Tuesday, 4 March 2008

Unusual structures for professional services

In my last article I looked at typical structures for professional services firms, and why you would want an explicit structure at all. This time I’m examining some less common structures, which nevertheless work very well for some of the firms that have adopted them. Each of these is based on a specific company that we work with, so we know that these models can work in practice.
  1. Bespoke consultancy with process-driven units
  2. Bespoke consultancy with product joint ventures
  3. Fully productized firm
Bespoke consultancy with product-driven units

This firm has evolved from a consultancy providing expert services on a project basis. Having noticed that there was a high demand for a certain specific service, the firm made the effort to analyse the structure of the service and turn it into a standardised range of four products. Each of these can now be offered at a fixed price (with discounts for high-volume clients) and each of them triggers a particular well-documented process.
These processes divide up into a series of specialised steps which can each be carried out by dedicated administrative staff – freeing up the expert consultants to do deeper, more original work. Customer support for the product offering is provided by specific people who know the nature of the products intimately, and usually are actually better at that job than the experts would be.
The bespoke consulting part of the business still exists but the product part is able to handle much greater volume than the consulting unit. The structure therefore contains:
  • Consultants/experts
  • Product delivery staff (subdivided into four different roles)
  • Customer support
  • Process managers
  • Business development
  • Finance team
Bespoke consultancy with product joint ventures
A similar firm which has taken a different route to scalability. In the bespoke business a number of prospective clients had good ideas for projects but without the corresponding capital to invest in them. Therefore the consultancy took the decision to invest its time in the projects in return for an equity stake and revenue share.
Three projects took off and in each case a core product was built. The clients and the consultancy each have a stake in the product, with the clients broadly responsible for sales and marketing, and the consultancy responsible for delivery and support. These latter two are resourced from the core operations team within the consulting business.
The bespoke side of the business continues and is structured as follows:
  • Sales and marketing
  • Operations (delivery and support)
  • Finance/admin

with the joint ventures acting both as an intellectual property holder and an outsourced sales force.

Fully productized firm
In some cases the firm moves away from bespoke service provision altogether and packages all its services into standard products. In many cases this occurs where a law or accountancy firm has a strength in one area such as will writing, trademark applications or company registration, and finds it useful to package that service. Packaging provides:

  • The ability to develop and practise a reliable, efficient process – because every delivery is the same, so you practise doing the same thing hundreds of times
  • Predictable fixed pricing for clients
  • Downskilling – the option to hire less qualified (and less expensive) people to handle repeatable work
  • A simple business model that is easy to plan
  • Lower operational risk

Margins on a single job tend to be lower, because price becomes one of the firm’s differentiators from its bespoke competitors, but the volume can scale up vastly.

The roles within such a firm tend to become dominated by sales and marketing and administrative staff, with fewer if any specialist consultants. If there is a consultancy role it is associated with designing new products and refining the existing process. Often this is the role taken by the founder who may originally have been a solicitor or accountant:

  • Sales and marketing
  • Process/product designer
  • Operational administration
  • Financial and other administration


Candie said...
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Necia said...

Keep up the good work.

Aleda said...

Good post.