COLLABORATE TO INCREASE BUSINESS GROWTH: PART I

HBR study confirms that collaboration in professional services firms leads to financial rewards

Nearly 3 years ago I launched a series of articles on the subject of collaboration among professionals from professional services firms (law, accounting, tax, consulting, etc.). I wrote about the importance of collaboration to firms’ organizational development and business growth, the reasons behind the visible resistance to it, and how to overcome such resistance and take full advantage of collaboration. Even though some of my blog entries might be considered polarizing, the theme of collaboration has repeatedly appeared in many of my articles. I am glad to see the findings and statistics of a recently released HBR study on collaboration validate my hypothesis and emphasize the importance of collaboration to professional services firms.

As a result of examining collaborative behavior of professional services firms over the past couple of years, Professor Gardner (a lecturer at the Harvard Law School) recently released her findings in an HBR article, titled “When senior managers won’t collaborate.” The key sentiment of it is in line with much of my beliefs: when professionals work together to collaborate everybody wins!

Why collaborate? In my “One for all, all for one" article of December 2012, I spelled out the benefits of collaboration. Collaboration encourages learning and development (critical for knowledge-based organizations such as PSFs), turns knowledge into action (which closes “knowing-doing” gaps), and increases the opportunities to grow business and succeed in the market place. Collaboration in PSFs provides confidence to existing clients that the firm will provide the necessary resources to support them and provide fresh ideas and solutions; for new clients, collaboration means a stronger and deeper team and higher chances for both the client and the advisor to identify someone to connect with and build trust which builds stronger, better relationships between clients and advisors…after all, people like to work with people who they like and trust. When it comes to client development, collaboration alleviates the burdensome stigma of sales. Working as a part of a team makes that experience less onerous, and promotes best practices sharing, while keeping everyone accountable.

Equipped with statistics and historical financial data, the HBR study backs up my words and demonstrates direct financial benefits of collaboration to the firm. When professionals collaborate, it results in the involvement of more practice areas, creates higher margin work, and institutionalizes client relationships. Thus, it becomes harder to replace an entire team of advisors and it becomes equally difficult for a departing partner to walk away with a client.

The HBR study goes on to outline the benefits to professionals as well. When team members get to know one another they become more likely to refer work among themselves. I often tell my clients: you have to work as hard to develop relationships with your internal partners as with external referral sources; they need to know you and trust you before they put their reputation on the line for you. The study has made an interesting observation here: collaborative professionals benefit from a steady stream of business even during slow periods due to their diversified skills, which further allows professionals to work on a variety of projects, and continue to collaborate. Collaboration creates a very beneficial feedback loop.

If the benefits are so overwhelmingly clear, why is it so difficult for collaboration to work in professional services firms? Stay tuned for my next article on the subject, which will examine the roadblocks to building and managing collaborative environment (CLICK HERE).

For a copy of the HBR article, click HERE.

© 2010-2015 Copyright Mira Ilieva Leonard / iStile All rights reserved

By Mira Ilieva-Leonard | Mira.ilieva-leonard@istile.com

THE PROFESSIONAL NETWORKS MODEL: EVOLVING TO STAY RELEVANT?

A series of questions and recommendations from the leading minds in the field

Professional networks have become the norm when it comes to connecting independent professional services firms in order for them to better serve clients and offer global solutions. As I indicated in my article “Making Professional Networks Work” when both the member firms and the network have shared objectives, long-term commitments, and clear expectations, that formula can be extremely powerful. However, that’s easier said than done! Many member firms I’ve worked with are struggling to justify their network involvement and investment, and are increasingly questioning the validity of the network model.

During my extensive experience with networks and their member firms, I’ve had the privilege to collaborate with a number of forward thinking network leaders. James Mendelssohn is certainly one of them. James is a Chairman of one such network, MSI Global Alliance (MSI) and a highly sought-after consultant focused on network management and leadership issues with Firm Management Associates. I was thrilled when James recently agreed to share some of the content he’s developing - alongside Quentin Vaile, former head of the international network at the UK law firm Berwin Leighton Paisner - on the future model of professional networks. Below, please find the first several articles of the series. I hope that you will find their thoughts and recommendations of interest and will follow their writings, as this blog will.

“PROFESSIONAL SERVICES NETWORKS – A VIABLE BUSINESS MODEL FOR THE FUTURE?”

