THREE PROVEN WAYS TO POSITION A PROFESSIONAL SERVICES FIRM

by Jason Mlicki | March 2011 The decision of how to position a professional services rm is actually a collection of decisions made over time. These choices become more strategic and more expensive as the rm grows, but theyre made at thousands of points along the way nonetheless. The question really is are they made proactively or reactively? In fact, usually the early clients of the rm arent really selected and attracted; theyre pursued and sold in a desire to survive. Over time, the rm grows -- adding new clients in new industries and applying new service remedies, which require different people and different skills. Along the way, the rm tells itself that its highly differentiated and well positioned -- after all the rm is growing and winning new clients. We have better client service, it says. We do things better (faster, or cheaper) than the big boys! Were more accommodating! Were more exible! One day, twenty or thirty years hence, rm leadership looks around and asks itself a few difcult, 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?

HOW POSITIONING EVOLVES WITHIN A FIRM

It starts at the rms founding when the principal makes the decision to hang out a shingle and attracts his or her rst client. The nature of these early client relationships establishes a precedent for the type of work and type of clientele the rm continues to service for years to come. And, rarely are those rst client decisions strategic choices.

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 rm at this point is largely irrelevant. Regardless, this is the moment when positioning stops being reactive and starts being proactive.

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 rms claiming competency in this somewhat narrow IT service offering. Despite all the noise, it is possible to identify rms having success with this strategy. If you perform a Google search on the topic, salesforce consulting rms youll nd about 1.2M hits. While this is still a daunting list, after clicking through a few rms the user quickly nds out that most rms offering this service are just IT generalists trying to express some modest expertise in this area. After a few clicks, one nds Red Sky Solutions (www.redskysolutions. com), an L.A.-based rm that specializes in sales automation, specically utilizing 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 rst 2 years of operations (and that was 7 years ago). Most attempts to position a professional services rm take this rst approach, though few do it as well as Red Sky Solutions.

EXPERTISE-BASED POSITIONING
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 rms expertise in a given direction such that it can attract a selection of high value clients. Ultimately, the rm realizes 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 rm offers to the market. Deciding what that expertise is becomes the fundamental task of positioning. Effectively 99.5% of the time there are only 3 answers to this most simple question.

Ultimately, the rm realizes that it can only truly own one simple idea in the minds of its clients.

#2 - POSITIONING BY MARKET #1 - POSITIONING BY SERVICE

Generally the simplest approach to position a rm 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 doesnt necessarily ask the rm to radically change itself. The professionals in the rm are asked to deepen their knowledge in a topic they presumably love -- some narrow portion of the craft theyve set out to do. That said, if the fundamental goal of positioning is to attract high value clients, then it has become increasingly difcult to do this solely by positioning The second approach to positioning is to align the rms resources to serve a range of needs for clients within one select industry vertical. Generally speaking, this is a market-based strategy. The rm 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 rm, Sargent & Lundy. Sargent & Lundy can describe its expertise in simple yet meaningful units of measure: it has led the design of 927 power plants totaling 135,643 MW of energy. This experience is tangible and real to the client. Its worth noting that the rm 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 rms 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 rm to learn quite a bit about something they often dont care much about -- their clients. While all rms talk about how well they understand a clients 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 trade conferences. Even if they do all these things, few have built systematic approaches to sharing this insight rm wide to build the collective knowledge of the rms people to truly be experts.

and hasnt looked back since -- growing from 8 employees to over 50 while being wooed by Silicon Valley VCs and being recognized as a Red Herring 100 recipient. 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 difcult path. The skill sets required to innovate a business model generally start with the difcult decisions made to build deep, meaningful expertise in a narrow area of service or a narrow market. The folks at Janova could never have developed While all rms talk such an elegant, user- about how well friendly software solution they understand a if they hadnt spent years clients business, mastering the craft of very few actually quality assurance and exploring the challenges commit themselves inherent with providing that to building deep service to large insurance expertise... companies. In fact, the rm had gone through a ten year evolution from being an IT consulting rm focused on CRM implementations to being a more specialist rm focusing on QA/QC to eventually becoming a software company. Its almost impossible for a generalist rm to jump to business model reinvention overnight.

#3 - POSITIONING THROUGH BUSINESS MODEL

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 difcult to wrap your head around, Ill offer a more detailed example: Janova Janova, a Mlicki client, is a software company that is the outcome of a complete business model reinvention of an IT consulting rm. The rm, Arc Consultants, was an outsourced provider of quality assurance and quality control services. Essentially, the rm made its living performing quality control on enterprise software implementations for large P&C insurance companies. As part of this process, the rm started experimenting with a variety of open-source software platforms to automate the testing process. Finding existing products on the market either prohibitively expensive or needlessly clunky, Janova set out to design its own product that would enable testing to be performed in Plain English by folks with limited technical backgrounds. The company launched its rst SaaS product in 2010

A FOURTH APPROACH FOR THE REMAINING 0.5% THE BIG IDEA

Wait a minute. Isnt the title of the article, Three Proven Ways to Position a Professional Services Firm? In actuality, there is a fourth way to position a rm, but its reserved for a very small collection of very well established rms in a marketplace. These are the rms that have already risen above the noise and grown to a signicant level of status in the marketplace. Theyre seen as leaders and the phrase, nobody ever got red for hiring [insert rm name] is a phrase used regularly in the space. Many of these rms 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 rms in any professional category has already been dened. Theres no room nor no need for any additional rms to join this rank. For this small set of rms, it is quite effective to position around the big idea. The rms that have been most successful with this approach are, of course, Accenture and IBM. Accenture has done it by positioning itself as the rm 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 rm. That said, it is the collective expertise and talent of each rm that enables it to deliver on the lofty message declared through the positioning. This approach to positioning could best be described as dont try this at home. Positioning any rm in the remaining 99.5% in this way sets the rm up for disappointment when marketing initiatives fail to deliver the outcomes sought by rm leadership. For further insights on positioning and additional examples of well positioned rms, visit our blog at www.mlicki.com/eyelet.

Jason Mlicki is President of Mlicki, the marketing agency for professional services rms. It positions them to increase margins and markets them to drive high quality inbound client inquiries. Reach Jason at www.mlicki.com.

SOURCES:
While this article is intended to represent the original opinion of its author, its important to acknowledge some sources of meaningful guidance and insight referenced in its writing: 1. Enns, Blair. Win Without Pitching. www.winwithoutpitching.com 2. Maister, David. Managing the Professional Services Firm. Free Press. June 1997.

Copyright 2012. Mlicki, Inc.