Three Proven Ways to Position a Professional Services Firm

Three Proven Ways to Position a Professional Services Firm

Dr. Amartya Kumar Bhattacharya

BCE (Hons.) ( Jadavpur ), MTech ( Civil ) ( IIT Kharagpur ), PhD ( Civil ) ( IIT Kharagpur ), Cert.MTERM ( AIT Bangkok ), CEng(I), FIE, FACCE(I), FISH, FIWRS, FIPHE, FIAH, FAE, MIGS, MIGS – Kolkata Chapter, MIGS – Chennai Chapter, MISTE, MAHI, MISCA, MIAHS, MISTAM, MNSFMFP, MIIBE, MICI, MIEES, MCITP, MISRS, MISRMTT, MAGGS, MCSI, MMBSI

Chairman and Managing Director,

MultiSpectra Consultants,

23, Biplabi Ambika Chakraborty Sarani,

Kolkata – 700029, West Bengal, INDIA.

E-mail: dramartyakumar@gmail.com

The decision of how to position a professional services firm is actually a collection of decisions made over time. These choices become more strategic and more expensive as the firm grows but they are made at thousands of points along the way nonetheless. The question really is: are they made proactively or reactively?

How Positioning Evolves Within a Firm

It starts at the firm's founding when the principal makes the decision to hang out a "shingle" and attracts his first client. The nature of these early client relationships establishes a precedent for the type of work and type of clientele the firm continues to service for years to come. And, rarely are those first client decisions strategic choices. In fact, usually the early clients of the firm are not really selected and attracted; they are pursued and sold in a desire to survive.

Over time, the firm grows - adding new clients in new industries and applying new service remedies which require different people and different skills. Along the way, the firm tells itself that it is highly differentiated and well positioned - after all the firm is growing and winning new clients. "We have better client service," it says. "We do things better (faster or cheaper) than the big boys! We are more accommodating! We are more flexible!"

One day, twenty or thirty years hence, the firm leadership looks around and asks itself a few difficult, yet fundamental questions. The questions themselves are never quite the same but generally speaking they sound something like this:

How did we get in THIS business?

Why are we providing THAT service?

Why are we pursuing THOSE clients?

The amount of time it takes to get here varies and the size of the firm at this point is largely irrelevant. Regardless, this is the moment when positioning stops being reactive and starts being proactive.

Three Fundamental Positioning Models

At this point, the task of positioning moves from being a situational one (how can we win this piece of business with that client?) to being a strategic one (what business are we actually in?). The decision becomes a matter of strategic focus and is about directing the firm's expertise in a given direction such that it can attract a selection of high-value clients.

Ultimately, the firm realises that it can only truly own one simple idea in the minds of its clients. Generally speaking, that simple idea is the collective expertise the firm offers to the market. Deciding what that expertise is becomes the fundamental task of positioning. While generally the decision is not quite this simplistic, there are three simple ways to think about positioning a firm.

#1 - Horizontal Positioning

Generally the simplest approach to position a firm is by building deep expertise in a relatively narrow service offering that has high value to a wide range of clientele across a variety of industries. I say this approach is the simplest positioning strategy because it doesn't necessarily ask the firm to radically change itself. The professionals in the firm are asked to deepen their knowledge in a topic they presumably love - some narrow portion of the profession they have set out to do.

That said, if the fundamental goal of positioning is to attract high-value clients, then it has become increasingly difficult to do this solely by positioning around a narrow service offering. As an example, perform a Google search on the topic of "analytics and data mining consulting." The resulting string yields over 25M hits. One of the subsequent links provides over 150 firms claiming competency in this somewhat narrow IT service offering.

Despite all the noise, it is possible to identify firms having success with this strategy. If you perform a Google search on the topic, "salesforce consulting firms" you’ll find about 1.2M hits. While this is still a daunting list, after clicking through a few firms the user quickly finds out that most firms offering this service are just IT generalists trying to express some modest expertise in this area. After a few clicks, one finds Red Sky Solutions (www.redskysolutions.com), a Los Angeles-based firm that specialises in sales automation specifically utilising the Salesforce platform. The message is clear and simple, "We partner with clients to implement and customize the following salesforce.com offerings..." The proof is equally clear and simple - 250 Salesforce projects within just the first 2 years of operations (and that was 7 years ago). Most attempts to proactively position a professional services firm take this first approach, though few do it as well as Red Sky Solutions.

