Tag Archives: business development

Gain Competitive Advantage by Implementing a Broader Approach

When writing the article “Why Taking a Broader Approach Drives Optimal Performance” in late February, for the March issue of Edge International Communiqué, the current crisis was not on my mind. That article referred to “the lost opportunities resulting from not thinking more broadly” in a non-crisis environment. The crisis has exponentially increased the sense of urgency needed to readdress how to conduct business and drive necessary change.

In normal circumstances it is often difficult to effect change even though circumstances may warrant it. People are comfortable with the way they do things and there does not appear to be any downside to business as usual. Even if they are open to consider the business case for change, the time and effort to gain acceptance and manage the change is usually significant.

A crisis, however unfavorable in its impacts, creates favorable conditions for change – people feel the pain and can be more easily persuaded that the status quo is intolerable. So firm management should be bold in taking advantage of the opportunity.

What does taking a broader approach entail, and how does it benefit the firm?

Here are four areas for consideration.

A Broader Approach to Business Solutions

Diversification of service offerings is a key strategy in a fast-changing world – in the same way as diversification of an investment portfolio is designed to maximize returns while protecting against market fluctuations.

In a crisis, your clients are looking to you for solutions that are crucial to their business rather than part of the normal decision-making process. They value your insights more highly and are willing to remunerate them proportionately.

This does not apply only to larger full-service firms. Boutique firms need to expand their market penetration or find different ways of serving their clients. A menu of options might include:

  • Geographical expansion
  • Serving other industries or sectors
  • Tailoring service to different types of client (e.g., domestic/international, large/small, public/private, corporations/individuals)
  • Re-engineering service options and delivery to better serve client needs, thus building competitive advantage

The risk for firms relying on practice expertise in one or two areas for a large part of their business is that it will limit growth in terms of size and/or profitability for multiple reasons:

  • Existing services become commoditized and can be more economically performed through different business models (e.g., outsourced on-line legal platforms)
  • Competitive price pressures
  • Some existing services may be directed at a declining industry or sector
  • Practitioners with specialist skills may not see the need to diversify their offerings

A Broader Approach to Professional Development

Leveraging resources to respond to increasingly sophisticated client needs in a changing work environment requires more than legal expertise. It is time to redefine a holistic program for professional development that increases the “range” of each professional. This does require investment but the payback will be invaluable through:

  • client satisfaction
  • talent motivation and retention
  • ability to leverage resources at a lower cost level
  • increased productivity

Consider whether the following are provided in determining what might be included in such a program:

  • broad exposure to different ways of working and addressing issues (e.g., professionals working for different partners/managers, in different practice or industry groups, on different types of project)
  • strong mentoring and on-the-job training
  • skills for working effectively in an increasingly virtual environment (i.e., use of technology and remote working)
  • development of soft skills (communication, task/project management, etc.)

Increasing Collaboration and Teamwork

Collaboration and teamwork are essential to a broader approach. It is time to consider

  • policies and criteria for allocating resources to projects and managing the process to ensure that the composition of teams is optimized; and
  • performance evaluation criteria, including the bases for a firm’s compensation systems that drive collaboration and teamwork.

It is also time to question whether:

  • the organizational culture and management style foster collaboration;
  • the firm’s strategic approach envisages bringing the best team to the table for each matter; and
  • the performance expectations and compensation criteria include elements that incentivize collaboration and the achievement of team goals.

Many talented professionals are productive and successful in their own right but, to the extent that they work individually or in small groups, the real potential of the organization is not realized. Lack of teamwork means that professionals dedicate time to tasks that could be done better and more cost-effectively by others, while at the same time not allowing others to benefit from their unique and relevant skills and expertise. To be clear, this is often not a result of a lack of desire on the part of individuals to collaborate, but a lack of an organizational structure that promotes collaboration.

Firms are uniting their people more than ever to discuss how best to adjust practices and move forward. Seize this moment to further entrench collaboration and teamwork as a key to success.

A Broader Approach to Client Outreach and Business Development

It is imperative to think more broadly about client relationships and to ensure that there is outreach to clients, not only to show you care but to provide value. Client expectations are changing rapidly, becoming multi-faceted and increasingly dependent not just on the proficiency of an experienced partner but on the quality and agility of the organization.

