Global Growth Guru

So bad it's funny - Tom Peters & Doug Johnson on Customer Hell

2011-11-16T14:23:00.000-07:00

In search of growth many companies get enamored in the hunt for new clients/customers and neglect the care and feeding of thier curent base of business.

Given low switching costs today (and the ease to locate alternatives) it is amazing how many companies put their paying customers through hell to do business with them. Being a huge advocate of outstanding customer care I chuckled at a recent tweet from my favorite business guru Tom Peters.

I must have caught Tom while he was sitting in an airport lounge with little to do as he responded to my reply. The best line from Tom -

Some wag said certain designers should be assigned special ring Dante's inferno-be required use own products for eternity.[sic]

Read the entire exchange and let me know if we should set up a Hall of Shame for Companies that abuse thier customers. I already have a few inaugural nominees.

tom_peters Tom Peters

Absurd call something "worst design ever." But getting Benadryl capsules out of bubble wrap leads me to wonder if there's anything worse.
4 Nov

in reply to ↑

@DougJohnsonColo Doug Johnson

@tom_peters I have you beat. Try any clam shell package for cheap electronic goods. To open it helps to have a welding torch

Tom Peters: Agree, but at least you can say "high value item." Benadryl pill about a nickel.

Doug Johnson: yup. And when you need Benadryl you probably need it now.We should compile a running list of bad design, poor customer service & lousy client interaction. Sad to say there are plenty.

Tom Peters:

Some wag said certain designers should be assigned special ring Dante's inferno-be required use own products for eternity.

in reply to ↑

Doug Johnson

@tom_peters INDEED! It might be presumptuous to ask Tom Peters to read my blog, but here goes bit.ly/tVcIjf & bit.ly/blJk0Y

Tom Peters on Two Pages & One Transformational Idea

2011-11-08T08:30:00.000-07:00

Tom Peters relates he spoke recently in Brazil sans PowerPoint. Not surprising he said the client was very happy, that his direct contact with the audience was more intense than usual.

We could divert into a long discussion of presentations with or without PowerPoint, but I'll leave that to others who have analyzed the great business speakers of our time. (Guy Kawasaki, Secrets of Steve Jobs). However, have you ever seen a world changing preacher or political leader use PowerPoint (think Billy Graham, Martin Luther King, Ronald Reagan).

Back to Tom Peters. After his PowerPoint-less speech he decided to transfer his notes to a single page. He realized the enormous challenge of summarizing 45 years of effort into one page. He couldn't do it and ended up with two packed pages. That is not bad.

As he says:

45 years to prepare
5 days and nights to write
2 page product

If you want to save time and glean a lifetime of Tom's lessons here is his work.

"EXCELLENCE. Now. EXCELLENCE. Always." pdf

There is a lot of good stuff in this document. Of course execution is always harder than strategy, or in this case writing about strategy. However, a single point jumped out that has the potential to radically change the way you run your firm/business and deal with your clients/customers:

Value added via transformation from "Customer satisfaction" to "Customer success"

We all spend an inordinate amount of time (or should be) focused on client satisfaction efforts. However, as I've point out before, clients often express satisfaction and yet jump to another provider of your service/product. If we are focusing all our energy on helping our clients/customers succeed in their endeavors I believe we will succeed in our goal to cement those relationships and maintain a long and mutually profitable arrangement. Forget about satisfaction, concentrate on success (clients first, yours second).

Why It's so Hard for CMOs to Keep Their Jobs

2011-11-04T18:54:00.000-06:00

At times it is better to step aside and shine the spotlight on someone else who has framed the discussion so brilliantly that you can't add anything to the equation.

However, as a "guru" that is hard to do. Nevertheless, it is late on a Friday and I've had a long week. So let me pull out a few salient quotes from this excellent article and let you chew on it over the weekend. Call me if it puts you on a window ledge and I can talk you down.

Maybe If We Talked About Why Top Marketers Are Getting Fired, We Can Find Ways to Stay Employed

It seems that the general trend that Spencer Stuart identified in its first tenure report in the mid-2000s continues to haunt CMOs. Your professional life is going to be short and not so sweet, and I'm not sure there's been a good or accurate conversation about why.

On the other hand, maybe some top marketers deserve to get fired?

It's the business, stupid. - SELL STUFF
Making money isn't just how a company stays afloat but why it exists in the first place. Though it's so pedestrian to those of us with liberal-arts degrees, sales are what matter to everyone in a company, you couldn't ask for a clearer or simpler demand from your internal customers: Sell stuff.

The purpose of brand awareness is lead generation, no matter how complicated the math gets on getting to that deliverable (or unfashionable it is to admit it). Many of the "successes" we marketers celebrate amongst ourselves are branding campaigns that get consumers to talk about branding. So while we're leading one another into this every-tighter circular thinking, our organizations are going about conducting the conversations that lead to purchase. Maybe CMOs get fired because they choose to define themselves by a narrow (and least useful) slice of the communications pie? I wonder if there's a correlation between most-watched brand videos on YouTube and the shaky job security of marketers who put them there?

But remember to keep selling, first and foremost. And, if you get fired -- and before you go find your next position and repeat the same experience -- take a moment to consider that maybe you deserved it.

Rags to Riches in the Shadow of Financial Armageddon

2011-07-30T01:14:00.004-06:00

Would you like to read about an uplifting, prototypical American success story to bring some joy over the weekend while we wait on pins and needles to see what Congress does to avoid the end of the modern world?

I will get to the Reggie Aggarwal / Cvent story in a minute, but for a moment perhaps we should hope for continued gridlock in Washington to see if this current episode of wolf-calling is the real thing. Given all the pronouncements of doom over the past 3 years by the ruling political class, one wonders what might have happened if gridlock prevailed during the panic of the TARP debate, multiple stimuli, QE1-3, bail outs, etc. After all, when is the last time we’ve had a President use the term Armageddon as part of their daily lexicon. Perhaps Roosevelt and Truman had reason to use the A word, but the proliferation of politicians claiming end times is getting more heated than Harold Camping was on the 21st of May. If the ruling class (Local, State & Federal government) wasn't spending 42% of the GDP, their empty rhetoric would have little relevance. But this is all a rant for another post.

Here we are four days away from the gears of modern life grinding to a halt due to the lack of fiat money lubricating their rotation, when lo and behold I get an interesting email (me and 50,000 of his best friends) from Reggie Aggarwal. Reggie is the CEO of Cvent, a dot com flame out, that rose from the ashes to receive $136 million this week. He sold a minority stake in his company to fuel their next phase of growth and development. Here is his story.

How can this be? In the shadow of financial Armageddon some sharp private equity investors are digging up the gold they buried in the back yard to risk making the largest business software investment so far this year. Perhaps all this theater in Washington is of the Kabuki variety.

Does it strike anyone else that all the DEFCON 1 alerts the politicians have been sounding since 2008 are much like Y2K? Much ado about nothing, no? Is it possible they are only noisy gongs or clanging cymbals? Real-life Wizards of Oz, telling us to pay no attention to the man behind the curtain?

As an aside, let me give you an investment tip. If we were on the brink of a true meltdown my survival investment portfolio would consist of bullets, coffee and cigarettes. Just think of the market value of those commodities to desperate marauders and caffeine/nicotine addicts. Sort of like Scrooge McDuck’s brilliant commodity play.

But I digress.

Stories of people like Reggie Aggarwal and his event management software company Cvent are what gives me abiding hope in the county and the prospects of a bright future. If we could reduce the relevance of the political ruling class by downsizing their spending (see Krauthammer's salient article) and outsourcing/cutting their services, we could ignore their clatter and focus on the great things that are going on in the world of entrepreneurial ambition.

Read Reggie’s rags to riches, near business-death experience. From what I can tell he sounds like a humble guy who has kept things in perspective and continues to pinch pennies in order to grow his business. The seven “lessons learned” he outlines are great nuggets of truth earned through the crucible of struggle, and should be copied by all of us.

I wish more in Washington would read his advice about being frugal. Although I did chuckle at his policy of sharing rooms when he and his team travels. I draw the line due to personal experience. Early in my career I had one of the most awkward moments of my business life when my boss insisted we share a room on a trip. I was young and thought that perhaps this was standard business practice. It was totally weird saying goodnight to my boss, Walton family style and trying to figure out who got the bathroom first in the morning. But that is already too much information. On this digression all I can say to Reggie is book rooms at the local Motel 6 and let each of your team have their own room for $39.99 per night. Sometimes morale is as important as frugality.

Obviously Reggie is of Indian descent. I don't know his family’s story, but my guess is that he isn’t too many generations removed from life in India. Spending my first 20 years growing up in Asia (Philippines, Singapore and Japan) I was exposed to the red-hot entrepreneurial DNA of the Indians and Chinese. Isn't it great that someone who doesn't look like Bill Gates (paraphrasing the words of Obama), or has a "funny sounding name" (Obama – the great unifier again) can achieve such success in a relatively short time in this county. Apparently Aggarwal doesn’t spend much time talking about the disadvantages he was dealt due to his heritage.

Instead of worrying about equality of outcomes he pursued his passion with a vision of America’s framework in mind... equality of opportunity. He worked like a dog (e.g. entrepreneur years: each one equals seven politician years), put everything on the line (eliminating his law career fallback position), added value to his customers and never gave up. His reward? Hopefully great financial gain (who knows how much ownership was retained over the years). But more importantly the satisfaction of a job well done, and a business that provides a great return for its investors plus solid jobs for hundreds of people. And the good news? It still sounds like he has a lot of fire left in his belly. Unlike all those other "millionaires and billionaires" who only work up a sweat fighting for lower taxes.

Those of us who are around the entrepreneurial/creator class (or are entrepreneurs) know how hard they work. We see up close all the risk they take and all the sacrifices they and their families endure...both financially and relationally. The average politician only sees the glory years when the entrepreneur has made it and is "loafing" clipping coupons and paying a lower percentage in taxes than their secretary (see why Warren Buffet is wrong on taxes). For every Reggie Aggarwal there are hundreds of entrepreneurs who sacrifice just as much and never see the Promised Land.

Rather than create animosity and envy, we should do everything we can to herald people like Reggie and hold them up as examples of American Exceptionalism and the type of opportunities our system provides. If we shift our attention from rubber-necking at the fabricated train wreck of Washington, we see clearly that America is among a handful of countries where guys with "funny" names can dream big and grow up to be successful CEOs and Presidents.

I have no idea what Reggie's political slant it, but unfortunately for him, he is now in the class of "millionaires and billionaires" that aren’t paying their fair share or pulling their weight. Based on this article Reggie sounds like a guy who eschews corporate jets. Although as a sharp businessman he probably has done the cost-benefit analysis and realized that for purposes of visiting five key clients in four different cities in one day (with his entire executive team in tow), flying Southwest (web fares even!) can’t touch the ROI of chartering a corporate jet. Of course it is the President that flies around in the ultimate corporate jet. And speaking of jets (uh oh, I'm pontificating again), I mentioned Warren Buffet earlier. Isn’t it funny that he is an advocate of increasing taxes until it is his ox getting (Al) gored.

Rather than vilify "millionaires and billionaires" and corporate jetters, forcing them to suck up and get distracted playing defense, why don't we create real incentives for the job creators like Reggie? After all, don't we need a lot more indomitable entrepreneurs like him to get us to a "real" unemployment rate that doesn’t take all of our fingers and most of our toes to count to?

How about this approach Mr. Obama and Mr. Reid? Why not pass a bill that says for every job an entrepreneur creates in a year he gets his taxes cut by 2%. No, not a 2% deduction, a 2% reduction. If Reggie is now in the top tax bracket of 36%, he will pay zero in taxes if he creates 18 new jobs. My guess is the Federal government would see greater revenue (and spend less) if Cvent added 18 new workers and Reggie paid zero. Talk about getting the doers, creators and risk takers back in the game in a big way.

Let's stop pointing fingers at "millionaires and billionaires" saying they need to pay more. Create a lottery incentive scenario...create enough jobs and you are handed a get-out-of-jail-free card. Besides a guy like Reggie (and most entrepreneurs) have sacrificed so much to get to where they are, they should get a huge reward. We want to create incentives for more people to go down Reggie’s path, not less.

You may ask why I have brought such a political slant into a blog about business and growth. It is because clearly we have a governmental spending problem that has been compounding for years. Obama is just the icing on the cake (although it is a really thick layer of super rich cream-cheese frosting). This spending problem (not revenue problem) is what has created a no-growth, jobless economy. Read Amity Shlaes, "The Forgotten Man" to see history repeating itself. I certainly don't want to grind through another seven years of this economy!

My work helping companies grow can only make so much of an impact when the politicians keep dumping wet cement on top of us. Sure there will be those breakout success stories such a Cvent, and those shoots of growth are encouraging in tough times. However, the overall economy is being handicapped to such a degree by poor policy that large numbers of Americans are struggling to make things work. We all know that American Works, literally and figuratively. We need politicians to free us of their imposed shackles in order to get back to our traditional animal spirits.

As an alternative, if we can't get a pro-business, pro-growth, low spending government maybe we can hope they leave us alone and stay in perpetual gridlock while guys like Reggie defy the odds and create jobs and wealth under the clouds of Mordor.

Tweetle Dee & Tweetle Dum

2011-06-03T01:45:00.000-06:00

I just couldn't let Anthony Weiner's Twitter-gate go by without a comment. Re-read my posts below about the dangers of social media if the names Weiner and Sheen don't grab your attention.

Charlie Sheen is dumb, Anthony Weiner is dumber. Just think where their careers would be if this was 2001 instead of 2011. It was a little harder back then without twitter and social media to shoot yourself in the foot...or elsewhere. Stupid behavior was far more private and much easier to contain. So buyer beware as you go down the path of developing your personal brand via social media. And if you have the misfortune of being born with a name that already elicits chuckles....

Twitter and fritter your time away - Is Twitter for twits?
Tom Peters and the de-evolution of thought
High-tech, high-touch - Networking in 2010

Today it is easy to self promote and gain exposure. But without the aid of those who know how to vet these messages and carefully help craft your position, it is easy to make a fool of yourself and damage your reputation.

As it gets easier for everyone to have their own soapbox, it becomes critical to make sure you have a clear strategy of how these tools can help or damage your efforts to grow a practice or a business. Casual experimentation should be not be done without realizing the consequences. Ask anyone who has put a compromising photo or an embarrassing post on Facebook how hard it is to retract that from the internet and that should give you reason to pause.

Before I'm taken the wrong way, I am a strong advocate of the value social networks can provide within a business context. But as stated before, they are only useful if one has a proper strategy and employees these tools intelligently. Keep in mind, what happens on the internet, stays on the internet - forever.

Tom signed off recently with this note:
Call it a night with my 6,001th tweet.
6,001th tweet? Is that a good thing? If I am hiring a serious, deep thinking business consultant I might pick one who isn't distracted from my issues with the constant need to tweet.

Tom, is this in line with your search for excellence

A less gilded future for lawyers?

2011-05-30T11:47:00.002-06:00

The May 5th article in The Economist on the legal profession (A less gilded future) had some interesting quotes that related to my webinar on Executive Level Business Development for Lawyers.

The Economist article had several points related to the importance of teaching lawyers to be businesspeople. Due to the need to run law firms in a more business-like manner, as well as a way to differentiate thier services to corporate clients who are demanding more linkage between value and fees.

The excerpt below from The Economist points out how important sophisticated branding will be to help firms grow in a zero sum economy. But it also mentions what my webinar was all about…that the key differentiator for lawyers going forward will something more than just improved business development skills and branding.

Ultimately, lawyering is becoming more of a business than a profession. Some lawyers decry this. Others welcome it. Few deny it. Because the American market cannot grow as it used to, firms will have to find new strategies and make use of sophisticated branding to stand out.

Mr. Leite suggests one way lawyers can guarantee themselves work: by becoming experts in other industries, not just areas of legal practice. Young lawyers can learn from being seconded to clients. And American law schools are slowly trying to instill some business acumen into future lawyers, though in Europe and elsewhere law remains distressingly academic.

Woven into an enhanced business development skill set will be the need to have the type of business acumen that allows lawyers to resonate at the C-level and thus separate themselves from the pack of other capable technicians.

What good, will sophisticated branding do if the lawyers at your firm aren’t effective brand ambassadors? Particularly damaging to those branding efforts will be lawyers that can’t carry the message to a new level and differentiate themselves and the firm from the host of other lawyers out there that do high-quality legal work.

Unfortunately most business development programs at law firms are still teaching the same basics they were ten years ago. While fundamentals need to be in place, the stakes are being raised by a few select firms and those top rainmakers that realize that market share will go to those who position themselves as sophisticated consultants who solve their client’s key business issues through a combination of their top-notch legal skills wrapped around insightful business expertise.

The Economist article says at the end, “many bosses of law firms realize that the profession is changing in ways that will be uncomfortable for some.” However, for CMOs, law firm executives and partners that are willing to lead instead of follow, innovation and new approaches will allow them to put Blue Ocean between themselves and their competition.

As in all changing industries there is a choice as to whether the future will be less gilded. One only has to look at the video rental business as an example of how status-quo thinking lead to the demise of an iconic brand (Blockbusters), while a lucrative new model was emerging right under their nose (NetFlix & Red Box).

It is always a little dangerous to compare consumer oriented businesses with sophisticated professional services, but the illustration is useful if it at least gets us to realize that staying on the course of "business-as-usual" might not be the wisest path.

Finally a New Year

2011-01-02T20:53:00.000-07:00

In November and December I got the sense from a number of clients and contacts that 2011 is going to be a reasonably strong year. Part of it is pure confidence that they are going to create their own luck in the coming year, but there are also a number of positive indicators confirming this trend.

However, there are still leaders who are in challenging situations due to the dynamics of their industry, or who have been so pressed over the past few years that mentally (and financially) they are having a hard time regaining a sense of optimism.

For those who are sure 2011 is going to be a break-out year I applaud you and look forward to joining you in a great New Year's Celebration on 12/31/11!

For those of you who are still seeking to regain your footing I would encourage you to look at these two outstanding pieces that helped me keep a solid perspective in 2009 and early 2010. Both of them address how to maintain productivity despite the anxiety and fear we business leaders feel during unusually trying times. I hope you get as much out of them as I did, and join me in the winner's circle this year.

P.S. This is good advice to follow anytime.

Dan Sullivan - The "Scary Times" Success Manual

Forget about yourself, focus on others.
Forget about your commodity, focus on your relationships.
Forget about the sale, focus on creating value.
Forget about your losses, focus on your opportunities.
Forget about your difficulties, focus on your progress.
Forget about the "future", focus on today.
Forget about who you were, focus on who you can be.
Forget about events, focus on your responses.
Forget about what's missing, focus on what's available.
Forget about your complaints, focus on your gratitude.

Matt McCall - The Entrepreneur's Greatest Enemy

"Anxiety and fear are the greatest enemies of the entrepreneur. You attract what you focus on and anxiety and fear not only focus on negativity, but eat up energy that can be applied more productively....During the implosion in 2000, I lived perpetually in this state for 18 months until exhaustion and 16 lost pounds forced me to reconsider. I got nothing done during that time...anxiety is toxic"

Here is how top business leaders/entrepreneurs manage anxiety and fear:

They live in the present and stop fearing what horrible outcome might happen.
They clearly visualize and define the promised land and communicate it clearly to their employees.
They remain focused on only the core subset of activities necessary to reach them.
They maintain a calm conviction and confidence in the inevitability of the end success.
They appreciate and accept the possibility of the worst case.
They try to take care of themselves physically, spiritually, etc.
They focus on the things that count in life.

Dissecting FT's US Innovative Lawyers 2010 Report

2010-12-11T11:42:00.000-07:00

US INNOVATIVE LAWYERS 2010

In the years that the Financial Times has been writing about innovation in the legal sector, we have never arrived at a static definition for an innovative lawyer.

That is an interesting way to start out an article about innovative lawyers. Perhaps we need to channel Justice Stewart who probably can identify innovation when he sees it.

Regardless if we can specifically define innovation or not, this much is certain: In the coming years the pressure from clients to deliver "innovation" will not dissipate. As FT points out:

In our search for legal innovation, we have found ourselves charting the rapid evolution of an inherently conservative profession. The innovative lawyer or law firm has to keep up with a changing world that in the past few years has focused attention on what it means to be a lawyer and posed complex challenges for the profession as a whole.

What is clear from the research is that the demand for legal innovation has not waned since the credit crisis of 2008.

There are so many nuggets of value in this FT article that I thought it would be useful to dissect it in order to point out key issues and determine if we could come up with a workable definition of innovation. I have an opinion on what constitutes innovation; let's see if it is defensible.

A small hint about innovation in any sector...the client, or customer, gets to label what is innovative. Much like what I wrote regarding client service..."what clients care about is value. And they get to define how that value is measured." So don't spend too much time trying to identify what makes you innovative. Experiment and let the market vote. If you self-proclaim innovation, generally your clients just snicker behind your back as they compare you to real advances they see in the market.

A key point of this FT report is that even though they are reporting on the changes affecting the profession, this effort is about the value lawyers can bring their clients as opposed to the state of innovation in the legal industry. This is an important distinction. Certainly individual lawyers working under the aegis of a firm should convey the combined value of the firm and their individual skills, approach, style and expertise. However, for purposes of this discussion we are focused on innovation at the level most clients see it...at the receiving end of services from individual (or small teams) lawyers. As FT puts it:

We seek to highlight instances where lawyers have achieved significant commercial outcomes for businesses. We have focused on the work that lawyers do rather than the business of law

As one looks at the specific examples of legal innovation contained in this report, finding examples of innovation is hard if you use the strict definition of innovation - a new idea, method, or device. It is rare when something novel breaks on to the legal scene. The invention of the poison pill, the first use of a reverse breakup fee, establishing new precedents or Supreme Court cases are a few that FT lists in the annals of legal innovation.

Lee Meyerson of Simpson Thatcher is quoted saying that in the "new normal":

Lawyers will have to see the big picture to be able to achieve successful outcomes for business. The difference is that we need to be agile, thoughtful and creative in an environment where things change hourly.

To be ranked in the US Innovative Lawyers report, "a legal team needed to have exceeded client expectations in a market where those expectations were riding high". Brad Karp, Chairman of Paul Weiss is quoted saying that since the credit crisis, "there has been a flight to quality and a dramatic divide between those firms that can handle 'bet the company' work and those who can't".

FT does a good job highlighting the fact that while much of the work profiled in their report can be categorized as company survival work, extreme life or death business circumstances are not always required for lawyering to be classified as innovative. Moreover, if we are honest, a great deal of important work doesn't fall into the 'bet your company' category.

There are many instances in the report where lawyers have transcended the traditional parameters of the legal role while going about their everyday jobs.

Again, we ask, what then qualifies as innovation if it can come about during your everyday job? I think we need to be careful to not hang too much emphasis on innovation. What strikes me about the report is it is talking more about creativity that is born from looking at client issues from a wider perspective than just addressing the technical issues. This is how I begin to define innovation among lawyers, and other professionals for that matter. This is what clients care about more than a true breakthrough.

Are you achieving successful outcomes by adding to your core expertise a wider range of skills, perspectives and understandings? A world-class physician is sought out not solely for their use of innovative technology or practices, but for their track record of successful outcomes. They best combine innovative procedures with a deep and holistic understanding of their patient's circumstances that lead to better outcomes.

FT says:

Innovative lawyers come in all shapes and sizes, but they have a set of attributes in common. First, they have to be excellent technicians and masters in their field of legal practice. Second, they have to be business people. The ability to knit these two skill sets together seamlessly is the foundation of the innovative lawyer.

