Climbing to Greatness with Jim Collins ::: I just started reading Good to Great by Jim Collins last night. If the rest of the book is as good as the article above (from Booz Allen’s strategy+business magazine), or last fall’s article in Fast Company, it’s going to be a very enlightening read.
Most surprising is his assertion that the truly great leaders are those that display a mix of “personal humility and professional will”. Ten of 11 of the companies that made his “great” list were CEOs promoted from the inside. (By comparison, six of the 11 comparison companies brought in CEOs from outside the company. On average, the great companies outperformed the comparison companies by several multiples.)
Collins also points out that technology played a part in the great companies’ performance, but as an accelerant and not as the agent of change itself. This is instructive, because those of us who work on the technology side (see my bio for full disclosure on what I do) are often in a position of suggesting technology that will change the way an organization operates.
In professional services firms (law firms, accounting firms, management consulting firms), the culture is often aligned against sharing information. Technology can lead to efficiency, but if you’re a firm that bills by the hour, efficiency isn’t necessarily your friend.
Sean Roche and I have been corresponding for a few days on this topic. Sean’s been around the block on these issues at least as often as I have, and he believes that firms would best be served by putting a moratorium on any technology purchases for the time being. Invest in training, he says, try and leverage existing technology, and improve the firm organically from the inside.
Putting aside the issue of whether the existing technology is worthy of further investment (a big issue, no doubt), I’ll return to Collins’ suggestion that technology can’t be the agent of change for companies to truly succeed. Without a leader who has set a clear vision for where the organization is headed, how that direction will be measured, and what role the technology has in those goals, the organization will simply not be capable of deriving any substantial benefits from the investment.
What’s been holding these firms back to date? Rule by committee “leadership” where decisions are often debated for months. A business model that results in undercapitalized, highly leveraged businesses that aren’t necessarily able to weather financial cycles. In the absence of a true leader, these organizations plod along. If Collins is right, the technology can only accelerate change that has been directed by the organization’s leader. Which means that investing in existing technology, without any change in strategy at the top, is doomed to fail. (Or, to be slightly less fatalistic: investing in existing technology won’t materially improve things at the firm.)
So… where does that leave us? I don’t think professional services firms have the options of sticking with their current business model. While rumors of the death of the billable hour in the legal profession are overstated, I do think they have a limited shelf life. The efficiencies from various technologies in play are simply too great to ignore. Pressure is coming from all sides (the latest threat to law firms, and to mid-sized accounting firms: multidisciplinary practices (MDPs)). Clients (the business people at the clients, not necessarily the professionals) are under increased pressure to cap costs to service providers, which means that those same service providers will have to get more creative about how to profitably provide valuable services.
The technology that will allow service firms to do this is varied. CRM is certainly a component. (Full disclosure again: I work for Interface Software, a CRM company focused on the professional services market.) By learning more about existing clients, segmenting prospects and adding some quantification to the sales (aka “business development”) efforts, firms can leverage their collective relationships far more than they’re doing today. Other than CRM, there’s also expert systems (Davis Polk and Linklaters are far along on these efforts), portals, and true collaborative systems that tie clients to professionals in a meaningful way.
Bottom line? There are strategic technology investments to be made that can significantly aid firms in growing their business. But technology alone can’t do it – which leads us to a larger issue: the need for more CEO types in professional services firms. That’s fodder for another discussion.