Collaboration with clients, partners and employees will unlock innovation and new growth
Building on our theme around the client of the future as summarised in my previous article, and also the workplace transformation article, throughout October we will be exploring collaboration by examining the pros and cons of internal and external collaboration models, how collaboration impacts and benefits the organisation and how it should be considered from a competitive and thus strategic standpoint due to its ability to bring together resources and exponentially increase capabilities.
By collaborating more effectively with clients there seems little question that better outcomes result, but how do firms effectively embrace this new, more open, and more uncertain approach in what can sometimes be risk-averse firm cultures.
In order to provoke some thought I wanted to share some perspectives I have heard previously at some of the Alternative events and which I have previously written about across a number of articles. Perhaps the biggest challenge to my mind is that the majority of firms, when asked about their innovation goals, say that it is around delivering better client outputs, and yet at the same time most acknowledge that the majority of their innovation activity is around internal efficiency. As I wrote about in my earlier article for Alternative Insights, this disconnect in goals and actions risks leading to an “authenticity” challenge for firms. One reason I pose for this disconnect is the related statistic that 85% of people surveyed felt that not enough focus is currently on the client and transforming the outcome they receive. When we explored in more detail the reason for this, what was most surprising was that 77% felt that they were not collaborating more for fear of upsetting the status quo.
This fear of upsetting the status quo is perhaps in some ways a false view that needs challenging. The fact is that there are many who are actively seeking to upset the status quo, and if firms don’t rapidly recognise this then they will face real survival challenges. Underpinning the reason for this fear of engaging in new more uncertain approaches is perhaps the statistic that 89% of firms felt that they were really too risk-averse to really innovate in a revolutionary rather than an evolutionary way. As I said before, the picture this paints is perhaps of a client model that currently isn’t broken enough to take many firms out of the comfort zones in how they work with clients.
Contradicting this and perhaps showing that firms realise that significant change is coming, is an awareness of what the future models with clients might look like, with a high 92% feeling that we are inevitably moving towards greater productisation of professional services through technology. Some firms are embracing this but they are in a relative minority. You can read more about some of my thinking around what is driving this shift towards greater productisation in my earlier article. The reason this shift is also worth considering is that any “product” business that is any good is incredibly customer-centric and good at collaboration on the product they build. One of the reasons that design thinking has started to become more popular in some professional services firms is that this has for a long time been the model adopted by product businesses. Working collaboratively with your customers to really understand their pain points and then jointly evolve solutions is always going to beat not following this approach. This relentless focus on customer outcomes though is for many professional services firms quite different to historical “trusted advisor” expert-led, “billable hour” process-focused models.
It seems fairly obvious that focusing more on customer pain points and collaborating on solving these would be valued by the customer. Perhaps part of the challenge beyond risk aversion is also a lack of experience in the way in which to structure this collaboration. In an article I wrote on the related innovation survey conducted by Spiranti I said that what struck me most was that only 16% of the 100+ professional services firms felt that they were achieving significant revenue growth as a result of their innovation efforts. There are a great many elements to consider but crucially over half of those surveyed said they had no formal innovation process. Without a process to engage clients in collaboration it would be impossible for any product business to survive. The study also showed that only a relatively small percentage of 26% were using established innovation techniques such as design thinking.
Another area that we will hopefully explore through the month in article submissions will be thoughts around the use of collaboration with partners/suppliers. There has for example been an increase in the use of start-up incubators in the legal sector. The Spiranti innovation benchmark showed for example that 25% of those surveyed said they had used incubators in some way. There is some debate around the different ways that these are being used and how they can benefit not just upskilling employees through immersion in new technology but also paint a positive innovative picture of the firm to aid winning client work. It will be interesting though to see how this area evolves as arguably were one to launch an incubator now it might seem rather passé! What will also be interesting is how more established providers collaborate more effectively with professional services firms. These organisations are definitely not start-ups and have to battle the label of “supplier” being seen as simply in it for the sale, which is unfair in many ways. We need to perhaps find the right models and narrative to break through this rather dated perception. Equally however we need these large software suppliers to show that they are seeking genuine collaboration and not the same “collaboration” window dressing that some services firms have adopted.
The final and perhaps most central area that we need to explore is around collaboration within the organisation. This sits right at the heart of what employees want, as per the future workplace transformation article. Employees want effective collaboration to drive better outcomes for clients and they also want the modern collaboration space and technologies that will enable this. In many ways this creates a challenge for some firms where they are operating a partnership structure with isolated but related practice groups which each have their own P&L without the effective mechanisms in place for recognising group efforts. It is still quite common to hear of these internal barriers getting in the way of genuine collaboration across the firm on behalf of the client. There are those that have overcome this and I hope we hear from some of them around how they have addressed this and what challenges they found, and how they overcame them. It will be good to hear about the way in which firms have addressed internal cultural challenges, incentivisation models and the way they have adapted both the working spaces and the technology.
Whether the collaboration is internal across employees, with partners or with clients, it seems clear that it will be central to unlocking real revenue growth for firms. There is enough data that employees, partners and clients alike all value this activity. It is also true that this is not a new concept and that many techniques have existed and been used to good effect in other industries, but professional services firms now need to rapidly catch up. Perhaps professional services firms can learn from product businesses around the value of collaboration, and perhaps indeed it will be essential that they do given the emerging consensus around the shift towards greater productisation of services businesses than ever before.
The idea of this article was not to conclude but rather to stimulate some thinking and to reference some of what I have heard and written about previously. What we really want across the month is to hear from all sectors on your thoughts. My encouragement would be to share your unique perspective and even, dare I say, create some challenges for others. While it takes time, writing leads to so many interesting conversations and opportunities, not to mention the positive brand recognition for you and your organisation. If you would like to share your perspective please contact firstname.lastname@example.org.