Tuesday, July 30, 2019

The Benefits of Targeting Fewer Markets

Beyond a robust economy, where does growth come from? In my experience, most firms seek growth by moving into new markets. But the most successful firms I've worked with serve only a few (typically 3-5) core markets. Large firms, of course, can serve many more markets and still offer substantial resources devoted to each. Small to mid-sized firms, on the other hand, are wise to concentrate their more limited resources on fewer markets.

Research supports this approach. From strategy guru Michael Porter to professional services consultant extraordinaire David Maister to Hinge Marketing's study of high-growth firms, the advice is consistent—it's better to go deep than broad. Professional service firms that focus on a few markets not only grow faster, but are generally more profitable. This has been evident among the small to mid-sized firms I've worked with over the last 25 years. Market-focused firms commonly have profit margins that are 2-3x that of diversified firms.

How can this be? It's really pretty simple: Knowledge of the client's business creates added value. Many technical professionals seem to think that it's how much they know about their own business that really matters. But from the client's perspective, they find greater value in our services when we can tailor them to their specific needs, which is possible only when we understand what they do and how they succeed. Market specialization also leads to better consolidation of internal resources and competencies, leading to greater efficiency.

There are, of course, some advantages to market diversification. Specialization can make you vulnerable to a downturn in a market sector you're heavily invested in. Thus many firm principals consider diversification a less risky strategy than focusing on a few markets. Even in a strong economy, different markets grow at different rates. Market diversification may elevate your chances of being in the right place at the right time. 

But market diversification has its shortcomings. Many firms boast of their breadth but offer little depth in terms of client sector knowledge, specialized expertise, or marketplace reputation. Diversified A/E firms often face organizational hurdles as well. It's harder to pool resources, build strategic consensus, collaborate across business units, avoid turf battles, or cross sell services when spread across multiple markets. 

While in theory market diversification offers greater flexibility to respond to shifting marketplace trends, I've seen this ability frequently hampered by internal competition. Concentrating management attention and resources on a promising market sector typically means diverting it from one or more other sectors. Many firms find this difficult to do, and their diversity ends up constraining rather than enabling their strategic dexterity.

So let me offer some advice to those firm leaders who recognize the need for strengthening their firm's market focus:

Pick a few target markets to focus on strategically. Your selections may be guided by a number of criteria—current revenue, sector growth potential, firm experience, staff expertise, etc. This may or may not involve choosing to exit other sectors—which is worth considering—but I'm not suggesting ignoring other markets on which you depend or compromising your financial performance. The intent is to give special attention to positioning your firm as a key player within your target markets (which are likely defined both by client type and geographic area).

Assemble market sector teams. You want to assemble individuals who will form your "centers of excellence" for each target market. Each team should have a committed leader to keep the effort moving forward. These teams will be responsible for driving the activities mentioned below. Give them this particular charge: Determine how to increase your firm's market share within your target markets. Don't merely settle for a "growth share" in a growing market; that's not a strategy for sustainable success over the long term.

Do your research. Client and market research seems to be an area of weakness in most A/E firms. As I noted in my previous post, firms that do frequent research grow at a much faster rate and are more profitable. In this case, developing your credentials within your target markets requires considerable knowledge about those markets and key clients. Adequate research is essential.

Actively participate in relevant trade associations. This involves more than attending meetings and conferences; you want to contribute to the organization's mission. Committee or task force participation is strongly advised, especially where you can help address technical, legislative, or regulatory issues of importance to that industry. This positions your firm as an advocate for clients in that industry, not just another firm seeking to do business with them.

Target marketing efforts on those core markets. As I've written about previously in this space, effective marketing is that which serves clients. Deep understanding of your clients' business enables you to better serve their needs and interests through your marketing. Don't make the mistake of focusing on promoting your firm's technical services or projects. Instead, address those issues of greatest importance to clients through a content or inbound marketing strategy. This helps establish you as a thought leader within your core markets.

Set up a system to share market information. You want to build organizational competency within your core markets, which means sharing the information and insights you accumulate through research and experience. Many firms default to simply posting this information on their intranet, but that's far too passive an approach to facilitate knowledge sharing. Instead you want to schedule regular meetings or conference calls for your market sector teams to share this information.

As I often tell firms, there's a big difference between serving a market and being viewed as a key player in that market. How do you think clients in your target markets think of you: As an outsider offering services to them or an insider working for the betterment of their industry? Yeah, it takes a considerable effort to position your firm in the latter category. That's all the more reason to focus on a few key markets.

