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The Evolution of Business Development in Professional Services Firms

by Erica Stritch on April 20, 2010

Evolution signI was in a meeting last week, and we started talking about the evolution of professional services firms and the roles individuals play when it comes to their business development responsibilities. As many of you may have surmised and probably experienced, economic realities and changes within firms have altered who must be involved.

Professional Services Business Development Then

When a professional services firm started 25 years ago the original founders and partners were responsible for bringing in all the new business. After all, they were the only ones in the firm, so their success as a firm and as individuals counted on it. This founding group of individuals had the desire and commitment to succeed in selling.

When it came time to hire new people, all they needed were doers. They needed accountants, consultants, and lawyers who were good at the technical delivery of the trade. The individual’s ability to sell didn’t matter because the founders and partners were responsible for bringing in the new business. This built the firm dynamic where a few senior rainmakers bring in the business to feed the rest of the firm.

Professional Services Business Development Now

Flash forward to 25 years later…

The founders and partners are retiring. The staff they’ve hired over the years are very good at delivering the services; however, they don’t have the skills to sell. And they don’t necessarily have the desire or the commitment to try to sell as the early founders did. After all, if they don’t want to sell they can just go work for one of the big consulting, law, or accounting firms and have a decent career delivering the services they love to deliver and never have to worry about bringing in new clients.

There’s been a paradigm shift, and professional services firms are running into problems because they don’t have the people who can sell or who have the desire to learn to sell.

This leads to the big questions: Where will the next generation of rainmakers come from? What’s a firm to do?

What has been your experience in developing new rainmakers in your firm?

Topics: Firm Management & Growth, Uncategorized
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April 20, 2010 at 11:15 am

{ 7 comments… read them below or add one }

Derrick Smith April 20, 2010 at 10:36 am

Erica,
Historically, I think this is right-on-the-money! However, I do think the one benefit of this economic downturn is that it is ‘reseting’ this mentality for many. In my industry (engineering consulting), there are few safe places left where a professional can now hide and not be deeply involved in the business development process. I’m a third generation firm owner, and our owners group has a fire in our belly; the result of a very challenging market reality.

Great article! -derrick

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Erica Stritch April 20, 2010 at 11:34 am

Derrick,

I think the “fire in the belly” is exactly what some firms are missing. That original group of owners has the fire and the passion to succeed, but how do you pass that on generation after generation? I am glad to hear you’ve been successful in doing so.

Erica

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Joshua Carney P.E. April 21, 2010 at 7:34 am

Interesting perspective. We started our firm last year at the very bottom of the so called “pit of despair” in the economy. We have since grown from 1 to 8 and continue to find new prospects. Starving and utter failure of the venture were very powerful motivators. My take on the rainmaker perspective is that while all of our employees are expected and encouraged to “sell” our firm, they all do so in different ways. Those who are technical focus on technical excellence. Those who are organizers focus on our management and delivery of projects. Those who have natural inclinations to sell and work with clients are developed in that way. We find the best performance comes with the alignment of teaching, individual goals, and natural talents, and everyone’s strengths lie in different areas and have equal value. I believe recruiting is the most critically important thing that we do. If we bring the right talent on board on day one, and develop them properly, many things, including rainmaking, take care of themselves. We specifically target graduate engineers (and we generally only hire out of college…a philosophy I have come to believe in after the last 15 years) who have the particular strengths we need. One year it might be a numbers person, the next year, a talker. It is all part of our long term strategy to always have a full pipeline in all of our career paths. It takes a while, but is sustainable and effective in establishing and maintaining a cohesive and performance driven culture.

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Erica Stritch April 21, 2010 at 7:55 am

Joshua,

Thanks for sharing your experience. I like what you say, “Starving and utter failure of the venture were very powerful motivators.” You had the desire and commitment to succeed with the business and have done so. Congratulations on your success so far.

You bring up a good point about recruiting. In a service business we are only as good as our people and our people are our brand and our business. Having the right people in the right roles is critical to success. And, in my experience, hiring is the toughest part of running a professional service business.

Having, as you say, a long term strategy in place is the key here. That allows you to step and look at what you need, where the holes are given the current talent you have, and fill them accordingly.

Erica

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Julian Summerhayes April 22, 2010 at 6:12 am

Erica

As a lawyer in the UK who has been in practice for nearly 15 years and prior to that with a background in sales and marketing (not an obvious switch I know), I have still to witness a paradigm shift. The problem comes down to control or more likely power. The classic partnership model is still the norm and that means that even where more junior fee earners are involved in BD, it is the senior people who still want to dominate the client relationship. This may work where the senior person is involved more than marginally with the client but the reality is very rarely like that save for the usual annual health check with the client. The organisation needs to adapt and allow fee earners to grow the relationship – that is far more likely to lead to cross selling or up selling opportunities. We don’t need a paradigm shift with the BD model but rather the organisational structure.

Julian

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Erica Stritch April 22, 2010 at 9:55 am

Julian,

“The organisation needs to adapt and allow fee earners to grow the relationship.” Yes! This is the shift that needs to happen.

Otherwise, what’s going to happen when the senior people who dominate the relationships retire? How’s the firm going to survive? The relationship is not just going to transition over to the more junior people, they don’t know what to do with it, they haven’t been trained to manage the relationship and “sell.” They aren’t all of a sudden going to go out and start growing their network. They must get involved early on.

The firms I’m seeing are in a really tough position because they have not gotten junior people involved. Now they are in a position where they want the next generation to take the firm over, however the next generation does not have the skill set to continue the firms growth. Now this mostly relates to firms who have been around for while and are at a point in their evolution where the founding partners want to retire and / or scale back. Younger firms still have the heavy invovlement of the founding partners, but if they don’t make a change they are going to run in to the same issue. It’s about getting the junior level people involved early and the senior people teaching them how to own the relationship. You bring up a very good point though about control and power. This requires some of the partners to have to “let go” and that can be a very difficult thing to do.

But without this, without developing the next generation of rainmakers, how will the firm survive in the future once the partners retire or scale back?

Erica

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Ian Brodie April 23, 2010 at 9:53 am

One of Ford Harding’s observations in Creating Rainmakers was that very often the best Rainmakers start early. That’s been my observation too.

Law firms seem particularly bad at exposing their junior staff to BD situations – either to observe or take a role. It’s not endemic to partnerships though – my experience of consulting partnerships is that they do a much better job of building the skills of their junior consultants at BD much earlier and giving them responsibility at the appropriate time.

Ian

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