Outstanding! We still can't define innovation, but at least we know what forms its foundation. I have long argued that what is more important than worrying about whether you are innovative or not, is whether you understand the needs of your client and can speak their language. I have worked with many clients helping layer on top of their excellent technical skills the ability to be a business person, thus creating innovation. Or at least creating an competitive advantage over their competitors. If a lawyer can achieve this, then they don't need to be concerned if the moniker of innovation is hung around their neck. They will be too busy with top tier clients and critical work to be worried about how they rank on the innova-meter. I will address the concept of the general specialist later, but that too fits into my definition of innovation.

FT also points out that to be a stand out entry in the report you have to add another step to the attributes listed above:

As can be seen from the top-ranked entries, the lawyers have stepped into the shoes of actuaries, scientists, ambassadors, artists and historians - they have crossed their own professional constraints in pursuit of their clients' objectives. From the five years of publishing this report...it is clear that those most able to innovate are lawyers who have wide-ranging personal and professional experience or legal teams that can bring together diverse specialists. If there is an argument for cognitive diversity in professional life, it is the FT's reports on legal innovation.

Some of the most effective professionals (lawyers, accountants, consultants, etc.) I've worked with are those who started their career's with a top tier firm, mastered their specialty, went in-house, grew beyond their technical area (e.g. a lawyer who took on a operational business function, a accountant who became a COO), then came back into a professional practice. They had knitted together these two skill sets. They sat on the client side of the table and realized the difference between providing advice and having to execute on initiatives. They stepped into the shoes of their client by becoming the client.

Not to be self-serving, but for professionals who can't take that career path, we provide coaching and consulting to round out their technical skills with business acumen and soft skills needed to become a trusted advisor and perhaps an innovator. We help skilled technicians develop their own cognitive diversity. Our ultimate goal is to help professionals expand their practice, land high-quality clients and win opportunities to do the most critical and interesting work.

It is my opinion that to operate at the top, lawyers will increasingly need to think of themselves, and act as well-rounded business advisors/consultants who are using their core legal competency as the foundation for their strategic advice. Anything less and you will find yourself fighting the downward pull of commoditzation and fee pressure.

The final point I wanted to comment on is the issue FT raises on whether the generalist lawyer is returning. Their European edition of this report goes into detail and provides additional clarity as to what they mean. Essentially they are putting forth the idea that a generalist approach allows a lawyer to be better at innovation than a specialist. Those who have the ability, experience or skills to look at a wider perspective are better suited to come up with creative solutions than the specialist who is too focused to see beyond their blinders. I agree with this concept. Often a narrow specialist misses the mark because they don't take into consideration additional data or don't have a full understanding of the client's needs.

The danger for a young professional it to think that being a generalist will lead to innovation and trusted advisor status. One has to be known for something first. What is it you do better than anyone else? I am a strong niche-aholic. Generally, we start our careers as generalist. Actually, we start out as empty vessels and meander around trying to find out spot. Therefore, to be successful we need to develop from being a vague professional towards being a specialist. This is a critical step in developing your career and practice. Done right you become positioned as an expert in a specific area for specific types of clients. However, to become an innovator or trusted advisor one must eventually make the move back to being a generalist. Firms need to do a better job helping their professionals navigate towards specialization and back again to a well-rounded advisor if they want to create a solid position at the top of the food chain.

To sell magazines, books, reports, etc., publishers often use the term innovation to catch our attention. However, as we can see from FT that word is often tossed around without a clear definition or a path to achieving innovation. While I am strong advocate of positioning yourself as a thought-leader, guru or innovator that is not always a possible goal. Often the best clients and most important engagements gravitate towards those professionals who combine expertise, business acumen and a holistic understanding of the client's needs and pain. As I said earlier, that is what clients are seeking. Certainly, there are those unique circumstances where breakthrough innovation is required. Nevertheless, clients would be ecstatic with a professional who combines their solid skills with wisdom, lateral and creative thinking, and a willingness to think outside narrow technical boundaries. That is my definition of innovation.

I guess innovation boils down to this: Achieving successful outcomes for businesses in complex situations. Whether this is attained through innovation, great service, creativity, high level performance, flawless execution, combining knowledge, working outside silo's, a holistic generalists approach to deeply knowing your clients business, or a combination of all these components - clients want professionals who provide deep value and a strong return on investment.

Regardless of the label, it is clear from the FT report that the future holds great promise for those lawyers and firms that push across the divide and reap the rewards as clients further bi-bifurcate the market. The flight to quality is not something one should lightly dismiss.

Doing the Japanese Thing

2010-12-09T10:05:00.001-07:00

Two recent articles point out an interesting, yet disturbing trend. Or if not a trend, at least an emerging mind-set that America is sliding into a Japan style malaise.

Gary Shilling points out his investment philosophy to deal with a decade of continuing deleveraging. In We're Turning Japanese: Deal With It, he mentions that his recent book shows why deleveraging will last for a decade and will result in GDP growth of only 2% annually. 3.3% growth is what is needed to just maintain the current unemployment rate.

Shilling feels it is a good thing that American consumers have capitulated on their three-decade long spending/borrowing binge, and have returned to puritanical thriftiness. Household savings will climb from a low of 1% to 12%, thus knocking 1% off real GDP growth. He feels that if consumers reverted to "normal" patterns of spending too soon, it would cause a depression worse than the 1930's.

Bill Gross of Pimco is equally as dour in his assessment of the U.S. and developed economies. He writes, "We're all Allentowners now", pulling from Billy Joel's 1982 song about the depressed Pennsylvania steel industry. His bullet points state:

The global economy is suffering from a lack of demand. Nations (I add, companies, individuals) compete furiously for a share of the diminishing growth pie.
U.S. and Euroland policies only temporarily bolster consumption. It doesn't deal with the fundamental problem of developed economies: Job growth is moving to developing economies because they are more competitive.
Developed economies must learn to compete the old-fashioned way - by making more goods and making them better. If not, the smart money will keep moving to Asia, Brazil and their developing counterparts.

Gross rants about a number of fiscal and political issues that need to be addressed to provide a path back to prosperity for the U.S. Nevertheless, to reclaim Ronald Reagan's "shining hill" we must "stop making paper and start making things. Replace subprimes and Treasury bonds with American cars, steel, iPads, airplanes, corn - whatever the world wants that we can make better and/or cheaper."

There is a lot of hand-wringing going on today in our county. It is understandable. The parallels to the great depression and Japan's lost decades hit too close to home for many of us. But remember, the bleakness that faced our country in the late 70's and early 80's, gave way to the booming 80's and 90's.

As I wrote last year in "Avoiding the Lost Decade" ..."The U.S. is not Japan in a number of important ways...the U.S. has a culture of innovation, and appetite for risk, and a willingness to give those who fail another shot - or two, or three or four."

Certainly we need our politicians to get things right. They need to clear the obstacles facing our innovators and restore confidence that America is a pro-growth, pro-business country. However, this sounds more like a job for Economic Heroes or Champion's of Free Enterprise as opposed to waiting for Superman... I'm from the government and I'm here to help, is a phrase that should not engender confidence. There is a lot of heavy lifting required to get us back into fighting shape. I'm afraid there are no short cuts.

However, if we can combine fiscal austerity with old-fashion American ingenuity (fueled by the best brains in the world who still want to live here) and our long-forgotten work ethic, there is no reason we can't pull ourselves out of this slough of despond. That is if the political class doesn't bury too many landmines in our way.

It is time to herald and champion the innovators of the free market. Responsible capitalism is our path to prosperity. Let's show everyone once again that America Works!

Best in class marketing and business development organizations – Professional Service Firms

2010-10-09T22:54:00.000-06:00

We felt it would be useful to establish a baseline of what distinguishes excellent teams, based on our work and real world, hands-on experience with both law firms and other professional firms.

The first factor that separates high-performance teams from the pack is that leadership (CMO/CBDO and managing partner) and the team have a clear understanding of their raison d'être - the reason they exist.

The best teams wake up each day with a single-minded purpose: Grow revenue.

While it seems obvious, it is surprising how many teams fail to have this burned into their psyches. Run-of-the-mill teams often are filled with smart, experienced, hard-working professionals, but they confuse activity with results. They talk about branding, positioning, differentiation, market awareness, social media, etc. They fail, however, to connect those marketing tools and tactics with the ultimate business development goal of growing revenue.

The second factor distinguishing high-performing teams is they know what leads to revenue growth - they know that the purpose of marketing within law firms is to create issues-based conversations with clients and prospective clients. To get there, they have a clear process:

Identify and prioritize clients/prospects and focus on the highest value opportunities.
Create issues-based conversations with clients/prospects.
Empower, equip and motivate the "sales force" (the professionals) to maximize the outcome of these conversations, including coaching and training to develop the needed skills.
Track activity and results.
Keep the professionals motivated and maintain business development momentum.
Repeat the process.

Third, the members of absolute top-tier teams are player-coaches who get out into the market and create connections and opportunities for their firms. They lead by example and join professionals on calls to help coach them in real time. They provide insight and action that both the professionals and clients agree add value to the client relationship.

Fourth, successful teams realize that there is a symbiotic relationship between marketing and business development. They do not view marketing and business development as independent activities. Instead, they purposely build an integrated process in which marketing and business development have well defined roles that are different but complementary. They also know that on the continuum of revenue generation (from both new clients as well as existing) there are no distinct hand-offs between function, but instead a sliding scale of involvement. With marketing playing a heavier role in the initial stages, and business development moving the process forward in the later stages.

Finally, high-performing teams have assessed the gap between the expectations of the professionals and the ability of the team to deliver. Often the expectations are unrealistic or unproductive. Under-performing teams find themselves bogged down in reactive, non-effective or non-strategic initiatives. Conversely, the top-performing teams have good leadership that keeps the focus on revenue growth and training professionals to be wise consumers of marketing and business development support. This leads to time spent on proactive initiatives that yield results.

Tom Peters and the de-evolution of thought

2010-08-27T15:16:00.000-06:00

Tom Peters, the heralded business guru, is starting to show progression down the communication and thought food chain.

I turned off phone-notification of his twitter account after a non-stop barrage of inane tweets a few months ago. In fact, I turned off all tweet notifications as the constant buzzing of my phone (always on vibrate mode) became too distracting.

Occasionally Tom's tweets will note something of value. Nevertheless, it is an electronic needle in the digital haystack and not worth the deluge to glean a random nugget of wisdom.

The hype and buzz around Twitter seems to be subsiding...probably a good development. Perhaps it is due to people like Tom Peters who exclaim:

Twitter: "Serious fun!"

Maybe serious fun, but is it serious business? Or just a serious time waster?

Tom signed off recently with this note:

Call it a night with my 6,001th tweet.

6,001th tweet? Is that a good thing? If I am hiring a serious, deep thinking business consultant I might pick one who isn't distracted from my issues with the constant need to tweet.

Tom, is this in line with your search for excellence?

Why rainmakers hate CRM - who to listen to

2010-08-26T12:45:00.000-06:00

If the suggestion to implement a CRM solution is coming from the C-suite (e.g. CEO, CFO, CEO, CIO, Sr. VP of Sales) don't waste the time, money and effort.

If the top 20% of your sales producers are begging you for CRM, move ahead posthaste. But don't hold your breath on this.

Instead, ask your top 20% what they need to close even more sales. Listen carefully. They know what works. Their suggestions are usually very cost effective.

Don't ask the rest of your sales force. They will ask for every expensive crutch in the world.

Why rainmakers hate CRM

2010-08-24T01:15:00.000-06:00

This is the dirty little secret that no one wants to bring up. Sort of like saying, the emperor has no clothes.

Your top salespeople, producers, rainmakers all hate CRM. And if they have the latitude they won't use it.

Why? It is simple. CRM doesn't help rainmakers make rain. Modern CRM has little to do with customer relationship management. It has a lot to do with being a customer reporting mechanism...a data entry, time wasting tool that allow big brother to look over your shoulder.

Do a quick check of your own organization. Those at the top of the rain gauge are probably not using your CRM system. If they are, they are using it in a fashion different from what management laid out. If they are required to get their "stuff" into the system, the top sales people are usually the ones who are habitually late, have outdated information, have early stage deals in the pipeline that have long since closed, or deals that close that never show up at all in CRM.

Those at the bottom of the production rung are using the tool fastidiously. They are the ones with current data, reports and pipelines.

The top rainmakers are too busy making money to bother with something that interferes with their sales efforts. If it helps, and allows them to sell more, they will use it. The laggards are looking for every excuse to avoid selling, so they figure data compliance will score them points.

As one top sales pro told me, "using our CRM is like a dog giving his master a stick to beat him with. If I'm honest and accurate with my reporting, I'm beaten up for not getting my deals closed faster. If I sandbag, I'm beaten up for not having enough in my pipeline. It is not a tool that helps me sell more and make more. It is a tool to provide management with their all important 'visibility'. Ha, if they only knew how cloudy that visibility really was, they'd have a stroke. I'm one of my firm's top producers. Why do I have to spend valuable time in the evenings getting salesforce.com updated. I can usually predict with 90% accuracy what will close and when without using CRM. Can't my guesstimates and numbers speak for themselves?"

For years, I've worked with client after client that wondered why their "investment" in CRM wasn't paying off. Fortunately, the investment is getting cheaper, but in many organizations, it is still easy to throw away hundreds of thousands of dollars on failed CRM installations.

How many have heard that there was nothing wrong with the technical implementation? From an IT perspective, all went as planned. So why then is adoption among the sales team only at 20% or less? Then, to add insult to injury, companies use all varieties of bribes and punishments to get their sales team to use a tool that adds little value to their selling effectiveness and doesn't really provide accuracy in terms of revenue projections. As well as drives up the cost of sales.

This is what happens in dedicated sales organizations. In professional firms it is worse. CRM systems often end up being an expensive email database (with a great deal of inaccurate data) tool.

I could go on with examples and pontificate on the problems of CRM and how they waste time, money and drive off top producers. Instead read what these experts have to say.

Jeffrey Gitomer: Best points are found at: 52 seconds, 1:50 and 2:44

Geoffry James:
Why Sales Reps Hate CRM
CRM is Almost Dead
Fixing CRM - Part 1: Rename It
Fixing CRM - Part 2: A Simple Process
Fixing CRM - Part 3: NO DATA ENTRY
Fixing CRM - Part 4: The BIG Payoff

In the early days of computer aided selling, most successful rainmakers used basic tools such as ACT. They did it because these simple, easy to use tools made them more money.

Rather than bogging down your sales force in a CRM quagmire, look at what your top producers are doing. What tools and techniques they would give up only when pried from their clenched fists? Give those to the rest of your team and train and coach them on how they can emulate the top producers and make more money. More money for them = more money for you.

Great sales leadership is about clearing away the obstacles that get in the way of your team...not setting up unnecessary roadblocks.

The entropic nature of money

2010-08-20T10:59:00.000-06:00

Recently I met a fascinating and brilliant businessman. A serial entrepreneur who has made money in consumer products, real estate, hedge funds and now in private equity. It was a fascinating and wide-ranging discussion. Truly, a robust business conversation with someone who loves business but also knows how hard it is to be successful.

Unless you associate with physicists, the laws of thermodynamics and the concept of entropy rarely come up.

However, this gentleman made the point that money was entropic... over time it dissipates. Those that are not creating wealth play a defensive game of preservation. Much like a drop of dye spreading out in a large body of water, wealth eventually fades. It might take several generations for significant wealth to be diluted, but eventually it happens.

One often wonders why entrepreneurs that have created $50 million, $100 million, $1billion in wealth stay on offense. The first reason...it is who they are. It is in their DNA to build and seek to add value. Wealth creation is the byproduct of that effort. Secondly, they instinctively realize the entropic nature of money. They know what took twenty years to build can be wiped out quickly if one is not vigilant.

Business is similar to sports. When one is aggressive, takes chances and keeps on the attack it is surprising how much can be accomplished, and how players of lesser ability can win over more talented opponents. But when one gets ahead and adopts a cautious "playing not to lose" approach, that is when you see defeat snatched from the jaws of victory. You see this all the time in football when the team with a lead goes on a prevent defense. Generally, the only thing it prevents is victory.

Andrew Carnegie said, "Put all your eggs in one basket, and watch it very carefully". That focus and a relentless approach is the path to success. Very few have hedged their way to success or great wealth.

In this challenging economy, the temptation for businesses is to hedge their bets by trying to go after multiple markets hoping that one will prove to be a winner. If you are large enough and have sufficient resources, that strategy might play. Most companies don't have that luxury. For the majority, now is the time to do a gut check and put all their power behind a focused strategy. It is a bold and scary thing to do. However, it might be what gets you through this downturn.

Under/over estimating our potential

2010-08-19T04:00:00.001-06:00

Seth Godin is always worth reading. Pithy is the word that comes to mind when I read posts such as this:

Exploration and the risk of failure

People seem to be in one of two categories:
Those who seek stability, affiliation, work worth doing and the assurance it (whatever it is) will be okay.
Those who explore, need to know that failure is an option and quest to make a dent in the universe.
You can be in either category, the world needs and rewards both. But pick a brand and a job and a posture that matches your category, or you'll fail, and be miserable until you do.
Hint: there is no category of: "does risky exploration, never fails."

This has important implications for the progress and success we can attain. In a lousy economy, we might as well be doing work we have a passion for and that feeds our psyche.

It reminds me of a very useful adage.

We tend to over-estimate what we can accomplish in a year (think about your New Year's Resolutions), and under-estimate what we can accomplish in five years.

If we are not in the right category as Seth outlines above our five year track record will fall way short of our full potential. Think about where you want to be in five years...it is not that far away!

Some more sodium pentathol, Mr. Client?

2010-08-18T00:23:00.000-06:00

Wouldn't it be great if prospects and clients would tell us directly what their biggest challenge and pain was, so that we did have to go through the difficult process of demand discovery?

Oh, wait. They do sometimes. It's called an RFP. It relegates us to competing on price.

Never mind. I'll stick to the tough work of relationship building, discovery and consultative selling. That is the path that leads to the uncovering of demand and in some cases creating demand where none existed before.

Very few can do this. They are called rainmakers. Don't tell the FTC, but it is an unfair competitive advantage.

News from the recruiting front - CMOs take notice

2010-08-17T11:01:00.001-06:00

The recruiting firm, Russell Reynolds just put out their 2nd Quarter newsletter that contained some interesting points regarding the demand for marketing officers.

It tracks with the advice we have been giving our clients...hire marketers that can affect revenue growth.

Here is what Russell Reynolds says:

"The demand for and movement of marketing officers picked up considerably during the first half of 2010 with a continued emphasis on fact-based, demand generation. This trend is running across every sector. We are seeing less and less interest in "Big Idea" marketers who rely on "just trust me" as their justification. Metrically-driven marketers and marketing programs continue to be in demand."

Translation: If you are not showing how you are bringing dollars in the door, your position is at risk.

This makes sense in a downturn, but let's hope this attitude sticks when we get back to a growth economy. There is nothing wrong with building the "Brand"...if it leads to revenue results. Marketers should be held accountable to specific numbers and results. In good times and bad.

Buck up Mort - America isn't done yet

2010-08-16T00:59:00.005-06:00

Perhaps it is time to stop reading the financial press. The news is getting too depressing.

Mortimer Zuckerman (with a name like that he is already starting with a handicap), chairman and editor in chief of U.S. News & World Report, starts out our week with a dreary op-ed in the Wall Street Journal titled The End of American Optimism.

I agree times are bleak. And it is clear that the current administration has little understanding about how real-world economics works. I encourage everyone to read The Forgotten Man - Amity Shlaes' outstanding history on the great depression. The eerie part is how the damage wrought by Hoover/Roosevelt has been mimicked by Bush/Obama. A Republican set up man, followed by a Democrat closer.

In both circumstances what started out as a challenging recession has been extended and exacerbated by policies and attitudes that have stunted and stymied growth.

But what doesn't kill us makes us stronger. The depth and strength of character of my wife's 100 year old Grandmother was forged during the depression and then the turmoil of WWII.

Graduating in the teeth of another tough recession (1982), I heard the same refrains Mort echoes..."we are in what a number of economists are referring to as the "new normal." This is a much slower-growing economy that, recent surveys have revealed, is causing many Americans to distance themselves from the long-held assumption that their children will have it better than they."

I heard people tell me that it was unfortunate I was starting my career at a time when the American dream had evaporated into an illusion. I read many articles at that time that said I would never achieve what my parents had. Well, Ronald Reagan came along at the right time and the next 25 years were pretty exciting.

November is coming and we may have the chance to unleash American optimism and innovation once again. So you will have to wait Mort. The entrepreneur class has not given up yet.

Jack of All Trades?

2010-08-13T11:31:00.001-06:00

The clatter around the iPad and the dramatic price reduction of Amazon's Kindle got me thinking about business strategy (actually, I'm always thinking about strategy). Particularly the pros and cons of focus versus ubiquity...specialist versus generalist.

The rumble between Amazon and Apple brought to mind the trusty old Swiss Army Knife (SAK).

I used to have a nice one. Nothing like this behemoth though. Which illustrates the novelty factor of a tool that is trying to be all things to all people.

After all, when it comes down to a fight with a bear, wouldn't you prefer a more specialized tool?

When I was a kid I had a modest, six function SAK. Of the tools on my knife, I found that the scissors were most utilized. Alas, being a young lad I didn't have much use for the cork screw. And one tool's function was never clear to me...although it came in handy poking my brother in the rear without inflicting serious damage.

When it came to major fix-it jobs, the generalist SAK didn't cut it (pun intended). If it was the only thing available, the outcome of the project was frustration. To achieve success, the SAK was replaced with a tool designed specifically for the task. If I needed to grind through anything thicker than a twig, a saw was pulled from the tool chest. If I had to drive a screw firmly, a large Phillips head screwdriver was the instrument of choice.

While electronic devices have the ability to morph between roles more easily than physical tools, I suspect the same trade off of specialization will play out between the iPad and the Kindle. At the current price points it is likely people will use the Kindle specifically for reading books, and the iPad for more general purposes.

How does this apply to our own business endeavors? In this highly specialized and fragmented world, does it make sense to narrow your focus and own a specific sector? Or is it better to try to cast a wider net? If you are a services firm, how does your strategy differ from a manufacturing company?

Let me hear your comments. I don't claim to have cornered the market of good ideas.

In this economy, we are all seeking new answers and trying to develop alternative strategies that will get us back on the path of growth. Are you doubling down by placing all bets on a focused, "return to the core" strategy? Or are you rolling the dice and firing everything you have hoping some projectile finds it mark before the clock runs out?

Ways to Grow Your Business

2010-03-28T09:15:00.000-06:00

Fortune magazine published a typical bromide on six ways to grow your business in a tough economy. Nothing wrong with the six items - the obvious are often the most effective - control your cash, hyperfocus, gain an edge, etc.

The one point that I wanted to spend more time on was - Write!

They said, "flood the digital market space with blogs, white papers, YouTube videos, and Twitter messages that align with the phrase you own. Then enhance your authority by writing a book."

I agree, in business today it is important to establish a direct dialog with your target market and carve out a niche where you can be a thought leader. The problem with this strategy is that if you have little to say that is worthy of thought leadership, all the blogging, twittering and writing in the world won't help. In fact, if what you are putting out is inane, sophomoric or blatantly obvious you are likely hurting your cause more than helping it.

Most of the professional service firms I work with ask about thought leadership as a key marketing strategy. I tell them if can pull it off why wouldn't you want to become a guru or the innovative thinker in your space? But many find that either they don't have the capability to achieve that lofty status, don't have the time to devote to the effort (being a guru is hard work), or they don't have the drive to make it happen.

What then? Mike Schultz does an excellent job debunking the myth that to be successful one must be a thought leader. In his article he points out a number of examples where competence, consistency, quality, helpfulness, likability and results win the client.

But if those are the only attributes you bring to the game then you will always have to keep trying to doing things better, cheaper, faster, while being even more likable. Without thought leadership you will always be at risk of commoditization. And while a solid professional can make a good living billing their time at $200, $300, $400 per hour, without thought leadership they can never command $10,000, $20,000, $30,000 per day... or in the case of a few world-class gurus' $50,000 per speech.

