In The Marketing Trend Devouring Your Core Business, I described how SaaS companies are using content marketing to aggressively commoditize traditional professional services firms. This week I offer some suggestions firms can put in place to immunize themselves against the onslaught.
Clients hire professional services firms because they lack the in-house capability to deliver the desired outcome or they require third-party objectivity for regulatory or political reasons. At the most elemental level, they are paying for a credible point of view on an issue or an innovative idea that helps them accomplish their goals. They don’t care where the thinking comes from—an accounting firm, a global consultancy, a SaaS company, or a boutique consultant. If you want to stand out, the proper response to the SaaS content marketing phenomenon is for your firm to relentlessly focus on creating value for your ideal client. The best way to accomplish this is through a strategic and differentiated intellectual capital (IC) agenda. Intellectual capital, unlike “content,” is not about media hits, viral shares, or user adoption.
RELATED: The Question is NOT Why Clients Buy, But How
Most firms think of an intellectual capital agenda as simply documenting, codifying, and emailing “thought leadership.” Knowledge assets undergird the core capabilities of any firm’s business model. But, they are of limited value unless they are being applied as engines of growth and a source of competitive advantage.
In other words, your intellectual capital needs to be transforming your core capabilities and knowledge into real tangible client value.
How do businesses define value?
Very simply, shareholders define value as:
(Revenue – Cost = Profit) x Growth Rate
Clients want to increase revenues and reduce costs to produce the maximum profit at an accelerated rate. While every client may emphasize different numbers and goals (including individual personal wins), each firm and every investor uses the same equation. It is that simple, but firms lose sight of the rudimentary equation. If you cannot demonstrate how your capabilities/services/solutions drive more revenue or reduce costs better and faster than your competition, your growth is going to struggle.
A strategic, focused, and purposeful IC agenda can:
- Uncover growth opportunities in non-traditional markets and solutions
- Generate revenue at a scale above the industry average
- Create significant value for your partners, clients, and people
- Differentiate your firm’s expertise and the firm’s value proposition
- Attract top talent because high performers want to work with top performers
RELATED: What Do Clients Buy From Professional Services Firms
Here are some prudent suggestions to strengthen your intellectual capital agenda and transform more value from your core capabilities:
1. Manage your intellectual capital agenda from the highest level.
Managing from the top ensures that the IC agenda prioritizes goals, investments, markets, issues, and solutions. If leadership is not setting the agenda, you are squandering resources and missing out on the scale required to break through a competitive, noisy market. Your IC agenda should reinforce your firm’s value proposition and permeate all elements of market interactions.
RELATED: Identifying Your Focus
2. Close the loop on your intellectual capital agenda to fuel a strategic, virtuous growth cycle.
Your intellectual capital agenda should inform and shape the firm’s business strategy—buyer understanding, growth opportunity identification, and competitive intelligence. It should empower the core elements of its execution, including solution development and delivery, marketing, and relationship development. Finally, the agenda should provide mechanisms for learning, solution refinement, and client feedback. Bob Buday at Buday Thought Leadership Partners offers a simple, powerful model for thinking about IC development and application. (See graphic below.)
3. Stop looking at intellectual capital as just a marketing initiative.
In The Marketing Trend Devouring Your Core Business, I detailed how SaaS firms are using IC for marketing. Their most common approach is disseminating “How To…” information in order to be helpful. Most professional services firms typically pursue IC only for demand generation (e.g. to fuel media relations and build brand awareness) using one of these three approaches:
- Facts and Figures: Firms track and disseminate data points that result from legislative or regulatory changes, simple research surveys, or databases that result from a specific business model (e.g. HR outsourcers’ access to 401K and healthcare claims, etc.).
- Analysis: Firms with discipline sustain Facts and Figures over time and outline the incremental impact of trends in various industries or functions.
- Insights: More strategy-oriented firms combine the Facts and Figures with Analysis and examine them in light of the broader economic/political/social context to envisage the future in a way to make bold attention-getting headlines.
