Leading Firms: How Great Professional Service Firms Succeed & How Your Firm Can Too
Leading a professional service firm is difficult enough in good times, and it is all the more risky in difficult ones. In Leading Firms: How Great Professional Service Firms Succeed & How Your Firm Can Too, David Kuhlman, a highly respected management consultant to many of the world’s top firms, gives an informed view on how those in professional services can achieve the same success as best-in-class firms.
Most businesses claim that people are their most important asset, but Kuhlman, a partner at Axiom Consulting Partners, explains that professional service firms are unique because their entire value chain consists of people who must differentiate themselves from competitors who often offer the same product in similar ways with near-identical messaging. From the author’s examination of why it’s more difficult to implement change than in a traditional business, to his analysis of the challenges of rising above the competition, he offers a comprehensive guide to the special dynamics of the professional service firm. Kuhlman covers in striking detail the aspects of the daily dealing with clients and markets as well as the planning and implementation of long-term strategy that leading a firm requires.
This book is divided into three parts. The first lays out foundations of success for any firm; this includes developing an effective strategy and also delivering consistent revenue, maintaining quality and maintaining profitability. The second section puts a strong focus on the capabilities that great firms possess as opposed to firms that are just merely “good.” This includes managing talent, delivering growth, and establishing brand synergy. The last part is about the practices and values necessary to develop a high-performing culture of professionals, one that continually nourishes the growth of superior talent while successfully managing client relationships and expectations.
Leading Firms is perfect for anyone who wants to explore their firm’s potential and to better understand how the most successful firms in their industry arrived at their positions of leadership. It serves as a how-to guide for anyone leading in, or participating in, moving a professional service firm forward.
The firm’s client value proposition, coupled with the basics of the business it is in, largely defines which clients or markets will be most attracted to what the firm has to offer and which services will be most successful. Most firms or their founders have some history with clients, services, and markets that give basic shape to where the firm ought to be most successful. The figure above illustrates this “performance envelope.”
Within these boundaries, the firm generally does its most successful work. Business development costs are low because the clients are known and they already respect the firm. Close rates are good because the firm is selling what it knows well and where it has strong credentials and references. Average billing rates and gross margins are at the optimal level because the work is most closely aligned with the firm’s skills and leverage model. Realization rates are high because the work matches clients’ expectations both for the firm and relative to what others do in the market.
Beyond the performance envelope lie challenges. Some offerings that perhaps the firms once provided are now so commonplace they have become essentially commodities or, worse, clients have all or most of the necessary skills and are merely looking for help at the margins. Work beyond the firm’s core skill set can certainly be done, but the client risks will be higher and realization rates lower since the work cannot be done as efficiently as offerings in the core.
What Others Are Saying About Leading Firms
In a 5-star reviewed titled “Valuable Perspectives on the Unique and Complicated World of Professional Services,” Hall of Fame reviewer Robert Morris writes:
“Since 1986 when I established an independent management consulting firm, I have been retained by a number of professional firms — legal, accounting, and other service firms — to provide assistance that agricultural, manufacturing, and pharmaceutical companies also need such as recruitment and management of talent, performance measurement, process simplification, and leadership development. I am greatly indebted to David Maister, more specifically to two of his books (The Trusted Advisor and Managing the Professional Service Firm) for providing information, insights, and counsel that continue to provide invaluable to those client relationships. Now I am also in substantial debt to David Kuhlman, for reasons that will soon be revealed.”
Small Business Trends
In a very favorable book review the author reports: “Kuhlman works to broaden the reader’s knowledge, to put mere ideas into workable outlooks that lead to workable solutions. With a textbook-like tone, Kuhlman reveals graphs, charts and terms that shows the value service firms can bring to customers. The end result is a better plan for strategy, from execution of customer service to pricing fees.
“As you can tell from the phrase ”Performance Envelope,” you can expect the terms throughout the book to inspire meaningful concepts, not just sales-speak or overly technical jibber-jabber. Readers from professional firms undergoing growth and who have some years of experience will not read a dumbed-down thought.”