The following are examples of how to usefully expand outreach:

  • obtain feedback at an institutional level about the relationships with clients, how they can be improved and, most importantly, how they can be expanded
  • engage with clients on pricing arrangements to ensure they are balanced and fair – clients are under pressure and this is an opportunity to both show your concern for them while at the same time protecting the firm’s long-term profitability
  • presenting timely and relevant credentials in areas that the client has not used in the past (cross-practice approach)
  • using digital service-delivery mechanisms enabled by new technologies to both enhance the client experience and reduce costs (e.g., communication and collaboration platforms, case management software, eSignature applications, use of extranets)

There is often a sense of comfort that clients are content with a firm’s services and that any issues are resolved through a partner’s close relationship with the client. That is narrow and dangerous thinking, particularly at a time of disruption.

Similarly, in the development of new clients and new business, reliance on “business as usual,” in-person marketing is insufficient. In a world that is now even more reliant on internet searches, social media and online directories and recommendations, presence in these media is essential to maintaining visibility.

Do not be overtaken by events and the changing scenario – act now to adopt a broader approach. Prepare for the future that circumstances have thrust upon you.

Leon Sacks, based in Miami and focused on the Americas, is a trusted international executive of 30 years’ experience, noted for growing revenues and managing transformation projects for professional service firms in the management consulting and legal industries. He has worked extensively in Latin America and is fluent in Portuguese and Spanish. Americas: leon@edge-international.com

Business Development: An Introduction to the 2-4-8 Model, Revenue Gaps, and the Relationship Bell Curve

The 2-4-8 Model

This model compares revenue against time allocation, helping us to make informed decisions around clients, productivity and sustainability.

Identify each of your clients in descending order by revenue ($) or profit margin (%). Place each client into the grid below, inserting your highest value client at number one and so on. You can continue down to 16 or 32 or 64 should you wish to.

Now consider the respective relationships in your grid and the amount of time you and your business spends servicing each client – for example:

  • Client No. 1 generates 20% of revenue and takes up 5% of time;
  • Client No. 7 generates 3% of revenue and takes up 20% of time.

Do we spend enough time with those clients that we should, and too much time with those that we shouldn’t?

Now consider the revenue over the past three years. Is the revenue for each client trending up, down, or no change?

Do you have the capability to increase your share of wallet with Client No. 7? If yes, work out a plan. If no, this client may not be financially sustainable in the long term and you need to consider your options.

Revenue Gaps

This approach uses the three-year 2-4-8 analysis to project out future revenues. Use a grid chart to identify gaps in your revenue.

In the example above, March has no projected revenue; therefore, based on the Relationship Bell Curve concept (see below), we should have looked for opportunities to close the gap 6 to 12 months ago!

The Relationship Bell Curve

We live in an environment where everything operates at speed. We want everything and we want it now.

But effective relationships take time to develop, and to build successful, profitable relationships you must embrace long-term thinking vs short-term thinking!

It takes on average, around 6 to 12 months to develop a relationship (70%). In some instances it may happen a lot quicker (15%) and, in other cases, it may take a lot longer (15%).

Mahatma Ghandi said “The future depends on what you do in the present”.

Make sure that you are working on your relationships well in advance!

 

 

Business Development Skills and the Billable Hour

3-cruickshankI recently reviewed a small firm’s Associate Guidebook. In describing the firm’s expectations of associates, two-thirds of the text was taken up with how to attain annual billable hours (2000). The remaining one-third addressed billing and timekeeping. Not a word was said about business development or career.

This got me pondering this question: What if small firms paid as much attention to business-development skills as they do to billable hours?

I speak of small firms because many of them have leverage of less than 1:1; indeed one partner to .5 of an associate is not unusual. If they continue to make partners at the historical pace, those partners (whether non-equity or equity) will all have to contribute to revenue. This message is, regrettably, delivered too late to most associates. “Late,” in my mind, would be any later than three years of practice. Just as we have seen in BigLaw, there will not be much room for “service partners,” or long learning curves.