Each of these is valuable, but they are not enough. Reallocate money being spent on brand perception studies and other navel-gazing. Start investing in supply creation.
If there are holes in your market understanding, your IC agenda should be filling them. Focus on understanding client issues from different value-creating perspectives—solutions, delivery, pricing, collaboration, new technologies, competitors, social trends, etc.—not just quick media hits. IBM offers a powerful, under-utilized model for thinking about value creation in terms of exploiting big data. It is a great place to start.
4. Stop loving your core solution.
| According to Accenture research: | ||
62% | of incumbents think important changes to their operating model are their best chance to survive. | |
75% | agree that successful digital operating models will be flexible, dynamic, and customer-centric. | |
As the worlds of consulting, software, and data morph into one, firms must shift to a client- and buyer-centric mindset. Most technical service providers fall in love with their own solutions for the solution’s sake. They are the proverbial hammers looking for nails and lose sight of what clients truly value (i.e. Revenue – Costs = Profit) and whom they see as a solution provider.
Start thinking differently about how your traditional core capabilities and your brand’s relevance can uncover new ways to create value and uncover growth opportunities.
RELATED: The Fallacy of Professional Services Productization
5. Know who your competitors really are.
You may think that your competitor is a similar firm in the next city or state when it could be a SaaS provider an ocean away. According to research from Hinge Research Insititute, most firms underestimate the actual number and form of possible competitors. Make no assumptions; keep your eyes open and makes sure that your intellectual capital agenda includes the proper perspective on emerging needs and providers.
6. Be strategic about your intellectual investments.
You cannot win by spreading your IC investments across the business. You have to prioritize your bets and manage expectations for your existing cash cows accordingly. Most farmers who own the cow don’t like to share the milk, hay, or barn. Manage expectations and investments for the entire firm’s long-term well-being. As they say, “Sacred cows become hamburgers.”
Establish a small, but effective IC council that represents key growth drivers of the firm. (See graphic)
Responsibilities include:
A) Govern IC priorities
B) Maintain client focus
C) Align research with the business strategy
D) Determine resource allocation
E) Prioritize timing and investments
RELATED: How to Easily Invest Your Marketing Budget
7. Rebalance your firm’s emphasis on “rainmaking” and intellectual capital development.
Both skills are important. However, rainmaking is NOT scalable; intellectual capital is, particularly when it comes to the commercialization of data-based products or software. Don’t be myopic and reward short-term revenue generation at the expense of long-term viability.
RELATED: Are Your Industry Experts Competent
8. Do a gut check about whether your firm has the culture to be a thought leader.
Finally, and most importantly, decide if you have what it takes to differentiate your firm via your intellectual capital or if you are unluckily dependent on the rising tide that the real market leader is creating. It’s time for your leadership to get honest with itself (i.e. put up or shut up.)
- Do you already reward innovation through promotion and financial incentives? If not, why not?
- What are your main performance measures? Innovative thinking, risk-taking, client-centricity or is utilization the golden, single measure of performance? Why?
- Is your firm driven by learning or by training? How and Why? Do you even know the difference? Why not?
RELATED: Are Your Firm’s Values Any Different Than the Local Dry Cleaner’s
Take away
It is time for your firm to think differently, see beyond past success drivers, and dial up a strategic intellectual capital agenda that fuels supply creation as much if not more than demand generation.
SaaS companies’ use of content marketing is a real, present, and obvious threat to professional services firms. It is here and already eating away at your core business. If you are not aware of this trend, you have even bigger issues with which to contend. Artificial intelligence, Blockchain, IoT, and any number of emerging technologies that do the work of an army of both blue- and white-collar jobs are knocking at the doors of traditional service firms—even, and especially, those seemingly protected under the auspices of a regulatory mandate.
Who are to be the winners and losers in this new environment has not been shaken out, but make no mistake: the shaking has begun.
