One of the most critical determinants of success in professional services is the "leverage capacity" your highest value resources. For professional services / consulting firm, which means you can get more of your best people, which translates into more revenue and accelerated growth. What I find most interesting is the large number of professional organizations of services who do not understand leverage or try to implement it in a way that is detrimental to their success. The ability to achieve a highly leveraged model is fundamental to the growth and profitability in the professional services sector.
How do successful companies achieve leverage?
The difference between companies that truly understand what leverage is everything and those who struggle with the concept is astronomical. Accenture has been developing and perfecting their highly leveraged model for 40 years. The number of companies trying to copy the success of Accenture, but refuse to recognize some of the fundamental reasons for this success surprises me. Accenture not only it has an organization that gets the most mileage (and revenue) from its star, but also develop people more quickly and disseminate knowledge more rapidly than most of their competitors. They do a better job of learning from their successes and their failures. Accenture achieves leverage through its methodologies, its extensive training system, and its culture to mentor and share knowledge promptly. On the other hand, PricewaterhouseCoopers (PWC) for many years achieved its influence through its software. Someone once told me that PWC was more than a software company to a consulting firm. As it is true that it does not matter, they were able to capture their knowledge in their software, and then charge fees to customize and install the software again.
The common thread between both the Accenture and PWC approaches is that software and methodologies both tend to free up more time for consultants to high value to focus on specific problems and more complex faced by their clients. This adds value not only to customers, thus justifying higher rates, also it allows companies to generate much more revenue from their high value resources.
What can you do?
When I say professional service organizations that they need to have more leverage, they are often told they can not afford it. The alarming thing about this is that the lever is much more critical for organizations in a mode of growth when they have very few high value consultants than it is with a company that has thousands of them. It 'also alarming given that there are some fairly simple high impact solutions to this problem.
The first step to leverage your most talented consultants on a wider range of projects requires a relatively small amount of effort, but reimbursement is significant. You want to leverage your technical architects, your business architects, and your thought leaders, and to a much lesser extent, your project managers. Project managers can be exploited in a couple of jobs, or on multiple projects at the same site as the client, but many times companies try to spread project managers too thin, resulting in missed target dates, overruns, projects unprofitable and dissatisfied customers.
Depending on the backlog, you might want to have the stars carry a workload of 3 to 5 clients or prospects. If you are worried about how to fill in for them on their current projects, or get customers to accept them in a part-time role, the following techniques may be helpful:
or capture their unique knowledge in white papers or in your methodology.
or measure them on their ability to educate and mentor less experienced staff.
or have them conduct training sessions for the less experienced consultants.
or increase their billing rate to a point that customers are comfortable with the role of part-time revenue is added to the potentially lower utilization.
or create chat rooms or communities of expertise to improve the sharing of knowledge and experience.
If you are not doing some or all of the above, you are not creating a culture of sharing knowledge and embedding best practices into your methodology. You are probably setting yourself up for failure. These practices not only allow you to generate more revenue from your team, but also speed up the professional development of the staff and, therefore, increase the value of your staff for your customers and for your company.
The impact of leverage on growth strategies:
In the Internet consulting firm explosion, which took place in 1999 and 00, two leading companies have adopted two different models. Studio 'A' took the minimum leverage approach. They experienced a lot of success in two or three of their markets, but found it difficult to get traction in new markets. This was a surprise, because they never let their best people from the cities of the north-east, while new offices struggled and failed in new geographies. Company 'B', on the other hand, has determined that rapid penetration of new markets was critical to their growth plans. They have developed a culture of sharing knowledge with a focus on teamwork. To help achieve this goal, they created the role of "catalysts" Selecting technical experts who had been with the company for some time. Through the use of catalysts, Firm "B" was able to quickly spread their culture and technical expertise into new markets. The catalysts were not committed to an office or project. They had the task of supporting multiple offices and jump starting new projects. Not only catalysts provide expertise to remote project teams and sales teams, they have also facilitated communications between offices, which provided a huge advantage.
The steps to take in Transition:
Many of you are trying to transform the professional services practices by a "body shop "model to a top model" solutions "value. The key to this transition is selling the customer on letting you take responsibility for how you distribute the resources to achieve the project objectives. Under the bodywork model you would have more than likely commit people on a full time basis. When your company instead becomes responsible for providing the total solution within a tight timeframe and under considerable pressure for a fee, you must have full control over your resources. With full control of resources and an effective methodology to provide the solution, you can get more leverage degrees and run their business more effectively.
Parting Thoughts:
The approaches highlighted in this document serve to illustrate the concept and the power to increase leverage. There are other tools and techniques used to help achieve the same goal, including:
or methodologies
or software
or Knowledge Management System and tools
or training programs
ö Culture
or Teamwork
or trustee
or Coaching / Mentoring
or feedback mechanisms
or project structures
or "catalysts"
or guarantee programs quality
What you use depends on the specific nature of the services offered. All elements of the list will help make more effective and profitable. How and when to use them is the key to success.
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