Developing Knowledge-Based Client Relationships: The Key to Avoiding Commoditization

Developing Knowledge-Based Client Relationships: The Key to Avoiding Commoditization AESC – December 5, 2007 Ross Dawson CEO, Advanced Human Technologies Author, Living Networks and Developing Knowledge-Based Client Relationships

The weightless economy Source: US DoC; Cap Gemini Ernst & Young

Knowledge depreciates!

We’ve come a long way...

“ Finite players play within boundaries;

infinite players play with boundaries”

- James Carse

The future of professional services The Seven MegaTrends Relationship leadership Knowledge-based relationships Networked value Strategic action

MegaTrends of professional services

Client sophistication

Governance

Connectivity

Transparency

Modularization

Globalization

Commoditization

Clients get savvy

The rise of accountability

We love instant communication

Flows across boundaries

Information wants to be free

Complete transparency for clients

The power of modularization

Global supply and demand

Services become commoditized

MegaTrends of professional services

Client sophistication

Governance

Connectivity

Transparency

Modularization

Globalization

Commoditization

Clients lead their suppliers

A relationship is a process

How do you create continued positive momentum in a relationship?

There is no such thing as a static relationship….

The spectrum of relationship styles

Client leadership

Stages of relationship development Align Broaden Partner Initiate

Information and knowledge

Types of services

Black-box : client receives an outcome, but is left none the wiser: readily commoditized and little scope for client interaction

Knowledge-based : client and professional collaborate, integrate their specialist knowledge, develop mutual knowledge: far greater value, and drives interaction and a strong relationship

The virtuous circle of knowledge-based relationships

It’s a small world...

The network organization

Key junctures for value creation Professional Firm Client Capabilities Opportunities

Integrating expertise to create unique value

Matching team structure to the client Relationship Stage Objectives Relationship team structure Key actions Initiate Access most relevant capabilities to demonstrate unique value to client. Sales leader with broad internal connections. Small team represents key firm capabilities. Select sales leader and team with relevant capabilities. Support sales team’s access to key firm resources. Align Establish clear communication channels to facilitate access to client. Clearly defined membership of relationship team, covering scope of firm’s relevant capabilities. Establish peer relationships between firm and client executives. Define relationship team roles, responsiblities, communication processes. Potential transition from sales leader to relationship leader. Broaden Bring in new contacts on both firm and client sides. Establish true organizational relationship. Client contact extends beyond core relationship team. Tiered relationship responsibilities. Contact redundancy for key client executives. Monitor and actively support relationship network that links capabilities to client opportunities. Provide tools (social media etc.) to notify extended team of insights into client. Partner Facilitate joint value creation through open relationship and access. Core relationship leader team on both sides. Direct communication between specialists on most issues. Support direct client interaction. Monitor effectiveness. Actively build innovation links across organizations.

Requirements for accessing expertise

Awareness of capabilities

Understanding of those capabilities

Confidence in those capabilities

Personal trust

Action!

Distinctive value

The heart of professional services

Enhancing Client Relationship Capabilities Culture

Focus on enhancing client service and client knowledge

Effective client relationship team communication

Attitude of client partnership

Effectively using processes and systems to enhance firm relationship capabilities

Skills

Setting and implementing relationship objectives and strategy

Leading and participating effectively in relationship teams

Customising relationship and communication styles to clients

Managing client expectations

Processes

Client relationship team formation – selecting the right professionals

Relationship team communication and collaboration

Developing and monitoring client relationship strategies

Ongoing client feedback and its application

Structures

Key account selection and segmentation

Selection and allocation of client relationship leaders

Cross-selling remuneration and recognition systems

Account management and customer relationship management systems

Strategy

Role of client relationship style in firm differentiation

Targetted client profiles, client industries, service lines and service delivery

Role of online service delivery within firm strategy

Long-term strategic directions and shifts in positioning

Thinking about commoditization Firm Service line Client Level Strategic choice 1. Eliminate 2. Automate 3. Outsource 4. Maintain

Are you an energizer?

How to be an energizer

Have and communicate a compelling vision

Seek and acknowledge quality contributions

Make and fulfill commitments

Be a connector!

Online resources “ Dawson has pulled off the nigh-impossible: improved on what was already a terrific book. Even more than before, this is essential reading for professional service firms.” - David Maister , author, Managing the Professional Service Firm www.rossdawsonblog.com Insights and free book chapters and articles at: “ I’m not sure that even Ross Dawson realizes how radical – and how likely – his vision of the future is.” - Seth Godin , author, Purple Cows To contact Ross Dawson: rossd@ahtgroup.com

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