My suggestion is to strive to be a thought leader while combining the other attributes of service and understanding the needs of your clients… if you have the ability why not?

Mid-Market Business Outlook

2010-03-17T22:34:00.001-06:00

EKS&H is an outstanding accounting firm based in Denver that puts out a very interesting business outlook survey. For 2010 they received responses from 173 of their clients and the report holds some promise for the next 12 to 24 months.

Due to the business demographics of Colorado, this report is an accurate depiction of the goals and challenges of the middle market. I suspect its findings would parallel a national survey of companies with revenue between $10 million and $200 million.

First, the good news - sort of. The report states, "overall, respondents supported the idea that the worst of times are behind us, with the majority predicting that they would not see a decline in revenues (87%), net profit (90%), employment (89%), or capital spending (87%) in 2010." So it seems flat is the new up.

A little more disconcerting is the fact that while 65% or the respondents expect growth in revenues and net profit, only 41% expect employment growth and just 38% anticipate increased capital spending. The jobless recovery will be the theme for at least the next 12 months, if not longer.

What I found most intriguing were the two most important goals and top challenges for 2010

Goals

Improve financial performance
Grow sales

Challenges

Downward pressure on pricing/profit margins
Inability to differentiate from competition

This is completely in sync with what we hear from all of our clients... perhaps stated a bit differently. What our clients are saying to us is:

"we need help growing the top line"
"we have cut as far as we can... if we can't increase revenue we are in big trouble"
"the competitive pressure is intense... we are under enormous price pressure from competitors"
"our customers/clients are treating us like a commodity... they don't seem to appreciate us any more... they are no longer loyal...it seems to be all about price"
"demand has evaporated, who is still buying out there?"
"we are seeing new competitors entering our market that we've never run into before, and many are buying market share"

When you think about it, if you don't have an effective growth strategy that creates absolute and relative differentiators for your products and services you are going to see downward pressure on profit margins. When the economy is booming there is often enough demand that even a mediocre company can fulfill a portion of the demand at adequate margins. But in a severe downturn you must be clear what "one square mile of the earth you own".

If you are asked, "what is the one thing you do better than anyone else?", and can't answer it in thirty seconds or less (without a moment of hesitation), you are in trouble.

So back to differentiation. If you can't clearly set yourself apart from your competitors, with a compelling value proposition, you are on the path to commoditization and razor thin margins. Without differentiation it is hard to grow sales in a good economy let alone this one. So the only recourse left to maintain or improve financial performance is to start cutting. Cutting people, cutting products, cutting service and cutting your future. It is a downward spiral that is hard to arrest.

Go back and read my earlier blog about demand and start asking yourself these questions:

If there is very little demand, how do we fulfill more than our fair share? In other words, in a zero-sum market, how do we steal market share from our hapless competitors? Or are we the hapless ones?
Is there a way to create demand? Bloody hard to do unless you are selling small ticket items.
Can we discover where demand still exists? Or can we find pockets of demand for products/services in which we could morph into being a credible provider?

In a low growth economy your best bet is to do the research needed to discover where demand still lurks, develop a clear strategy to differentiate (think intense focus), and then sell like mad.

Pareto probably didn’t have to sell

2010-03-11T00:35:00.000-07:00

I got to thinking about one of my past blogs … that one that said sales trainer Mahan Khalsa claims 95% of our success hinges on 5% of our actions, a 95/5 ratio. Pareto says it's only 80/20. Who's right or is it all a myth? And do these ratios apply to everything we do?

Now Seth Godin is weighing in.

Some people hate comparing business with sports but sometimes the parallels can be useful. Take baseball … in major league play, if your batting average is one hit out of four (.250) your annual paycheck will probably be between $1 and $2 million. Move your average upward to one out of three (.333) and your agent can negotiate a ten year $150 million deal for you.

Let me try to apply these ratios to professional services firms where my own consulting work has been concentrated. Providers of professional services who bill their efforts in increments of time – dollars per hour – often find it hard to accept the apparent randomness of sales. I'm frequently told that the ratios of Pareto, Khalsa or baseball simply don't apply … their financial contribution to the firm is billable rate multiplied by billable hours so the correlation between effort (hours) and reward (fees) is closely linked. To them, each of their hours is equal in value and certainly 5% of their hours can't represent 95% of their success.

But how about the firm's rainmakers? Those marketing leaders who translate the skills of the professionals into innovative but all too seldom selling opportunities that can expand the business life of the entire organization? Suddenly, realization sinks in that a very short ratio of the marketer's time has the potential to make a huge contribution to the firm's well being.

If we look at companies (non-professional service), the sales and marketing executives have little to do with production and quality control. And that's probably all for the best as most sales people are not know for precision. The sales team knows their job is messy, inaccurate and at times unpredictable.  They know they will fail more often than succeed. After all, that great .333 average also means two failures out of every three times at bat!

The challenge for professional service firms is that for the most part the production team are the same people handling sales (business development). Most service providers blanch at the messiness of sales. Many find it hard to make the mental adjustment between the demands for accuracy in "production" and acceptance of the low odds inherent in sales. Fear of failure is especially prevalent among professionals who try to sell. And rather than embracing the numbers game required in sales, they simply lock up and find every excuse to avoid the unpleasant task.

So a professional, who wants to build a successful practice, has to get more "at bats" or improve their batting average. To supercharge growth they should ideally strive to achieve both - increased sales opportunities and a higher closing percentage.

Since new business "pitches" are rare, professionals that are "on stage" before prospects have to be razor sharp to make a serious impact. The only sure way to insure your firm is the gold standard of sales effectiveness is a lot of practice doing the right things.

Here's a great example of practice makes perfect in baseball: Walt Weiss was a golden glove short stop for the Oakland A's and Colorado Rockies. Over a 14 year career, he had 6,256 fielding opportunities and made only 190 errors for a 97% success record! How did he do it? He was always on his toes, primed and ready. Walt told me he loved practicing grounders and would take 100 or more a day in practice so he would be ready for game time and the 5 or 10 balls that may come his way. Sounds a bit like Khalsa's 95/5 success ratio doesn't it?

If you have to sell as part of your job don't squander those critical moments of impact.  I've seen that one small opportunity generate significant long term gain for professional services firms over and over again.

We may argue over the ratio's - be it 80/20, 90/10, 95/5, or even 99/1. But the point is, a small number of opportunities can yield enormous gains. I know too many professionals who point to one or two clients that were truly career makers.

The bottom line?  Aways be on your toes, ready to capitalize on those rare occasions of maximum impact.

Why executives need to experience doing business with themselves

2010-03-10T09:35:00.001-07:00

If one of the top sales guru's says it is so, it must be true. Not to boast, but I posted the same point back in November when I asked if Bill Gates ever has to install anything on his computer. My point: Walk a mile in your clients/customers shoes. You might be shocked by what you learn

What is crucial in this economy (or any economy for that matter)? Jeffrey Gitomer, the hyper-charged, sales guru said in his weekly newsletter: Be your own customer at least once a month!

This came from an embarrassing incident when he decided to do business with himself. He tried to order something off his own web site only to find to his dismay how bad his service was. He said his website promises fast and easy purchasing. But in reality..."that promise was ANYTHING BUT the truth. It was a pain in the butt. I clicked off my own site in frustration and disgust."

Gitomer is an in-your-face kind of guy. So his candor is appropriate. Too bad more CEOs don't eat their own cooking and face the facts about dealing with their own companies. As he says, "Had I not tried to buy something from my own website, I would have never know. I would have danced along actually believing my own words, never realizing that customers were frustrated - and worse - not purchasing."

If you are only listening to your direct reports and not experiencing your customers viewpoint on a personal basis I assure you, you are only getting polished spin. As a leader you can certainly hire consultants to come in and analyze your business and produce significant and weighty reports. But the best recipe to improve business performance is to put on your disguise and become your own worst customer.

Gitomer sums it up in a way that McKinsey could never do:

"Here's what to do to self-insure your own success"

Call your business five minutes before you open, and try to place an order, or get service.
Call your business five minutes after you close, and try to place an order, or get service.
Go online and try to buy something. How long does it take compared to Amazon's one click?
Call your business during the day and complain to someone. Then ask for the person's boss - or even your CEO. Make certain you have plenty of Pepto-Bismol on hand.
Call yourself and listen to your pathetic voicemail that tells me everything I DO NOT want to hear, and DOES NOT tell me one thing I want to hear - where the heck are you?

I have a couple to add if you are in professional services:

Look at one of your bills to a client and try to explain what it says. What value and ROI is your client getting from working with your firm?
Explain one of your reports or "deliverables" to a 12 year old in language that makes sense.
Take one of your proposals and ask - so what? - after each statement you make.
For each recommendation you make explain in concrete terms (again so a 12 year old can understand it) how you are doing one of the following for your client: Making them money, saving them money, or reducing their risk.

Demand - What drives it? Can you create it or just find it?

2010-03-05T22:58:00.001-07:00

Strategies - The Journal of Legal Marketing just published my newest article: The Future of Marketing & Business Development - New Models for Success.

In it I touch on driving demand for your services. But what is not fully explained are the following concepts.

Demand Fulfillment
Demand Creation
Demand Discovery

What differentiates them, and why understanding the differences will make a huge difference in 2010.

I will expand on these definitions in coming blogs. But for now click on the link above for a little weekend reading.

In tough times listen to the master - Winston Churchill

2010-02-28T22:20:00.000-07:00

Winston Churchill is a deep well of classic quotes. But none are better than his words dealing with challenge and adversity. He was a man that was truly battle tested.

The last month of Q1 2010 is upon us. The financial news is still bleak, so what are the words from Churchill we should heed?

"a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."

Given the news there must be huge opportunities out there. Keep in mind it is easy to be a pessimist. For most of us it is easy to let gravity pull us downhill into negativity - something to do with our fallen nature.

It takes effort, energy and willpower to maintain a positive outlook in the face of significant challenges.

We are just going to have to summon up our strength to be willing to keep digging through the manure to find that pony!

Archimedes' Lever: What do you need for business success?

2010-02-26T10:52:00.001-07:00

Give me a lever long enough and a fulcrum on which to place it, and I shall move the world - Archimedes

Ponder this before the weekend. What are the levers you need in business today to be successful? We all know what today means...tough economy, hyper-competition and rapidly changing technology and business models. These thoughts bubbled up as I sat through a session on using LinkedIn.

I'll expand on this in the future. But for now imagine your fulcrum as a triangle with the points labeled: technology (e.g. LinkedIn), "real" connections (see High Tech/ High Touch post) and strategy. Contained within your fulcrum are your skills, knowledge and expertise. The amount of energy you must exert to generate the level of success you desire is totally dependant on the length, composition and strength of your lever.

Critical as well is the tensile strength of your fulcrum. If the inner core of skills, knowledge and expertise (let's add integrity while we're at it) are weak or undeveloped, your fulcrum will crumble as you exert force on it.

Short weak lever... start working hard!
Long weak lever.. immediate results but, snap... there goes sustainability
Long strong lever plus solid fulcrum... move the world if you so desire

What should your lever be? It goes back to a phase that was popular at the advent of the internet age - Content is King. Develop outstanding, world-class content on a consistent basis and you have the lever that will allow you to move mountains.

Thomas Jefferson - The good opinion of mankind, like the lever of Archimedes, with the given fulcrum, moves the world.

Web 3.0

2010-02-26T09:34:00.000-07:00

Don't you wonder who gets to label things and why they stick?

I think we all know that web 2.0 is the moniker some buzzketeer gave to the resurgence of internet companies and web tools after the infamous tech bubble burst in the early 2000's. But when do we get to claim we have moved on to Web 3.0. And what will that mean?

I can't tell you that, but at least I'm planting my flag in the ground and claiming to be the leading web 3.0 guru. Sounds lofty, no? I'm moving on since web 2.0 is so '09.

Why I dream about Coca-Cola

2010-02-25T17:21:00.001-07:00

In my dreams I want to die and come back as a consumer product marketer. Every marketer that is involved in business to business (b2b) marketing secretly harbors jealousy of their business to consumer (b2c) brethren.

Why? Because b2c is more creative, immediate, measurable, fun and easy. In addition, companies that market to consumers are usually willing to take chances and do crazy and imaginative things.

When you are marketing and selling professional services or b2b products it is not advisable to cross too far over the foul-line. Are you going to hire an accounting firm that says - Just Do It? Do what? Fudge on your tax return? If you are a consulting firm are you going to hire as your spokesman a .... never mind, let's not go there.

For over 20 years I've been focused primarily on b2b marketing and business development effectiveness. I have done some work for b2c companies and recently helped a small, but growing recreational products company as a pro-bono project. Those efforts were always very successful (in terms of revenue generated) and just a whole lot of fun.

What is a blast are the tools that the sophisticated marketer has at their disposal today. Not only cool creative tools, but powerful technology and analytical tools that finally allow marketers to pin-point (in real time) what is working and what is not. In consumer marketing, especially with products that can be sold via the web, a savvy marketer can see immediately the impact of campaigns. Multiple parallel initiatives can be run and evaluated against each other. Tweaks, modifications and quick changes can be done on the fly.

As sales and marketing changes (due to technology and the economy) it is important to ensure you have the right type of talent and skills in your growth organization. Too many companies have mismatched the talent they have with what produces results in their environment.

Always keep in mind what moves the meter within your business model. When I talk about moving the meter I mean this: What actions and initiatives bring dollars in the door. If your marketing people wander off talking about anything other than bottom line impact - money generated - smack them upside the head.

Here is what moves the meter in four broad categories:

Business to consumer - small ticket/impulse (e.g. Procter & Gamble, Southwest Airlines, Pepsi, McDonalds). Marketing is dominant
Business to consumer - big ticket (e.g. Apple Computers, BMW, Toll Brothers Homes). Marketing is still king, but sales increases in importance
Business to business - product oriented (e.g. IBM, Oracle, Xerox). Sales has all the organizational power. For good reason.
Firm to client - Professional Services (e.g. McKinsey, Skadden, KPMG). Client relationship partners hold the keys to success. Focus must be on quality work, client retention, client expansion and new client acquisition. Business development (sales) effectiveness of the professionals is the focus. Traditional marketing and branding have little impact. Inbound marketing, guru/thought leadership development and sophisticated marketing analytics have more impact.

Do you have the right people in place, doing the right things, using the right tools to maximize the ROI for your sales and marketing initiatives? Too many companies spend way too much on what produces little, and miss out on low cost strategies that produce outstanding returns.

When your proposal is mistaken for the phone book

2010-02-23T22:25:00.004-07:00

From our White Paper - Client Satisfaction Surveys: An Important Tool for Tough Times.

"Over many years our key finding has stayed constant. Clients are consistently disappointed in how little their service providers understand about their business and their culture. In numerous cases we have seen clients express they were satisfied with their professional firm - only to switch providers, or bring in other firms shortly after claiming their satisfaction.

The typical client satisfaction approach has not proved to be a good indicator as to whether a client will continue to do business with a firm. Research has proved that clients are often satisfied with a particular piece of work, but not enamored with the overall understanding of their business and need for proactive and insightful advice. If all we are doing is providing good advice on a reactive basis (e.g. when the client calls us), the evidence shows we are at risk."

If we are just order takers, even really good order takers – precise, accurate and fast - eventually a more proactive competitor will take that client from us.

Recently a professional service firm called my company (Catapult Growth Partners) to help analyze why they lost a major client. It is a shame we didn't get called in a year earlier when they felt something was awry with their client relationship. The ending might have been much happier.

After ten years of solid work with this Fortune 1000 company, the firm was informed that all their work was going out to bid through an RFP process. They were assured it was just a new protocol to ensure pricing was in line. Their main contact told them that it was just a formality and that the procurement group would go through their motions, but there was nothing to be concerned about. That in these tough economic times their CFO was requiring scrutiny on all major expenditures.

They believed this line.

Let me cut to the chase. They lost, and not due to cost.

We reviewed their proposal and interviewed the client to gain an independent, third party, perspective. We were seeking candor. We gathered competitive intelligence on the competition and were able to obtain a copy of the winning proposal.

The news for our client was bad. For ten years they did very competent technical work. It was accurate, timely and fairly priced. But they were perceived as order takers. There were not considered to be innovative and the company told us they rarely brought new ideas or information to them.

Their RFP was literally a 100 pages long. About the only thing that was not boiler-plate was a picture on the cover of their client's manufacturing plant. Atrocious, boring and totally self absorbed was our description of the proposal.

It was all about them. Pages and pages about the firm, it's history, it's numerous service lines (most of which had little to do with the needs of the client), bio's, awards, the number of offices they had, and their self stated reputation of innovation (which was only innovative in their own mind).

Despite the fact that they said it took a team of five people working for weeks (and probably costing $50,000) the proposal did not demonstrate anything other than the ability to answer rote questions. Not to be too harsh (but they needed to know the truth to learn from their mistakes), we told them it showed only the ability to search and replace the name of the client. Why did it take so much effort to cut and paste standard marketing collateral from other proposals?

The most egregious shortcoming is that it demonstrated virtually nothing about the needs and challenges of this client. After working with them for ten years their understanding and insight should have been rich and valuable.

The winning proposal consisted of the following:

Two page executive summary
Eight page statement of understanding and value added approach to solving their needs
One page ROI analysis
Twenty page appendix that "checked the boxes" and answered the procurement required, low value- added questions contained in the RFP.

It followed what we felt was a model for proposal templates, touching on all these critical points:

Clear articulation of the client's current state and situation
Understanding of their needs
Goals and objectives of the project
Succinct outline of their unique approach
Team members – short description of the specific value they brought to the client
Their differentiators
Fees
ROI analysis
Appendix

Throughout this proposal the challenger demonstrated a deep understanding of the client and showed they invested time and listened carefully. They addressed the business problem that needed to be solved. They quantified the impact and magnitude of the challenges. A negative picture was painted of maintaining the status quo. Finally they used a return-on-investment analysis to quantify and "dollarize" the value to the client of hiring them.

The incumbent followed the RFP rules and further cemented their order taker reputation. The challenger found out what the real needs and challenges were and responded with an innovative approach. True the challenger's fees were slightly less, but not enough to be a factor as we discovered in our interviews. If one were to read both proposals side by side it would appear the challenger really knew the client and the incumbent was responding blindly.

An ironic twist was the company told us the bar was higher for the incumbent given their insider's perspective. They were looking for the incumbent to use the RFP process as a way to prove their unique knowledge and insight gained from ten years of experience.

When we talked to the incumbents team they said they only thought they had to be close on price to keep the work. Wow. Talk about missing the mark!

Our client thought there was an issue with their proposal process and wanted our advice on how they could improve their odds in the future. While their proposal process was flawed, the problem was a deeper client service issue. Had they managed this account properly, understood the issues their client was facing and provided proactive input, they may have avoided an RFP in the first place.

When we spoke to the relationship partner he kept pointing out that they lost the client due to their proposal being 5% higher than the challenging firm.

So the next time one of your professionals tells you they lost on price, look a little closer. Often that is the easy out to avoid having to face tough facts and doing the hard work to build true client intimacy and value.

Pareto was a wimp

2010-02-22T04:00:00.001-07:00

I wish I could take credit for the title of this post. But I saw it on the web site for sales master Mahan Khalsa.

He must be a guru if he can get away with this look:

As my recent blog explained, Pareto was the Italian economist who came up with the 80/20 rule. Khalsa goes so far beyond that ratio that he named his firm ninety five 5. He claims 5% of our actions generate 95% of our results. That in an ultra competitive world focusing on the most important activities has never been more critical to success and survival.

I am a big advocate of the 80/20 rule so I had to think through his premise.

A couple of recent projects brought me to my personal conclusion that in today's economy 90/10 is probably the proper ratio to keep in mind.

Consider these facts. A CEO had my firm analyse the performance of his three most profitable offices. He wanted to see what he could do to replicate their success across the other seven offices in his firm. The findings were consistent. Each office derived approximately 90% of their revenue from 11 to 13% of their client base.

The most profitable office had results that were even more skewed. In 2009 this office generated $8 million in total revenue. The numbers broke down as follows:

$4 million from the largest client
$3 million from the next five largest clients
$1 million from the remaining 44 clients

If you do the numbers it means 50% of this office's revenue came from 2% (1/50) of their clients.  88% ($7/$8 million) of their revenue came from 12% (6/50) of their clients.  That is darn close to 90/10.

It is interesting to also consider the impact of the remaining 44 clients. They represent 88% of this office's clients and yet only 12.5% of the revenue. It makes you wonder what they are doing with these clients that they average only $27,727 per account, while their top six clients average over $1.16 million.

This revenue analysis did not represent profitability per client. As is typical with most professional service firms it is challenging to get to the exact profitability per client. But without going into painstaking detail the top six clients equated to more than 100% of the office's net profit. The remaining 88% as a group were significant money losers. Taken as a complete group, the office had a profit margin of over 28%.

If you were the CEO what would you do? Would you suggest to the office managing partner that he fire all clients except the top six?  If you were the partners on these smaller, money losing clients you would raise a ruckus since your compensation was based on revenue and not profitability. And of course someone will mention that the largest client started out small, and these small clients hold that potential as well.   True, but the odds of getting hit by lightening are probably better. How strong the push-back depends on whose ox is being gored.

What this analysis reinforces is that generally 10% of what you does indeed generates 90% of your gain. You need to have this data to make informed decisions as to where to focus you energy and resources.  In this situation those top 10% clients require a disproportionate percentage of resources to keep and retain them.  For the remaining clients this CEO needs to have the courage and candor to determine which ones actually have the potential to grow into high profit accounts and which ones are resource wasters.

For unprofitable clients can you change your pricing or service approach to convert them into profitable clients? Or are you better letting them move on to your competitors so they can losing money instead of you? If they have the potential for growth what do you need to do to ensure it occurs?

With the 90/10 rule in full force you must apply rigorous financial analysis to your business in order to make the right decisions as to where to allocate your precious resources. And then find a way to effectively sell and manage the right basket of clients that will generate outsized profitablity.

The over-engineering of strategy

2010-02-18T10:53:00.000-07:00

Strategy development is often more complex than it needs to be. Perhaps that is due to firms like McKinsey and Bain that load up strategy consulting with complex research and then shroud it in a bit of mystical black box guru prognostication.

Well, maybe that is a bit over the top, but in many organizations the right strategy tends to bubble up from lessons learned by those on the front lines who have the tough job of translating strategy into action.

In my mind the best strategy is the one you can pull off. As the saying goes, an average strategy well executed is better than the perfect strategy the never gets off the ground.

At a speaking engagement I once quoted German General Helmuth von Moltke who once said "No plan survives contact with the enemy." One of my listeners, a retired American Army Major came up afterward and said he heard that often when he was in the service but that it did not negate the value that the process of planning and strategizing brought to an organization. He was right. Planning and strategy development is important. We can't just go into battle winging it and expect the results to be great on a consistent basis.

One of the problems of strategy development is we get so caught up in polishing our PowerPoint's that we forget to get into the field and try a few things out. Real life execution with a good feedback mechanism is one of the best ways to find out what is going to work out best.

As I said in a previous blog:

Execution is strategy
Simplicity and common sense are the best tools to use in strategy development (credit to Napoleon)
All the planning changes once the game begins (von Moltke again)

I also said in the same posting to follow the OODA loop, and then repeat. And keep repeating forever. Nothing remains static. The only constant is change. Once we start resting on our laurels the rotting process begins.
Don't over-engineer strategy. Pull the trigger and get out on the field and start running some plays. You will be surprised with the progress you make.

Growth in a non-growth economy - Part 8: Lean into the disruption

2010-02-17T11:45:00.000-07:00

There is a great deal of noise, confusion and fear in the marketplace. In this environment you need to be support your clients like never before. As I have said before, client retention should be your first priority.

