Managing Professional Services Firms:
Individual Coursework John Sreetharan
The link between professional
services and vertical integration for
Mymedia-UK
Introduction
At the beginning of the Managing Professional Service Firms (PSF) module I was
asked the question -why are you taking the course and what would like to achieve?
My response was “to learn how to run my business in a more professional way”.
This was intended with a hint of humor because I know Mymedia provides a
professional service. However, on reflection I now understand the distinction
between being a professional (person or firm) and providing a professional (or
good) service. To bring this slightly closer to home this report will discuss how the
models, framework and insights have or will help my role in managing Mymedia-UK
Ltd (www.mymedia-uk.com) and its transition from a service based firm to a
professional service firm.
More specifically I will discuss what it means to be a professional and how there is
an element of being a double agent as you take on the role of the marketeer and
the manufacturer and the impact of the growth trap all of which play a role in the
daily management of a PSF. The challenge I currently face when managing
Mymedia-uk is to meet our objective of vertical integration from a manufacturer
(since 2003) with the aim of selling the business in 2015 as a niche marketing PSF.
The aim is to grow in knowledge, expertise and provide advice to clients on
marketing, production and distribution.
Providing a professional service
As previously mentioned being a professional (person or firm) is not the same as
providing a professional (or good) service. Initially the distinction between the two
seem closely linked but on reflection being a professional can be defined as a
person (or firm) that provides a highly customised service and provides expert
knowledge (credence based). On the other hand a company such as Mymedia that
provides a professional (or good) service is not by definition a PSF. Figure 1
outlines the different types of businesses and the activities that a person is likely to
work on.
The aim is to change from a service based firm to a needs based firm and then to a
relationship based which in my view will be the most valuable for our people and
shareholders. This aim
brings a number of challenges that I am currently trying to overcome in order to
provide a professional service. These challenges include; marketing new products
and services to clients, training employees, providing career progression
opportunities and building an expert specialist reputation.
Figure 1 identifies different types of businesses and how a persons focus, energy, client relationship and the
success indicators. Source Laura Empson.
Double Agent - Being the marketeer and the manufacturer
A point that really hit home during the course was a description of how an expert
provides the role of the marketeer and the manufacturer. In my limited 6 years
experience of running a businesses I can relate this directly to parts of my journey
since leaving school. Initially I learnt skills which could be ‘sold on’ to clients, these
were mainly in IT, web design and print media, which I now see as getting my
hands dirty (or manufacturing). As the company grew my role changed and I
managed others who were specialists in their field, this experience placed me in a
position where clients would approach me for advice, which I would provide by
using experts that I employed. In my present role I can relate the double agent
concept to finding the right balance between developing relationships with
customers (the marketeer) and protecting the processual service business (the
manufacturer).
At the moment we are crossing the stage between service based and needs based
as seen in figure 1 where we are trying to protect and nurture the service business
because it underpins all our business activities but at the same time aiming to
provide expert advice to clients by gaining expert knowledge both academic (which
is why I’m at Cass) and practical.
A question to raise at our next board meeting to trigger debate is - what are our
client actually buying? Do we think our clients want a service or is the service now a
given and they actually need guidance and advise. In my opinion I believe clients
want more advice and to be lead by us in terms of their marketing.
Growth - sometimes it hurts
The course raised an obvious point which is sometimes overlooked when running a
business that relates to the motives behind growth. Business owners assume that
growth is a decision we make, but actually is that the case? I would say that most
business owners start with the intention to grow but what’s interesting about PSF’s
is that growth is not a choice, its the nature of the beast. Broadly speaking partners
need managers, managers need assistance, and assistance and managers need
career progression. The outcome is a pyramid structure which allows a PSF to
lever positions at lower levels for the benefit of the partners.
It’s probably not that unrealistic to assume that if you want to run a PFS growth is a
necessary option. During a discussion with a partner a FTI Forensic Accounting
LLP it was interesting listing to a person who grew a PSF and had first hand
experience in the growth cycle (or whirl wind), his main motive to sell was to
provide more opportunities to employees (but I’m sure the money was welcome).
Figure 2 illustrates the internal pressures to grow a PFS. Source Laura Empson.
To bring the discussion closer to my own experience and the current challenge's I
face with Mymedia’s vertical integration strategy have raised the follow question: as
I invest in people with the view of creating experts and they gain experience and
knowledge how do I encourage them to share important information to support the
business in the long term?
A compounding factor in an attempt to getting closer to finding a solution will be the
job itself which at the current (service) stage means that employees provide
answers to clients, spend time explaining and informing customers and individual
success is based on delivering a job on time. This work ethic / culture is not geared
towards sharing knowledge because the basic skills are known and there is limited
expertise to tap into. With that said as the company grows there will be an increase
of knowledge which needs to be shared and used to the companies advantage. I
wonder if the goal at this stage should be to create a culture of peer pressure and
client reviews which can then used to motivate people to learn and want to move
from measuring success in the case of time and quality (service based) to repeat
business (relationship based).
A further consideration is needed to decide which services can be outsourced and
which services should remain as an in house skill. To develop from a service based
company to relationship based company should we employ experts or outsource
the service to a consultancy. By doing so we could appear to be an expert to our
clients which in the short term may be effective although a concern in this approach
would be the potential culture clash when the day comes that we need to employ
our own experts which we saw in the Kinsley Lord case study. To maintain our
service roots we may need to invest in our own people and develop them so that
we can aim to create a one firm one stop shop model as seen in figure 3.
Figure 3 is a model of the business divisions of a big 4 firm illustrating the standardised
service compared to a customised advisory service.
Summary
So how will the course change or help my approach to running Mymedia to provide
a more professional service?
• Another dimension has been added to Mymedia’s vertical integration plan, by this
I mean how vertical integration actually means you are providing moving away from
a standarised offering to a customised offering. This means two important things,
one is that the more customised the offering is the higher value this will be as
perceived by the customer. Secondly this means the job is actually more fun and
challenging.
• The course also provided some clarity to the likely challenges that I will face to
understand what client is actually buying and where it is to provide a service
(process) or where it necessary to provide a more customised solution.
• Finally the course has realigned my focus away from growth to the need of
providing a customised service which in turn will lead to growth as seen in figure 2
and during the interview with Forensic Accounting LLP. In my view this approach
will provide cultural benefits within the firm and help drive career progression,
growth and productivity as the impact of peer pressure and client review evolve.