Applying the techniques and effort of managing billable hours of associates to the management of their business-development skills would lead to some of these practices:

  • In first-year orientation sessions, associates learn about how the firm makes profits and how every lawyer contributes to those profits.
  • Concrete stories and examples are given in first year about how young lawyers brought in business.
  • There is a monthly report to management on business-development training time and hours.
  • As associates make more business-development efforts (e.g., by speaking and publishing), the firm sponsors discussions of what is a “productive” hour vs. one that might be written off.
  • Annual evaluations have a business-development category that receives as much attention as the annual billable target.
  • A bonus (perhaps a trip to a significant trade conference) is awarded to associates with strong contributions over the year.
  • By fourth year, each practice group leader sits down with those associates to discuss their path to partnership and the business-development plan to get there. This plan is reviewed twice a year. Hours are reviewed monthly.
  • Associates who demonstrate few skills or productive hours are given a warning about their future at the firm by the end of fifth year.
  • Partnership entry criteria include both originations by the associate and the potential of that associate (via scrutiny of their measurable efforts).
  • Associates who are struggling get mentoring or external coaching (or both) on business-development skills.
  • Just as the firm raises the associate’s billing rate, it moderates their billing targets but increases the business-development target.
  • Stern memos go out from the managing partner when business-development hours are low.
  • And perhaps this is fantasyland, but firm management and partner meetings spend as much agenda time on business development as they do to the monthly billed hours report.

For law firm leaders, this application of old tools to new skills can easily be imagined. If your partner-heavy firm is to thrive, leaders may have to make these a reality.

Business Development: Strategic Client Relationship Management

2-FortinaRemember the old adage “The Client is King”? Put more baldly, the reason your business remains in existence is because you have clients. To lose sight of this carries the risk of losing clients. You know that the world you operate in is highly competitive and aggressive. You also know clients are (mostly) sophisticated buyers of legal services with high expectations and demands. The better you know your clients, the better the relationship – and therefore the less chance your clients will look elsewhere. It is well understood that it costs more to discover and develop new relationships than it does to look after existing ones. In addition, you do not need to have new clients to grow your business; you could quite possibly grow your share of their wallet by extending your service offering to your current clients through effective cross selling.

It is assumed that your firm has a clear plan and strategy which encompasses strategic client-relationship management, namely:

  • You have a clear and well communicated Firm Strategic Plan, Business Plan and Operational Plans that are understood in all parts of your firm (HR, IT, Finance, Secretarial & Administration, Reception and all Legal Staff);
  • The Strategic Plan includes: Vision, Values, Purpose, Mission, Key Success Factors, Key Strategic Objectives; Practice Objectives; Goals and Actions;
  • You have identified your Ideal Client.

With this in mind there are many business development aspects to take into consideration when looking after existing clients. It is important that you align all business development activities to your firm’s overarching strategic plan – so the day-to-day activities feed into the business plan, which feeds into the strategic plan. If they do not, ask yourself this: What is the purpose of these business development activities?

Client relationship management should be your number one business development activity. How well you do it may have long term impacts on your relationships and therefore the success of your firm. Here are a few questions which will help you work out how well you know your clients and explore the type of relationship you want with them.

In regard to your client:

  • Do you know your client’s strategy?
  • Do you know what significant business issues your client is facing?

And what about you?

  • Do you make it your business to understand what is special and unique about your client?
  • Do you care about your client?
  • Do you offer a clear explanation of what you are doing for them and why?
  • Do you keep your client sufficiently informed on progress?
  • Do you make sure that you are accessible and available when your client needs you?
  • Do you keep your promises on deadlines and targets?
  • Do you keep within your scope parameters?
  • Do you make your clients feel like they are important to you?
  • Do you make an attempt to be interested and helpful beyond the particulars of the tasks?
  • Are you consistent in all your communications and interactions with your client?