But if you can keep your head, stay cool and focused, the next six to eighteen months should present a window of opportunity that will not stay open indefinitely.

While it might be hard to gain the attention of some new prospects, often it is during market turmoil that new relationships are forged. A tight, focused business development and sales strategy could wedge open doors that will shut tight again once the economy rebounds.

In every downturn there are certain companies that do just fine... and others who leap ahead of their competitors.

My anecdotal research shows that the organizations that emerge stronger from recessions are those whose leaders find ways to ignore bad news and use the disruption to their advantage. They realize that everyone is having a tough time but they don't bemoan the conditions they face. They know that crying foul does nothing to motivate their troops as they move towards future goals.

They lean into the disruption and maneuver past their discouraged competitors.

Growth in a non-growth economy - Part 7: Pareto Lives

2010-01-12T23:31:00.002-07:00

The old 80/20 rule. That is how Pareto is summed up. The rule means that in most endeavors a few (20 percent, or less) items/activities are vital and many (80 percent) are trivial or insignificant.

A corollary to the 80/20 rule is the theorem, don't confuse activity with results. If you run afoul of these two axioms you may as well stay home and tend your lawn. At least you will reduce your stress and your neighbors will be envious!

In a no growth economy remind yourself everyday that not all clients are equal. Within your existing client base it is important to also be selective about specific opportunities. Keep in mind that not all pursuits or projects ("matters" for my lawyer friends) are equal.

Client segmentation, selection and opportunity assessment are more crucial than ever. The process begins with a rigorous business analysis and ranking of your clients. Drill down to the types of projects ("products" for my non-consulting readers) you should be focused on. What do you do best? What delivers the most value or return on investment to your clients?

Within your own firm, your goal is to identify those high potential clients that will make a significant impact on your performance over the next 12-26 months, not just the largest ones.

A major mistake we see are firms that focus their key account management efforts on the clients that produced the most revenue for the past year or two. They may be worthy of focus, but in today's shifting economy it might be better to determine the up-and-comers. Woe to the firms that focused on Chrysler, Circuit City or Lehman Brothers solely because they used to be their best clients.

The same goes when you are assessing new clients to target for your expansion efforts. There is an old sales adage about farming and hunting. The farmer tends to existing clients (maintaining and growing) while the hunter looks for the next target to vanquish. This delineation is a false one within professional services. The skill set is virtually the same…you must understand needs, build trust and demonstrate value. All of these factors are needed regardless of whether you are growing a current client or acquiring a new one.

Professional service firms must reexamine their opportunities and risks on a client-by-client basis starting with an assessment of the basics: whether a client/customer has enough cash or liquidity to survive. Then, thought should be given as to how the current economic crisis will affect all aspects of your client's long-term viability, profitability, growth and future need for your services … plus the ability to pay for those very services!

The tough part is that this type of discipline is hard work and not generally a competency most professional service firms have within their staff. Many times the marketing team is given this chore. But generally marketing professionals are more adept at the creative side of the job ... developing creative marketing communications. That is, branding, collateral development, PR and advertising. This type of analytical business discipline will be a critical skill for the great marketers of the new decade and has to be acquired in the tough days of 2010.

The final point is that this rigorous analysis of your client mix is neither static nor a onetime effort. Your growth team of marketing and sales executives must dynamically reevaluate their strategies and priorities with constant attention to the ever-shifting economics of the current downturn … and that requires regular client segmentation.

Growth in a Non-Growth Economy
Part 1: Intro
Part 2: Key Issues
Part 3: Client Intimacy
Part 4: Be Smart & Act Fast
Part 5: Focus & Minimize
Part 6: Beware of Benchmarks

Customer Experience Management

2010-01-11T21:43:00.003-07:00

In robust economies - described as sellers markets (ah the good old days) - customer/client experience is important but perhaps not the make-or-break proposition that it is now.

To hold your attention, does this corporate symbol conjure up in your mind great customer service and outstanding customer experience?

Disney Mission Statement - "To Make People Happy."

Later in this post I will point out where even Mickey and the gang (and a big law firm also) have fallen down on the job, and hypothesize why...

...When supply far outstrips demand, the customer/client has a plethora of choices. Price is an important factor, but we can't forget that the level of service and the experience of doing business with us is still part of the buyer's calculus.

In the future, when the supply/demand curve comes back into equilibrium, and the prospect of cut-rate prices fades from the buyer's minds how they were treated by your organization will long be remembered.

As long as you are not striving to be the lowest cost producer, customer care and service has always been a differentiator for companies that want to be great and not just good. And don't be complacent if you have decided to occupy the cheapest rung of the ladder...even Wal-mart has great customer service. Certainly a few companies have made short run profits by providing nothing but the lowest cost. Nevertheless, those entities usually are not enduring.

When your clients/customers are being wooed by your competitors and they have multiple choices of whom to do business with, service is the critical survival tactic.

The concept of customer experience goes far beyond customer service, customer care or other such labels. It is truly the voice of the customer ...the total experience of interacting with your organization.

Client satisfaction is important, but if we are measuring it from our vantage point we will probably lose in the long run. We often forget that it is what the client thinks is of value that counts. Not our opinion of what they should be gaining from us. Study after study has shown that the retention rate for satisfied customers is not as high as expected. They were satisfied, but not truly enamored ...not "Wowed!"

The only way you can gauge the totality of the customer experience is to walk a mile in your customer's shoes. Interact with your company at every point that one of your customers would. Analyze your experience and be brutally honest. Are you easy to do business with? Is it comfortable interacting with your company? Is it efficient? Frustrating? Do you live up to your reputation, your brand promise? The details really count ...you can't fake your way with fluffy tag lines or clever logos. What your clients experience when touching your organization is make-it or break-it time.

It is always easier to provide examples of customer experience when talking about companies that cater to the consumer as opposed to business to business (B2B) situations. But the concept of customer experience management applies to anyone who operates in a free market environment ...B2B (client experience management), B2C (customer experience management) and non-profits (donor experience management) all must attract and retain loyal constituents. The only one left out are monopolies and government bureaucracies.

Let me give you a couple of real life case studies for all of these types of entities (including a law firm)

Disney - The pinnacle of customer experience management, right? Their mission statement says it all: ..."To Make People Happy." For anyone who has visited one of the Disney parks, you know this to be true. Everyone from the ticket booth clerk, to the street sweeper to the cartoon characters that entertain you, treat you like a special guest. The experience is ...well, magical! But is their customer experience management perfect? No.

Last year I took my four daughters to Disneyland and it was even greater than expected. But what was Disney's post-visit interaction? Simply nonexistent. No follow up, no special offers to cross-sell, up sell or cement their brand. Maybe they're counting on the lingering memory to lure me back ...that or four girls pleading for Daddy to return.

For last year's trip to Disneyland, I just booked a decent nearby hotel on Hotwire and bought the park tickets at the entrance. This year I thought it would be more fun to stay in one of the Disney hotels and see if they had any special offers or programs. Going to their web site I was completely disappointed. Not only is it not aesthetically pleasing, but it is confusing, cumbersome and a pain in the neck to use. Will this poor customer experience at the front end of the process turn me away? Not likely in this case ...after all, they have a one-of-a-kind product. But if you are not Disney, can you afford such a critical breakdown in the customer value chain? Especially at the point a customer is researching a buying decision?

Why do you think a company like Disney has such a weak chink in its armor? Read on ...I'll give you my answer at the end.

Two years ago, I was working with one of the top law firms in New York. They have a world-class reputation built on outstanding people and stellar results. They also have lawyers that charge close to $1,000 per hour. What was their client experience like? Well, I was not a client, but I was helping them interview and gain feedback from a number of their key clients. So I put on my client viewpoint glasses and looked at everything from the perspective of a client. A mystery shopper so to speak. My findings were eye opening as the lawyers at this firm had grown complacent and no longer looked at things with a fresh perspective.

While I can't divulge details, one of the biggest disconnects for clients was the lack of concierge level service. To the lawyers that wasn't important. After all they were delivering great outcomes. But to clients used to paying $1,000 per night for a great room in New York, why couldn't a law firm charging that amount per hour pay attention to the details of great client service. Not just some of the impressions I outline in the next paragraph, but important details such as incomprehensible billing statements, disjointed hand offs between partners and practice groups, not listening to the client's objectives, poor transfer of knowledge about the client among different partners, weak communication about budget overrun's (lots of big surprises) ...limited understanding of the client's business strategy. On and on.

When visiting the office of this firm, you first have to find the private bank of elevators far removed from the main lobby. The firm's name was found in tiny letters on the desk of the security guard (with several letters missing). While security in New York City is a requirement, the process at this firm was painful for visitors. A bottleneck existed as the solitary guard checked you in. Now I'm sure this fellow was well trained as a security agent but his client service skills were certainly lacking ...he made the TSA folks look good. His process was to look through a worn out index box for your name. Rarely would he find it there, even though we confirmed our multiple visits. Then a phone call to see if you were on the list of expected visitors. If there were no other visitors going through this process it would still take five minutes. Several times on busy days, we waited 15 minutes just to get into an elevator. On the fourth visit in a month to the office, the guard showed no recollection as to who we were. Maybe as an added security measure a Men-in-Black memory eraser was flashed into his eyes at closing time each day!

The elevator opened into a small, dark lobby, with furniture circa 1982. Literally we were greeted by a receptionist glancing up from her novel. No "welcome to XYZ firm how can I help you?" Just a detached question, "Who are you here to see?" What? Didn't the 15 minute dialog in the lobby with our favorite security guard give you any heads up we were here to see the Managing Partner? I must admit she did better than the security guard ...by the third visit she actually remembered my name!

You might argue that this type of client service doesn't matter if you are looking for the best lawyer to represent you in a "bet-your-company" litigation. And it might not. But do you want to take a chance in today's economy? Sometimes little things matter. This is not to say that we only look at issues such as this when assessing a firm's client experience environment. But first impressions often indicate other areas of concern ...in this case they lead to our finding a number of substantial issues that caused concern to the clients of this firm.

Why do these things happen? I promised an answer.

Sometimes it is hubris, maybe arrogance. If you have been at the top for so long, sometimes it is hard to remember what it was like to be hungry or scrappy. Complacency can set in and the assumption is that we are so good at what we do the little things don't really matter very much.

But more often the cause for these breakdowns is that the leaders in these companies have not experienced firsthand what it is like to be a customer or a client. When an organization is small or in its start up years, each client is so important that everyone goes out of their way to service them. But as a company becomes successful and grows, layers often develop between the leaders and the customers.

With Disney I know the executives visit the theme parks regularly and keep a keen eye on all the interactions that occur with their customers. In this case it is easy to actually experience the company through the eyes of their customers. Certainly when Robert Iger goes to Disneyland he doesn't wear a suit and a name badge with CEO blazoned on it. He blends in with the crowd and truly walks in his customers shoes.

But I can bet that neither Iger nor other Disney executives ever have to book a trip to Disneyland on their web site. They just call up Mickey and tell him the brass will be staying at the park next week and all accommodations are taken care of. But by doing so, they are missing out on an important customer experience interaction that could affect their brand. I would also guess that the weak link in their customer relationship building after a visit to the park comes from the same blind spot. They don't need to be reminded to stay connected to Disney and all its products ...they live and breathe Disney every day. Maybe they need to experience that interaction first hand as well.

With the law firm, the breakdown occurred because of ennui. Things had been so successful for decades; partners had worked there for years that the details faded away into background noise. Perhaps there was a touch of hubris but mostly it was a result of, again, not seeing things through the eyes of the client. When they realized clients were concerned with small things as well as large, they jumped into action to correct numerous issues.

The challenge of running a company in any environment is that the urgent hijacks the important. But leaders must take a fire-fighting break to stay focused on the most important element of a successful entity ...those who pay the bills.

A tough downturn is forcing all of us to work harder, with fewer resources. While we must attend to urgent crises, the care and feeding of customers must still be job one. The only way to do it right is to personally walk through each client interaction and do a gut check on the experience.

2010: Possibly the most critical year of your career

2010-01-08T11:22:00.001-07:00

Let's all put 2009 behind us. It was a stinkin', lousy, no-good year. It would be best to just forgetaboutit!

But what about 2010?

There is an adage within professional services that the golden years of your career is the decade from 48 to 58 years of age. This probably applies to everyone in a professional endeavor. When I was in my early 30's, thinking I was a hot-shot, I pushed back on this piece of tribal lore. But now that I'm in this range it all makes sense.

As a professional the first ten to fifteen years of your career are spent developing your skills. The next ten years are spent honing, refining and developing your expertise into world class status. Or if not world class status, at least developing a strong niche for which you are known. Also that period is spent learning the soft skills of client interaction and laying the foundation of your client base. Finally in your mid to late 40's it all comes together - skills, expertise, personal brand, client base, etc. For the next ten to fifteen years -depending on your energy level - it is time to make hay.

So why do I say that 2010 might be the most critical year of your career? If you are in your mid to late 40's it is critical that you solidify your personal market position. But with the great recession many client relationships have evaporated. With clients that are still hiring consultants and professionals, many long-term relationships have been disrupted due to enormous pressure from clients to cut costs. There has been a great shuffling in the market, and when the dust settles the competitive landscape will look very different.

It has been as though 2008 and 2009 were years when the foundation was jack-hammered up. The new structure is being poured, but before the concrete hardens and sets you had better re-establish your market position and client relationships.

If you are early in your career, there will be plenty of time to establish your "book of business". But if you are in your "golden years" of production, 2010 might be the only year you have left to get things back on track. That is unless you want to be working into your true golden years.

I know many feel worn out and tired from the efforts to maintain their business over the past two years. There are a number of clients we work with that are still standing, but are battered and bloodied. Sisyphus often comes to mind when we look back over the past 24 months. Great effort was expended, but little traction or progress was made before the boulder rolled back down over us.

It may be tough, but 2010 is the year you must double down on your efforts. Put your muscle back behind the stone and endeavor to get it up and over the hill. If you can persevere and push hard, momentum will return. Then in 2011 and beyond you will have the luxury of chasing the rock down the other side.

2010 - What to Do Now?

2010-01-07T23:22:00.002-07:00

After a nice break over the holidays, and a great trip to Costa Rica (Pura Vida), it is time to get back to work.

I am excited to start the new year with an announcement that The American Lawyer (the top magazine to the legal industry) published my article - What to Do Now - in the January issue of their magazine. This certainly helps solidify Catapult Growth Partners' reputation as one of the top thought leaders in growth consulting.

While the focus of the article is on what law firms need to do to survive post-recession, it contains a number of points that apply to any business that is struggling to re-establish profitable growth as we move into 2010.

As a reader of this blog you will recognize our constant theme that it is important to look outside the confines of your industry for ideas and best practices that could be adopted and adapted to your industry.

So even if you are not in the legal industry I would encourage you to read the article and see if you can glean ideas that could help your business.

Here is to a much better year than 2009

Growth in a non-growth economy - Part 6: Beware of benchmarks

2009-12-23T23:37:00.000-07:00

Best practices is a cliche that is tossed around too lightly. Many time "best practices" within an industry are actually poor practices when compared to more innovative sectors. Too often what constitutes a best practice is labeled as such just because that is the industry norm - it is the way things have always been done.

Rather than blindly listen to consultants speak about best practices, study for yourself what leaders in other industries are doing to navigate during the downturn. Don't assume what worked during the last tough stretch will be successful during this great recession.

For example, in previous downturns a winning strategy was to double down on large, historically profitable customers, geographies and market segments. Today, this approach may prove ineffective as the world's economic woes are affecting clients and markets in unexpected and extremely specific ways.

Growth leaders should toss out historical expectations and focus on emerging pockets of client/customer profitability. A major mistake is to benchmark competitors. Great companies always strive to radically improve on industry norms, and look outside their industry for benchmarks. The seek to innovate in new ways.

A perfect example of this is Apple's retail strategy. Industry analysts and consultants scoffed at Apple when they first rolled out their stores. Didn't Apple see the dismal failure of other computer retailers? Gateway computers lost a fortune with their string of stores. Their retail strategy was deemed an albatross around their neck. Apple's strategy, on the other hand, has been so successful that Microsoft is emulating them. Good luck Bill Gates! As this humorous article points out, being a copy cat might prove hard for them to do.

Take advantage of this downturn and break away from the pack by emulating best performers in other industries. Don't be weighed down by meaningless benchmarks or "worst practices"

Growth in a non-growth economy - Part 5: Focus & Minimize

2009-12-22T21:43:00.000-07:00

The rule of three plays an important role in this economy. It is crucial to stay focused and minimize the noise of an economy that won't cooperate. There are so many opinions and most are negative. Those who will prevail and thrive must tune out the distractions and keep a steely eye on a narrow path - like Ulysses avoiding the sirens.

Identify and focus on three critical initiatives at any one time. An honest assessment of your current state is the starting point.

Look at where you are now
Outline where you want to be in twelve months
Determine how you will get there
Move quickly with ninety day tactical action plans
Reassess quarterly

All initiatives should be categorized into three primary buckets:

Finding money (cost cutting, improving efficiency, speeding up revenue cycles, etc.)
Positioning and gaining "mindshare" (with clients, prospects and key talent)
Generating revenue

Looks like we hit a hole in one on the Tiger/Accenture post

2009-12-21T02:21:00.000-07:00

Perhaps you read my post on Dec. 9th about Accenture's debacle with Tiger Woods as their long-term spokesman. Good branding gone bad

Not that it was hard to come up with the conclusions I stated. An easy two foot putt in golf parlance.

Maybe Frank Rich and Brian Stelter of the New York Times saw the post as well.

Rich in a mocking tone, nominates Tiger as Person of the Year About Accenture he states, "If Tiger Woods was so important to Accenture, how come I didn't know what Accenture did when they fired him? ... One would like to assume that Accenture's failure to see or heed any warning signs about a man appearing in 83 percent of its advertising is an anomalous lapse. One would like to believe that business and government clients didn't hire Accenture just because it had Tiger's imprimatur."

Triple ouch!
Sting #1. A well versed NY Times writer didn't know what Accenture did until they fired Tiger and he went to their web site to learn more about the company. So much for $100 million in advertising they spent on - Go On. Be a Tiger

Sting #2. He questions their wisdom and judgment, or at least awareness. Would you hire Accenture for marketing strategy now? ("Accenture helps chief marketing officers drive growth and achieve high performance by developing superior strategies, planning the effective implementation of these strategies, and executing these plans flawlessly"). You have to question a management consulting firm that doesn't know how to perform due diligence to uncover a fraud.

Sting #3. Rich wonders why they used Tiger as their brand ambassador when, surely, clients didn't hire them for Tiger's good looks?

In my post back on the 9th, I questioned how long it would take Accenture to start pulling Tiger off their back. Brian Stelter gives the details in his article - Accenture, as if Tiger Were Never There. It took them over a week to sanitize their web site, and now they are working quickly to Tiger proof the rest of the firm.

Stelter quotes a spokesman for Accenture - the company's advertising is about "high performance," and Mr. Woods "just wasn't a metaphor for high performance anymore." Well, some might debate that last point.

This whole Tiger fiasco might put a halt to wasteful marketing spending within professional service firms for a long time. Which, in my opinion, is not a bad thing.

Let your clients know you're not a dog

2009-12-18T23:06:00.002-07:00

Friday - time again for a chuckle.

Yesterday I spoke of the importance to flex your style to match and accommodate your clients - and to make note of their communication preferences.

While many busy clients prefer to interact electronically (and we should strive to serve them in the manner they request), we need to keep in mind that occasionally we have to get out from behind the computer and connect face-to-face.

After all, one doesn't want to run the risk of being mistaken for a dog.

Self-Service Society

2009-12-17T23:11:00.000-07:00

We have become a society that prefers self-service. When the interface is well designed it is usually more efficient to take care of a matter over the internet than deal with a human.

The next generation of upcoming leaders takes self-service and electronic interaction to the next level. Texting brings immediate results, phone calls and voice mail go unanswered. Most 20 somethings will spend hours on a web site before calling and speaking to a customer service rep.

But there are times when it is best to pick up the phone and talk to someone, or get face-to-face. Speaking to a knowledgeable human can often save hours of time meandering to an on-line solution.

Many smart, technically oriented professionals (accountants, lawyers, consultants, etc.), tend to be on the introvert side of the Myers Briggs scale. As such, they find it easy to succumb to a digital style of communication and interaction.

And while it is fast, efficient and easy to use our electronic tools, keep in mind that when it comes to client development and service it is best to mix it up. If you are observant you can usually determine how a client prefers to interact. Observant or not, it makes sense to ask your clients how they would like you to communicate with them. When do they want to see you? When should you call? When is it better to email, text, etc.? Believe me, most of your clients will appreciate this sense of service and courtesy.

Nevertheless, keep in mind that when the matter is critical, difficult or sensitive it is important to override the clients desire to communicate electronically. When it is tough, don't hide behind a voice message or email. When it really matters, the human touch is still the best way to go. And once in a while, when it doesn't matter, find a way to drop in, or spend face time with them.

There is a professional that provides me with personal financial advice. A nice, pleasant, avuncular sort of fellow. Truly a great guy to lunch with. Everything is fine except an inflexible style of wanting to always communicate by phone, or in person. Doesn't work too well with my schedule, my work demands, my travel. There are also times when I literally don't have one minute free for pleasantries. I need quick, short response via my blackberry, please!

I've told him, that if I don't answer my phone leave a voice message explaining the purpose of the call. Then send a summary via email. I will respond in the time frame and manner that best suits my situation and frame of mind.

Don't be a professional who has to be educated by your client how they want their service delivered. Keep in mind, service matters. They are the client, they should be catered to. Flex your style to accommodate theirs.

Growth in a non-growth economy - Part 4: Be Smart & Act Fast

2009-12-16T15:39:00.000-07:00

One of the toughest challenges of leading in a downturn is overcoming inertia. Regaining momentum is hard when things have ground to a standstill. Another battle is getting others to shift their thinking to new ways of doing things. Few of us willfully choose change. It is human nature to cling to the familiar, even if it is not working.

For reference click here for Part 1 of this series, here for Part 2, and here for Part 3.

Most successful firms and companies have established certain cultural norms, traditions and precedents. But in a severe downturn, what got you to where you are may not prove successful going forward. Thus, it is hard as a leader to overcome the status quo mindset and get others to think in new ways. Nevertheless, when conditions reach a tipping point things can change quickly. One perverse benefit of this downturn is that it is forcing many firms to rethink long-held traditions that are not productive

One of the most important strategy questions any business or firm must ask during a serious recession is whether the stress they are facing is due to a correction in supply and demand, or if it is indeed a structural change in the industry The other key "stay-awake" issue is how to manage through a downturn so that when the rebound occurs you are not so hamstrung by cuts and cost control that you can't thrive again.

Expense reduction, cash-flow management, headcount reduction and profit maintenance has been the focus for many companies and firms for the past twelve to eighteen months. Now that most of these tactics have been implemented, we are seeing lean, battle hardened, leaders looking for emerging growth opportunities. They are trying to determine how to sell and compete differently in a changed market.

The economy will come back and business should revert back to more normal conditions. But the rebound is likely to be much slower than we are all hoping for. Firms will have another one to two years of difficult growth challenges ahead. Therefore, it will be critical to look for outside-the-box growth opportunities and understand how to effectively develop business in difficult times.

Over the past year we have worked with a number of firms who have experienced significant challenges and faced rapid changes to their business conditions. Generally leaders facing significant uncertainty tend to react in two distinct ways. Some become extremely conservative and try to preserve the status quo by not taking action. This is the classic, "playing not to lose" or "prevent defense" approach that generally causes progress to unravel. Others charge ahead with a flurry of initiatives - often uncoordinated, random and based on instinct.