Wednesday, July 17, 2019

Really Busy? Now's the Time to Get Marketing Working for You

Business is booming, so why take the time to read an article on marketing? You have more pressing matters, don't you? Depends on your perspective. Are you just riding the wave for as long as it lasts or are you planning ahead for sustained success in any economy? Are you taking whatever sales opportunities come along or are you specifically targeting certain markets and clients for growth?

Here's the thing: Marketing (as contrasted with sales) is almost never a priority in the A/E business. When times are good, we're happy to think that marketing is humming along in the background, keeping our name out there and polishing our reputation in the public square. But when business drops off significantly, marketing is one of the first expenses to be cut (witness the many marketers shown the door during the Great Recession).

Odd, isn't it? When we need new business the most, marketing is one function we decide we need the least. Why? Because most firms don't really expect much from marketing, and they don't track marketing outcomes enough to know really what to expect.

The crux of the matter, in my opinion, is the loose connection that typically exists between marketing and sales. This came into focus again for me as I was assessing the marketing function for a mid-sized engineering firm. In interviewing their key seller-doers, several openly questioned how much marketing contributes to their sales success. Even those who viewed marketing most favorably could only speculate how marketing might improve their ability to sell.

Why do we need marketing if not to help us sell more? The problem is that most firms can't explicitly show where marketing improves sales performance. The benefit is only assumed. Now is the time to put such assumptions to rest and identify demonstrable ways that marketing increases sales success. Why now? Because when your seller-doers are too busy to sell, you need effective marketing to help keep the pipeline full. Marketing also helps you better position your firm with the markets and clients you really want to do business with.

Another key reason for investing in marketing now, as I alluded to at the beginning of this article, is building a hedge for the inevitable downturn. It's always easier to optimize your business development process in good times than when you're desperate for work. The Great Recession hit most firms hard, but others did pretty well. The primary difference between the two groups, according to research, was not external circumstances but internal competencies. There's no better time than now to be strengthening your marketing capabilities.

I'm quite bullish on the potential of marketing to deliver tangible, bottom-line benefits in good and bad times. But not in the usual configuration. Marketing needs to go beyond the ethereal image building and collateral creation, and help drive the sales process. It needs to be the clearinghouse for marketplace insights. It should be a prominent voice in shaping business development strategy. That's the role of marketing in most industries. Let's make it that way in ours.

A few thoughts on how to make that happen:

Your marketing should be a substantial lead generator. Done right, marketing and sales aren't just complementary activities; they are different stages of the business development process. Marketing attracts interested buyers; sales secures their commitment to do business together. Sound overly idealistic? Data and experience prove otherwise.
Let's first contrast two approaches to marketing: (1) outbound marketing (the traditional method) is centered on producing promotional content like press releases, advertisements, brochures, and newsletters that focus on your firm's activities and accomplishments; (2) inbound marketing is centered on producing educational content like articles, white papers, blog posts, regulatory alerts, conference presentations, seminars, webinars, and newsletters that focus on issues of vital interest to clients.

Now some data: Companies that employ inbound marketing generate over 3x as many sales leads and spend 62% less than those using traditional methods. Professional service firms that generate half their leads online through posting valuable content grow 4x faster (unfortunately, the A/E/C industry only produces 8% of its leads online). According to Zweig, A/E firms win 74% of the time when the sales lead comes through their website.

I could go on with the evidence, including from my own experience as an A/E firm marketer, but you get the point—the best way to start integrating the marketing and sales functions is to turn marketing into an effective lead generation machine.

Shift focus to creating content that serves clients. This is inherent in making the change to inbound marketing, but I think additional emphasis is warranted. Transitioning from self-congratulatory content to client-centered content is a big step for many marketers in our business. Unfortunately, many of them think they're already doing content marketing (essentially a synonym for inbound marketing) because, well, they're creating content. But content that serves the interests of clients is far more effective than the usual promotional content.

Seller-doers often help stunt the transition to client-centered content. What they usually want marketing to produce are service- and market-specific brochures and SOQs to hand out to buyers. But an article, white paper, or checklist that offers advice and information directly relating to the buyer's concerns works better, in my experience. Content that demonstrates your expertise is always better than content that just tells about it.

Don't let proposal production consume your marketing resources. This is the classic marketing challenge in smaller firms, and even in some larger ones. The so-called marketers in these firms spend the vast majority of their time working on proposals (a sales activity). But the real problem is that they often are spending 65-75% of their time on losing proposals. That's a tremendous opportunity cost.

