Insights into Leadership of Professional Service Businesses
by Alan Patching
Achieving a certain level of success in our business really can prove to be an obstruction to realising even more success, particularly in difficult times of rapid change. Often successful people adopt the philosophy of always doing what they've always done in the hopes of always having what they've always had.
This kind of thinking can be a recipe for disaster in today's economic and political environment. It's reminds me of the guy who was pulled over by the police one evening for speeding. As the policeman walked towards his car, he noticed his seat belt was undone. He hastily grabbed for the belt and somehow managed to buckle it up while maintaining eye contact with the approaching officer. The policeman told him he was going to book him for speeding but needed to ask him a question first.
'Do you always drive with your seat belt done up?'
'Of course officer…it's the law!'
'In that case I have another question for you', the cop said.
'Fire away' the driver replied.
'Do you always drive with it looped through the steering wheel like that?'
Quick as a flash, the guy responded 'Only when I'm driving in a straight line'.
I wonder how many of us are driving our business in a straight line with the seat belt effectively looped through the steering wheel, when the road ahead is sure to be full of more hair pin bends than even the business road the world has travelled in recent years.
How can we effectively deal with economic change?
Before looking at some specific suggestions for your business, let's take time for a philosophical look at things – to see if we can find some insight and inspiration to assist us.
I believe the key to ongoing success in any market is to be found in the Basic Entrepreneurial Model which was originally proposed by my US colleague and friend Dr. Denis Waitley. This model proposes that to remain successful we need to:
- Continue to deliver innovative products and services that meet market demands
- Produce and package them well and innovatively
- Market and sell them innovatively and effectively.
The key is clearly innovation, yet in many corporations, we are often guilty of leaving all the innovation to the companies that design and package the products and services we market and sell.
In terms of the Basic entrepreneurial Model, this effectively leaves our ongoing success entirely in the hands of others. It would serve us all well if we continually looked for innovative ways to deliver the services we provide for our clients. The WOW factor has always been a great way to build relationships, and it often takes very little extra to get the WOW response. But it takes leadership to remain aware for opportunities to provide that little extra.
Ongoing success today demands of us that we practice self leadership in both our business and personal lives.
In our business, one way to practice self leadership is to choose to apply innovation to improve our clients' service experience. By this I mean, even if our products are designed and packaged by others, we can provide feedback from our client base to assist in the innovation of new products.
This will result in the design and production of better products to service our clients' needs. We can also apply innovation in the manner in which we deal with our own clients and customers. For example, a simple policy of a financial services company to regularly update its clients on the reasons behind current economic circumstances by email might not sound all that innovative. However, it will seem innovative to a client who has received no such information from any other source. No one said innovation had to be ingenious.
Now, as soon as innovation is mentioned, many people switch off, thinking it requires great creativity and believing they are about as creative as a lead pencil. I ask you to choose not to be one of this group.
Avenues to innovation
Creativity is only one avenue to innovation, and there is much to be gained from the others. These include extension, replication and synthesis. Let's see how we might apply each of these in our services businesses.
First, let's examine extension. This is innovation by taking an idea which worked in another industry or area of life, and extending it to suit the needs of our business environment. South West Airlines of the USA did this when they wanted to significantly decrease turn around times at terminals so they could compete with larger airlines without exposing their business to the risk associated with purchasing larger and more expensive aircraft. They learned how to turn aircraft around faster than any other airline in the world but not by studying other airlines' activities. They modeled their procedures on what they learned from observing and extending the teamwork of formula one racing car pit crews. Now, most would agreed, that's innovative!
Replication is easier still. It simply involves seeking out a technique or system that works perfectly well in another arena and importing it directly into our services business. It would be hard to go past the example of Cisco systems from the world of information technology. Cisco was faced with an annual customer service bill of over $500 million, largely through their call centre operation which gives technical advice. They replicated a simple internet chat room to solve their problem.
So now customers discuss their problems with each other in the Cisco facilitated chat room rather than use the company call centre technical advisors for every problem. The result, savings of hundreds of millions in customer service costs and – wait for it- significantly higher levels of customer satisfaction reported. What an amazingly simple, yet really innovative solution that was!
In synthesis, we innovate solutions to our problems by taking ideas from different areas and combining them, or synthesising them, into a solution for our own challenges. The ResidenSEA company noted a huge increase in cruise business by wealthy retirees. They designed and built the 48,000 tonne ship, The World, which undertook its maiden voyage in 2003. The World has very few casual traveller cabins. It mostly comprises two and three bedroom apartments, complete with full kitchens and all other mod cons. It boasts a supermarket as well. An apartment on board will set you back between five and twenty million Aussie dollars. It's a floating resort representing the innovative synthesis of concepts from a range of industries including the cruising, retirement services, residential development, shipping, entertainment and hospitality. Some will be quick to point out that the company behind the concept was reported as having some financial difficulty, but I don't think this should dissuade us from innovative effort, it simply emphasises the importance of leadership and management to ensure the innovative effort is financially sustainable.
But how can service industries professionals use the innovation practices of extension, replication or synthesis in their businesses?
Clearly, each reader will need to develop his or her own answers to that question. But let me introduce a few ideas which might assist you to do just that.