Let this not be you. Instead of hunkering down, resisting action and freezing ("deer in the headlights"), or throwing everything against the wall (confusing activity with results), the key is to quickly assess the situation, identify your critical success factors and focus on a few tactical initiatives that will have impact in the next three to six months. If you can't boil your action plan down to one or two pages go back and focus again.

Aggressive execution is the key. Don't allow your firm to get stuck in analysis paralysis. Creating momentum is critical as a leader. If it becomes clear that an initiative will not yield results be quick to kill it or course correct rapidly. This is far more effective than not taking any action at all.

Remember that the more uncertain things are, the more people prefer to stick with comfortable and predictable routines. In uncertain times leaders need to get their organizations unstuck. They need to insist on changes that make business-as-usual impossible. And they must defuse or neutralize those who persist in resisting change.

One benefit of a crisis is that those who normally would have argued every point begin to accept that decisions must be made. Leaders should not squander this unique opportunity to act. The conundrum is that when decisions are readily accepted, they are difficult to make. All business decisions are made with incomplete information, and this is especially the case in the middle of a crisis.

At a time when the stakes are much higher than normal, every instinct tells you to decide slowly. Yet it is vital to decide and act with little delay, based on the best assumptions and information available.

Be Smart and Act Fast - Prescriptive Advice: #1 of 10 points

Don't spend time or money on large scale, major initiatives. At this time the market is too fluid and visibility is murky. Rendering long-term strategic plans obsolete before they are implemented. Start moving forward on tactical initiatives - activity will create clarity. Clarity generates focus. Focus leads to success. And success begets success.

Growth mistakes - mirror, mirror on the wall

2009-12-15T17:24:00.000-07:00

Looking for best practices or benchmarking within your own industry can be a trap when it comes to growth.

Often, best practices for a specific industry are not best practices at all. They are weak, old and tired ways of doing things. Why do we do it this way? Because we always have!

For a fresh perspective look at what others are doing in unrelated industries. It might not translate or work in your situation, but it may dislodge some old thinking and start you down a new path that does work.

Recently we were called in to advise a professional service firm that had spent two years, and millions of dollars "mirroring" the sales/business development organization of their parent. Not only was this "sales" organization not generating much revenue, it was disrupting the traditional model that had worked reasonably well. Leadership at the parent was very frustrated and ready to start letting heads roll. It was a people problem they ascertained - obviously since the model worked extremely well for them.

The fundamental problem was so basic, it was embarrassing to charge a fee. The parent is in a low-cost provider, transactional business model. The primary value they deliver to their clients is cost reduction. The subsidiary is a high value oriented consulting firm. Their value proposition is built around, trust, thought leadership, high added value. The sales model they were mirroring (due to pressure from the parent) was not only going to fail in terms of generating sustainable revenue growth. It was also putting at risk many of the long-term client relationships of this firm.

The parent also mistakenly thought their consulting subsidiary could be a good sales channel for their core services. But the buyers, approach and mindset are so different for these two firms that the expected synergies could only have been dreamed up in the head of a financial analyst.

The astounding fact about this situation is that the two companies were not small, unsophisticated organizations. Total sales revenue is close to $500 million for the subsidiary, much more for the parent. It just goes to show, that even smart, sophisticated and previously successful business leaders can stumble from a blind spot.

Mark Twain said, "What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so."

Never emulate a growth model just because it works for someone else. Even in similar industries the nuances of your organization or firm require more thought than that. Be wary of benchmarking "worst-practices" within your industry. Don't spend too much time glancing sideway or over your shoulder at your competitors.

Leaders chart their own path to success and are willing to break free from the confines of how it has always been done.

Growth in a non-growth economy – Part 3 Client Intimacy

2009-12-14T21:44:00.002-07:00

This posting is an excerpt taken from our revised white paper, Client Satisfaction Surveys – Tools for Tough Times.

It is focused specifically on how law firms can improve their efforts around client interaction, satisfaction, retention and growth.

While it offers advice that is adapted to the law firm environment, the truths and fundamentals apply to all B2B firms/companies that must maintain strong, on-going client relationships.

In this recession, the words client intimacy, and phrases such as "getting close to your clients", are tossed around as though the effort to build rock-solid client relationships is simple and straightforward. Those of us who have worked in the area of key client management know the concepts are easy, but successful execution is hard. Given the critical importance of maintaining clients during a downturn, we took time to write a best practices road map to outline a step-by-step process. No clichés or banalities – just solid, practical advice.

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CLIENT SATISFACTION SURVEYS – TOOLS FOR TOUGH TIMES

PREFACE & REVISION NOTES

For over twenty years we have been engaged in all matters dealing with client service and satisfaction. Success is based on delivering work that the client deems valuable in a manner that reinforces the service aspect of the professional services business.

As providers of professional services, we should recognize that business development, client service, quality delivery and client satisfaction are all bundled into the concept of client care. From the client's perspective, they are seeking a professional who delivers great work, is responsive, cares about their personal and professional agenda, and understands their business so well that they are always on the spot with proactive ideas and strategies.

To the client it doesn't matter if we call this approach business development, client management, client service or quality control. What they care about is value. And they get to define how that value is measured.

The care and maintenance of our client base is the fundamental component that leads to success, profitability and growth.

Properly executed, this client centric approach will yield positive results regardless if we are striving to build a practice by landing new clients, or strengthening our position by solidifying, expanding and retaining key accounts.

No great civilization ever developed without a stable food source. Nomads stayed small tribes due to a reliance on hunting and gathering, as opposed to developing predictable agricultural practices. The same goes for any law, consulting or professional service firm. Without steady, repeat work from a solid base of clients, firms will never reach a scale that will allow them to achieve greatness.

In the challenging economy of late 2009, the issue of client satisfaction and retention has vaulted to the top of the critical success factors for all firms. How firms deal with the execution of their client satisfaction approach will make the difference between success and failure.

In the legal industry, the swoon in demand has forced rapid changes to the way business is conducted. When the demand curve shifts back up, many of the changes will stay a permanent part of the landscape.

Entering into the equation during these trying times is pressure from the Association of Corporate Counsel. The ACC established their Value Challenge, and just released the ACC Value Index – a client satisfaction measurement tool - to help ACC members share data regarding the performance of their outside counsel.

The Value Index rates outside counsel on six categories:

Understands Objectives/Expectations
Legal Expertise
Efficiency/Process Management
Responsiveness/Communication
Predictable Cost/Budgeting Skills
Results Delivered/Execution

It boils the results down to the ultimate question: Would you use this firm again?

During this downturn the ACC Value Index might be seen as rubbing salt into the wounds of firms. But in reality it provides law firms with a clear road map to align interests and drive value. Rarely does an association of major buyers outline a concise checklist of what constitutes value and satisfaction.

The good news in all of this is that the ACC is not saying their members don't value the services of outside counsel. What they are saying is they want a way to better align the goals and interests of both parties.

In a time when clients, such as Microsoft, have removed marquee firms from their preferred provider list, it alerts us to the fact that no relationship can be taken for granted.

At the core of the ACC Value Challenge is the notion that clients no longer want just favorable results. They are concerned about cost containment, budget certainty and putting into place a benchmark based on return on investment. Process improvement is the underpinning of much of this pressure. But without a clear understanding of the client's goals, issues, pressures and limitations, process improvement can still lead to poor outcomes – you just get there faster and cheaper.

The ACC Value Challenge is a good starting point for firms to understand what their client's value in the relationship. In 2010, it will be mission-critical to implement a structured and enduring client interaction program that keys off the Value Index. The true depth of understanding of value will come by spring boarding from the Value Index into areas of particular strategic importance to your clients.

We will all need to go beyond weak client satisfaction programs. Programs that add value to both sides of the relationship will require client interaction that weaves together satisfaction measurement (determined by the client), regular client conversations (with a strong component of business understanding) and service delivery excellence.

Some firms have told us that this level of relationship "discovery" is of concern to them. They worry that by probing too deeply they might open up conversations that simply lead to demands of lower fees. If that risk is present, then it is assured that if we stay away from this level of client understanding and intimacy, our clients will find other firms that will happily do the work for reduced rates. Far better to deal with the issue directly and determine what can be done to improve the fee/value equation.

The care and feeding of a firm's most important clients has become too important of a task to leave solely in the hands of a single relationship partner. Leadership must also have a clear role and significant responsibility. Support in the form of process, structure, training and measurement must be put into place to ensure that the significant investment in time and resources reaps the anticipated rewards.

Given the increased importance to reinforce and strengthen our client relationships, we have changed our approach to the client satisfaction process.

Over many years our key finding has stayed constant. Clients are consistently disappointed in how little their service providers understand about their business. Unfortunately, lawyers generally rank very low on this scale.

In numerous cases we have seen clients express that they were satisfied with their law firm - only to switch legal providers, or bring in other firms shortly thereafter.

The typical client satisfaction approach has not proved to be a good indicator as to whether a client will continue to do business with a firm. Research has proved that clients are often satisfied with a particular piece of work, but not enamored with the overall understanding of their business and need for proactive and insightful advice. If all we are doing is providing good advice on a reactive basis (e.g. when the client calls us), the evidence shows we are at risk.

From our hundreds of interviews with buyers of legal and professional services we know the primary driver of value is how well a professional understand a clients business and the internal pressures they face to accomplish their goals. This level of understanding goes beyond a simple grasp of the issues that affect the client and their industry.

Service providers that gain high rankings in client loyalty (a far more important score than client satisfaction) are those that have a holistic understanding of the client. Issues such as:

Industry issues
Micro and macro trends
Detailed understanding of key competitors and emerging threats
Knowing their strengths, weaknesses, opportunities and threats
A clear understanding of the internal landscape – people, politics, pressures, goals, objectives, culture, etc.
Knowledge of their financials
Agendas and objectives at the business and personal level.
Strong knowledge of the issues the customers of the client face
Ability to speak their "internal" language
Clarity as to the personal goals of the individuals we work with and how they get rewarded

This list can go on, but the point is we have to strive to become a trusted advisor or else we face commoditization and increased fee pressure. In the past we might have shied away from robust business and personal discussions, but now we must establish that as a primary driver of alignment, understanding and delivering value.

Vague, and basic questions around "how are we doing" may lull us into thinking we have satisfied clients and the account is not at risk.

As such our restructured our process is built around an initial discussion regarding business issues and not satisfaction questions. We explain to clients that the best way we can align interests and bring value to the relationship is to deeply understand the business issues they are facing and the challenges that are hindering them.

In this downturn there is plenty of advice from experts about "getting close to your clients". In our publication, Survive and Position to Thrive – Law Firm Strategy for Tough Times, we said:

Evaluate your core competencies, key clients and strategic targets in order to get much closer to those that will really matter in the coming one to three years – refining, tightening and focusing your market facing strategy.

The problem with this advice is that it is obvious and the phrase "getting close to your client" is a simple platitude. This report strives to go beyond stating the obvious and provides tangible steps and tactics to follow in order to tighten the bond between a firm and its clients.

The challenge, as always, is in the execution. Certainly having a roadmap such as this report it useful, but unless you commit to a repeatable process and stick with the effort, the results will be less than ideal.

We have worked with several firms to re-design their client satisfaction programs. To ensure that key client relationships were being strengthened and all lawyers in the firm were engaged in active "client conversations".

The foundation of success was providing a framework of training, coaching, process and tools to enable all lawyers to have productive and meaningful client loyalty interactions.

Strong results come by educating lawyers that this is not about business development. Rather it is about giving them the tools and confidence to be able to develop an intimate knowledge of their clients, and be positioned as a trusted advisor in order to secure and strengthen their bond. The side benefit of this approach is generally more work, but that is not the focal point.

This has allowed lawyers that are not natural business developers to feel comfortable with the process and engage with clients in a way that has produce significant results.

Success in client loyalty comes from the combination of a simple program, education, training, coaching and accountability.

Embrace the ACC value challenge, be proactive and involve the client – let them know you are taking client value seriously. No one approach will fit all situations, so define success together with your client. Do this right and future growth will be the natural by-product.

READ THE FULL WHITE PAPER - Click Here

Rainmaking in a Drought - Tip #2

2009-12-11T17:20:00.001-07:00

Never, never, never give up - Winston Churchill

Tip #2a - Never, never, never lose your sense of humor

Not marketing, not sales - Think Growth Architecture

2009-12-11T00:16:00.000-07:00

Too many companies are focused on the balance of power between sales and marketing.

The delineation between sales, marketing, customer care, etc. is passe. Companies need to think of developing their growth architecture - an approach that is focused on growth, utilizing all tools available within an organization.

Speed and technology is forcing innovation to the top of the value chain. Download this file to see a graphical depiction of a growth architecture. A company's growth architecture is a strategic imperative that is completely focused on providing outstanding client/customer value. Everything a company does is wrapped around the customer. In 2010 the voice of the customer/client will be king.

Good branding gone bad - Tiger & Accenture

2009-12-09T22:46:00.001-07:00

A picture is worth a thousand words. It is hard to top this - but I will give it a shot. Apologies up front for all unintended puns. This certainly qualifies for the "life is stranger than fiction" hall of fame.

The branding of a professional service firm is hard enough without things like this happening. I must admit, I am glad I am not the Chief Marketing Officer at Accenture right now. Perhaps Accenture and Tiger need to hire McKinsey to help them figure out what to do next.

It is ironic how life goes in circles. Years ago, I was at Arthur Andersen when that firm ran into some bad press. Had to do with a little Texas based client by the name of Enron. The head of marketing at the time had his hands full with crisis management PR.

Now, the firm that was spun out of the Arthur Andersen family, Accenture (formally know as Andersen Consulting), is hitting a rough patch with its brand spokesman and icon.

Let's be clear. The problems Arthur Andersen had, stemmed from a serious breach of professional conduct related to client work. That brand was mortally wounded by its own professionals. Accenture is suffering through an embarrassing moment due to a decision to link its brand to a personalized moniker - Tiger. As far as we know, the firm has not done anything wrong related to its professional performance.

In all likelihood, this will blow over, but not before Accenture suffers a few clever, and no doubt, distasteful jokes. The amazing thing is, that as of today, Accenture still has Tiger front and center on their web site. It will be interesting to see how they deal with this situation.

If Accenture were selling shoes, or golf clubs it would be one thing. The best strategy would be to lie low for a bit, then bring Tiger back in full force. After all, sports fans are more interested in performance on the playing field than elsewhere. If Kobe Bryant can make a comeback - we are talking about a personal brand comeback, not a sports performance comeback - then Tiger doesn't have too much to worry about. Annual endorsements might drop from the $100 million per year range to $25 million for a few years. But if he can keep winning tournaments he can find a way to scrape by. And in a few years, consumer marketing companies will come back to his door.

I don't intend to gawk like a voyeur - the tabloids are taking care of that. I am truly curious how the marketing leaders at Accenture will react. It is very difficult to utilize marketing and branding to differentiate a professional service firm. Marketers at these types of firms are not selling consumer products. So it is almost impossible to make a professional firm stand out in the market and become a recognizable brand.

What Accenture accomplished by linking their consulting performance with Tiger was brilliant. They did a phenomenal job moving away from the Andersen name and establishing a new brand. Due to an arbitration settlement when they split from Arthur Andersen, they had to drop the Andersen name. What looked like a liability at the time proved to be prescient as Arthur Andersen stained a world renowned name. They looked like geniuses, dropping the Andersen name, going public and soaring above the flames of their crashing sister firm.

It is important to note, that for a professional firm, even a brilliant marketing and branding campaign such as Accenture's Tiger initiative, doesn't make the phone ring. Orders for consulting services most likely did not roll in when ads ran. I doubt any CEO of a Fortune 500 company ever called Accenture and said. "I just saw your ad and I would like to place an order for a million dollar strategy project, two business process outsourcing engagements - one in IT and the other in finance - and can I get a 50% discount on a human capital alignment if I pay in cash?"

No doubt the part of the Tiger arrangement that did drive business was the handful of private golfing rounds that Accenture got with him as part of the package. That type of one-on-one business bonding outing probably yielded a few million dollars worth of work. Inviting the CEO of a company to play golf with Tiger is a differentiator.

In hindsight a couple of key mistakes were made with the Tiger campaign. They made Tiger an equal part of their own brand. They tied their brand to a fallible celebrity/personality. They over-extended the Tiger brand. They ran with a good thing for too long. They placed too much emphasis on branding - a mistake for a professional firm.

This illustrates that the art of marketing and branding within professional services is bloody hard. Often it is ineffectual, and progress can evaporate quickly. The challenge of selling the intangible and making services "real" is one of the hardest feats to pull off. The amount of money invested in professional services marketing and branding is often wasted in terms of a ROI. And Accenture has demonstrated that success can be ephemeral.

Accenture will probably go back to the old fashion way of branding a professional firm. Good quality work, backed up by great client relationship skills. Hmmm, maybe Accenture will find another place for Tiger.

Miracle Part 2: Why All-Star Teams Fail

2009-12-08T23:48:00.000-07:00

To compete in today's economy we need to change the way we play the game.

Part 1 (click here to review) of this post used a clip from the movie Miracle (1980 Olympic gold medal hockey team) to reinforce the point above, that is so pertinent to business today.

The movie clip is embedded at the bottom of this post.

The second piece of sage advice that comes from coach Brooks in this scene, is the lesson that all-stars don't always deliver. During this downturn a number of smart firms are taking advantage of the situation to upgrade and enhance their talent. If it is true that to compete in the future we will have to change the way we play the game, it goes to reason that we will need some new players to help us run our revised game plan.

As Jim Collins likes to say, we have to get the right people on the bus, the wrong people off the bus, and the right people in the right seats. He says that leaders who take companies from good-to-great, stick with the disciple of "who" first, "where" second. Transformational companies get the right people in the right places before they start down the road.

Strategy and talent management go hand-in-hand. But success is in the details of execution, and that is where talent makes the difference.

Back to the movie. In the clip, coach Brooks is being tested. How can he expect a crop of young college kids to compete against the mighty Eastern bloc teams, let alone the dominant Soviets? After all, his players were true amateurs - the Soviets and Eastern bloc players, state funded professionals.

A dubious member of the committee brings up the fact that the U.S. put their best on the ice against the Soviets - Professional All-Stars - and they still lost.

Listen several times to Brook's response: "It wasn't because you (All-Stars) weren't good enough....All-Star teams fail because they rely solely on the individuals talent, the Soviets win because they take that talent and use it inside a system that's designed for the betterment of the team."

As we plan for the future, and compete for talent, it is important to realize that All-Star's don't always live up to their billing. While you search for A+ level talent, you should read this article, this one and this one. Harvard, Forbes and the Wall Street Journal all say the same thing. There is significant risk inherent in hiring stars. What made someone a top performer at one organization, or within a certain type of culture, does not guarantee success in all environments.

As leaders we know that having a group of highly talented individuals isn't enough to ensure success. As coach Brooks said, we have to have a system that leverages and maximizes our talent to ensure increased value to the entire enterprise.

For executives running professional service firms, this advice needs to be woven into the core of your strategy. After all, professional service firms should be the zenith of organizations that value human capital. We know that many leaders give lip-service to people being their greatest asset. But in professional services, where key assets literally walk out the door each day, talent management must be a core competency.

As you build your team to compete in 2010, design it around a system that takes that talent and uses it inside a system that's designed for the betterment of everyone. Betterment of your firm, your people and most of all, your clients.

Rainmaking in a drought - Tip #1 Avoiding sales mistakes in a recession

2009-12-07T20:14:00.000-07:00

When things get tough, the tough get going. When it comes to sales and business development in a recession, it is important to tell the tough to not confuse activity with results.

Success in selling or building a practice requires a certain level of client/prospect interaction and activity. Nevertheless, when things get challenging I see people engaged in business development/sales make one of two mistakes.

They get so frustrated, burned-out, or nervous, that they lock up and don't do anything - finding ways to kill time thinking they are productive.
They go into a frenzy of activity, chasing any client/prospect that moves.

Both are serious mistakes.

When it comes to rainmaking in a drought (or selling in a downturn), less is often more. And to over-cliche this - you need to go slow to go fast.

Selling/Business Development Tips for a Downturn - Tip #1

1. Gain more from less
Rather than fixating on a high level of activity it is better to narrow your focus on the best qualified prospects, and/or invest more time with key clients. Increased activity, focused on fewer - highly qualified - clients/prospects will yield better results. See this previous post about a firm that is doing this right.

Now, more than ever, you have to have deep insight into the challenges, problems, needs and pain points (knowing the magnitude and impact of the pain is critical) of your clients. In major B2B selling (aka consultative professional services business development) our offerings are designed to solve problems for our clients. Whatever service we provide, it is a tool to deal with a problem or a risk and thereby improve a less than ideal situation in our client's world.

In a recession, problems multiply and resources to solve those issues decrease. Clients have to prioritize which headaches they will deal with and which ones they can endure. The tyranny of the urgent is extreme, and long-term gain is often sidelined to deal with immediate - high intensity - pain. We have all seen significant chunks of consulting services relegated to the "discretionary" bucket in this downturn. Nice to have services is the moniker I give to those items.

The deeper the recession, the more clients have to cut costs. This leads to sharp scrutiny on spending priorities. Therefore, the pressure on us builds to know the client at a much deeper level. We must really know their industry, their internal environment, their mission critical goals, their most pressing problems, who the real decision makers are now, etc. No more lip service to "knowing our clients".

If you do these things well in a downturn, it will go a long way to protecting your revenue stream. The benefits are a long, residual tail as well . If you give a small group of high priority / high potential clients, this type of attention during a downturn - getting into the foxhole with them - you will have a loyal client for life.

Currently I've seen many organizations engage in drive by selling. Avoid this like the plague. If you have been on the receiving end of this approach you know what it feels like...."Let me show you 10 ideas, products, services we can offer, I'm going to start spewing forth - stop me when you hear one you like."

Hopefully, you have had the pleasure engaging with a professional who approaches client development from a consultative approach and seeks to be your trusted advisor. They delve deep, get to know you and your company at a level that is rare in our high speed world. They seek to solve the big problems and match up their services in a customized manner that resolves your most explicit needs. If they are not the solution, they will seek ways to bring other resources to bear (even if it doesn't benefit them directly). Compare this approach to the previous. Which model would you prefer to employ?

In times of high demand (sellers market), you can get away with the "tell and sell" method. But in a buyer's market, that approach will either drive you out of business, or relegate you to the lowest cost provider category.

Let me ask a simple question. If you are chasing too many targets, can you execute on this - less is more - sales and client development strategy? Not a chance!

By focusing intensely on a small universe of highly selected clients, and ratcheting up the amount of time we spend with each of them, we end up gaining more from less.

Miracle Part 1: We have to change the way we play the game

2009-12-04T14:11:00.001-07:00

Change is the word of the day.

Whether we wanted it or not, change is coming down at us from the top and bubbling up from the bottom.

From on high, we have a President who ran on change. At the grassroots, we have an economy that is forcing us to alter our ways. For many in the business world, the run from 2003 to 2008 was pretty nice. The Dow climbed from 7,500 to over 14,000. Most of us didn't want change, but have had it forced on us by the market.

So change we must. But is that necessarily a bad thing? Most of our growth, both personally and professionally, comes when we are forced out of our comfort zone and made to stretch. We rarely grow, or sharpen our game, in times of plenty. Usually the opposite occurs; we get fat, happy, lazy and set up for a fall.

The clip below, taken from the movie Miracle (about the 1980 USA Gold Medal Olympic Hockey Team), is instructive in its simple brilliance. The words of coach Herb Brooks (played by Kurt Russell) are a clarion call to us today.

In this scene, Brooks is presenting his case to the Olympic Committee on why he should be the coach and, more importantly, why they have a chance to win. He is met with skepticism. One committee member embarrassingly mentions that the previous Olympic team lost 15-1 to the Czech "B" team.

There are two important messages in this clip. The first is about the need for change. The second deals with talent management. I will address the second point tomorrow, but for this post let's focus on change.