I know, we've grown so accustomed to this that it's become normative in many firms. But firms in the top quartile in overall financial performance sport win rates of 10-15% higher than average. Best way to get there? Be relentlessly selective. One of my clients during the last recession, a 100-person engineering firm, was struggling mightily in acquiring new business. After studying their situation, I advised that they cut the number of proposals they submitted in half. They were stunned.

But eventually they (mostly) agreed to try my approach. They reduced the number of proposals the following year by 42%, increasing their win rate to 46% from 26%, and increasing sales by 31%. A key factor in their turnaround was reallocating marketing and seller-doer time to focus on higher-priority lead generation and sales pursuit management. That resulted in a much better integration of the two BD functions.

Consider getting marketers more actively involved in guiding key sales pursuits. I just made the case for preserving marketers' time for marketing. Do I now contradict myself? Technically yes, but I have a broader objective in mind—the integration of the marketing and sales process. Keeping marketers strictly within their marketing box doesn't help achieve this goal. Nor do we want seller-doers to be uninvolved in marketing. The two should work seamlessly.

The seller-doer model still predominates the A/E profession, and it has many advantages. One big disadvantage is that when seller-doers become overwhelmed with doing, they aren't likely to be doing much selling. Who will help maintain the focus on business development? It can be a sales-savvy marketer, particularly when it comes to major pursuits that deserve special attention. Such pursuits, done right, blend marketing and sales tactics over the course of the sales cycle in an orchestrated collaboration.

In many cases, marketers are better positioned to prioritize the sales process, keep it moving when the project workload tends to crowd out everything else, and see the big picture in weaving together a winning strategy. And you know what else? Such involvement in sales makes them better at marketing.

Invest appropriately in market and client research. Being something of a research wonk myself, I marvel at the paucity of business development-related research in the typical A/E firm. I remember the old days when market and client research involved a half-day trip to the university library. Now I can get better information online in a fraction of the time.

So why isn't such research on the increase? Same answer as above: Too busy. Same solution: Dedicate people to conducting regular research—marketers being a good choice. The benefits seem clear. One firm picks up market and client insights primarily from casual conversation with clients, consultants, contractors, and vendors. Another firm conducts regular research and knows the status of every facility in their region that they might have interest in working with. Which firm has the competitive advantage?

One study found that professional service firms that conduct ongoing research grow 10x faster and have 60% higher profits than firms that conduct no formal research. That finding jives with my experience with firms in both categories. There's no justification in the digital age for foregoing regular market and client research. I recommend assigning this responsibility primarily to marketing, which is where the function normally resides in other industries.

Imagine being the firm known for its thought leadership, delivered through a variety of media and formats. When clients consider certain issues and challenges they face, they naturally think of your firm because yours is the most visible in offering relevant advice and information. You receive frequent inquiries from prospective clients because of your client-centered marketing.

Those inquiries often lead to discussions about how you might help further—essentially the start of your sales process. That process guides a series of planned conversations leading to an eventual decision to do business together. By the time the RFP is released, your firm is at the head of the pack and knows exactly what they want to see in your proposal. Throughout the entire sales process, you are supplying the buyer with valuable content that helps them define the path forward.

This is the vision for a strong marketing function, merged with a seamless business development process (as illustrated below). Most A/E firms aren't there yet, in large part because the role of marketing hasn't been properly valued and aligned. There's no better time to take care of that shortcoming than now.

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Monday, July 1, 2019

How to Transform Training Into Tangible Results

I'm a big advocate for training, as you might expect of someone who earns a substantial portion of his income providing training services. But my enthusiasm is mitigated by the realization that training usually fails to yield noticeable or lasting changes or improvement among those who are trained. This is particularly true of so-called "soft skills" training like that related to leadership, business development, project management, client service, or communication.

Don't you typically expect behavior change and performance improvement when you invest in training? Then you need to look beyond merely training. That's not to suggest that training isn't valuable in meeting such goals; it's just not the whole solution. Unfortunately many managers seem to think it is, or at least tend to rely too heavily on training to address performance deficiencies.

If you want to see a good return on your training investment, there's a lot more involved than simply hiring a good trainer. In fact, the quality of the training provides little assurance, in my experience, that it will have a positive impact on your firm. What matters most is what happens before and after the training. Let me offer some suggestions:

First, define what specific outcomes you're seeking. While training has other inherent benefits, let's focus on the one that most managers expect in return for spending thousands of dollars on it—performance improvement. That, of course, involves behavior change.
Training works best when it is part of a larger performance improvement initiative where the expected outcome is changing how people do their work. Training, then, becomes only one step towards achieving the desired results, and is dependent on the success of the other steps. So before you hire a trainer or develop your own in-house program, determine specifically what you want it to accomplish.

