PSOs face a historic opportunity to change for the better – here’s why you can’t afford to miss it
Dion Hinchcliffe of Constellation Research and Graham Kimberley of Unit4 recently held a workshop for Management Consultancy Association (MCA) member companies “The Future of Professional Services.” We’ve included some of our favourite bits from the session below.
The challenge for service-based businesses
Whether we’re talking about management consultancies, architecture and engineering firms, or any of the other countless industries that offer human expertise as their main product, professional services have faced a unique set of challenges over the past year. And with growth across the industry expected not to assume a steady or predictable cadence in the future, we can’t rely on things going back to business as usual as we have.
The pandemic has been experienced differently by every company, but common themes emerge across the board. Client billing is down. Projects have been scaled back, cancelled, some have been accelerated in ways that escalate pre-existing issues leading to employee stress and disengagement due to unreasonable expectations. Renegotiations, sustained downward pressure on fees, and increasingly uncertain sales pipelines are the order of the day. Even some of the largest service-based businesses are considering – or have already begun – reducing headcount.
Responding for the short and long term hasn’t been easy. But as recent downturns have made clear, focusing on resource constraints can have effects that are extremely damaging in the long term. Both on the ability to deliver on existing projects, and on the ability to win new business and rebound when conditions start to improve.
How can companies respond in a way that ensures survival and success?
By anticipating new conditions that will replace the old as we emerge from lockdown, companies can position themselves for the business climate’s return to a healthier state.
But we should be aware – this healthier state is unlikely to resemble the pre-COVID work at all. We need to understand the new reality, that we need to work and plan both for a ‘New Normal' – that exists now - and a coming ‘Future Normal’.
Clients are going to be much more selective and demanding about projects going forward. Deal flows and talent sourcing will be more turbulent. Delivery talent will require better enablement and support for their new daily work realities.
But the emergence of new technologies and the necessity of deploying them to ensure survival creates a unique situation. Major opportunities now exist in creating a more holistic and dynamic PSO operating model that can cost less and with less talent loss, while actually increasing margin and significant new types of business and growth opportunities have come within reach to offset recent revenue impacts.
How professional service firms can leverage technology to overcome the “new normal”…
Several key shifts in technology are emerging that PSOs must embrace to navigate the world of COVID. We’ve already all become intimately acquainted with the technology that facilitates remote working – but this is simply the beginning.
New tech can be organized into three categories: that which supports the business and client delivery, that which supports the PSO worker, and that which supports the overall health and wellbeing of all of professional services’ stakeholders.
These growth trends range from the essential – like next-generation client engagement that prioritizes consumer-grade digital experiences and enables more sustained, informative, and transparent connections between your firm and your customers, and smart recruitment tech that leverages AI to find the talent you need and personalize outreach – to the more speculative but high-potential. Such as new business models supported by technology that allows us to synthesise insights from data which has previously been untrackable and explore green fields, access new markets, and increase the profitability of our existing revenue streams.
… and prepare for the “future normal”
With sudden and widespread shifts surrounding the industry – and likely to continue to surround it for some time – PSOs have a historic opportunity and an existential need to pivot and adapt.
Embracing new trends represent the most obvious way for service-based businesses to navigate through the storm and towards a brighter future. But key to achieving this is motivation. Leadership must be willing to embrace the need, and balance cost cutting and rapid investment simultaneously to secure revenue and growth in the medium and long term “future normal.” Ultimately, PSOs willing to create the smartest, most adaptive, and most effective post-COVID new operating model will reap vast rewards.
We need to create a new PSO Working Culture and Mindset. Top executives and line workers in PSOs are least likely to have the mindset to more openly collaborate, engage, and accept help in today’s new remote environments. Executives must lead by example and act as advocates for great examples the adoption of new technologies within and outside of their own business.
The New Future of Professional Services
If you’re interested in more of the thinking that informed both the session and this blog, check out the Constellation Research white paper The New Future of Professional Services below.