Professional Services Value and the Collective Wisdom Race
On this week’s Rethinking Professional Services, we discussed Rethinking Knowledge Management. My passion for this topic is driven by a recognition that it is frequently undervalued. Many services teams do not realize that just like a product strives to create functional differentiation, professional services teams must also do the same.
While writing The Seven Principles of Professional Services, I intended to explain the value customers see in paying for professional services by developing an illustrative equation.
Professional Services Value (PSV) = Knowledge + Experience + Skills
While for illustrative purposes only, the equation surprisingly identified some interesting facts about the use of “Knowledge” as an asset in professional services.
“OUR PEOPLE” ARE NOT OUR ONLY PRODUCT
When selling professional services, we are selling the time and value of our people. We are often fixated on how we can sell our people effectively because we think it is the only “product” we have to offer. This is both difficult and shortsighted.
When each service provider is selling the same collection of certified consultants, how can the customer identify who has the greater value? In competitive selling, it is easy for one company to say, “We will assign Bob, we stole him from our competitor because he is awesome.” While our competitor might say, “Bob? Yeah, we got rid of him because he didn’t fit in with our culture of customer excellence.”
On paper we’re all just selling the same people. To try and differentiate we focus on selling personalities. This is an incredibly difficult and unreliable thing to attempt because we don’t know if the buying personalities match with the personalities we have to sell. While there might be real differentiators within our people, the customer finds it very difficult to believe any of it during a sales cycle. This makes the process of selling people more of a gamble than a well-informed strategy.
When we look at this through the lens of PSV equation, we learn that there might be a way to alter this process to focus on a more tangible element. While all three components of the PSV are obviously embodied in our consultants, one component, knowledge, can also be extracted and sold separately.
This learning formed the basis of our Journey Selling framework for professional services. Our process extracts the critical knowledge of how our people make the customer successful and turns it into physical assets. While we still need to bring the consultants before the customer to prove that they are competent, the assets also give the customer the confidence that no matter which consultant we get from the service provider, that these assets are available to them.
When used correctly, the creation of knowledge assets can be used to amplify the PSV and create a tangible differentiator. In fact, it is the only tangible differentiator that I know of within the professional services sales process. Because the process is selling the service that people will provide in the future, it is the only part of the equation that can be demonstrated today.
THE COLLECTIVE WISDOM RACE
Another observation of the PSV equation is that every service provider is evaluated using the same equation. That means that each service provider is attempting to illustrate their knowledge, skills and experience to win the deal. The winning firm will be one whose PSV is ranked the highest.
If the first part of my argument is correct, and selling people is unreliable, this leaves the knowledge asset as the only reliable differentiator. Until of course, that knowledge gets copied or re-created by our competitor.
The commoditization of Collective Wisdom in professional services is no different than the process that our own products go through. No sooner have we created the competitive advantage by using our knowledge base does some other company use their knowledge base to try and replicate the same offering or outcome. For us to move ahead again, we need to create the next competitive advantage before they do. This is, the Competitive Wisdom Race and every professional services team is in it. The team that outpaces its competitor in the generation of collective wisdom as a differentiator will elevate their PSV and win.
After many years of building teams that I’m incredibly proud of, an important lesson I’ve learned is to not underestimate the awesome teams my competitors have also built. As a service provider whose primary revenue driver is people, we have a choice to make. Sell our people just like everyone else and see where the chips fall or learn to sell both our people and our knowledge in an attempt to win the Collective Wisdom Race.