Align training content with the specific changes you intend to make. I've long been baffled by firms that invest in training that teaches strategies or methods they have no real intent to adopt. Do you want to improve how your people manage projects? There are some very good project management training programs available. But you must first address the question of how your firm is going to manage projects differently in the future. There's no point in having someone teach your people to do things a certain way if the firm will persist in doing it another way.

Firms routinely bring in trainers or send employees to outside training programs to learn a "better way." But those employees won't be changing how they do things unless the company is committed to such changes. So select training based on what changes your firm or department intends to make (or that simply reinforces what you are already doing).

Build the necessary "infrastructure" before training. The way you do your work is usually supported by certain procedures and tools, both formal and informal. If you expect changes in how your people work, you'll need to make corresponding changes in the "infrastructure" that supports that work. If you intend to train project managers in a different approach to tracking budget and schedule status, for example, you'll probably need to change some project accounting procedures and perhaps create some new spreadsheets. Make these changes before you do training.

There are a number of reasons why this is important. It signifies you're serious about the training resulting in real changes. It further reinforces the content and concepts of the training. It enables the training participants to begin applying the new approaches both during and immediately after the training while it's still fresh in their minds.

Several years ago, I led a major initiative to overhaul project delivery processes for a national environmental services firm. We spent over a year preparing for the training—identifying internal and external best practices, determining which new practices we were going to adopt, compiling these in a project managers handbook, creating new tools and resources. The training program, then, specifically addressed the changes we had already decided to make, and participants used the new handbook and associated tools in hands-on exercises during the training. There was no doubt the firm was serious about the training having a lasting impact!

Your objectives may be much less ambitious, but there is still wisdom in preparing the way to make the training you're planning be successful. Don't jump into training until you've taken the needed steps in advance to support it.

Make sure the training incorporates real-life, hands-on exercises. People learn best by doing, so any good training program should include adequate time for practicing some of the methods being taught. These exercises are even more effective when they involve real-life scenarios.

If you're providing sales training, for example, you want participants to have the chance to apply the material to current sales opportunities. This both makes the material more relevant and gives participants a head start in actually using what they've learned. Still better, have participants do some preparation in advance of the training (e.g., pulling sales account information together) so they can get the most out of the exercises.

Adopt new terminology from the training program. Many technical professionals fail to appreciate the importance of using new terms to describe new approaches. But the research bears this out. Words have a powerful influence in how we perceive things. Calling new ways by old names only reinforces the natural tendency to revert back to old habits.
For this reason, an effective training program should introduce you to some fresh terminology. My advice: Adopt at least some of these new terms as your own. If you prefer your own terms, that's fine as long as it's different from what you've been using and you incorporate these into your training.

Provide ongoing coaching and encouragement. Changing old work habits is difficult, so don't expect lasting change after training unless you continually reinforce it. Talk about the new approaches and expectations constantly. Get rid of procedures and tools that encourage people to revert back to old ways. Provide ongoing help in applying the new concepts on the job.

My favorite approach to training is what I call "real-time coaching." If you wanted training in proposal writing, for example, we would spend a little classroom time covering some fundamental concepts, but spend most of the time actually working together on a real proposal. There's no better way to learn and to help ensure that the training "sticks."
But regardless of what approach you use for the training itself, I strongly advocate the use of follow-up coaching. You can learn more about this approach in my previous post on the topic.

Reward those who best put the training into practice. The old axiom that "people do what rewards them" is true. If behavior change is the primary objective of training (and it usually is), make sure you acknowledge those who fulfill that objective and reward them for their efforts. Because change is difficult, many people will try hard initially but give up when the effort is not reinforced in some way. Rewarding your top achievers ("adopters") also serves to motivate others who may be more reluctant about adopting the new approach.
The rewards need not be extravagant or costly. In fact, elaborate tangible rewards tend to displace the more enduring intrinsic rewards of doing things a better way. Focus on the latter, using positive reinforcement to sustain desired behaviors.

Tuesday, June 25, 2019

Get the Staffing Mix Right to Improve Profitability and Retention

The hot-button topic in the A/E business today is staffing. Most firms are struggling to find enough people to perform their growing backlog of work. The problem is particularly acute when it comes to hiring more senior professionals—say in the range of 8-20 years of experience. Demographic projections suggest that the supply of technical professionals is going to be a challenge for years to come.

The problem is exacerbated in firms that already suffer from a poor staffing mix. The labor shortage makes it all the more difficult to achieve the appropriate balance of senior, mid-level, and junior staff. Further complicating the matter is the fact that many A/E firms don't really have a grasp of what a good staffing mix looks like, nor how much a poor mix can impact their performance and culture.