Coach Brooks says, "The only way we can compete with the eastern block teams is if we're willing to change...change the way we train, change the way we prepare. We must make our training and schedule longer, tougher and much more competitive. We also need to change the way we play the game. We need to adopt a new style"

As an undergrad at a Division I hockey school (and a mediocre goalie) in 1980, I was glued to the T.V. with a multitude of classmates, watching the improbable become possible. The thrill of the victory was a highlight during a time when our national pride needed a shot in the arm, and we had to be reminded that America is a can-do country. Just so my younger readers don't discount my hyperbole, take a look at how tough things were in 1980.

I know we are all hoping for a miracle as we face 2010. Keep in mind luck is the residue of hard work and design. And we know the harder we work, the luckier we get.

Are we looking at our businesses and seeing what we must do to change the way we compete and play our game? Are we willing to adopt new strategies and tactics? Are we making the difficult choices that will make use tougher and more competitive?

How we embrace change will go a long way to creating our own miracles.

Things can always be worse - you could be a cat

2009-12-04T13:21:00.000-07:00

In 1980 I was a sophomore in college -- blissfully insulated from the real world -- ensconced in my cushy private-school life. My father was the unlucky one - fighting the business battles of that day to pay the tuition (thanks Dad).

While our current recession will rank up there as one of the most severe since the Great Depression, the early 80's were no picnic. Consider the landscape in 1980:

The Iranian's held hostages at the U.S. embassy in Tehran.
The Soviets were still the soviets -- aggressively pushing their agenda into Afghanistan and elsewhere.
The prime rate was 20.5%
Inflation rate: 14.8%
Unemployment: 10.8%
30 year mortgage rate: 18.5%
Jimmy Carter was President

Our current problems are unique, different and challenging in their own right. But if we were able to overcome the ugly 80's we should have confidence that the indomitable US economy will find a way to shrug this off and grow again.

Remember to focus on your blessings and keep in mind, it could always be worse:

Growth in a non-growth economy - Part 2

2009-12-03T12:06:00.000-07:00

In Part 1 of this series, I spoke about the slim chance of a rapid recovery and how we need to develop new strategies to grow - even when the general economy is stuck in a slow-growth, or no-growth mode.

At this point in the economic cycle, most organizations have had multiple layoffs and cut costs to the bone. It is going to be hard to wring out much more efficiency or reduce expenses further without permanently handicapping a company. The only way forward will be to find new approaches to invigorate top-line growth. In the long run, no organization reached greatness through cutting.

I also mentioned the two critical success factors to manage through the downturn, and be positioned to rebound are:

Making your sales force as effective and efficient as possible. Or for professional service firms - enabling your partners/consultants (a firm's "sales force") to be more efficient and effective in their business development efforts
Getting very close to your existing client base

A great deal of my work is done within the legal industry. For the first time in over twenty years, law firms are suffering with the rest of the economy, as demand for legal services has dropped significantly.

Given that most law firms have had a long period of uninterrupted growth, they were not as well equipped as other industries to know how to react to, and manage through this downturn. Utilizing my experience in other professional service sectors, and deep legal industry knowledge, I wrote Survive & Position to Thrive: Law Firm Strategy for Tough Times. The intent was to provide practical advice to help law firms manage through the recession. A number of the points in this series will be pulled from that report.

Even though this report if focused on the legal industry, a great deal of the information cuts across industry lines. My advice is based on best practices that apply to most organizations that are struggling in the recession.

Point 1 - Differentiation and focus are critical
Most people have heard the famous Jack Welch maxim that if GE couldn't be #1 or #2 in a market, they would exit that sector. He also said, "If you don't have a competitive advantage, don't compete." Can you clearly articulate your firm's competitive advantage? What is your true core competency? What do you do better than anyone else in the world? Would your client's agree with how you answer these questions? Do all your people believe your answers?

Point 2 - Remember who pays the bills
A major challenge we have seen over the past year is that many law firms (and companies) are so focused on internal cost cutting initiatives, that they are forgetting clients are the reason they are in business. Firms that stay overly fixated on internal matters are the ones that will lose clients and market share to proactive, client-facing firms.

Point 3 - Watch out who is on top when the dust settles
While many law firm leaders are rightly worried about structural changes in their industry, they must keep in mind that tough recessions (marked by significant supply/demand corrections) don't usually alter business models dramatically. But market share and competitive positions can be radically altered. Think about the auto industry. Eventually demand for cars will rebound and we will still be buying most of our vehicles from a local dealership. When things turn around though, there will be a lot more Ford stores than GM ones.

Point 4 - Make lemonade
Major downturns can be a useful catalyst to motivate firms to improve and modify inefficient aspects of their business model, which will be a stumbling block in the future. It can also provide needed air-cover to clear out some talent that really needed to find a new home.

Point 5 - You are a leader, so lead.
The potential exists to exit this recession in a stronger market position than when it started. It will only happen though, if leadership takes a proactive, market-facing approach. Darwin didn't say it was survival of the strongest or most intelligent - it was survival of the fittest, meaning those most able to adapt. Without nimble, adaptive leaders, a firm has little chance to be a future leader.

Point 6 - Restore momentum
Tough times often derail individuals and firms. One major challenge is to maintain morale and overcome inertia. When things slow down, or grind to a halt (as seen below) it is hard to raise the energy level in an organization. A body at rest tends to stay at rest. A body in motion stays in motion. Great leadership keeps the team moving forward, despite headwinds. Activity creates clarity. Clarity generates focus. Focus leads to success. And success begets success.

Be smart and act fast.

Stay tuned - next in the series: Prescriptive advice on our be smart, and act fast framework.

No time for sibling rivalry

2009-12-02T01:10:00.003-07:00

We are in a tough battle for revenue. There is no time for intra-company squabbles. The classic war between sales and marketing (business siblings), must end if we are to survive and thrive again.

You've seen the drill. In many best-case scenarios, sales and marketing are in isolated silo's, operating independently, transmitting mixed messages to the market. On the dark end of the spectrum, they are at each others throats fighting for budget, pointing fingers and shifting blame for missed revenue targets.

For those of you in professional services, have you ever heard your marketing team moaning that they did everything to drive attendance to a seminar, but no new work came from it? They place blame on the partners/consultants for failing to make a single follow-up call. From the other side, the partners are heard complaining that the million dollar re-branding initiative didn't do a thing to make their phone ring.

Business nirvana, is the seamless blending of sales and marketing into an integrated market development model. Done properly this structure provides a feedback loop to improve effectiveness and maximize ROI. It also focuses on continuous improvement to find ways to enhance revenue growth. We define this as a firm's Growth Architecture.

Growth Architecture is a client centric strategy, that integrates systems in order to drive revenue. Marketing is just one function within your Growth Architecture, as is sales/business development. Both marketing and sales are further broken down into tactics and actions. Strategy, people, process and support systems must all fit together if an organization is to maximize return to its shareholders.

In good markets, it is important that all elements of your growth function work in sync if you want to maximize market share and profits. In tough markets, if they don't work in harmony, the enterprise could be at risk.

Peter Drucker said, "The aim of marketing is to make selling superfluous. The goal of marketing is to know and understand the client/customer so well that the product or service fits him and sells itself. Ideally marketing should result in a steady stream of prospects who are ready to buy."

Research has shown that marketing and sales are the least efficient processes in business today. Skill sets and organizational structures for sales and marketing are changing due to market conditions and technology innovation. Competition for clients and customers has reached a peak.

In this environment there is no time for sibling rivalry between these two interrelated functions.

Another fundamental shift in marketing & sales

2009-12-01T01:46:00.001-07:00

Who recalls the hype surrounding the first internet bubble in the late 90's? The claims were grand - the internet was going to radically change the way we lived. Nothing would be the same again.

At first, executives at large companies were dismissive. Then companies such as Amazon, Yahoo, eBay, and a host of shooting stars (remember Webvan, or Pets.com?) broke free of financial gravity and reached ridiculous market valuations.

"Old-economy" executives started to sweat as dot com wonders contemplated buying these dinosaur's, using their inflated stock as currency. The most innovative and quickest companies were pegged to be the future winners. But keep in mind that the mother-of-all internet companies, Google, didn't exist until 1998. So much for the concept of first mover advantage!

Hubris and arrogance (plus a good dose of stupidity) kept most of these dot com entrepreneurs from executing on their acquisition strategies. Their fear was the thought that buying a company with real earnings would damage their valuation, which was based on "eyeballs". The notable exception was the Time Warner acquisition by AOL. Ten years later, after the stock value has gone from $350 billion to $36 billion, AOL is being spun off.

But back in 1999, you could get any CEO to break out in a cold, panicked sweat by asking, "what is your internet strategy." They all lived in fear they were going to be "Amazoned."

This all seems like such distant history as we grind through the Great Recession. But one thing is clear. Despite the fact only a handful of original dot coms still exist, the internet has radically changed our lives. How long can any of us go without high-speed connectivity?. As much as we'd like to toss our blackberry's into the compactor, we know within 15 minutes we'd be rummaging through the trash to retrieve the devilish device.

After the dot com bubble burst in 2001, it appeared that era was just a crazy period of hype and euphoria. Nevertheless, the bubble had substance. Ground work was laid for significant change. From the perspective of history, it is nothing short of astounding how the internet has transformed all aspects of modern life.

Which all leads to a discussion regarding the newest trend and how we are undergoing another major transformation of business functions. Specifically how internet marketing - and its latest iteration, social media - is turning the rules upside down.

A recent study by The Center for Marketing Research concludes that social media is on the rise, particularly among the US's fastest growing private companies (Inc. 500). I guarantee, when we look at effective sales and marketing practices in five years, they will be dramatically altered as a result of the trends that are unfolding now.

In my world of working with professional service firms in a business-to-business context, I am already seeing significant shifts in efficacy of marketing. Concurrent with this shift in marketing strategy, is the development of new models of business development effectiveness (sales to those of you not in professional services).

I plan to write a great deal about this topic in 2010, as the challenge to companies and firms is twofold. Not only must we find ways to squeeze growth out of a tough economy, we must also look at a major restructuring around the execution of marketing and sales. Not only are tactics changing, but new strategies are emerging. This will force disruption in how sales and marketing organizations are structured, what skill sets will be needed (or no longer of value), how mindsets must shift, and how new tools need to be deployed.

Talk about a tough road ahead. It is analogous to overhauling an engine while driving at 60 mph. We won't have the luxury of pulling over and getting things right before we take off again. But, hey, this is how things work in business today.

For those of us who have accepted change as a fact of life, this will be a fascinating and interesting time. There will be big winners and big losers over the next few years. As Google has proved, business models can emerge from nowhere and dominate in less than five years. AOL showed us that previous high-flyers can slip just as quickly.

Stay tuned for insights, ideas, examples and best-practices from firms and companies that are innovating and executing in this new world of sales and marketing.

Don't hesitate to send me examples of what you are seeing out in the market place as well. As no one has a corner on great ideas.

High Tech/High Touch - Networking in 2010

2009-11-30T05:00:00.003-07:00

In John Nasbitt's 1982 classic, Megatrends, he theorized that as technology became more pervasive, our desire for human contact would expand.

Flash forward to 2009. Witness the explosion of social media, and in an interesting way, Nasbitt's prediction has come true. Although, I doubt he foresaw the age of Facebook, Twitter, et al. Where our desire for human "contact" would be taken to extreme degrees, as seen by some with thousands of "friends" and "followers".

Before I'm taken the wrong way, I am a strong advocate of the value social networks can provide within a business context. But as stated before, they are only useful if one has a proper strategy and employees these tools intelligently. Keep in mind, what happens on the internet, stays on the internet - forever.

Resist the hype, and realize that social media and technology are just additional arrows in our quiver. If you are a professional building a practice, an executive looking for a new position, a company seeking to establish a brand and grow, social networks are of value. Nevertheless, new communication tools rarely eliminate what was in place prior to their arrival. They usually add new and unthought-of twists. Proof #1 - Google advertising on billboards.

Proof #2 -
In the 1940's everyone predicted the death of radio, as television captured the national attention. Here we are 70 years later, and at last check, radio still holds a dominant niche. When it comes to marketing, branding (personal and corporate), positioning, exposure, etc. social media gets in line with a number of traditional tools and creates some interesting new hybrids. But that is material for another post.

In today's economy, networking has taken on heightened importance. My twist on Nasbitt's prediction is, as the landscape becomes cluttered with technology, and the level of "noise" hits a crescendo, the need for strong human connections becomes paramount.

The Wall Street Journal had a wonderful story about lessons learned from an old-fashioned social network. In their piece titled "What Facebook Can't Give You" we learn how over 52 years, a group of men evolved into movers and shakers - supporting one another from obscurity to greatness. What is instructive is that most of these men were of humble origins. Many son's of immigrants. The common denominator was they were ambitious, hard-working and built a killer network.

Having participated in a number of old-fashioned networking groups during my career, I found the ones that were successful had similar characteristics as what the Journal described.

Ambition and work ethic of the members had to be in sync
The members were focused on similar goals
The underlying purpose was to help each other succeed in our professional lives
The secondary purpose was to share ideas, thoughts and best practices from a multitude of industries and endeavors
A wide range of professions, interests and types of individuals are needed to build a vibrant and lasting group
Personal respect and trust had to develop
Friendship and camaraderie came as a by product

The ones that were not successful were usually pre-arranged by someone to be a purely commercial leads group. Often with no thought if we were even looking for the same types of clients or customers.

As we compete in a very tough economy, don't make the mistake of networking only on the internet. You must get out into the real world and build personal relationships. Your underlying networking strategy has to be based on first helping others achieve their goals: a classic servant-leader model.

More so than ever, networking is what leads to the best job opportunities, the best clients, the best projects, the best growth trajectories. In an age where information is ubiquitous, relationships are what provides real traction.

Keep in mind, that despite the fact that we can have hundreds, if not thousands of contacts through social networks and other technology platforms, the human brain can only handle 100 true relationships.

In business if you have the right 100, career critical relationships, you will exceed your goals. Take your top 100, boil it down to your fabulous 50. Then sift once again to arrive at your 20 crown jewel relationships. This is business, not family. So pick wisely and develop the right relationships. Remember high tech/high touch. You can use technology as a proxy from time to time, but for your crown jewels and fabulous 50, nothing replaces the human touch.

Keys to building networks that work:

Networking is about helping others first
Networking is a sincere effort, rather than a score keeping event
You must show a sense of urgency and obligation to support those in your network
Networking is about showing gratitude and maintaining trust
You must recognize how to help someone in your network - what are their needs, what is a good lead for them, etc.
Networking requires spending time selling other people's services, or helping them achieve their goals
It is time consuming, so be selective with whom you build relationships with
Networking is helping others learn how to network
Networks age and are not static, so you must stay motivated to always work on the health of your network
Networking is connecting others who will benefit from the introduction - regardless if it ever benefits you
Networking can be one of the most interesting, exhilarating and satisfying thing you do in business.

Finally - never, ever stop networking.

Not once you've landed your dream job - dreams can end. Not once you've built the perfect practice - clients are fickle and fragile. Not once you've achieved all your goals - that is when you can use your network to give back in a big way.

Force Multiplier

2009-11-25T13:22:00.003-07:00

I try not to bring much of my personal life into this blog, unless it illustrates a business point. It is vanity and generally boring.

But on this Thanksgiving eve I hope, in the spirit of the day, you will give latitude as I weave together personal and business with a healthy dose of thanks - the literary equivalent of a triple flip. Apologies up front if it flops.

First flip
In military parlance there are two concepts that translate directly into business.

Tip of the spear - The front line troops who lead the charge into harm's way.
Force multipliers - A factor that dramatically increases the combat-effectiveness of a given military force. Usually the addition of small elite troops (Special Forces) that significantly enhance the probability of mission success.

Warton's Center for Leadership and Change Management gleaned valuable lessons from the military, pointing out, "it is evident that the U.S. armed services have built what many companies strive for: 1) a culture of readiness and commitment; 2) cross-service and cross-national integration; and 3) pragmatic flexibility."

In the context of business growth, we often think of our sales force as the tip of our spear. I don't intend to insult the brave efforts of our military by comparing them to a sales team, but the analogy is useful.

Our sales force (partners = sales force in a professional service firm) is the part of our organization that is closest to the client and has the most direct impact on growth. A well trained and leverage sales (or business development) team makes an enormous difference on client satisfaction, retention, growth and expansion.

While most corporations have clearly defined sales structures and processes (hopefully being supported by good "air-cover", aka marketing), most professional service firms rely on their professionals to be both the sales team and the service delivery mechanism.

As the concept of sales matures in the professional service industry, innovative firms are learning that they can use a force multiplier to enhance the effectiveness of their partner's sales efforts. A large cadre of dedicated salespeople will never work in the professions, but the right mix of highly trained, and exceptionally professional, consultative sales leaders can make a huge impact. With the right player/coach approach, I have seen results that would make even the most recalcitrant managing partner sit up and take notice.

Second flip: Personal familiarity with a real force multiplier.

Captain Scott Johnson - Special Forces Afghanistan 2005

I have tremendous respect and admiration for my brother, a Captain in the Oregon National Guard. Currently on his 3rd tour of duty in the Middle East. As a soldier who did his duty in the regular army, he has continued to serve our country as a "part-time" warrior. First spending a year in Iraq, then 15 months in Afghanistan and now back for another year in Iraq, all under the aegis of the National Guard.

As a physician's assistant in civilian life, and member of the military medical staff, he has the option to stay within the safe confines of his forward operating base (FOB) and attend to the medical needs of the troops. Nevertheless, in all tours, he has opted to be on the front lines. In order to be an on-the-spot, first responder - on numerous occasions making an immediate difference in the survivability of wounded soldiers. Transferring from the "regular" army to the Special Forces, he spent most of his 15 months in Afghanistan, "up close and personal" with the Taliban.

For me, the most surreal exchange, was receiving a call from his Afghan cell phone a few minutes after an intense fire-fight. Technology has brought this war right into our homes, with a 15 minute delay.

One of the most amazing things about the U.S. military, and the Special Forces, is how they are not only a combat force multiplier, but also a humanitarian force multiplier.

The picture below shows that on any given day, a member of our military can be engaged in deadly conflict with the enemy or providing care and support to the innocent civilians. I know of no other fighting force that displays this capacity.

The thought of being able to switch gears from fighting for your life, to checking on the health of a child is beyond my capacity. And yet, our men and women in the military do it every day.

Third flip: Thanks on Thanksgiving.

While there is a dash of envy over the excitement of my brother's military endeavors, and a little vicarious living through him, for the most part I'm eternally thankful for the sacrifice he has made. I am a bit embarrassed that I have not serve as he, and I'm especially humbled by not doing more to support our troops and the families they leave behind.

The men and women of our military are a humble lot. For the most part, they go about their jobs with quiet dignity, shying from the limelight. In my brother's case, we had to pry out of him details of his award - a Bronze Star - the fourth-highest combat medal. His came with the Valor device - bravery in the face of the enemy, combat heroism.

We stumbled across his second Bronze star (with Valor again). Seeing his commendation letter on the kitchen cabinet, thrown there like a piece of junk mail. If you've never read a military award commendation letter you should. They are service and heroism captured on paper. It's that, "aw shucks, I was just doing my job", attitude that you have got to love about these guys (and gals).

I can brag, because I know he won't.

As we sit down tomorrow and enjoy our feasts, let us make sure we give special thanks, and earnest prayers, to those who do so much to protect our rights, freedoms and liberties.

Without the sacrifice of military men and women over the years, we wouldn't have the luxury to sit around and argue over matters such as health care, cap and trade, and Supreme Court appointments. On the hierarchy of needs, liberty and the pursuit of happiness come only after life and security is made possible by men like Capt. Scott Johnson.

God Speed my friend.

Innovation sightings

2009-11-24T12:45:00.000-07:00

Some of my readers have asked why a blog focused on the growth of businesses occasionally detours into unrelated areas. While my professional experience is centered on translating strategy, sales and marketing into profitable growth, my educational training was in economics, finance and accounting.

As such, I will highlight issues that have a significant impact on the business climate. Macro issues, so to speak. This blog is dedicated to helping transfer knowledge about the business of growth. Often that requires we study the intersection of all that impacts the economic ocean in which we must swim.

As a historical economist (not a hysterical one - that is another matter), I feel growth is often impacted more by fiscal, monetary and regulatory policy than general economic conditions. Lately, many of the C-level executives I speak with, are weighed down by governmental policies that don't augur well for the general business community. Although there will be sectors catering to the government that will do well.

Well meaning or conspiracy theory - take your choice - the phrase, "we're from the Government, and we're here to help" is sending an icy chill across the private sector. We live in an age of government intervention. Business leaders know that aside from the direct impact, the law of unintended consequences is about to spring into full bloom.

With this lengthy preamble, let me address one of the biggest issues facing us today.
The health care debate.

Regardless of one's opinion, we all know that the passage of a major health care bill, will dramatically alter numerous aspects of our lives. For good or bad? That is above my pay grade. But I can assure you the ripple of unseen consequences will spread out further than anyone can anticipate at this juncture.

For those of you who read my post health care in the iPhone age, you know my predilection is to let innovation flourish - before we force a centralized, one-size-fits-all approach on all of us. And not just in health care. I am a big fan of innovation across the board. The products, services, organizations that add the most to our societal well being, often spring from the milieu of a thousand small experiments, all being tested by the mighty consumer. Large and innovative, large and nimble, large and efficient are combination that rarely pop into my head.

Please read this article about innovation in health care coming out of India. In Bangalore, the "Henry Ford of Heart Surgery" is saving lives, providing innovative, inexpensive cardiac care. Oh, and by the way, making a nice profit at it.

If this model of efficiency and innovation can work in India, why not experiment in the United States? Perhaps the future of containing health care costs is outsourcing the most expensive and complicated procedures to efficient medical factories in Bangalore, Mumbai and the Cayman Islands. I can just see it. "Honey, you and the kids go out snorkeling today, and come and see me in the recovery room this evening."

Keeping true to my theme of growth and innovation, look at this post as mental floss to drive home the fact that often the best ideas come from other industries. If you are a professional service firm, what lesson's can you learn from "Dr. Ford?" Can we translate the innovative ideas occurring in India into our organizations? Or do we run for cover when outsourcing is mentioned?

Recently, I spoke to leaders of firms that visited Disney and the Mayo Clinic to gain insight into spectacular client service. In this economy, we have three basic models to follow. Low cost provider, innovator, or client intimacy. Have you chosen your model? Would a trip to India help open your mind to a different way of thinking?

If you dismiss this posting as a political discussion on health care you are missing the point. Certainly if that is what you are seeking, there are gurus much better versed in that subject. But if you are seeking to think differently about your business and looking for outbreaks of innovation, this is your spot.

My final thought. Beyond looking for lessons that could be translated into your business, can you think of how it might spur business opportunities? What are the implications from a legal context of this development? Some of my clients are in the HR consulting business. How could they capitalize on the growing trend of medical tourism. Could a financial services firm offer innovative financing alternatives to pay for elective surgery in foreign countries. Certainly travel, hospitality and health care companies can form alliances and bundle interesting new offerings.

Let me know if you see any other sightings of innovation springing up. Our economy is built on this type of creative destruction. It only accelerates in tough times.

Cloudy with a chance of meatballs

2009-11-23T14:17:00.002-07:00

The children's book (and movie) by this name is a good metaphor for what we can expect from economists. The prediction of food falling from the sky is about as accurate as what we are hearing from the usual sources.

On 11/12 the Wall Street Journal's economic forecast highlighted the general consensus: Unemployment will continue to tick higher for some time, but with a wide range of severity. As usual, if you lined up all the economists end-to-end, you still couldn't reach a conclusion.

A little personal insight, I'll be honest. That is the job I want - one where you can be wrong most of the time and still be held in esteem.

