by Jeff McKay and Ted Harro
The whiz kids from your expensive strategy consultant will often tell you that cross-selling is the solution to your firm’s growth challenges. “If clients like and trust your tax, they will like your IT consulting,” they say. “If they like your intellectual property group, they’ll like your real estate group.”
Cross-selling is the professional services version of a textbook client penetration strategy. It is always in vogue and makes intuitive sense. The only problem is that it seldom works.
Cross-practice collaboration puts cross-selling on steroids. A cross-practice solution “integrates” multiple practices to solve clients’ largest and most strategic problems. It is an outstanding concept that outlines huge growth benefits. Cross-practice collaboration:
- Exploits the full breadth of your firm’s services and increases your consultant utilization.
- Moves you “upstream,” to add strategic value to the C-suite. More value means more fees and a more respected brand.
- Attacks your clients’ biggest problems holistically and minimizes their risk (an “integrated” solution, including one throat to choke).
- Demonstrates your firm’s preeminent and differentiated client-centric service model and fuels your referral base.
- Increases revenue potential for every line of business by finding the “white space” between your disciplines: more fees, less selling and higher utilization.
That is some really cool and rewarding stuff. You are probably nodding your head in agreement and thinking of an example or two of clients that have been served this way. So, if it is such an idyllic and common sense strategy, why is it so rarely executed across a firm? Because your strategy consultants don’t implement and are not the people staring your leadership team in the face. Writing that strategy is easy. Putting it into action is Herculean.
Your strategy consultants haven’t been in this meeting, the one that happens after they leave.
Sitting around the conference room table are 5-10 partners. The cast of characters typically includes a Sunny Optimist (quietly disregarded by the team), a Hardened Realist (aka a cynic), a Bean Counter, a Big Talker, a few Mutes and the most sinister character of all: The Back Stabber. Getting everyone into the same room is the easy part. What’s hard is getting this crew to actually pull in the same direction.
Everyone around the table is part owner of the firm—and only too happy to remind you of that fact in both subtle and blatant ways. Add to that the typical matrix structure that gives every person in the room plausible deniability for doing anything self-sacrificial. Top it all off with the obvious but rarely discussed fact that most partners in professional firms have gotten to their current positions as a result of heroic individual effort. It’s no wonder that many of them deeply desire that others will just give them what they need and leave them alone to do their work.
A Collaboration/Cross-selling Analogy: Rivers vs. Canals
Daily life in professional services firms is pretty predictable: serving clients, finding new clients, sitting through some continuing education, recording time. Like a meandering river cutting the soft soil of its outer banks on its circuitous route to the ocean, firms follow the natural path of least resistance toward the traditional practice-centric life. The natural flow of professional services life:
- Rewards practices for delivering practice-centered outcomes—revenue, utilization, profitability and, perhaps, client satisfaction. What gets rewarded gets done.
- Thinks and talks about their “stuff “instead of client issues. They look at the world through their technical discipline and ask, “Who needs my brilliant offering?” instead of looking at the world from the client’s point of view and asking, “What issues are most vexing in my clients’ eyes?”
- Avoids owning a “collaborative” revenue P&L. Collaboration is an ethereal concept in a matrixed world. When you are a “boss” with no real authority, it is easier, less risky and requires less political capital to just let others do their own thing.
The teamwork required to implement a collaborative strategy is an unnatural act for professional services firms.
Collaboration is more like building a canal and requires channeling water in an unnatural direction. But, under the right circumstances, it can change the world.
The Panama Canal cuts an unnatural path across a 40-mile stretch of the Isthmus of Panama and through the continental divide of the Cordillera Central mountains. It reduces the time for ships to travel from Virginia to California from five months to two weeks and turns what was a death-defying journey around Cape Horn into a routine trip completed by 14,000 ships each year.
But the building of the Panama Canal was neither easy nor cheap; it cost hundreds of millions of dollars and thousands of lives. France began the project and abandoned it midway. The United States finally finished it decades later.
Collaboration at this level requires team members to pay personal costs and deny their natural human tendencies. In professional services firms, this means:
- Having uncomfortable conversations. Most senior partners didn’t get to their current roles by being the most persuasive colleagues. They got there because they’re great at working with clients or they’re technical experts. Looking a colleague in the eye and challenging him to do the right, but difficult, thing is something they don’t have a lot of training for. Being honest and telling a colleague that you don’t trust your client relationship to them. Don’t underestimate the lengths leaders will travel to avoid those conversations.
- Trusting others when the heat is on. Working together usually comes at a short-term cost, even when everyone agrees intellectually in the long-term benefits. The big fear is that one of us will be exposed to “the powers that be” as a direct result of our agreements to work together and while others will scurry to the shadows. Don’t think that smart, accomplished partners are above the fear of abandonment.
- Expending unbillable time. Collaboration takes time, usually in meetings and often away from clients. This is especially true in the early days when you have to gain clarity into where the high-gain collaborative opportunities lie and discern how to capture them. In environments where short-term results are king, that up-front cost hurts. Don’t forget that people generally avoid big up-front costs with uncertain rewards.
- Thinking long, long term. Consultants are rewarded for short-term performance. Asking them to collaborate today for a benefit tomorrow is like asking a 6-year-old if they would like dinner or dessert first. Don’t ignore the pull toward the quick hit.
See Deloitte’s Guillermo Salazar’s post on LinkedIn: Consulting Industry: Stop measuring Utilization! Its putting us out of business.
So why bother with the cross-selling strategy? Three BIG reasons:
- Your clients deserve it. Sure, you can keep doing business like everyone else. But the truth is that your clients have challenges your team could solve collaboratively, and they need you to solve them.
- Your people deserve it. You have a group of partners and younger professionals who got into this business because they love the creative act of solving client problems. And they want to be part of a firm that creates exciting opportunities for the future– opportunities to do cutting-edge work, to be known as a great firm, to meet and work with fascinating clients, to take on increasing responsibility.
- Your firm deserves it. Whether your firm is five years old or into its second century, you stand on the shoulders of your predecessors, and you’re a steward of the future. Sure, you can continue using a set of practices loosely held together by an organizational chart and a logo, but you have to ask yourself: is that the best way to instill pride, reputation, and accomplishment into the firm?
Building the Panama Canal was worth the cost for one reason: ship owners and captains showed a strong desire to avoid Cape Horn and to get to port faster and more safely. Economic, security, and social reasons created the compelling case for the Herculean effort.
Is the same true for your firm as it attempts the unnatural act of cross-practice collaboration? Here’s how you know:
- Are clients demanding you to work together to solve their problems?
- Can you quantify how much business you’re losing as a result of not collaborating? (Hint: A lot is not a quantity.)
- Are you losing some of your best people because they feel their careers are constrained by a practice-centric model?
Until you can answer those questions, the ships are sitting in the harbor or merrily sailing the slow route down the coast. Once the answers are clear, prepare for the difficult, rewarding work of moving mountains and changing the way the world works.