Analysis of Asia Pacific Partner Hires at LM100 firms - January to December 2020
Authors: Legal Monitor in collaboration with Carlyle Kingswood Global.Link to full PDF article here
Clients are demanding of professional service firms better quality work, faster delivery and greater transparency and accountability. In order to address these increasing demands of clients, providers’ anxiety to please clients results in stretching resources, entering areas beyond their capabilities and creating relationships that are unsustainable.
Increasing levels of competition are coming from two areas. Bigger players are becoming more aggressive and in growing market share are taking work from the middle markets. Conversely, there is a high growth rate of aggressive start-ups using price as a competitive strategy to establish their name in the market.
The disruption in markets caused by new technologies and increasing client demands increases pressure on many firms to add new skills to their portfolios. With the perennial challenge of finding and keeping good talent, this added pressure increases the vulnerability of established firms and makes it difficult for them to grow and scale.
When you study these challenges thoroughly however, doesn’t it seem that these challenges are not the cause of difficulties for professional service firms, but actually the effect of not performing well at the strategic level?
These challenges emanate from an underlying weakness in marketing.
With weak marketing, firms wanting to grow need to take whatever work they can get from clients or take any client they can get. Leading firms, with effective authority positioning, drive demand and can determine which clients and which work is best for them to take. Authority positioning means that firms are seen as expert advisors rather than mere service providers, which gives them greater influence in client relationships, to offer what the client needs, rather than accepting what the client thinks they want.
Increased competition is a factor of the increasing commoditisation of markets. With little to choose from between suppliers, clients typically buy the cheapest. Firms are seen as commodities when they fail to differentiate themselves from competitors. Leading firms address this challenge strategically by defining a focused specialisation. Rather than expand services to appeal to more clients, leading firms narrow their focus to what they do best for a limited target market. This means that as a specialist, their prices can be higher, as they create a market position where others can’t compete.
The combination of authority positioning and focused specialisation create a flow on effect relating to the need for new skills. Because leading firms operate strategically in a narrow market with a focused specialisation, they also limit the need for a broad range of skills and can operate with specialists who need limited training. They don’t need to stretch their resources or operate in areas of weakness to please clients. Their positioning and focus enable them to dominate their market, instead of having to spread themselves thin to win more work.
The reality is that the challenges professional service firms suffer can be avoided by operating strategically to position themselves as the authority in their market and by promoting their focused specialisation. To achieve supremacy, a firm needs to develop a strategic authority marketing system, so that they create the demand for their services to give them choice in who they take on as clients and what sort of work they engage clients for at premium prices.
Credit to author: Greg Roworth
Greg Roworth has successfully started, grown and sold five businesses of his own, the last one being a seven figure consulting firm.
During his consulting career, Greg has personally assisted hundreds of six figure businesses to scale towards and beyond seven figures, while simultaneously enabling the owners to significantly reduce their work hours (some to zero).
Greg is also author of three highly acclaimed books on business strategy and growth.
During his time as CPA/CA Greg was selected by the NZ Institute of Chartered Accountants to consult to accountancy firms around NZ to assist with business development services beyond compliance.
Greg is also a dedicated family man, who has been married for 39 years with three children and six grandchildren.
He values commitment, ingenuity and persistence and loves to meet people with inspiring visions for what they can do in life.