This is the first in a series of blogs that will look at the world of professional services networks; their future; different business models that can be followed to ensure their success; and what member firms need to do to capitalise on their membership of such networks.

There are some strong networks out there, and others that are struggling. There are some good member firms of networks, and others that are members for entirely the wrong reasons or with totally unrealistic expectations. We’ll be looking at all of this, and we won’t be pulling our punches. Some may find our comments uncomfortable and will undoubtedly stick their heads (even further) into the sand. Others, I hope, will accept them in the spirit with which they are offered and consider changes that may lead to the long-term sustainability of their organisations.

For the full article, click HERE.

“DO PROFESSIONAL SERVICES NETWORKS HAVE A FUTURE?”

The professional services world is changing – and probably faster today than at any time in the past. The principal reasons for this are twofold; and these converging pressures create the perfect storm for change. First, client needs are changing. One in five SMEs in the UK now trades overseas. And if you discount the high number of very small traders who are never going to look beyond these shores, then the proportion is clearly much higher amongst those businesses that many professional services firms would consider to be prime targets. Demand from clients for their advisers to be able to respond to an international enquiry has never been higher. Secondly, the professions are changing. Of course, the professions are always changing, but the pace of change within the professions at a local and national level is now having a very marked impact on the way in which firms are able to service their clients overseas.

If you take these two factors within the context of many people, in both their personal and business lives, believing that big is not always best (just look at the shift in retailing patterns over recent years), then the need both for networks to look critically at themselves, and also for those firms that either within a network or considering joining one, to review their motivation, and see whether their objectives are being met, has never been stronger.

For the full article, click HERE.

“CHANGING THE MODEL OF PROFESSIONAL SERVICES NETWORKS – ONE FIRM, ONE VOTE”

‘Partnership is not a great management approach at a single office level. And when you translate that into the international arena, it is a disaster. Democracy within the typical network business model is all very well in theory, but in practice …’ That comment from my previous blog certainly struck a chord, and so for the next few blogs, I plan to focus on various aspects of network governance where democracy sometimes emerges … but not always with the desired results.

With many networks set up as membership organisations, the concept of member participation in the governance process is often embodied in the constitution. Indeed, I know of one network where each member firm, whatever their size, gets one vote on each important decision. And, if the network wishes to appoint a new member firm, then 75% of the membership has to vote in favour. Very democratic, perhaps, but a complete nightmare. Not just because of the administrative problem of trying to get that number of firms to actually vote, but it totally undermines the position of the team whose task it is to appoint new members. What do people from the other side of the world know about a particular firm that someone who has visited and reviewed that firm do not?

For the full article, click HERE.

CHANGING THE MODEL OF PROFESSIONAL SERVICES NETWORKS – WHO SITS ON YOUR BOARD?

The ‘one firm, one vote’ concept, still adopted by many groups (largely because of their inability to change rather than a belief that this is a good model for any other than the smallest firms), may appear to be democratic, but in reality it simply hinders the logical decision-making process. Some groups have managed to vest the management of the group to a small Board of Directors, and they will normally have significant powers, with only key issues being put to the membership as a whole. And therein lies the problem. Or, in fact, two problems.

First, while day-to-day management becomes more efficient, fundamental issues of change remain within the domain of the membership as a whole, with all their diverse interests. Turkeys don’t vote for Christmas, and member firms in membership organisations are primarily driven by the interests of their particular firm, rather than the organisation as a whole. That’s fine if votes on key issues are decided by a simple majority, but I know of at least one large network that requires a 75% majority on any decision of substance.

Secondly, it is fine to vest management in a Board of Directors, but who sits on that Board? Well, almost without exception, the Board comprises senior partners from a number of the larger member firms, together with the senior employee, normally the Chief Executive or Executive Director. Whilst these are normally, I am sure, worthy men and women, there is absolutely no doubt that the most important thing in their business lives will be their own firm, and not the membership organisation of which their firm is a member. So unless the situation is well managed, there is an inevitable conflict of interests.
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The more ‘corporate’ the structure can become, with directors who really distinguish between their different roles, the more likely it is that the network will succeed and flourish.

For the complete article, click HERE.

© 2010-2015 Copyright Mira Ilieva Leonard / iStile All rights reserved

By Mira Ilieva-Leonard | Mira.ilieva-leonard@istile.com