In regard to the relationship:

  • What type of relationship is it and how would you rank it out of 10 (1 low; 10 high)?
  • What are you doing to maintain, build and / or enhance it?
  • Who is / are the key contact points for the client? Do they like them? Do they know they can change their contact?
  • What is your current position with your clients – panel appointment or transaction / commoditised / project based work?
  • Where do you want to position your firm – preferred supplier, trusted advisor role?
  • Have you completed a client plan and identified measurable goals?
  • What is the total annual spend on your services by the client? What percentage do you get? Can you improve on this?
  • Do you have the right people on your client service team?
  • Who are your competitors and in what areas?
  • Have you done any client listening lately? Health checks, debriefs, client conversations? Do you have a 12-month client listening plan? What regular relationship meetings do you have with the client?
  • Getting closer to the client – Have you developed a relationship matrix: i.e., who are the people you need to know and service within the client’s business?
  • Do you have single or multiple relationships with key contacts – looking across the firm and the client?

Conclusion

The wonderful Dale Carnegie said, “You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” The same goes for business relationships. Get interested in your clients – invest time, effort and energy into your relationships!

Helping Partners Jump Hurdles

Screen Shot 2016-06-27 at 6.09.25 PMJust about every law firm strategic plan requires some degree of business development planning and activities.

For three reasons, however, lawyers often find the related areas of marketing and business development difficult hurdles to jump.

THE PROBLEMS

Doing what we have always done

For decades, lawyers have been able to restrict their marketing strategies and activities to previously successful formulae, unconsciously applied. Successful businesses were built up on the back of the firm’s goodwill and a database of existing clients developed slowly over many years by dint of instinctive marketing, opportunistic activities and haphazard relationship building. In the past, and (for some lucky firms) even now, there has been little need to do anything different, despite the fast-moving and increasingly competitive age in which law firms now find themselves.

The introspection of The Technician

The second issue is that the behavioural patterns endemic in most law firms conflict with a methodical marketing ethos. These behaviours result both from the technical attributes and traits which characterise the good lawyer, and from the ‘chargeable hours’ culture which has developed in law firms in recent years.

After all, most lawyers took up the law in order to practise their chosen technical profession, and doing and concluding a piece of professional work is what they find most interesting. By virtue of both training and inclination, lawyers can be or may become introspective and focused on precedent. And for those who developed their client bases in the dim and distant past, there can sometimes seem to be little incentive to go out and ‘do some marketing’. What is more, the cerebral and analytical traits expected of professionals can militate against taking an entrepreneurial and wider view of life. In short, lawyers are not typically good at picking up the phone and making a cold call, or in following up an identified prospect. Furthermore, if lawyers are rewarded and valued mainly for client work and profitability, the pressure is inexorably applied to the achievement of short-term, chargeable targets and objectives, rather than long term non-chargeable business development activities.

The problem of differentiation

Successful marketing depends, at least in part, on being able to demonstrate that the services on offer are sufficiently attractive to dislodge the competition. The problem is that the services of one law firm or individual lawyer are relatively difficult to differentiate from the services of another.

In the face of these natural barriers, many firms long ago decided to make greater strategic investments in their marketing departments, with the idea of focusing their professionals on the legal work which they clearly like and are best at. Investment may have helped, but the introduction of sophisticated marketing professionals has also provided a cop-out, allowing professionals to abrogate to the specialists their responsibilities to manage their own careers, to build client relationships and to develop pipelines of business

There are three long-term measures to help partners face up to their responsibilities.

THE SOLUTIONS

  1. Catch them young

Competence in Business Development is now seen as a key skill for all lawyers and has become a critically important criterion in assessing promotion prospects and – for partners – their compensation. Hence, exposing young lawyers early to the principles, practice and mindset of developing their own business is easier than trying to teach old dogs new tricks.

  1. Value and reward the rainmakers

It may seem an obvious point but many firms seem still mainly to value personal revenue production. To an extent, good rainmakers will always do well if and so long as their business development efforts result in good revenues for themselves, but one rainmaker recently told me that he was becoming frustrated at the lack of any value or recognition for business brought in by him for others in the firm.

