MAKING PROFESSIONAL NETWORKS WORK

Increasing the chances of success of alliance relationships

Over the past several decades, globalization and regulation have forced the creation and development of a multitude of global professional networks a/k/a alliances or associations. Their purpose is to provide a structured framework for independent local firms in different jurisdictions to come together and cost-effectively provide services to clients across borders. While the majority of these networks are found in law and accounting, they also cover industries like tax, insurance, real estate, architecture, etc. Recent research shows that these networks employ more than a million professionals and staff, and have cumulative annual revenues in excess of $200 billion. Throughout the last few years, I’ve personally worked with about a dozen networks across various industries, witnessing both best and worst practices, hence this article.

Whether it’s an extremely well structured network (like the Big 4), or one more loosely organized, for the network to function, its member firms must have shared strategic objectives that lead to strategic value creation, contributing to a feasible venture that can withstand competitive pressure and environmental change. That’s mainly manifested by the members’ ability to receive referrals from other members, the quality and reliability of firms to which they can refer, the potential to attract and of course, retain clients by being able to provide services in other states or countries, as well as the members’ capacity to exchange knowledge that can reduce risks in their own firm's operations, and access to other resources. Clients are in the heart of the member firms. The network’s purpose is to provide a platform to facilitate meeting members’ objectives by offering support like branding, market positioning, technical knowledge, etc.

As with all organizations, their success depends on shared objectives, long-term commitment and collaboration. Professional networks have to work very hard to become and remain successful. According to industry data and my professional experience, the most common challenges for networks are unbalanced relative contribution, differing short term vs. long term priorities, culture clashes, and incompatible styles and objectives of members. And what is the solution?! A reconciliation of at least two sets of the following: business systems, people, cultures and structures, plus added sensitivity to the cultural and environmental specificity of each member.

It makes sense, right? If you think of the leading, well-structured networks, they all share a common brand, business systems and perhaps people and organizational culture (although the latter might not always be the case). So why won’t more organizations adopt this model? Firms often perceive that these networks will impair their strong local brands, threaten the independence of their operations, and require unacceptable levels of data and relationship sharing. In sum, these concerns indicate a lack of trust and an unwillingness to incur additional cost.

Firms will get as much out of their network relationships as they are ready to contribute. Before joining (and during membership tenure), firms must make the cost/benefit analysis, assessing the true cost of the membership, beyond the annual dues, inclusive of the time and resources necessary to assign to the relationship. Firms must keep in mind that network memberships offer them a global development strategy at a fraction of the cost and time necessary to create such a strategy from scratch. They must clearly articulate their strategic objectives and ensure they are in line with the ones of the rest of the members. They must recognize that a network membership is a partnership and for it to work they have to get to know, like and trust their partners, at least the ones who share their strategic growth direction. They must be willing to commit and at the same time work to earn the respect of their partners. They must be prepared to compromise and be patient – networks are long-term commitments.

On the other hand, networks must demonstrate the value of its membership, and work to build and develop a collaborative environment. Many of the collaborative principles outlined in my article “ONE FOR ALL: ALL FOR ONE” are applicable here. Networks must enable relationship building and knowledge sharing. Joint training and development of professionals’ technical and advisory skills are essential. While networks must set clear expectations and contributions, they must recognize and allow for flexibility. Markets and conditions change and so will members’ circumstances. Networks must offer and maintain shared backbone business systems, and request member adoption or compatibility. This is a much less burdensome process today because so many firms are technologically savvy and more willing and able to integrate new systems. Last but not least, networks must take a segmented approach to serving its members. They must assess their capabilities, gauge their involvement interest, and engage them accordingly.

Making professional networks work is a complex process with a multi-party commitment. It can certainly be a worthwhile venture for both the network and its members as long as there are shared objectives, long-term commitment, and collaboration.

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