As one who obtained a degree in economics I admit I love the dismal science. Each society has their soothsayer, medicine men and witch doctor. In our modern era we call upon the economists to perform that function.

Economists have sophisticated tools and look smarter and more refined than previous prognosticators. But let's admit it; they are financial weathermen - wrong more often than right. Nevertheless, they hold our attention.

So what does the WSJ survey say?

50% of the economist predict a slow U-shaped rebound
31% a sharp V-shaped recovery
11% a languishing L
7% a W (Which will be blamed on Bush since that was his middle initial)

If I do my math correctly, 69% of the economists don't see great things in 2010.

While I still glance curiously in their direction, I prefer to make up my own economic predictions.

How? By creating my own weather patterns.

In all down markets there are companies, firms, individuals and institutions that defy the odds and manage to grow despite the heavy gravity.

Let's explore this together as we plan for 2010. I will share tactics and strategies that will be of value. I ask my readers to send me examples of companies that are zigging while the economy zags. Together we can learn a lot.

What is strategy anyway?

2009-11-21T14:11:00.004-07:00

Tom Peters uses these two quotes extensively:

Execution is strategy - Fred Malek
The art of war does not require complicated maneuvers; the simplest are the best and common sense is fundamental. From which one might wonder how it is generals make blunders; it is because they try to be clever. - Napoleon (Bonaparte, not Dynamite)

I like this quote from a famous German military strategist:

No plan survives contact with the enemy - Helmuth von Moltke

As we look forward to 2010, and think about strategy in a time of limited visibility, it will serve us well to keep things simple, focus on exceptional execution, and realize that strategy is a fluid process, not a onetime event.

Since you can only plan the beginning of a military operation, Field Marshal von Moltke believed strategy was a system of options. He considered the main task of military leaders was to extensively prepare for all possible outcomes.

My school of thought is to think smart, but act fast. Analysis paralysis can keep you in the starting gates far too long. My model is based on the OODA loop, developed by John Boyd, a USAF Colonel:

Observe
Orient
Decide
Act

Then repeat
Getting stuck on the O (Observe) is not a winning recipe. Boyd's OODA loop was developed to direct one's efforts to defeat an adversary and survive.

He said that "in order to win, we need to operate at a faster tempo or rhythm than our adversaries - or, better yet, get inside their OODA loop". Keep in mind the context for Boyd was high-speed, fighter-jet, dog fights. Screw up and you die.

Action creates clarity.

On a dark night we don't stop driving because we can't see the full path ahead. We plan our destination, start moving and course correct as the situation requires. If we get lost, we stop, pull out the map (OK, with GPS this is a dated analogy), adjust our plan, and continue our journey.

I've mentioned before my white paper written to help law firms navigate through this downturn. But if you download Survive & Position to Thrive - Law Firm Strategy for Tough Times, and look on page seven you will see specific advice on how to be smart and act fast. Advice that is applicable to any business trying to find their way through tough times.

In this economy I see many leaders making one of two mistakes. Either they freeze and stick with the status quo, or they thrash about with a flurry of unconnected initiatives. In the first case, keep in mind, you can't steer a parked car. In the second, don't confuse activity with results

Strategy is not an event. It is not a point in time. It is a continuous feedback loop, built into your business via execution. Great execution will increase the odds of success and be the source of continuous improvement. Rather than waiting on a great epiphany to provide the perfect strategy, or a break through innovation, start moving forward with the best plan you have. Don't let perfect be the enemy of the good.

A good plan, violently executed now, is better than a perfect plan next week - General George Patton

Does your firm need a roll bar?

2009-11-20T00:32:00.000-07:00

The Insurance Institute for Highway Safety just made it harder for auto makers to achieve its top ratings. The Institute added new, more stringent roof-strength requirements to protect passengers in rollover crashes.

Only 19 cars and eight SUV's were named "top safety picks", 67 less than in 2009.

Many auto makers are upset about the ratings as they state that roof-strength alone is not the only metric to indicate the safety of their vehicles. They are backed up by several auto safety experts who say that while roof strength can help prevent injuries in rollovers, other factor,s such as seat belt usage and the entire safety cage structure, also play important roles.

Crash-avoidance technology (e.g. stability control) and vehicle design are just as important keeping vehicles from rolling over in the first place. The flaw in the institute ranking is it doesn't measure accident avoidance efficacy.

This makes sense. If I'm driving a jacked-up jeep, with a short wheel base, it is much more likely to roll. The best strategy to avoid a rollover is to conservatively drive a vehicle with a long wheel base and low center of gravity. If you watch midget racing you know why the drivers are ensconced in a cocoon of metal roll bars.

So what does this have to do with business, and leadership in tough times? Keep reading.

Great business leadership often goes unnoticed. Unnoticed, much like modern, high-tech cars, that keep you out of accidents. No one really talks much about the big wreck that almost happened. It certainly doesn't make it onto YouTube.

Today, businesses and firms that manage to avoid the economic meltdown are not often in the limelight. The spectacular melt-down or fantastic turnaround gets the press.

Leaders that can pull a firm or company out of the fire are usually bigger-than-life persona's. Lee Iacocca, Steve Jobs (when he returned to straighten out Apple), and Jack Welch come to mind. But Harvard professor Rakesh Khurana, suggests in his book, Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs, competent executives with relevant skills may save companies from problems brought on by their flashy counterparts. For my law firm leaders, does the name Tower Snow ring a bell?

Jim Collins, the noted Good to Great Guru, opines about Level 5 Leadership. He describes a Level 5 leader as the antithesis of egocentric celebrity. These are the leaders that transform firms and companies from good to great.

Level 1 equates to individual capability
Level 2 to team skills
Level 3 to managerial competence
Level 4 to leadership as traditionally conceived
Level 5 - extra dimension: paradoxical blend of personal humility and professional will

Collins goes on to say, "They are somewhat self-effacing individuals who deflect adulation, yet who have almost stoic resolve to do absolutely whatever it takes to make the company great, channeling their ego needs away from themselves and into the larger goal of building a great company"

I have told executives and managing partners: The firms that will emerge as great performers from this crisis will be those that had leaders who kept responding and acting with a focused effort that seemed to be just beyond what they thought possible. This is the stoic resolve Collins mentions.

I also stress that in these tough times, it is the servant leader who leads by example that will prevail. The quiet, confident, self-effacing leader who is willing to roll up their sleeves and do the heavy lifting will be what is needed. The self-aggrandizing and magnetic leader is probably not the style best suited to get you through this fire.

So what do you want in today's economy? A well suited level 5 leader that keeps you out of a wreck? Or the exciting, midget racer leader that needs a roll bar because they are going to flip in the first hairpin turn?

Gentlemen, start your engines

2009-11-19T05:00:00.000-07:00

I must admit, it is nice to be validated. Let me explain.

As the downturn continues to weigh down on us, even stalwart businesses such as law firms are changing under the pressure.

In Bruce MacEwen's excellent blog about the business of law firms, he explores some interesting changes occurring at Reed Smith, a large global firm.

Now for those of us who have had exposure to other industries, the market induced modifications law firms are considering may not seem overly innovative or dramatic. But trust me, for a law firm, they are nothing short of draconian.

What, pray tell, has Reed Smith done? Try layoffs, cost cutting, reduction in salaries and billing rates, expecting people to be judged on performance not tenure. Now they have asked non-equity partners (What is a non-equity partner you ask? Sort of like a bank Vice President) to invest in the firm.

I know it might sound as though I'm being a bit flippant about these points. But for law firms, that have had an extremely long and profitable run over the past twenty years, this is as radical as corporate America outsourcing major functions. And it points out that in this downturn, no one is immune.

Back to my validation.

For several years I have been suggesting to law firm leaders that they should modify their business models to be more efficient, effective and business oriented. But with a 20 year record of growth, it was hard to get anyone to take action. I understood that perspective. Change for the sake of change is hard when all appears to be going well.

I finally captured my thoughts in a white paper that outlined how law firms (and other professional firms) could steer through this recession.

One point I made:

Study what leaders in other industries are doing to navigate this downturn... A major mistake is to benchmark competitors ...the best companies strive to radically improve on industry norms, often looking outside their industry for benchmarks. Take advantage of this downturn and break away from the legal pack by emulating best performers in other industries and professional services.

In the wake of the downturn, Gregory Jordan, Global Managing Partner of Reed Smith, said law firms in general are making decisions independently and apart of industry trends:

“Law firms aren’t copying each other,” he said. “Everybody is trying to figure out how to run their business and how to get it as rightly-positioned as they can. We’re seeing it every day. We’re going to see sharper decision making by all the law firms, not mimicking each other on every little thing. This isn’t so much coming from the law firms, it’s coming from the market place. We take our cues from the clients.”

Other points I made:

Certainly there are more than two things to address. But if you miss executing on the critical “big two” success factors you might not survive a serious downturn. And even if you did survive the odds were high that your organization would be crippled and would lag significantly behind competitors when the economy rebounded – perhaps never to regain previous market share.
Serious recessions like this one don’t dramatically alter business models, but they can radically alter market positions. Even in the current low-growth environment, a dramatic realignment of firms’ market positions is taking place. The downturn has proven to be a powerful catalyst forcing firms to improve and modify inefficient and ineffective business practices, and a few savvy firms are discovering the opportunities inherent in this marketplace.
In uncertain times like these, people prefer to stick with comfortable and predictable routines. That’s exactly the wrong approach. Firm leaders will need to work hard and intelligently to get their firms unstuck. They will need to insist on aggressive changes that make “business as usual” impossible and defuse or neutralize those who stubbornly resist change.
A survival-of-the-fittest approach will eventually result in firms that are more profitable. But Darwin didn’t say it was survival of the strongest or most intelligent: Survival was the reward for those most able to adapt. The law firms that survive this crisis and emerge as great performers will be those with leaders who respond and act with a focused effort—an effort that pushes boundaries just beyond what the firm thinks possible.

Gregory Jordan again:

“It’s all part of a focused analysis of what should we do to change and improve the firm as we find ourselves in the best position to succeed in the recovery following the recession.” We, like all big firms, worked our way through the layoffs and rightsizing of staffing level . . .they’re all part of a very deliberate effort on our part to continue to evolve and innovate, to be in the best possible position to be winners in the shakeout

As I said, I do enjoy it when smart people agree with me.

Law firms experimenting with new business models. Gentlemen, start your engines - now it gets fun!

Avoiding the lost decade

2009-11-18T05:00:00.004-07:00

Having lived in Japan during the boom years of the 70's, and observing my father engage in business there through the 80's, it appeared that Japan would become the dominate economic super power. While I was in college in the 80's he encouraged me to stay up with my Nihongo and be prepared to work for a Japanese company upon graduation.

It was good advice through the 80's. But that changed dramatically in 1990. Much like the U.S. today, Japan, in the early 90's, experienced significant credit and real estate bubbles. Similarly there was a huge amount of over borrowing that lead up to a sharp economic downturn. The Japanese government used historically low interest rates and significant stimulus spending to try to get their economy back on track.

As Tom Raum outlines in a recent article the parallels are very similar. In fact, Japan's Nikkei index, now just under 10,000, is still 75% lower than it was 20 years ago. That sounds more like two lost decades.

Will the U.S. face a similar fate? And if so, what does that mean for those of us with intentions of finding ways to still grow and prosper despite a stiff head wind?

First of all, we have lost a decade if you look at the Dow index. March 30, 1999 was the first time the Dow crossed 10,000. Nice. We are back to 1999.

Second, we have been in a tough downturn for 23 months in a row. So we have lost two years on this front.

On the positive side, the U.S. is not Japan in a number of important ways. Having grown up in Asia and lived in Japan for six years I know all too well how the Japanese are loath to "losing face". Joseph Schumpeter's concept of creative destruction is anathema to their societal norms. Therefore, the capital market's restorative process is artificially slowed down by government intervention in Japan. Unfortunately this is similar to the emerging concept in the U.S. that some institutions are "too big to fail." Hopefully we don't accept this destructive policy for too long.

We don't have as much of a problem with an aging society, and unlike Japan, America is wide open to growth through immigration. We tend to be more willing to write things off. The U.S. has a culture of innovation, an appetite for risk, and a willingness to give those who fail another shot - or two, or three or four.

If we don't lose these societal attributes (the U.S.'s secret sauce), we should be able to rebound well before a decade passes. But this has been an especially severe and unusual downturn. In addition, there is a great deal of uncertainty from the small business community (our primary engine of growth and innovation) about regulatory changes, when liquidity will return and limited visibility as to where growth will come from. This is not a good formula for job growth, which is what is needed to get the economy back on track.

A lost decade is not likely in the cards, but a lost five years is not unreasonable. If you consider severe regional recessions, such as the oil patch bust in the mid-to-late 80's, it took cities such as Houston, Denver and Tulsa a full five years to get back to even.

That puts a solid and sustainable rebound at 2012.

The Wall Street Journal points out in a November 11th article, that a record number of U.S. companies beat earnings expectations in the third quarter. Nevertheless, a big portion of these profits came from cost-cutting. As the old adage goes - you can't cut yourself to greatness. Cost cutting to improve earnings is not a sustainable strategy. Top line growth has to occur at some point, or we risk a double dip recession.

As they say, "it is what it is." So now what can we do about it?

Certainly intelligent cost containment is still in order. But we don't have to accept the fact that a no-growth economy means we can't grow.

It is a zero sum game now. The market is static and a tide that raises all boats is not coming in soon.
Growth will have to come from stealing market share and finding new pockets of untapped revenue opportunity. Maintenance of your own market share and client base is critical. As is identifying the most attractive micro-markets where your competition have become weakened and exposed by broad cost-cutting initiatives.

This is where a mix of toughness and nimbleness is needed. Companies/firms that want to be strong and well positioned in the future must take off the gloves, be smart and act fast.

We may be headed to a lost half decade, but there is no reason you have to participate. Find ways to opt out!

Desperately seeking precedent

2009-11-17T05:00:00.001-07:00

I work with a number of law firms. Lawyers are trained to provide a valuable service to their clients - keep them out of trouble. As such, they generally take a risk averse posture to many things, including the management of their business. Yes a firm is a business, more so today than ever before.

Lawyers operate by precedent. In the legal system, precedent is a legal case that establishes a principal or rule that a court or judicial body utilizes when deciding subsequent cases with similar issues or facts.

In today's economy we are all facing significant pressure and the need to consider radical change. Change to our business models, change to our cost structure, change to our personal standard of living. And to be honest, nobody really likes change - especially when it requires tough choices.

It is human nature to resist change and seek stability. It is normal to want to know who has gone before us and been the first one to do something new. Lawyers are not the only ones who want to operate by precedent.

Sure there are those few mavericks that truly want to be first. The pioneer's reward can be great, but many ended up on the prairie with arrows in their back. In business, some early adopters (or first movers) reap huge rewards. But if Google comes to mind, remember first there was Yahoo and Alta Vista.

As we work with clients (and not just our law firm clients) everyone wants to know who is solving the problems of this tough economy. They ask about our strategies, "Can you show me where this has worked before?"

The problem with this type of precedent based approach is that in this downturn there are not too many step-by-step guidebooks lying around. To be successful you are going to have to break from precedent, take some risk, stop looking over your shoulder at your competitors and be willing to try something new.

If you wait until there are numerous case studies in your industry you will be left in the dust and it will be too late to catch up.

When everything looks like a nail

2009-11-16T09:50:00.000-07:00

Seth Godin is one of my favorite irreverent thinkers. If you haven't read any of his books, pick up one at the airport. They are quick, easy reads, always with a thought or two that makes you stop and ponder.

And ponder I did when I read his latest blog post. As a professional does every client look like a nail to you, needing to be hammered? Or instead are they a fine block of mahogany needing carving and staining?

In this recession we have to stop doing things the same way we did before. It is not working.

Jumping to conclusions, assuming needs, presenting our capabilities and not listening when we are trying to win work, or expand/retain clients are the death knell in a hyper-competitive world where supply exceeds demand.

For once we really do have to understand clients needs, issues and pain points. We have to be willing to help them achieve their goals and solve their most pressing problems - even if it means helping them find a different solution than what we have to offer. We do have to diagnose before we prescribe.

It is tough out there. Are you still showing up at a gun fight carrying just a knife?

Does a law firm just have to be a law firm? Can an IT consultancy offer more than technical input? Can a headhunter provide strategy advice? How do investment bankers generate fees and add value in a low transaction environment. What does it take to move from being a hired expert to an integrated trusted advisor. What is a professional service firm anyway?

The answers may not come easily, but the questions had better be asked. I guarantee your more innovative competitors are not sitting still waiting out the downturn.

Going Rogue via Web 2.0

2009-11-15T02:05:00.003-07:00

Love her or hate her - there is little middle ground - you need to study how Sarah Palin is using web 2.0 and social media to expand her brand. Especially if you are a professional service provider or an executive looking for a job.

This article in the Wall Street Journal outlines how Palin's book tour is built around a well thought out web strategy. There are lessons to learn from how Palin and Obama have taken political personal branding to a new level, leveraging tools that are at the disposal of us all.

When you think about personal branding no one exemplifies that concept better than politicians. Certainly politicians are affiliated with their party, but the good ones build a "brand" that sets them above party politics. Obama won decisively because he branded himself in such a way that he won over many independents and republicans.

In the business world the best example of personal branding are the top tier gurus (e.g. Tom Peters, Jim Collins, Malcom Gladwell, Gary Hamel) who build everything around their name. While some of these gurus are sole practitioners, others have built sizable consulting firms. Steven Covey leveraged his personal brand into a publicly traded company.

Corporate executives build their brand as well. Who can separate Steve Jobs and Apple, Bill Gates and Microsoft, Jack Welch and GE. Think of the positive impact on Apple's stock when Jobs returned to company ten years ago.

There is an interesting confluence of events that makes the development of your personal brand critical if you want to succeed in the coming years. The first is the advent of all the tools that web 2.0 puts at our fingertips. The second is the rough downturn that has heightened competition for everything. For jobs, clients, customers, market share, margins. Everything.

Personal branding is no longer simply the province of politicians, high level business consultants or top tier executives.

If you are a professional service provider you know that many clients hire the individual over the firm. Certainly the reputation, or brand, of your firm is important. But if you don't have the personal reputation, your firm affiliation only goes so far to help you build your book of business. If you are getting hired for high value, mission critical work (bet your company engagements) your personal brand is the first evaluation criteria most clients use. Then they validate their choice by linking you to the reputation of your firm.

In this great recession era, what this means for most of us is the development and maintenance of our personal brand will be crucial for future success. As a professional it is part of your job. But for many who are looking for work in this economy, it could be the determining factor in your career progression.

Observing top politicians will highlight many best practices on how to effectively build your own strategy and leverage the web. So whether you like Sarah or not, watch how she maximizes her message with facebook, twitter, google ad words and web analytics. One interesting thing to note (and I will expand on this in future postings) is how the traditional web site is losing importance to the interactive nature of these other web platforms. If you think the term "traditional" web site doesn't make sense, be aware that generation Y sees email as archaic.

She may or may not be running for President, but Sarah Palin is going to make a boat load of money in the next few years. Many thanks to this wired world we live in.

Lessons from the Great Recession

2009-11-13T15:00:00.000-07:00

As a result of the downturn many are saying that their retirement has been pushed back years, or that they may never be able to retire.

What would happen to our society and economy if the response to this was not one of despair, but people saying "who cares about retirement?" I'm going to do what I love, follow my passion and be so excited about what I do that I'll never want to retire."

Talk about reformation! If everyone was sitting in the right seats on the right bus the outflow of innovation, satisfaction and productivity would be astounding. The maximization of human capital, so to speak.

This is a fantastic dream that won't occur across the board, but on an individual level what are you doing about it? Wouldn't you prefer to be 80 years old still contributing to something you love, than sitting on the porch waiting for your social security check?

Two great resources to check out:

Jim Collins on developing your personal hedgehog strategy

What you are deeply passionate about?
What you can be the best in the world at, and what you cannot be the best at.
What best drives your economic engine? Key business ratio

Now Discover Your Strengths - Marcus Buckingham

Can your firm also develop this passion for excellence? It can if your people have that attitude. A professional firm is the sum of its individuals. Do you have the right people on the bus? Sitting in the right seats? All operating from their personal hedgehog strategy - linked to your firm's hedgehog strategy?

If not now when will you get this right?

Growth in a non-growth economy - Part 1

2009-11-12T04:30:00.002-07:00

I spoke last week at a retreat for a large law firm on how to grow a firm/business in a non-growth economy.

The presentation was based my real world experience (this is my forth major recession - I've got the scars to prove it.) and research from our white paper on how professional service firms can preserve market share and position for growth in today's economy.

The event was held the day before Halloween - my points were scary, but not frightening if a firm has the courage to break from precedent and question the status quo.

On my flight home from I sat next to an executive who was intrigued when I told him about my key note address. First he was surprised law firms and professional firms needed help with growth and strategy - I guess he thought fees grew on trees.

Then he posed a good question - "Does your advice hold if the economy bounces back with a strong V-shaped recovery?"

My two points back to him:

Don't hold your breath for a sharp rebound. If you do you might not be around in a year.
If by chance I'm wrong (and I do hope I am) everything I spoke about will serve you well in a strong economy. The difference is in this downturn it is critical to follow my advice. In a growth economy it will help you dominate your market.

I also told him the two critical success factors to manage through this downturn are:

Make your sales force as effective and efficient as possible - realign marketing to support sales and revenue generation.

Get closer to existing clients and key prospects - stress quality over quantity and really understand their needs and what outstanding client service means in their eyes.

If you manage a professional service firm the translation goes as follows:

Transform your marketing organization into a business development function that enables partners (the firm's "sales force") to be more efficient, effective, focused and active in their BD efforts.

Evaluate your core competencies, as well as key clients and strategic targets in order to get much closer to those clients that will really matter in the coming one to three years. Refine, tighten and focus your market facing strategy in order to make your value proposition crystal clear and lined up with your clients key needs.

In the next few weeks I will be posting excerpts from my remarks and the white paper, so stand by.

Health care in the iPhone age

2009-11-11T06:00:00.004-07:00

I don't claim to be an expert in the health care debate. Heaven knows it is a complicated, cumbersome, and convoluted situation with points on both sides of the spectrum that are valid.

But we live in the age of innovation. Where the market unleashes products like the iPhone, and the freedom and flexibility of our entrepreneurial economy sparks thousands of new apps (50,000 and counting). In this environment of unprecedented creativity does it make sense to move backwards to a monolithic, top-down, central planning approach to trying to improving 1/7th of our economy?

Maybe I'm wrong, but show me where this approach unleashed the type of innovation and creativity we have seen in a few short years since the iPhone was launched. Apple is now the dominant player in its space because it didn't try to control development of apps. It let the developer community have access to all the tools they needed.

They facilitated a laboratory of experimentation. The result? Thousands of apps that no one could have ever planned with a top down approach. Are all of them useful? No. But the best ideas float to the top as consumers vote with their pocket books, or paypal.

It strikes me that health care is too important to leave in the hands of a large bureaucracy - no matter how noble its intentions. Why not unlock the power of innovation in health care much like Apple has done in its market?

Why not give innovation a chance first and let a thousand experiments bloom. In this day of mass customization it worries me that such a critical part of our economy and a service needed by all will be directed more and more from a less flexible and uncreative infrastructure.

New breakthroughs and innovation rarely come out of large organizations. Why do we expect anything different from the government? If a truly free and unencumbered market can't solve this problem, then the government can step in, take control and say "I told you so."

But give freedom and innovation a chance before we throw a heavy blanket of bureaucracy on top of it.

Twitter and fritter your time away - Is Twitter for twits?

2009-11-10T02:09:00.000-07:00

Among many professionals (and their firms) with which we work the question has arisen how Web 2.0 (e.g. social networking) could or should be used especially in terms of raising awareness of their expertise, service, abilities in order to attract clients and grow their practice.