#2 - Vertical Positioning

The second approach to positioning is to align the firm’s resources to serve a range of needs for clients within one or a handful of select industry verticals. Generally speaking, this is a market-based strategy. The firm effectively owns the market it serves in the minds of its clients. One of the best single examples of this is the power-focused engineering firm, Sargent & Lundy. Sargent & Lundy can describe its expertise in simple yet meaningful units of measure: it has led the design of 927 power plants totalling 135,643 MW of energy. This experience is tangible and real to the client. It's worth noting that the firm has ridden this single market focus for over 120 years and has derived ~$500M in revenue annually from this strategy (equivalent to ~8-10% of the US market for these services).

While this method to positioning is generally the most successful one, less than 5% of professional service firms in a given industry has the courage to position itself in this manner. This is due to the fact that it requires the professionals in the firm to learn quite a bit about something they often do not care much about - their clients. While all firms talk about how well they understand a client's business, very few actually commit themselves to building deep expertise through the methods of listening to clients, reading their industry publications and attending their relevant professional conferences. Even if they do all these things, few have built systematic approaches to sharing this insight firm-wide to build the collective knowledge of the firm's people to truly be experts.

#3 - Positioning Through Business Model Innovation

The third approach to positioning is to innovate an entirely new business model to serve clients in a new or novel way. Since this is a bit more difficult to wrap your head around, I shall offer a more detailed example.

QStart Labs

At first glance, QStart Labs is just another software development firm. But, as you look more closely, you realise that the firm has created an entirely new business model for providing this service. Essentially, it is part developer, part investor and part entrepreneur. The firm contracts with venture-backed startups over multi-year terms through revenue-share arrangements. That sounds confusing, but it is really quite simple - the firm knows a boat load about how to get a new software product to market so they are willing to share in the risk (and reward) of a new venture. Now, the interesting part is that while the revenue share model was built to serve the needs of startup companies, it has enabled the firm to open relationships with companies of all sizes and types that are interested in a unique type of relationship with a software development firm.

While this approach to positioning generally creates the most value for the client and has potential to create the most growth, it is by far the most difficult path. The skill sets required to innovate a business model generally start with the difficult decisions made to build deep, meaningful expertise in a narrow area of service or a narrow market. The folks at QStart Labs built significant chops by working closely with a number of VCs to take products to market over a number of years - skill sets you do not just build overnight.

A Fourth Approach for the Remaining 0.5% - "The Big Idea"

Wait a minute. Isn’t the title of the article, "Three Proven Ways to Position a Professional Services Firm?" In actuality, there is a fourth way to position a firm but it is reserved for a very small collection of very well established firms in a marketplace. These are the firms that have already risen above the noise and grown to a significant level of status in the marketplace. They are seen as leaders and the phrase, "nobody ever got fired for hiring [insert firm name]" is a phrase used regularly in the space. Many of these firms are quite generalist in nature but grew at a time when demand for their expertise far exceeded the available supply of it. They exploited this opportunity by being the most professional consultants in the room.

This 0.5% of firms in any professional category has already been defined. There is no room for additional firms to join this rank. For this small set of firms, it is quite effective to position around "the big idea." The firms that have been most successful with this approach are, of course, Accenture and IBM. Accenture has done it by positioning itself as "the firm to achieve high performance." And IBM has followed with its campaign "for a smarter planet." Both approaches position around a "big idea" that is much greater than the underlying expertise of the collective resources within either firm. That said, it is the collective expertise and talent of each firm that enables it to deliver on the lofty message declared through the positioning.

This approach to positioning could best be described as "do not try this at home." Positioning any firm in the remaining 99.5% in this way sets the firm up for disappointment when marketing initiatives fail to deliver the outcomes sought by the firm leadership.