![]() A gray-hair practice provides seasoned counsel based on experience.Accenture’s Technology Consulting practice has long been an archetypal example of this. ![]() A procedure practice offers a systematic approach to large, complicated problems that may not be cutting-edge but require attention to a plethora of considerations.The Big Three Indian outsourcing giants, Wipro, TCS, and Infosys, have gained scale and recognition while operating at this end of the spectrum. A commodity practice helps clients with relatively simple, routine problems by providing economical, expedient, and error-free service.Successful practices are clear about their position on this spectrum. The Practice SpectrumĪccording to our colleague Jack Gabarro (who built on the ideas of former HBS professor David Maister), PSF practices fall on a spectrum of sophistication that ranges from “commodity” to “procedure” to “gray hair” to “rocket science.” ![]() These tools are based on our research over the past two decades, more than two dozen cases on PSFs that we have written, and our discussions with several thousand PSF leaders. Practice leaders can use two tools-the practice spectrum and the client portfolio matrix-to assess, track, and make adjustments to the development and deployment of professionals and the management of the client portfolio and thus achieve lasting superior performance. ![]() Whom a practice hires affects the clients it can serve, the clients it serves affect how the skills of its professionals evolve, how the skill set evolves affects the clients the practice can acquire in the future, and the cycle keeps repeating. The strategy of a practice therefore is tightly linked to its clients and the professionals serving them. In turn, the clients being served affect the development of the professionals’ skills. 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. So 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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