Monday, 31 December, 2007

Managing the Professional Service Firm

For last two days, I am reading this book by David Maister. Though I have not yet finished it, I found some of the points covered in this book, quite relevant to my work. Let me share them with you.
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Almost every professional services firm, has three goals to perform: deliver outstanding client service, provide fulfilling careers and professional satisfaction to its own people and achieve financial success.
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There are three types of client work: Brains, Grey Hair and Procedural. Brains type of work involves new solutions to new problems. Grey Hair type of work requires some prior experience while Procedural type of work requires efficient delivery of solution. The types of practices needed for these types of work could be termed as Expertise-based Practice, Experience-based Practice and Efficiency-based Practice respectively.
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The Dupont formula for profitability of industrial companies is as follows:
Profits/Equity = Profit/Sales * Sales/Assets * Assets/Equity = Margin * Productivity * Leverage
The author has similarly derived the profitability formula for professional firms:
Profits/partner = Profits/Fees * Fees/Staff * Staff/Partners = Margin * Productivity * Leverage
The author has further provided the formula for productivity as given below:
Productivity = Fees/Staff = Fees/Hours * Hours/Staff = Value * Utilization
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We can put all practice development activities in following five categories:
  1. Broadcasting - generating leads and inquiries
  2. Courting - selling and proposing
  3. Superpleasing - ensuring client delight with current matter
  4. Nurturing - marketing to existing clients
  5. Listening - gathering market intelligence
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Following are the means of listening to clients
  • User groups
  • Reverse seminars
  • Attending client industry meetings
  • Market research
  • Senior partner visits
  • Engagement team debriefings
  • Systematic client feedback
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The marketing tactics in descending order of effectiveness are as follows:
  1. The first team
    1. Seminar (small-scale)
    2. Speeches at client industry meetings
    3. Articles in client-oriented (trade) press
    4. Proprietary research
  2. The Second string
    1. Community/civic activities
    2. Networking with potential referral sources
    3. Newsletters
  3. Clutching at straws tactics
    1. Publicity
    2. Brochures
    3. Seminars (ballroom scale)
    4. Direct mail
    5. Cold calls
    6. Sponsorship of cultural/sports events
    7. Advertising
    8. Video brochures
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