How do you know if your staff mix is problematic? Consider these possible symptoms:
  • Staff complaining about the lack of upward mobility
  • Unacceptably high levels of turnover among junior-level professional staff
  • Senior managers and project managers running higher utilization rates than those working under them
  • Firm leaders not leading because they're too busy doing project work
  • Inability to make adequate profit on routine project work (i.e., projects not requiring highly specialized skills)
  • Too little business development activity, with common complaints by seller-doers that it will negatively impact their utilization
Any of these sound familiar? I commonly encounter these situations among the firms I work with. I suspect most would give me a puzzled look if I asked what their staffing model is. Most probably hire based more on their intuition than any mathematical model of staffing mix relative to the work to be performed.

While I claim no special expertise in this area, I am familiar with the concept of a staff leverage structure—a concept little discussed in our industry but commonly understood in other types of professional service firms. Leverage refers to getting the right balance of staff to match the needs of your project work. The figure below, taken from David Maister's classic book Managing the Professional Service Firm, illustrates the most common leverage problem I see in the A/E industry:

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Most firms are arguably a little top heavy for the work they perform. As I noted in my previous post, we are increasingly working on fairly routine projects where we have a limited role in diagnosing the problem and defining the solution (clients are handling a growing share of that preliminary work). Consequently, many of the design and consulting projects we perform have become rather commoditized. Short of finding ways to enhance the value of our services, we are often left to compete on price and struggle to achieve the desired profit.

Effective leverage is achieved when you assign work tasks at the lowest level they can be competently performed. This generally yields the highest profitability, especially on lump sum work. One analysis found that optimizing leverage can have a more positive impact on profits than more popular methods such as managing utilization or average billing rates. 

Leverage and Staff Retention

Maister observes that the relationship between leverage and the labor market is captured in a single sentence: People do not join consulting (or design) firms for jobs but for careers. They expect to advance upwardly at some reasonable rate (what is "reasonable" is of course subjective). When firms are overloaded with senior professionals, there are fewer opportunities for promotion. On the other hand, when firms promote staff without consideration of staffing mix, they can perpetuate the problem of being under-leveraged (i.e., top heavy).

Plus, when senior professionals carry too much of the load of getting the work done, they often do a poor job of delegating and investing time in developing younger staff. In my consulting work, I frequently uncover frustration among junior staff about limited opportunities to take on increased responsibilities and grow their skills. Ironically, as baby boomer managers complain about the higher turnover among millennials, they often are contributing to it by their inability to let go and let others take on tasks they unnecessarily hoard for themselves.  

How to Determine the Right Staffing Mix

A/E firms use various methods for defining their staffing needs, from mathematical formulas to relying on gut feelings. All approaches involve some level of subjectivity, but the following process—inspired by accountant Ken Burke—is the best I've seen for making an objective assessment of staffing mix:
  • Categorize the types of project work your firm performs. This assessment should drive your leverage structure. Routine work generally requires a lower principal/senior to staff ratio (the common way leverage is calculated). More specialized work inevitably necessitates a higher proportion of senior professionals.
  • Estimate the number of hours required for each type of work for the coming year, starting with work already under contract.
  • Define the right staffing mix for each work type based on the percent of time required from each staffing level. For example, you might determine that the optimum staffing mix for typical residential land development work is 15% principal level, 35% PM and mid-level managers, and 50% junior staff.
  • Determine the number of hours for each staffing level per project type. If you estimated 35,000 hours of residential development work for the year, the staffing breakdown would be (1) principal level: 15% x 35,000 = 5,250 hours; (2) PM/mid-level: 35% x 35,000 = 12,250 hours; (3) junior level: 50% x 35,000 = 17,500 hours.
  • Calculate total hours and project staff needs at each level. Total all hours across all project types for each staffing level. Then apply average utilization rates for each level to determine the number of staff needed in the right proportions.
  • Compare your projected optimum staffing mix with your current staffing. How closely do current numbers at each staffing level match what you've determined is the right mix for the work you have? What changes, if any, can you make?
Determining your preferred staffing mix not only helps you better allocate current personnel, but make better hiring and promotion decisions. If a senior engineer leaves your firm, do you automatically hire a replacement? Maybe not. Should you promote that staff architect without backfilling with an additional junior staffer? Maybe not. If a manager is running a high utilization, is that necessarily a good thing? Maybe not. Your staffing model, as determined through the process outlined above, will guide those decisions.