Certainly a number of "celebrity" professional service providers (e.g. Marcus Buckingham, Geoffry Gitomer, Stephen Covey, Tom Peters, Seth Godin, etc.) are utilizing many of these tools to maximize the impact of their marketing and business development efforts and build their "personal" brand. For most of these gurus the personal brand is the company brand.

Before we delve into the tools available it is probably a good idea to roll the clock back to see how far we have come. Some may insist this is progress, others may see it in a different light.

Rather than outlining what we now have at our disposal let's consider what we didn't have 27 years ago. Entering the work force in 1982 the landscape looked like this. Cell phone virtually did not exist - those that had them paid an exorbitant cost and carried around a brick. There was no voice mail - messages came on pink sheets, or an answering service called and let you know who had been trying to reach you during lunch or after hours. A few PCs were in the office, but they were limited in their function primarily to word processing (does anyone call it that anymore?). If there was any connectivity to another computer it came over a 300 baud modem producing a slow scroll of letters across a green monitor. The fax machine was starting to make market penetration, but the question at the time was, "do you have a fax number?" With the assumption that only 20 or 30% of people would answer in the affirmative.

Can you imagine if someone walked into the office of a Fortune 500 CEO in 1982 and told them that they had the brilliant idea of putting TVs on every desk? And not just a typical TV, but one that would let the user watch anything (good, bad or ugly) they wanted, shop from their desk, chat with their friends, easily look for a job and pursue their personal hobbies and interests. As you were being thrown out of the CEOs office you could yell back that this TV could also be used to get some work done.

Approaching a CEO in 1982 with this value proposition would have made you look like an idiot. A TV on every desk? How would anyone get real work done?

But here we are - exactly in that situation. And not only is the TV on every deck, it is available everywhere we go with our iPhones and Blackberry's.

Looking back now it is hard to remember what work looked like and what it was that we really did. There was more time to think and deliberate. Certainly we were not able to do many things as efficiently or manage as many tasks at one time. But we were able to give deeper thought to a smaller set of objectives.

The advent of the modern internet era makes one question if all the productivity advances are canceled out by all the wasted time and time spent on the inane. You know what I'm talking about. How many of you have watched a youtube clip forwarded to you by a friend while at work?

Which brings the point back to the utility of Web 2.0 in the context of increasing sales and revenue. As a professional service provider one of the key parts of our job is to demonstrate our knowledge, expertise and value to clients. The old fashion method of slowly building a personal network is still critical (and as I argue later, may be more important than ever as self promotion has become so easy), but how do tools - such as blogging, instant messaging, email (the granddaddy that is falling out of use with the younger generation), social networks (Facebook, LinkedIn, Plaxo, etc.), webcasts, and Twitter - fit into the mix. And are they of value in promoting and growing a professional practice?

Beyond legal considerations that certain professionals need to adhere to, the question is can these tools be used effectively? And what new tools will be developed in the near future? After all, the newest rage, Twitter, just broke into the mainstream during the 2008 election cycle. How the Obama team used social networking may be instructive, but watching McCain trying to catch up with rapid-fire twittering might seem a little out of sync.

The main consideration is to be very careful and develop a well thought out strategy before launching your personal branding efforts. It used to be a huge effort to develop a personal brand beyond your local market unless you were willing to speak, write and get published. The path to guru status was long and arduous. And the filtering mechanism ensured that only those that truly were gurus achieved that status.

Today it is easy to self promote and gain exposure. But without the aid of those who know how to vet these messages and carefully help craft your position, it is easy to make a fool of yourself and damage your reputation. Just think about all the hastily written emails that went out before your brain could tell your finger not to hit send. That should drive the point home.

As it gets easier for everyone to have their own soapbox, it becomes critical to make sure you have a clear strategy of how these tools can help or damage your efforts to grow a practice or a business. Casual experimentation should be not be done without realizing the consequences. Ask anyone who has put a compromising photo or an embarrassing post on Facebook how hard it is to retract that from the internet and that should give you reason to pause. Do I really care about the tweet that tells me my professional advisor is walking the dog with his kids? What about the great blog that starts out strong and then languishes with only one new post in the past three months?

Web 2.0 is like a loaded gun. In the hands of a child it is a disaster waiting to happen. In the hands of a trained professional it is a valuable law enforcement tool. Since these tools are cheap (free), easy to use and simple to set up, the barriers to entry are non-existent. If you are a professional seeking to expand and grow your practice don't sit down and casually set up your on-line presence over a weekend without a clear strategy and the proper rules of engagement.

The other important consideration is how much time are you willing to invest in these efforts. I've talked to many people who have started using these tools that tend to fall into three camps. The first finds out quickly that the time required to be effective is significant and that they don't have the bandwidth or ability to consistently put out useful information. The second group gets so excited and enamored that one has to question if they have any time left to do real work. The successful group adheres to their strategy and uses these tools to help them achieve their pre-established goals.

Certainly unexpected twists and turns can result by jumping into this arena - both good and bad. But with everyone having the ability to blast their thoughts out into the blogosphere it takes strategy, planning, hard work and consistent effort to make the investment of time pay off. Just like successful rainmakers and business generators have known forever - there are never any short cuts to greatness or sustained success.

Does Bill Gates have to install anything on his PC?

2009-11-09T06:00:00.001-07:00

As business leaders we so often get removed far, far from the experiences of our customers or clients.

The thought struck me the other day as my firm was installing a complicated software application from Microsoft. Does Bill Gates have any idea how difficult, and frustrating many of his products are to use?

What should have been relatively straight forward took two IT techs most of the day working through problems and mysterious ghosts in the machine to get it all working. And then a few days later, my PC does something weird and it is back to the drawing board. I promise I didn't do anything to break it.

My guess is that every time Mr. Gates leaves his office, a swat team descends onto his computer and tweaks it so it runs smoothly. I'll even wager that when he shuts down his computer, it shuts off immediately. Same thing when he fires it up in the morning - no chugging away for five minutes like my machine.

The point is, as a leader how recently have you been on the receiving end of your product or service. Do you think any of the GM executives ever drove a five year old Suburban with 100,000 miles on it? If they did they would know how crummy the quality control was on their vehicles. No doubt these auto exec's thought they were putting out great products as they probably swapped out cars every few months - always driving a shiny new model.

If you are a bank president, have you ever called your customer service number to see how easy it is to do business with your organization?

If you are the managing partner of a service firm, what is it like when clients come to your office, or receive a bill from your organization.

The examples can go on and on. But if you are the leader of your enterprise get out from behind your desk and experience interacting with your company from the customers point of view. While it might be easier to ascertain your level of customer service if you are in a business that caters to consumers, this is still a worthwhile exercise for a professional service firm. After all professional service firms still have service in their name. Something that too many of us "professionals" have forgotten.

I encourage you to walk a mile in your client/customers shoes. You might be shocked by what you learn.

An old dog teaches us new tricks

2009-11-07T23:54:00.002-07:00

In keeping with my recent theme I came across another example of old line businesses showing us that you can adapt, morph and stay relevant - and more importantly profitable - in highly competitive environments.

In Barrons, Jonathan Knee wrote an interesting article pointing out that the hype over the near term death of newspapers is overblown. Newspapers have been treated as the poster children for anachronistic business models that have been trampled by the internet. But Knee points out that while newspapers have been significantly impacted by new media they are still one of the most profitable types of business in the media sector. The report of their demise is greatly exaggerated.

I used to say that newspapers will not go away as no one wants to bring their laptop into the bathroom. But with iPhones that scenario has become a reality. Although nothing will replace the tactile pleasure of reading the Sunday paper with your coffee cup creating rings on the paper.

So while not facing immediate extinction they do face a clear and present danger. Nevertheless he says, "doing worse, doesn't mean doing badly." Profit margins for newspapers have fallen quickly from 30% to the mid-teens. This rapid realignment has forced these traditionally stable businesses to implement significant operating adjustments.

Not only have newspapers had to face strong decline in advertising demand, but the internet has not been their friend, stealing their lucrative cash cows - local classified ads - from previously insulated and protected market positions. Autotrader and Craigs List are the new kings of this category.

Knee goes on to note that while there are permanent changes to the industry, smart operators have adapted by developing strategies that focus on reinforcing their competitive advantages, and not trying to reclaim lost ground in areas that have been structurally changed.

"The newspaper of tomorrow will indeed be very different in terms of how it is produced and delivered, what is in it, and how profitable it is. Operators must aggressively focus on cost and cooperation, designing truly distinctive offerings that leverage their advantage in this newly competitive landscape."

In my world of consulting with law firms and other professional service firms it is useful to draw parallels and extract lessons learned.

Virtually every law firm, and most other "knowledge based" service firms are struggling in this great recession. I've made the point that profitable business models don't disappear overnight. Particularly if the underlying product or service is still of value and in demand by consumers. That is the case with newspapers. People still want news, more so now in this globally interconnected world. It is the delivery platform that has changed.

I have also advised many clients that while recessions rarely eliminate business models, they do have the tendency to radically alter market share and position. Just because your firm was dominant five years ago, doesn't ensure that lofty position in the future. And recessions can change the competitive landscape quickly as some firms hunker down, and others take advantage of market disturbances by being smart, opportunistic and aggressive.

If you are the managing partner of a law firm or consulting firm how do you take a lesson from the newspaper industry. Let's think for a moment in the context of a law firm. While short term demand for legal services has diminished do we think that in the future the need for legal counsel will go away? Of course not, that is a ludicrous notion. The delivery platform might change (as it has over the past twenty years due to technology), but does the following list indicate the need for less legal advice or more?

More complexity in the world leading to new problems and challenges. No one has repealed the law of unintended consequences.
Globalization and connectivity will only expand.
Information, assets move faster than ever
The regulatory pendulum has swung back in favor of more oversight, complexity and governmental control
The speed of innovation doesn't show signs of slowing down.
The world's volatility index doesn't appear to be settling down.

In fact, I spoke recently with a senior healthcare executive about the growing trend of medical tourism - people going to Mexico or India for medical procedures. He wondered about the legal implications for the whole medical, insurance ecosphere if for instance a company encouraged one of their employees to go to India for a knee replacement (at significant savings) and things went awry.

For professional firms it would be wise to re-read what Jonathan Knee says about the smart newspaper operators - they will develop strategies that focus on reinforcing their competitive advantages . . . not fighting to hang on to lost ground . . . must focus on cost and cooperation, designing truly distinctive offerings that leverage their advantage.

I'm sure the newspaper baron's are not happy that their world changed so dramatically so quickly. But the winners in that industry will be the ones who get over what has happened and move forward to compete effectively in the new environment. Some will wither and die out, or just keep cutting costs hoping that reduced overhead will be their salvation. But the winners will figure out new models and approaches that will allow them to compete and perhaps prosper.

The same goes for many of the law firms, consulting firms, professional firms I work with. When you compete in a knowledge economy, your competitors can come at you from anywhere in the world. You better be smart and have a clearly defined strategy that reinforces your competitive advantages and enhances your value proposition.

For some this is terrifying. For others it opens up exciting new opportunities to dominate specific niches and areas, ultimately leading to significant profit increases.

What can a railroad teach professionals?

2009-11-05T02:11:00.003-07:00

The big business news this week is Warren Buffet's acquisition of BNSF - Burlington Northern Santa Fe Railroad.

What can this 150 year old, basic transportation business teach professional service firms? Well if you listen to what CEO Matthew Rose said it was enlightening. He literally said their success was not due just to keeping the trains running on time (does that phrase sound familiar to professional service firm marketers?). Instead it was all about understanding your customers and servicing their needs.

Buffet made the biggest bet of his career buying an old line company that has remained profitable and relevant by:

Knowing their customers extremely well and anticipating their needs
Intelligently applying technology to increase efficiency
Always seeking out productivity enhancements
Assembling excellent leadership and best in class management

Since I spend most of my time consulting with professional service firms helping them grow profitably, it is instructive to see what an old, mundane, commodity business did right to create over $40 billion of value.

For smart, knowledge based professional service firms it is good to know that success is more than just keeping the trains running on time. It is also about:

Knowing what business you are really in, and what your value proposition is in your client's eyes - BNSF is more than just a railroad.
Staying close to your clients and seeking new ways to solve their problems.
Always seeking out ways to do business more efficiently, effectively and not hesitating to innovate.
Making sure you have the best talent running your business - Jim Colin's: Getting the right people on the bus and into the right seats. Professional service firms need professional management particularly as they navigate this disruptive economy.

In the immortal lyrics of the Grateful Dead - Driving that train, high on cocaine, Casey Jones is ready, watch your speed. Trouble ahead, trouble behind, and you know that notion just crossed my mind. Trouble with you is the trouble with me, got two good eyes but you still don't see. Come round the bend, you know it's the end.

Don't let that be you! BNSF shows us that even after 150 years, in the midst of a real tough recession, they have their eyes open wide and are proof that decline can be detected, avoided and reversed.

Tata plays the recession right hugging their clients

2009-11-01T21:12:00.009-07:00

In a recent white paper I outlined key tactics that law firms must do to get through this recession and be in a position to thrive again.

One of my main points:

Evaluate your core competencies, your key clients and top prospects. So that you can get much closer to those clients and prospects that will really matter in the coming years. Refine, tighten and focus your market facing strategy.

This advice goes for anyone in business these days as pointed out Friday in the Wall Street Journal. The Journal quoted the CEO of Tata Consultancy on how they have been able to maintain market position during the recession. They executed extremely well on the advice listed above.

When they realized early that things were starting to turn down they decided that first they would make sure they were very close to all their customers.

The thing they point to as what they have done right during the tough times is to become much closer to customers and staying with them through the downturn.

They entered into different conversations than in the past. Rather than trying to sell customers on more services, they coached their people to sit down with customers to understand their pain points and see what they really needed from Tata. They asked what they could do to help. Could they find ways to take out costs? Could they help customers in their recovery process?

Believe it or not, clients/customers care that you care. And not just when things are good and they can buy from you. How you manage relationships, expectations and do things to help during a downturn can cement relationships for life.

I saw it first hand early in my career and know it works. I worked for a firm that did everything right during another very tough recession - getting close to our clients, crawling into the foxhole with them, supporting them in every fashion we could. The reward when the economy rebounded? Market share twice that of our closest competitor.

Merger for Growth?

2009-11-01T19:30:00.003-07:00

During recessions it is often common to see stronger players utilizing the opportunity to buy up competitors or make strategic acquisitions, taking advantage of depressed values.

Some recent deals that have been announced:

Oracle aquiring Sun
Xerox acquiring ACS
Dell acquiring Perot Systems

The common denominator of these deals appears to be mature companies in slow growth industries seeking new channels of revenue.

In addition to these corporations we are also seeing large professional service firms following a similar growth strategy:

Watson Wyatt merging with Towers Perrin
Hogan & Hartson merging with Lovells to become one of the largest global law firms

Currently Watson & Wyatt is one of my clients, and I have done work for Hogan in the past. In my career I have been involved in a number of professional service firm mergers, both as an advisor as well as being a professional at firms going through the process.

I was with a small boutique firm that was acquired by a publicly traded company doing rollups in the accounting world. I jumped ship quickly after being recruited by Arthur Andersen.

I was at Arthur Andersen when the Andersen Consulting split occured.

I helped grow a management consulting firm and sell it to Hitachi Consulting. Most of the partners left the day after their employment agreements expired.

I advised a private professional firm that brought in private equity to help it expand.

I've worked with several law firms that merged with other firms.

Many people will tell you that it is tough to merge professional service firms since culture and people are so critical to success. That is true. When your most valuable assets literally go down the elevator each night it can present unique challenges. After all when Oracle acquires Sun, Sun's IP or manufacturing plants don't have the option of walking over to a competitor if they don't like the new environment.

But it is not impossible for professional service firms to pull off successful acquisitions or mergers. In fact, recessions often are a better time to try to accomplish the effort as many of the professionals have less options during tough times. They are more motivated to stay put and try to make it work in the newly merged firm. By the time the economy picks up they may realize that the merger is working and their initial concerns have faded.

While an acquisition or merger is hard to pull off, the real heavy lifting starts after the deal is done. In a professional service firm these are some of the key issues to overcome:

Client conflicts - although this should have been covered during due diligence
Cultural conflict - usually the biggest stumbling block is compensation
Leadership struggles
Client retention
Talent retention - usually there is a spike after a merger, but again today's economy may mitigate this issue.

Here is what I've learned by having lived through a number of these firm combinations, both from the inside and as an advisor. Leadership needs to keep the following high on thier priority list:

Competitors will use the news as a reason to go hard after your clients. They will use every excuse under the sun to place fear, uncertaintiy and doubt into the minds of your clients.
Competitors will also go after your best talent. Both to pick up the talent, but also as a way to get to your clients. Keep in mind the strongest swimmers usually jump ship first. Your B and C talent will sit tight and not want to jeopardize their jobs, while your A talent might think it is time to start looking around.
Mergers and acquisitions are similar to recessions. Both get people worried, distracted and inwardly focused. Since an outward, client focused approach is so critical to professional firms this inward focus can help your competitors with thier strategy to raid your clients and talent.

I recently published a white paper on how law firms can navigate this recession. Much of the advice also applies to how other professional service firms can maintain market position during the downturn. In addition, much of the advice applies to a merger:

Get very, very close to your clients. Especially your top tier crown jewels.
Get close to your talent. Especially those people you must retain.
Communicate more often than you think is needed. And then communicate some more.
Create incentives for your line partners, associates/managers to stay focused externally on clients.
An internal branding, communication and marketing program is important to help your talent realize that the merger is good for them, that they can relax and focus on continuing to deliver great client service. Let them know WIIFM - what's in it for me, at a very personal and individual basis.
Communicate effectively to your clients and market why this merger is good for them - forget about why it is good for you, they don't care.

Cheap or Inexpensive?

2009-05-08T12:36:00.004-06:00

In today's economy it is rare that I speak with a CEO or Managing Partner of a professional service firm (PSF) that is not concerned about growth and profitability. Unfortunately in many cases growth is almost impossible and the task at hand is to at least maintain current revenue levels or stem the bleeding.

Everyone is questioning their market facing strategy. What worked in the recent past often is not working now. Sales (Business Development in PSFs) and marketing strategies, tactics, resources and people are all under scrutiny.

In many industries and professional services the traditional marketing approach is rapidly changing to be much more focused on short term revenue generation as opposed to expensive and long term "brand-building."

Many leaders are trying to find new paths to prosperity and seeking to change and/or upgrade their sales and marketing talent. One of the big challenges is that there are a lot of seemingly talented sales (business development) and marketing people available. And these people are generally very good at marketing and selling themselves. I can't tell you the number of executives that tell me, "I can't figure out why our VP of Sales - Chief Marketing Officer - etc. didn't work out. They seemed so convincing in the interview."

Good sales and marketing people often interview very well, then flop on the job. Just because they were successful in one environment doesn't ensure success in any revenue generating environment. There are great producers that can only succeed in large organizations with significant support structures. Others do much better in a greenfield, entrepreneurial role.

The question to ask in this environment is if the candidate you are seeking really has delivered dollars into the door - in good times and bad. A lot of available talent rode a rising tide, but are not effective selling in a downturn. If they are out of work find out why. A good revenue generator should rarely be without a position - regardless of the economy. Certainly there are valid reasons, but one must probe very carefully.

If you are seeking to upgrade your sales and marketing talent the best course of action is to find a top producer who is successfully entrenched in their current role. These are the people you know are truly delivering tangible value to their organizations.

It is also important in a tough economy to eliminate the silo's that tend to build up in organizations between sales and marketing. If you can't articulate the purpose and difference of each function that is a big warning sign from the outset. Sales and marketing are related functions, but in the optimum situation marketing supports and enables a more effective and efficient sales effort. If marketing can't be tied to specific revenue generation and evaluated on a return on investment basis you had better start asking some tough questions.

In the current environment we are advocating a single point of responsibility for revenue generation - the Chief Revenue Officer, if you will. The role of this leader is to ensure that all expenditures on marketing and sales result in a return. That your "investments" in sales and marketing are truly investments and not just costs.

The final point to make is that once an firm or company has identified and vetted their key revenue officer it is not time to be cheap. Good talent might be a little less expensive than in the past, but when hiring at this level be willing to spend up to the point that will allow you to bring in the "A-plus" talent. If you want to be positioned to thrive in this economy, anything less is a waste.

A good example is a recent client that was debating between two candidates to lead their marketing and business development group. One person had a decent track record, during the last expansion and was willing to accept a salary in the range of $200,000 with little bonus potential. The other candidate said it would take a minimum of $350,000 plus a substantial bonus based on performance. To put it in context this client will generate a $110 million of revenue this year.

Let me tell you this - if the CEO of this company doesn't believe a true "A" player can't generate enough upside growth in revenue and profit to justify investing an extra $150,000 per year then he has a lot bigger problem on his hands than trying to keep these costs down. Additionally a revenue leader who is satisfied with a base salary and is not asking for upside based on performance raises a host of red flags!

In this case we advised them not to be cheap - it will likely produce mixed results or be the wrong hire, which will be an expensive mistake. We told them to show some courage, step up and hire the "A" player. When they look back a year from now they will realize he was an inexpensive investment.

In this market a true revenue producer is worth their weight in gold. This economy is not the time to be penny-wise and pound-foolish when it comes to revenue production.

Survival of the Fittest: The two most important roles today

2009-04-29T19:47:00.002-06:00

As noted in the previous post during this recession the key goals most companies we are working with have are to improve financial performance and grow sales. This is a slightly different way of stating the quote included in the other post:

"To survive this downturn we have to cut costs and maintain or minimize revenue erosion."

Since those are the common denominators it makes sense that two of the most important executives in a company today would be the CFO and the VP of Sales & Marketing. The importance of a strategically focused CFO who is able to work hand-in-hand with a cost focused controller - effectively balance future needs with the day to day financial management of a company - is an absolute necessity in these troubled times.

Over the past decade there has been inflation in the number of C-Level titles. In addition to the familiar – CEO, CFO, COO – we’ve seen the addition of the CIO, CTO, CKO, CPO, etc. During booms titles proliferate as companies feel spunky and want to convey that business is cool and fun. Also during strong expansions the war for talent increases and everyone want the proverbial “seat at the table”. Adding lofty titles is one strategy for attracting and retaining good people. But when business is tough, brutal and a challenging grind we tend to get back to the core fundamentals of running a company. No more free sodas and snacks in the break room, get rid of the foosball table and Wednesday afternoon massages are history. And superfluous titles and roles become hood ornaments – attractive options, but not required to operate properly.

It is interesting though that the driver of growth and revenue – sales and marketing - doesn’t have its own C title. Possibly it has been due to the bifurcation of these roles and that in many cases they are seen as related but separate functions. Animosity and competition between sales and marketing is legendary in the business world. But given the imperative to find ways to maintain growth there is no room left for this intra-company rivalry. Both sales and marketing need to be fully integrated working to support the success of each other.

So while the expansion of C-level titles is often a bit frivolous the concept of a CRO (Chief Revenue Officer) is supportable and timely. This is not to be confused with the other CRO (Chief Restructuring Officer) that we have seen lurking in many turnaround situations these days!

Having one executive fully responsible for the profitable growth of an enterprise will require both sales and marketing to come together in a way that drives revenue as effectively as possible. With a CRO gone are the turf battles whether sales or marketing gets more resources. The primary focus of a Chief Revenue Officer is on bringing dollars in the door by utilizing the best mix of tools in their arsenal and the wise allocation of scarce resources.

In smaller companies and firms we often see the CEO or Managing Partner filling the role of the visionary, leader and revenue czar. Ideally though it makes more sense for the CEO to maintain the forward strategic vision, provide leadership and inspiration, while the CRO takes care of the fundamentals of executing on a tactical growth plan.

Most of our clients understand the value of a good CFO. They are now beginning to wake up to the importance of a great Chief Revenue Officer as well.