  1. Personal business plans

For a firm to achieve success, the strategic objectives of the firm must cascade down to teams and individuals.  A well drafted personal plan helps to set practical and detailed goals which link with the firm’s objectives, including its plans to develop new business. The existence of written goals and objectives has been shown to improve performance. From my own observations of hundreds of law firms across the world, only a few partners have written objectives in place and even fewer regularly review those objectives. It is widely accepted that professionals who take time to consider their ambitions and to crystallise their plans into written objectives perform better than those who have no written goals.

Unlike trees, plants and animals, law firms do not grow in substance or in size as a natural result of the passage of time but need careful development.  Whilst the best work comes as a result of successful work done for satisfied clients, the last three decades have shown that business development effort has to be made at the levels of firm, practice group and individual in order to help the firm prosper.

A Business Development Reality Check

Action buttonRemember when things were busy and prosperous, and meeting a prospective client was a joy? There was a spring in your step and, while you were not cavalier, your future did not depend on any given individual so there really wasn’t a whole lot of pressure on each greeting or encounter.

Remember that more senior lawyer in your firm who used to feed you a ton of work until she retired, or was laterally hired away, or whose own practice dried up a bit so she stopped sending the work down?

The New Status Quo

Now, there has been a bit of a drought in your practice. A few deals that were coming to you collapsed. Some clients who professed to understand an imminent need postponed anyway.

The industry you focus on is going through difficult times.

Your clients have some new awareness of how to put the fee pressure on you. Even long-standing clients are doing RFPs just to keep you sharp.

You read about alternate fees and you’re not quite sure when to use them and when not. You read conflicting reports about the receptivity of clients to alternate fees: first you’re told clients love them and demand them, and then you are told that clients reject them and see them as a device for you to extract more from them.

Trust out there seems to be waning.

Your internal meetings tell you that many of your colleagues are in the same boat. While there’s comfort in numbers, the pervasiveness of the problem does not bode well for your next compensation review.

So, the anxiety grows. The greater the anxiety, the less you want to deal with this. You didn’t like schmoozing at the best of times… and you don’t like it any better in the worst of times.

What to do?

I wish I could tell you that there was a magic button that would solve all of your problems. All you would need to do is make a one-time investment of $99.95, and every time you pressed the button, new and profitable clients would walk through your door. The magic button would be available in your choice of colors and designs. You could set it to “Silent,” or select the bell tone of your choice. When you pressed it, in would walk your ideal client and all you would have to do is simply listen for a few minutes to learn exactly what they wanted you to do for them in exchange for the substantial amount of money they were offering.

Well, guess what? The equivalent of that button is available to you right now – and there is no cost involved! Instead of money, this magic button requires you to invest some time and thought. Furthermore, the button does not conjure a paying client every time you press it… instead, you have to press it multiple times for every client you get, and for those you already have. But the end result will be the same: you will build your practice instead of watching it decline.

Pressing the button is a metaphor, of course. The “push the button” activities available to you right now include such strategies as the following:

  • Visit client premises.
  • Phone the client between matters to find out how the last matter is unfolding.
  • Follow up on the client’s personal issues that he or she has mentioned to you… How did the surgery go? Did your daughter get into that university?
  • Send an unexpected gift that relates to the personal interest of your client… Who would’ve thought that there’s a new book on butterfly collecting?
  • Invite your client for lunch… or for a cup of coffee in the morning… or for a beverage after work.
  • Know enough about the client’s business and industry that you can make it the topic of conversation. Impress the client further by asking smart questions that could only be asked by having done some research first (which you can often acquire by spending five minutes on Google).
  • Say “yes” to client invitations even if it means a bit of a sacrifice on your part.
  • Express appreciation for every referral… and I don’t mean via email. How about a personally written thank you card that goes out with a stamp on it? (Trust me: the referral source will be flabbergasted.)
  • Do an optional “lunch and learn” at the premises of business clients, small and large. Prepare properly for them by knowing who is going to be there, interviewing them to fine-tune content, and ensuring that they have valuable takeaways that are relevant to them.

I can add to this list but you get the idea. You have the button, and you didn’t have to pay for it. You just need to keep using it.

Soon it will be the “Happy Holidays” time of year, and there will be a lot of socializing. By all means participate. However, keep in mind that it’s how often you push the button during the other eleven months of the year that will correlate to your business development success.