How is your firm making those staffing decisions? Do you have the right staff mix for the work you have upcoming? Do you even know what that mix should be? I welcome other perspectives in the comments space below.

Friday, May 31, 2019

Order Taker or Trusted Advisor: Which Are You?

I've been around the A/E and environmental business long enough to observe a gradual decline of our consulting role. Other old-timers I talk with generally see the same thing. Our younger colleagues may have missed the trend but nonetheless sense something is amiss. They want to be more valued, more respected, more trusted. We once were.

Why has our value as consultants been diminished? There are varied reasons: Clients are more sophisticated, our business is mature, our services are more commoditized, technology has narrowed the knowledge advantage—to name a few. But the reason that troubles me most is our voluntary forfeiture of much of our consulting function. We gradually stopped offering our advice as clients increasingly stopped asking for it.

There's an interesting parallel in the world of sales. A study of over 6,000 salespeople concluded that there were five basic seller profiles. The largest group, the Relationship Builders, employed the time-tested friendship model of selling. Buyers gave these sellers their business largely because they liked them. But the Relationship Builders were the least successful group, comprising only 7% of the top sales performers.

The most successful group was called the Challengers. They made up 40% of the top performers. These sellers were notable in their knowledge of the buyer's business, their distinctive viewpoints, and their willingness to challenge and push buyers toward what they believed was the best solution. In other words, they consulted buyers even when they weren't asked to—and it usually paid off for both parties.

The disparity might also be expressed as the difference between being order takers and serving as trusted advisors. All consultants aspire to be viewed as trusted advisors; it is the gold standard of our profession. But the reality is that many A/E professionals find themselves increasingly just filling the order. The client tells them what they want; the consultant dutifully does it.

Is it time to reclaim our consulting role? Perhaps it would be helpful to consider the differences between order takers and trusted advisors (the following is adapted from the article "From Order Taker to Influencer" by Vicki James):
  • The order taker asks: What do you want? | The trusted advisor asks: What do you need?
  • The order taker's inquiry: Focuses on project scope, schedule, budget. | The trusted advisor's inquiry: Focuses on how the project delivers business results.
  • The order taker's response: Simply does what the client requests. | The trusted advisor's response: Willing to challenge and recommend other options.
  • The order taker's advice: Tells the client what they want to hear. | The trusted advisor's advice: Tells the client what they need to know.
  • The order taker's general approach: Transactional and tactical. | The trusted advisor's general approach: Strategic and relational.
Of course, the above comparisons oversimplify the distinction between the two roles. Most professionals find themselves spending time in both, depending on the client, the project, and other circumstances. But I think most of us will agree that we too often settle for the order taker role.

Where do we begin to reclaim our role as consultants? I've written at length about this subject in various articles in this space. Here's a quick summary:
  • Let desired outcomes drive our project planning. Our projects must achieve specific strategic business objectives to be successful. We need to get more serious about making this a priority.
  • Acknowledge the problem of project myopia. This is the tendency, prevalent in our profession, to focus on the technical details of project work to the neglect of seeing the bigger picture. Projects are not an end in themselves, but a means toward the end of serving client needs.
  • Connect our work to the client's return on investment. In most consulting and design work, our completed scope is still an unfinished project. Someone must take what we have produced (plans, report, etc.) and convert it to something that returns value on the client's investment. We should take a more active role in facilitating better collaboration and integration of the different parties' project contributions. And we must extend our discussion about projects to the results they are supposed to deliver.
  • Recognize the importance of nontechnical project elements. We've already touched on the strategic fulfillment our projects must accomplish. We should also emphasize the human element. Our work serves people, both in the finished project and the process of working with others to make it a reality. Attention to the client experience is gaining momentum in our industry; we would do well to give it the importance it deserves.
  • Develop our consulting skills. As the consulting function slowly ebbs, what becomes of our abilities in this area? What about our younger colleagues who primarily experience the role of order taker? We need to be more intentional in building consulting skills such as active listening, communication, strategic thinking, problem solving, creativity, and collaboration.
Agree or disagree? Are we losing ground as consultants and advisors? I'd love to hear what you're seeing and experiencing. Click the comment button below and share your thoughts.

Wednesday, May 8, 2019

Tangibilize Your Firm's Intangible Strengths

Have you ever tried to articulate your firm's value proposition? Your value proposition is the primary reasons clients are likely to select you over your competitors. For most A/E firms, coming up with a compelling value proposition is exceedingly difficult because most firms aren't that different from each other in the eyes of clients.

