![]() ![]() But that top-down approach doesn’t work in a PSF, because of the fluid and constantly evolving nature of the PSF’s two strategic assets: its professionals and its clients.Ī practice’s ability to deliver value to clients rests on the skills of its professionals, and the skill set of those professionals affects the choice of clients. The Link Between Clients, Capabilities, and StrategyĪt industrial or commercial companies, senior leaders can outline a strategy for a division and marshal support to execute it. In this article we’ll provide a framework that shows how PSF leaders can proactively position their practices and manage their client mix. Conversely, if the practices are disciplined about their positioning and their client portfolio, the firm becomes stronger than the sum of its parts. If a PSF’s constituent practices are diffuse in their strategic positioning or mix of clients, the firm ends up with a weak market profile, internal conflicts, and dissension among the leadership about the firm’s future direction. This approach to shoring up billings is perilous. We see this over and over: consultancies, law firms, accounting firms, and the like offering services and signing up clients they should never have considered. #Billings pro self serve professionalSo it should be no surprise that during the coronavirus pandemic and the concomitant economic crisis, professional service firms (PSFs) have been chasing after all kinds of business just to keep the lights on. When the going gets tough, companies often get desperate. Rather than spreading clients across all four, firms should focus their acquisition efforts and follow different relationship strategies for each type of client. The second tool is the client portfolio matrix, which separates clients into four categories on the basis of cost to serve and willingness to pay. Successful practices understand their true position on the spectrum and know which performance levers to pull. All practices fall on a continuum of sophistication that ranges from “commodity” to “rocket science.” Any position on this spectrum can be profitable, though the forces driving profits change as you move along it-as do the capabilities and skills required. This article presents two tools that professional service firms can use to manage their client mix and optimize their strategic position. If a firm’s practices have a diffuse mix of clients and unclear strategic positioning, it will weaken the firm’s market profile and lead to internal conflicts, especially about the organization’s future direction. During economic slowdowns, consulting, law, and accounting firms often start offering services and taking on clients they really shouldn’t, just to keep the lights on. ![]()
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