In exactly 7 days from now I travel to San Diego to deliver an 18 minute presentation on how to create a firm that yields a net profit per owner of at least $1 million. Less than 2% of firms are able to achieve a result of that magnitude and an even smaller percentage are able to sustain that for an extended period of time. In an industry where business practices are highly transparent and there are few, if any, proprietary technologies that confer a competitive advantage, the question needs to be asked: why can’t all firms achieve a result of this magnitude? I suggest they can and in this post I explain how.
When asked to do this presentation my first thought was how can I possibly explain in 18 minute how firms are able to do this – this is what I normally take 3.5 days to talk about in our Bootcamp program? I then realized that how they do it is actually quite simple. The hard part is what type of mindset is needed to be able to implement the “how” bit of the solution even though it is, as I suggested, “quite simple.” As it turns out, the people who are doing this are a rare breed but what’s really interesting is they are proof that anyone could be doing it.
It will come as no surprise that a key to achieving this result is to design and implement a business model that’s different from the rest of the industry. Now given the importance of people in a professional knowledge firm it seems logical that the critical success key is to be found in what the firm does to attract and retain talent.
Everywhere I go I’m told by firm leaders that “the biggest challenge we face is getting quality clients (as in growth orientated and willing to seek and pay for our services) and attracting and retaining quality team members (as in talented, productive, engaged and loyal.) These two challenges may seem to be unrelated but they are inextricably connected–at least in my view. Here’s why.
My practice success mantra is client centric. It goes like this:
Choose to work with clients in respect of whom you are able to create significant value, people who recognize the contribution you make and are willing to share a fair proportion of that value with you.
I don’t intend to elaborate on the strategic implications of this guiding strategic focus here other than to say that once you have identified the avatar that represents this type of client (which may be a narrow client target or a broad target) the services you need to offer will be self-evident and this in turn will determine the skill sets you need to attract and retain. It will also determine who your competitors are and what your pricing options are. In short, it will define where you sit on the industry value curve. The most successful practices are run by people who know exactly where on that curve they reside. If there’s one key to creating a GREAT practice that’s it! As I said KISS.
Now let me return to the Thriving Firm Conference in San Diego for a moment. By the way, it’s not too late to register if you’re interested.
One of the speakers at that conference is Jody Thompson, the co-author with Cali Ressler, of the best seller Why Work Sucks And How to Fix It. I’m looking forward very much to meeting Jody because I love their book because I think it’s pointing to the future organization of professional knowledge firms. It outlines the rationale and an implementation framework for creating a Results Only Work Environment (ROWE). If you’re running (or aspire to run) a firm with more than 2-3 people you need to take a look at this work and a couple of others.
In Drive: The Surprising Truth About What Motivates Us, Dan Pink reports on the science of motivation which is so relevant to how today’s knowledge workers engage or disengage. He points to the fact that with the exception of routine, repetitive work which does not call for much, if any, thinking extrinsic motivators like money and the threat of disciplinary sanctions do not work. Knowledge workers, Pink argues, seek autonomy, mastery and purpose. Put simply they want to have control over the way they work (this is consistent with the ROWE idea that’s rapidly gaining traction), they want to work on projects that stretch them and be mentored and coached by people who help them develop their skills and they want to do something that gives then a sense of contribution by having a meaningful purpose which goes beyond their pay check (cheque) and the firm owners’ bottom line.
Pink’s work is immediately relevant to what I was saying previously about where you position your firm on the industry value curve. If you’re at the bottom end of the curve doing low level compliance work and simple but insignificant review and compilations for simple and insignificant clients (I hope that’s not too harsh–they may be good people but that does not make them good clients) you will find it incredibly hard to attract and especially retain talented people of the type Pink is referring to, namely people who have the desire and the capacity to think, contribute, grow, take responsibility, and ultimately help you take your firm to greatness.