Let's take a look at the financial services businesses, for example. The equity markets of the world took a severe battering a few years ago. Some newspaper reports measured the better performing funds by the fact that they lost less than their competitors. It is not surprising in this type of environment that client complaints increased, which had financial services providers busy putting out fires. It is important to deal with these issues, in the interests of the client relationship, particularly when many clients are tempted to blame advisors and begin to compare their current advisor with others in the market.
However, it is more important not to take our eye off the big picture – and the fundamentals for success in a financial services business– while at the same time addressing the very necessary issue of client concerns (I'm sure professional services providers from other areas will see clear parallels with their own business situations). However, for consistency, I will continue to address the financial services example in this article). It is here that we can apply innovation. Examples of such application might include:
- Innovative use of technology to keep clients informed of market opportunities and new investment products, and to pass on information which explains current economic circumstances and suggests strategies for weathering the storm.
- An example might be simple use of email for a regular advice or information service, or perhaps the establishment of a website with access restricted to password equipped clients.
- Holding seminars for clients, and perhaps their clients or friends, to provide the latest view on the market from an expert in the field and to respond to clients' current concerns.
- Employing and training a person to field all calls and record questions from clients, so that professional advisors can personally answer those that need to be answered professionally during business hours and perhaps get back to others by email where the response is not urgently required
- Establishing a net based chat room for responding to clients questions at a regular time each week. The idea is to be innovatively proactive, rather than reactive, in dealing with client issues.
- Arranging for clients to keep you informed of problems they have had and the way they dealt with them and then sharing these solutions with your broader client base without revealing the identity of the information source. Australian hospitality industry consultant, Max Hitchins, made himself into an internationally recognised authority using exactly this technique.
Really, the solutions to our business challenges are limited only by our own willingness to apply innovation techniques in their identification and resolution.
A look at counter cyclical thinking
Let's take a brief look at a completely different industry, and one that is more product than services related – farming. In long periods without rain, the media has stressed the severity of the drought on our land in no uncertain terms. However, it has also brought us important lessons from some farmers who stored huge amounts of silage in the good times, and still survived well during the bad.
We hear reports of others who staged the fattening of their stock to allow sell off at times of high stock prices occasioned by the drought that was destroying so many of their competitors. These people followed the fundamental of counter-cyclical thinking of preparing for the bad times during the good. They also made the effort to seek out the opportunity presented by and within the crisis. In so doing they send a strong message that is directly transportable to many of us in all manner of service industries.
The history of economic markets teaches us many lessons, none more compelling than the absolute certainty of good times following bad. Effective counter cyclical thinking extends to preparing for the good times during leaner periods. For the short sighted, dealing with client concerns and complaints borne of any current economic environment is all consuming. However, the optimists, the success oriented, the tenacious and the completely professional, never lose sight of the important fundamentals.
Certainly dealing with client concerns is a fundamental, and it surely must be dealt with, not as being of supreme importance at the expense of all other fundamentals, but rather as being of great importance and equal with the other fundamentals.
What are these other fundamentals we need to focus on in a service business?
None can be more compelling than the promise of the economic cycle that good times will follow lean. I firmly believe that in 2020, the many services businesses will look back on the first ten to fifteen years of this millennium as the most productive ever experienced. Once again, the financial services sector and other services industries it feeds, is an example worth examining.
Compulsory superannuation will continue to make 9% of the national salary and wages bill available to support financial services businesses while those businesses assist others to achieve the success they seek. The baby boomers are currently reaching 50 years of age at the rate of several hundred per day, and 50 seems to be a magic age at which they take stock of their financial position and turn their attention to retirement more than they ever previously did. Their kids are off their hands, income is as good as they have ever experienced, and the media constantly reports medical science developments which give them a very clear anticipation of life well into their seventies and eighties.
They are already aware of the need for better financial planning for their retirement when they decide to consult a financial planner. They are better qualified prospects than the industry has ever previously experienced. And many are thinking, educated people, prepared to pay for professional advice. Downturns in the economy can actually represent great opportunities for financial services professionals working with this market sector. What better time to listen to advice than in an adverse market?
Of course, the compulsory superannuation situation spawns project for investment of the 'super' funds, which in turn produces similar opportunities for any number of other service professionals.
On the other hand, nothing is more easily understood than the tribulations of financial services sector operatives dealing with a client base angered by recent dilution of their wealth at the hands of a harsh and non-discriminating economic market. Nothing would be more regrettable than large numbers of financial services professionals allowing this predictable economic cycle circumstance to take our minds off the fundamentals.
Compelling fundamentals which include:
- The fact that, failing breakdown of our economic system, good times will follow the tough
- The fact that strength of relationship will help us survive most of the troubled period, if we take the time to work on our business relationships but in context with a big picture focus for our businesses.
- The fact the baby boomer phenomenon is set to make the next decade and beyond the best years ever in many service industries, for those who dedicate some of their effort in any lean times to prepare for the good times ahead
In summary
Leadership of service oriented businesses involves not only doing well in good times and surviving the tough, it involves strategic approaches to remaining ready for rapid market conditions changes and that includes a rush back into good times rather than just a continuance of any quiet current status quo. Spend time on development of your own self leadership to achieve this, and good luck applying the fundamentals we've discussed herein.
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