising the body of Grey hair Rocket science knowledge knowledge Client problem: Client problem: Client problem: Client problem: Efficient Solutions to common Help in making an informed choice A Major complex and ill-defined issue A major ‘bet your company’ issue problems from a variety of options and that the client has little or no that the client has no similar guidance through the process experience of. experience of. Key skills: Key Skills: Key Skills: Key Skills: Efficient, low cost delivery of Providing user-friendly advice which Real-time diagnosis and judgement. Providing innovative and novel established methodologies, models reduces anxiety in the selection solutions and processes. process an thereafter CSF’s: CSFs: CSFs: CSFs: Established methodologies, models Established methodologies, models Experience of similar problems; in- Highest level diagnostic skills; and processes; efficient and low cost and processes; efficient and low cost depth technical and/or functional creativity; state of the art delivery delivery systems; inter- knowledge. knowledge; pioneer concepts personal/relashionship skills; managing the ‘sales’ costs. Profit Driver: Profit Drivers: Profit Drivers: Profit Drivers: High Volume, High leverage Above average fees; good leverage. High Fees; Low Leverage Premium fees; very low leverage; may also refer work to others Selling Proposition: Selling Propositions: Selling Proposition: Selling Proposition; ‘Better, Faster, cheaper.’ ‘Use us, we’ll help you make a better ‘We’ve seen similar problems before. ‘Smartest brains around.’ choice and provide you with on- Trust us, we’ll help you over your going support.’ problems Source: Mike Cullen, adapted from David Maister and Jack Gabarro Page 15 Leadership in Professional Services
Market Positioning within professional services Apply the body of Customising the body of Grey hair Rocket science knowledge knowledge Low differentiation High differentiation Multiple providers Limited providers Execution Diagnosis Low leverage High leverage Low Margin High Margin Source: Mike Cullen, adapted from David Maister and Jack Gabarro Page 16 Leadership in Professional Services
The Future: What do clients think • The rise of the outcome • Death of the pyramid • Reinvention of the model Page 17 Leadership in Professional Services
Ten principles that clients should apply to commissioning external professional service support 1. Be the best - Clients need high performing advisors with a track record of success and experience. 2. Do different – Clients want external experts to bring a different perspective rather than echo the status quo, which means Government needs people with experience of the disruptive industries like Consumer, eBusiness – not the public sector. 3. Challenge back – Sometimes clients can be guilty of asking advisors to read their own watches, seeking support for with that is the core responsibility of the organisation. 4. Just what’s needed – Clients should be able to construct a team to meet their goals, without being obliged to take particular grades. 5. Partner presence – The oversight and client engagement provided by partners is vital, and should come as standard, not at cost. Source: S Kelly, COO - Cabinet Office Page 18 Leadership in Professional Services
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