Managing The Professional Service Firm

a primary means of achieving a competitive advantage is to have a better understanding of the wants and needs of clients than does the competition. This deeper understanding, if it is to be obtained, comes from a very straightforward activity: listening to clients.

Listening—soliciting clients’ evaluation of current services and getting them to describe their unfilled needs—has two interrelated purposes: (a) improving the competitiveness of current services and (b) identifying opportunities to develop new services.

many firms cannot “fix underperformers” as a profit improvement tactic because their financial reporting systems do not reveal where the real underperformers (assignments, service lines, clients, or partners) really are.

What this reveals is that improving profitability has two distinct management components. Some elements (predominantly short-run “hygiene” issues) get overmanaged, and many (long-run “health” issues) are undermanaged.

quality. In the short run, this may not hurt the firm: If the clients are willing to pay us higher fees to be inefficient, why change? There is a reason to change. It is called “competition.”

many practice groups continue to maintain expertise-based approaches to running their affairs when their marketplace is probably closer to the efficiency stage.

major component of practice development is superpleasing existing clients on existing matters. This means much more than doing outstanding technical work and more than servicing the client in such a way that he or she is just “satisfied.” Effective word of mouth only results when the client is delighted and eager

there is a clear priority among these. Within McKinsey, a new consultant learns within a very short period of time that the firm believes that the client comes first, the firm second, and the individual last.

At McKinsey, in the words of one partner, “Everyone realizes that the (client) relationship is paramount, not the specific project we happen to be working on at the moment.”

Goldman Sachs: “You learn from day one around here that we gang-tackle problems. If your ego won’t permit that, you won’t be effective here.”2