By Tim Williams
THESE QUESTIONS CAN PREDICT YOUR FIRM’S FUTURE SUCCESS
While these unstable times make it infernally difficult to forecast your fiscal year revenue, there is a set of attributes and behaviors that can help foretell your firm’s long-term success. These are leading indicators, meaning they are predictive and diagnostic — the actions and attitudes that produce outsized financial and reputational capital for your firm.
These predictive behaviors and principles are rooted in an understanding that the central role of a professional service firm is to solve problems and create opportunities — not fulfill scopes of work. Because client organizations today are under immense pressure to produce immediate business results, agencies must demonstrate their willingness and ability to be accountable. They must reorient their organizations away from the idea they’re in the “service” business and commit to the idea of being in the value creation business.
The ability to both create and capture value
Value creation is a reciprocal concept. As your firm creates more value, you should be able to capture more value as well. The following 10 questions will help you diagnose where your firm is on the journey toward both creating and capturing more value.
Thinking about your firm as a whole, give each of these statements a rating on a scale of 1 to 10, where 1 is “strongly disagree” and 10 is “strongly agree.”
1 Our client-facing teams have a good understanding of how the agency creates value and what that value should be worth to our clients.
2 We begin every major new client assignment with a discussion of “scope of value” (expected outcomes) before we discuss the scope of work (expected deliverables).
3 In pricing discussions, we focus the dialogue around outputs and outcomes (results and deliverables) rather than inputs (hours and time of staff).
4 We are willing to be a true stakeholder in our clients’ success by sharing in both risks and rewards.
5 We proactively price every assignment based on the value (expected outputs or outcomes) rather than just estimating the costs (inputs such as hours or time of staff).
6 We are willing to walk away from prospective clients who require us to disclose our costs.
7 We pay just as much attention to external measurements (marketing outcomes, business results, etc.) as we do internal measurements (hours, labor costs, etc.).
8 We apply as much creativity to pricing as we do to solving our clients’ marketing problems.
9 Our current business model incentivizes our people to be effective (produce results), not just efficient (hold hours to estimate, meet billable time targets, etc.)
10 Just as our clients are trained to be professional buyers, our client-facing executives are equally well trained in the art of professional selling (pricing, presenting, and defending value).
Now add up your ratings. A perfect score would be 100 (10 questions each with a maximum rating of 10). In workshops we do with agencies around the world, we ask participants to raise their hands if they have a total score of 20 or above. Usually, that’s almost everyone in the room. We then ask for a continued show of hands as we increase the total score: 30 or above, 40 or above, 50 or above. By the time we get this far, almost every hand has gone down.
In school, this would be a failing grade. As an industry, we have a lot of work to do when it comes to focusing our operations around effectiveness and measuring what really matters.
Your firm’s imagined future
Now imagine what your firm would be like if your management group rated these questions with a total score of 90? How would you be different?
You’d have a team of professionals focused squarely on doing their very best work in the service of business results for your clients. More self-confidence. Better margins and resources to pay for the best talent. And higher trust levels with clients.
These are among the vital factors that predict your future success — your key leading indicators. No doubt your firm aspires to do great things – to create immense value for its clients. To fund your growth, it’s essential that you also capture your fair share of that value. Keep in mind the perceptive observation of the late great Stephen Covey, “No margin, no mission.”