The Professional Services Firm of the Future
- The most significant changes in the services industry are occurring in the four areas of business model reinvention, customer behaviors, workforce and technology.
- Service firms that align with these movements are much more likely to survive.
- Service firms that promote and lead these movements will thrive.
The Future of Professional Service Organizations
Accurate prediction is not about guessing or supposing what lies ahead. It's about measuring and extrapolating market trends and customer behaviors.
Service industries is incurring accelerated change in the areas of business model reinvention, more empowered and demanding customers, acquiring and retaining specialized staff and most of all, technology which is redefining what's possible.
These movements are not new, and their trajectories will continue. I know this not because I can forecast what lies ahead but because they make sense for the industry's stakeholders, especially clients and staff.
Professional Services Business Reinvention
The professional service firm of the future will shift its business model, services, brand and value proposition to remain relevant.
Traditional service providers have already shifted from generalists to specialists, from services to solutions and from local to global. Many have evolved from piecemeal service providers to integrated solution shops to modularized services to ecosystem participants in a value chain of services. Some have become asset-based consultancies by using technology to package their ideas, methods, data, intellectual property and know-how.
They innovate to transform the scope, quality, value, delivery and resourcing of services. For example, they may define ways to shift billing from time to value, reduce risk with shared outcomes, or experiment with technologies to enhance virtual models or remote services delivery.
The top professional service firms are shifting their competitive advantages to achieve their growth goals. These industry leaders recognize that advantages are only competitive advantages if they meet the four criteria of being relevant, measurable, unique and sustainable. The first two are much more easily achieved than the later two.
Research from the Business Growth Report shows there are only four sustainable competitive advantages in the services industry. They are innovation, corporate culture, customer affinity and business intelligence.
Professional service firms are selling an intangible solution, which elevates the importance of brand. Competitive advantages must morph into the company's brand to create clear differentiation and a unique value proposition (UVP). Brand conveys reputation, leadership, value, safety and other factors which heavily influence client purchase decisions.
Professional service reputations are also much more transparent. Your brand is no longer what you say but what you do – and how well you do it is publicly available information. You don’t get to decide how customer centric you are, your customers do.
Like their clients, services firms are increasingly contracting and outsourcing specialized skills and non-core competencies. Much of this is done via ecosystems. Shedding fixed costs and renting the skills of others aids the pursuit to be the best in the world at whatever it is the firm does.
Shifting Customer Behaviors
Customer behavior is the primary force of market change, and the professional service company of the future will monitor and advocate these shifting behaviors.
With their mobile apps and social networks, clients are more connected, informed, empowered and demanding and that has forever changed the balance of power in commerce.
Glass Door and similar websites deliver unvarnished company opinions from the staff that worked at those companies. Social networks, review sites and online marketplaces aid professional service buyers with discovery, analysis and comparisons. When selecting a new service provider, about 60 percent of the buyer journey is completed online.
Increasing customer demands, such as à la carte services, transparent pricing, shared risk and fees based on value, not time, are becoming commonplace. The most successful service firms will endorse, not resist, changing customer behaviors.
That starts with Customer Insights and Voice of the Customer (VOC) programs to measure what customers most want from their service providers. Clients are not homogenous so this data will be categorized by customer segment.
These programs eliminate internal bias, which is the single biggest mistake made by service firms and leads to a cascade of downstream consequences such as deteriorated brand, marketing and sales messaging. CRM technology can be used to acquire customer intelligence at scale at apply that information at just the right times throughout the buyer journey.
Forward looking firms will compete to win and retain clients based on their customer affinity programs. The top two customer affinity methods in the professional service industry are customer relationship management (CRM) and customer engagement. CRM and engagement are complimentary but separate.
It's critical to recognize that CRM isn't just software. CRM is the strategy that defines how to acquire and grow mutually beneficial and profitable customer relationships. CRM software then brings automation, information and scale to the strategy and supporting processes. The technology is essential to achieve customer intimacy at scale but is aimless and insufficient without supporting strategy.
The service firm of the future will also automate and measure client sentiment to grow customer lifetime value and minimize customer churn. Tools such as customer satisfaction surveys or Net Promoter Score (NPS) can be used to measure client disposition, escalate disappointed clients for quick remediation and feed automated customer health score calculations.
Service organizations seeking long-term viability will build a corporate culture that is intentional, proactively designed and in a constant state of awareness and improvement.
Culture is everything in a professional services organization. It drives capability and delivery. It defines customer centricity, employee experience and quality of service.
A high-performance growth culture defines, measures and reinforces shared company values that drive the behaviors which determine the quality and volume of workforce (discretionary) effort, and in turn determine staff productivity, and the quality and amount of work that gets done.
Service companies are uniquely people-driven organizations, and the corporate culture is the human performance engine that directly impacts the level of success, or failure, for every business strategy, revenue initiative, operational performance and change transformation.
The Gig economy lies at the intersection of culture and innovation for service firms.
It's shifting the professional service workforce from the bottom to the top. Millennials and the most senior people are opting for contract or freelance work. For the service firm, embracing this trend will create a more variable-based cost model, provide access to more specialists, and assign client resources based on skills and experience, instead of simply moving resources based on their availability.
This staffing model will create other changes for the firm's full-time employees. Service firm partners and executives need to promote extraordinarily clear visions and be the drivers of culture. Managers will shift from career bosses to project-based mentors. They will need technology for coaching and communication programs to a much broader audience. They will deliver performance feedback much more frequently, such as by project milestone, not by elapsed time.
Service delivery leads will require more formalized and repeatable methodologies to achieve consistency of services. As workforce composition shifts to a more fluid labor allocation model, HR managers will more fully embrace talent management programs for recruiting, on-boarding, compensation management, performance management, training and succession management.
Talent will be more mobile, agile, empowered and self-directed. Done correctly, staff will be part of multi-disciplinary teams that get projects done better and faster.
Technology that promotes customer collaboration and co-creation, converts data into insights and delivers business intelligence to service firm workers will heavily impact long-term success..
Managing software applications is not a core competency for most service companies so everything will be delivered from the cloud. The most popular professional services technology applications will be platforms with ecosystems that facilitate on-demand access, seamless integration and sharing data across departments. Platform systems can help avoid the sprawl of fragmented apps and data siloes.
Tools such as CRM software and Professional Services Automation (PSA) software will aid collective problem solving, customer collaboration and co-creation with online project offices, project team forums, client ideation portals and enterprise social networks (such as Microsoft Teams and Salesforce Slack) integrated to the project profile.
Service firms of the future will adopt a data first strategy to shift from intuitive, gut-based, subjective decision making to data-driven, fact-based objective decision making. They will use tools such as dashboards, distributed data operating models (DDOM) and predictive analytics.
Machine learning and artificial intelligence (AI) will not be standalone apps but integrated to the primary business applications. This shift is essential to gain user adoption and improve staff productivity and management decision making.
Service staff will benefit from business applications that mimic the apps they use in their personal lives. These newer business systems will be built with User Centered Design (UCD) and social technologies. They will be easy to use and not require formal training.
The coronavirus pandemic accelerated a trend in remote services delivery. Virtualized consulting with online tools such as Trello for project management, WebEx for video conferencing, Mural for visual collaboration, Box for document management and Slack for communication have eased distance barriers, reduced travel-related expenses and aided anytime/anywhere resource availability. The services firm of tomorrow will find the right mix of onsite and remote consulting services delivery.