Leading Firms: How Great Professional Service Firms Succeed & How Your Firm Can Too
David Kuhlman
SelectBooks (2013)

Valuable perspectives on the unique and complicated world of professional services

Since 1986 when I established my independent management consulting firm, I have been retained by a number of professional firms — legal, accounting, architecture, engineering, etc. — to provide assistance that agricultural, manufacturing, and pharmaceutical companies also need such as recruitment and management of talent, performance measurement, process simplification, and leadership development. I am greatly indebted to David Maister, more specifically to two of his books (The Trusted Advisor and Managing the Professional Service Firm) for providing information, insights, and counsel that continue to provide invaluable to those client relationships. Now I am also in substantial debt to David Kuhlman, for reasons that will soon be indicated.

In his book, he explains how and why great professional service firms succeed and how his reader’s firm can, also. He focuses on several separate but related, in fact interdependent components: strategy, revenue cycle, resource allocation, profitability, quality of execution, the “growth engine,” brand synergy, the “performance envelope,” and talent flow.

As he correctly observes, “many firms struggle with perennial problems, despite their sophisticated analysis and considerable efforts. They move from solution to solution every couple of years, changing their structure, redesigning principal compensation, or revising promotion criteria. Well-crafted solutions seem to spawn unintended consequences in surprising places. Frustrated leaders find that the seemingly obvious solution, while thoughtfully developed, carefully explained, and impeccably implemented, doesn’t get the acceptance it deserves. It seems harder than it ought to be, particularly for a simple model.”

Kuhlman addresses these and other challenges, sharing lessons he has learned over several decades in combination with information and counsel based on that extensive experience. He duly notes that “professional service firms are governed by different forces and constraints than are make-and-sell organizations. They are different in the way they operate, in the way they create value, and in the unique ways they develop and grow.” The same is true of what tends to be their decision-making process, the dynamics of their workplace, and the culture within which leadership and management skills are developed. Here’s one of several key points that he makes in the Introduction: “To oversimplify, firms invest substantial time and energy to develop assets that can leave at pretty much any time, taking all or most of the value with them.” He also acknowledges why change and consistency in a professional service firm are so difficult to achieve. For many principals, they are mutually exclusive.

What to do? Kuhlman suggests that the necessary structure for enduring success has a foundation that consists of (a) a strategy that is well-grounded and reasonably well-executed, professional discipline (i.e. command over the basics of the business), (b) differentiating capabilities “in a world where offerings are similar and talent comes from the same pool,” and (c) a high-performance culture in which principals are aligned with each other as well as with the direction of the firm and share a strong sense if stewardship.

These are among the dozens of passages that caught my eye, also listed to indicate the scope of the book’s coverage.

o Why Change in a Professional Services Firm Is Hard (Pages xvii-xx)
o Bringing It Together: Making a Cycle a Cycle (35-36)
o Basic Economics of Leverage (38-41)
o Multiplying Effort: The Role of Mindshare (47-50)
o Creating Balance: Leadership Awareness and Courage (51-61)
o How Firms Encourage Quality (69-73)
o Measuring and Interpreting Client Satisfaction (73-79)
o Thinking Differently About Sustained Growth (85-86)
o How a Firm’s Activities Create Brand Strategy (104-110)
o The Continually Collapsing Performance Envelope (114-117)
o The Pull Toward Stagnation and What to Do About It (117-127)
o Success Formula: How to Maximize Talent Flow (137-141)
o Meritocracy vs. Pragmatism: Two Contrary Forces (146-149)
o Why Meritocracy Is Uniquely Important (158-161)
o Successorship (161-163)

When concluding his book, Kuhlman once again acknowledges that the road to success for a professional service firm “is a complicated and rocky one. The business, its economics, and its priorities are simple on the surface until the human component makes it maddeningly complex.” Yes, there are lessons to be learned from others. “Successful firms can, in fact, provide valuable lessons, and that is what this book is about.” However, ultimately leaders in a professional service firm must discover “a better version” of their firm. In this context, I am reminded of Oscar Wilde’s admonition, “Be yourself. Everyone else is taken.” The same can be said of a professional service firm. In the final paragraph, David Kuhlman expresses several thoughts that can also serve as a conclusion to my brief commentary:

“Managing a professional service firm has been likened to herding cats and the metaphor is apt, but it misses a fundamental point: While cats are not cattle, they will follow a leader and work together if they are engaged as what they are: unique, opinionated, strong-willed professionals who have joined together for a common purpose. They will never travel in a herd, but they can — and will, if properly led — work together to build something truly great.”

Those who share my high regard for this book, are urged to check out the aforementioned books by David Maister, The Trusted Advisor and Managing the Professional Service Firm, as well as Henry Chesbrough’s Open Services Innovation: Rethinking Your Business to Grow and Compete in a New Era.