Exactly the same conclusion has been reached by management guru Gary Hamel and his colleagues. Hamel is the author of The Future of Management. His book is filled with amazingly important insights and if you check him out on YouTube there are several presentations he’s done that are worth viewing. Hamel points out that “Human beings are most enthusiastic when they’re doing things they want to do” (p. 208.)
How right that is–just think about that from your own perspective. He makes this point in that section of his book that he calls Give Everyone the Chance to Opt In. Giving people the chance, of course is one thing, but who’s going to want to opt in to boring, routine, repetitive work? This is another way of saying, if you want people to engage, get to a point on the industry value curve where you can give them an opportunity to work with clients in respect of who they can add value by stretching themselves and feeling they’re part of a team that’s making a difference.
In his GREAT book Linchpin, one of my favorite authors Seth Godin reports (p.77-8) on research done by Richard Florida (author of The Rise of The Creative Class) where he polled 20,000 creative professionals and asked them to nominate what motivated them to do their best work from 38 factors he listed. The top 10 listed in order were:
- Challenge and responsibility
- A stable work environment
- Professional development
- Peer recognition
- Stimulating colleagues and bosses
- Exciting job content
- Organizational culture
- Location and community
Godin notes that only one of these top 10 motivators is an extrinsic one (#4 – money) and he notes that “The rest are either things we do for ourselves or things that we value because of who we are.” This is precisely what Carli Ressler & Jody Thompson, and Dan Pink, and Gary Hamel, and Seth Godin and practically everyone else who are working in this space today are saying.
Godin goes on to make the really important point:
The interesting thing about money is that there’s no easy way for an employee to make it increase, at least not in the short run. Most of the other elements, though, can go through the roof as a result of our behavior, contributions, attitude, and gifts.
And yet , cynical management acts like a factory, figuring that the only motivators are cash and freedom from scolding.
So here is the amazing truth about how to create a $1 million firm. Pick your clients, pick where you want to be on the industry value curve and focus on that, pick your team, understand what motivates talented knowledge workers by giving them autonomy, an opportunity for mastery and an understanding of why your firm exists and the role they play in it then leverage the heck out of it. This all starts with your firm’s leadership although it actually can start anywhere because everyone can be a leader in his or her arena of influence – read Linchpin and you’ll understand why I can say this and what you can do about it whether you’re in a formal leadership position or not.
If you do these things you too will take home at least $1 million from your firm, you will make a difference and you will inspire everyone who is good enough to work with you to do likewise.
What I’m proposing here has very little to do with the conventional wisdom of implementing so-called “best practice” – this, I suggest, is rubbish and I’d hgo so far as to say the pursuit of the “best practice” panacea is the reason most firms fall far short of their potential. Jim Collins got it so right. Best practice results in good firms and good is the enemy of great! Sure you need to be using the “right” technologies and work practices but everyone is doing that (and those who aren’t are not even on the success radar) and while this is necessary for survival it’s not sufficient for greatness. The difference between the GREAT firms and the rest is enormous so it clearly has little to do with best practice.
I strongly suggest that you start a conversation within your firm involving your partners and team members on the matters i have raised in this post and take some time to review the reference material I have pointed to. You might want to start by looking at YouTube videos but studying the books I have mentioned is very important. You might also want to take a look at the resources available to you from The Disrupters Conference at which I and several other industry consultants presented at Las Vegas earlier this year. The entire conference which addressed value pricing, timesheets, alternative KPI metrics, leadership, business model design and a raft of other things is available on video, there are also audio files, checklists, software etc. etc. It’s a great place to start getting some materials together that you can use as a catalyst to start thinking about where to take your firm in the future in a way that will give you a sustainable competitive advantage.
Let me finish by saying, the reason you will garner a sustainable competitive advantage from implementing the things I’m talking about is not because they are hard or even risky. It’s because most people won’t do anything about it because they couldn’t be bothered. They’ll just meander along continuing to do what they’ve always done and continuing to get what they’ve always got which might be good but it will not be great.