I have guided leaders of several firms through exercises designed to help them identify key elements of their value proposition. Most of those firms have predictably struggled with it. They typically start by listing as their top differentiators attributes (such as responsiveness, reliability, quality, relationships) that are difficult to prove to prospective clients.

I like the RAIN Group's description of a strong value proposition. They suggest that an effective value proposition must have three characteristics (likening it to a three-legged stool):
  • It must resonate. A strong value proposition aligns with what clients want and need, and what they value. It's relevant.
  • It must differentiate. It sets your firm apart from your competitors. It's different. 
  • It must substantiate. It offers proof that you can deliver the value you claim. No empty marketing slogans. It's verifiable.
Each of the three characteristics present a formidable challenge to the typical firm. It's easy enough to relate to the client's technical needs. But we're less clear about how we meet high-value strategic business needs. And we often struggle to connect our work to the associated human needs and desired outcomes. (See "Uncovering the Client's Real Needs")

Most A/E firms seem to list differentiators that are experiential and unverifiable. In other words, existing clients might recognize that your firm is trustworthy and flexible, and they might continue to work with you because of a strong relationship. But how do you sell such virtues to prospective clients? And doesn't every firm make similar—and similarly unprovable—claims?

If you're convinced that these kinds of intangible qualities constitute your competitive advantage, then you must determine how to tangibilize them. This means making them, at least in part, observable and verifiable. How do you do that? Let me suggest three primary ways:

Produce objective evidence. You're probably familiar with the venerable test of marketable benefits, which involves answering two questions: "So what?" and "Can you prove it?" Assuming you can describe how a particular area of expertise or qualification is beneficial to the client (and don't assume it's automatically evident!), then you're faced with the second and toughest of the two questions: Can you show me the evidence?

The fact is that there is scant evidence for most of the marketing and sales claims we make: "We provide high-quality work," "Our designers really listen," "We put our clients first," "Our employees are dedicated to producing exceptional solutions." Such verbiage only drains the value from your value proposition. For this reason, I encourage you to try to avoid claims of distinction that you can't validate.

Instead, focus on those strengths that you can verify. For example: "As evidence of our commitment to quality, change orders related to our designs have averaged only 0.7% of construction costs over the last decade, compared to an industry average of 2%." If you lack the evidence to back up your claims, go find it if you can.

Define a delivery process. Most of the supposed intangible strengths that A/E firms offer as differentiators are not the product of corporate intent but of individual competency. Client service is a ready example. Every firm claims to provide it, but very few can show a process or system for ensuring its consistent delivery. Combined with the fact that few firms even measure how well they serve clients, this typically amounts to a meaningless sales claim.

I can attest to the value of being able to describe (and show) a process for delivering the intangible strength you're trying to sell. Years ago, I developed a client service delivery process for my former employer, a firm that determined it wanted to be "the service leader" in its target markets. We even could produce a picture of how we provided leading service:

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Admittedly, it's an oversimplification of what great service entails, but it nevertheless proved to be a valuable business development asset. My favorite example of this was a shortlist interview for a nationwide environmental services contract with a major airline. I had tried to convince my colleagues not to even pursue this since our firm lacked any experience with airlines or airports. But we managed to make it to the shortlist.

We decided to stress our service delivery process since we had heard that the airline wasn't happy with some of their current environmental consultants. When we showed the slide with the diagram above, the selection committee chairman exclaimed, "Why are you the only firm talking about this? Poor service is why we're looking at new firms. Yet you're the only one to tell us how you're going to give us better service!" We got the contract.

Can you take a similar approach for other intangible strengths? I think you can. You could talk about steps you take to strengthen client relationships. You could describe your firm's policies for ensuring responsiveness to clients. You could outline your training program that promotes better collaboration on projects. Et cetera. 

Demonstrate it in how you develop new business. If you've read many of my posts here, you know that I advocate a service-centered approach to business development. To borrow Charlie Green's terminology, this amounts to "samples selling"—demonstrating your intangible strengths versus merely talking about them. You can allow the prospective client to sample most aspects of project work before buying; for example:
  • Client focus—by reversing the usual focus on you the seller and centering it on the buyer instead
  • Problem solving—by helping the client characterize and identify the solution you hope to help implement
  • Quality—by delivering sales products (white papers, correspondence, proposals, etc.) of exceptional quality
  • Reliability—by consistently delivering what you promised, even in the little things like returning phone calls promptly
  • Expertise—by providing great insight and knowledge relative to the client's needs
Those intangible qualities that you believe are genuine and valued by your clients typically mean little to prospective clients without proof. By taking steps to tangibilize them as described above, you can turn those empty sales claims into real points of distinction. Maybe you'll even hear one of your new clients exclaim, "Why is everybody just talking about this instead of showing us how they're truly different?"

Wednesday, April 24, 2019

Leading When You're Not the Boss

I've spent most of my career leading without authority. First it was as a business development professional, guiding people in key sales pursuits or on major proposal efforts. Later I was charged with leading several corporate strategic initiatives, from overhauling the firm's project management practices to improving client service to implementing a behavioral safety process. That role continues, now as an outside consultant.

Most A/E firms have several people responsible for leading important efforts with no direct authority over the people they lead. This is often the byproduct of a matrix organization, where leaders of technical disciplines, or practice areas, or nonbillable functions, or strategic initiatives, must engage coworkers in achieving critical goals simply by their influence. If this describes your situation, here are some tips from my accumulated experience in such a role:

Communicate a compelling vision. There is a universal yearning for betterment. Can you capture team goals in a vision that attracts and energizes others? A strong vision should encompass: (1) why we’re doing this, (2) how this benefits both team members and the firm, and (3) what this future state will look like. In casting a vision that persuades, you will want to appeal both to others’ emotions and logic.

Clarify roles and responsibilities. Assuming the vision attracts, team members still want to know what’s expected of them in that pursuit. Role definition is a crucial step in gaining people’s buy-in. Does it look like a good fit? How valued is their contribution to the effort? And, of course, the really important question: How much time will this require?

Budget team members’ time. This is one of the most important, yet overlooked, aspects of building a “volunteer workforce” in a company. Given our industry’s focus on billable hours, people will be particularly interested in knowing how much this effort might impact their personal utilization. The answer: Usually, not at all. That's because their time is budgeted from a portion of the nonbillable hours that already exist.

Manage the effort like a project. A/E firms generally do a poor job of managing nonbillable hours, in large part because they don’t fully appreciate their value. Think of nonbillable time as “investment time.” It’s where most improvement efforts will come from. Like projects, you should define the scope, tasks, schedule, budget, deliverables, standards, and metrics necessary to achieve the desired outcome.

Build your team with advocates. Change guru John Kotter recommends creating a network that works in parallel with but outside the organizational hierarchy. That’s because the typical structure is designed to maintain, not change. A network approach also allows you to build out the team prominently with people who have bought in. A common problem with change/improvement efforts is that they are staffed with people selected because of their position in the organization, not because of their advocacy for the cause.

But also enlist some key influencers. Hopefully the initiative you’re leading was launched with senior management support. In any case, the backing of key influencers within the firm will greatly help your progress. Kotter calls this a “guiding coalition,” and found in his research that the credibility of this group was critical to initiative success. Solicit visible endorsements of the effort from these established leaders.

Learn who in the hierarchy you can count on. There will be times, of course, when you must engage managers in the organizational structure (e.g., when taking the effort to each department or office). It’s helpful to recognize which of these individuals can be trusted to do their part in advancing the effort. If you can work around them, or wait to engage them after more momentum has been created, you can avoid some of the inevitable organizational inertia.

Pilot the effort at a smaller scale first. The objective in this case is to tackle problems at a more manageable level and score a few smaller victories. Demonstrated success often invigorates change initiatives, stimulating more buy-in and participation. So start with those groups, departments, or offices where there is greater chance of early success. Then gradually expand the effort across the organization as appropriate.

Minimize the use of delegated authority. Assuming you have senior management support for your initiative, it will likely be tempting at times to seek their intervention in forcing acquiescence from noncompliers. But this has the same effect as it would if you exerted your own authority to push participation. Some heavy-handed measures may be necessary to bring some outliers into the fold, but they should be used as a last resort. That's because want-to is far more productive than have-to. Seek to influence and negotiate rather than coerce.

Develop your relevant expertise. You don’t need to be the consummate expert to lead an initiative (such as me leading a project management improvement initiative, as I've done several times), but you do need to demonstrate you know what you’re doing. Do your homework and learn as much about the subject matter as possible. You certainly want to be able to articulate why this is the right vision and the best approach for achieving the desired results.

Celebrate small victories. It’s recommended that you set intermediate milestones, spaced no further apart than 4 to 6 months, so you can more easily maintain a sense of progress. Acknowledge and celebrate successes, even small ones. It helps sustain momentum.

Lead by example. Ideally, you should be the hardest worker on your team. Your passion should be contagious. Your personal power as a leader comes more by what people see in you than what you say. In fact, your leadership credibility will be seriously damaged if you’re not living out what you’re espousing.

For more on this topic, see "Why Leaders Are Way Better Than Bosses"