How professional service firms can become more valuable

What is your firm’s value proposition?  To effectively answer this question, begin by identifying where your firm falls on your industry’s value chain.  To understand the changing dynamics of the value chain concept, observe what’s happened to the music business. 

Tim Williams

Consumers are still spending roughly the same amount of money on music, but the money isn’t going to the record companies and music stores; it’s going to iTunes.  The money in the music business value chain is still there—it just moved. 

The same is happening in other rapidly evolving industries.  Companies are spending, but they’re spending in new and different areas of the value chain. 

Instead of trying to squeeze the last bit of value from traditional sources of revenue, professional firms should be focused on finding a different spot on the chain.

Finding a valuable spot on the value chain

Defining a value proposition capable of producing the most profit means selecting a place on the value chain where the offerings are still scarce and underdeveloped.  For example, in the world of advertising agencies, the underdeveloped side of the value chain includes such services as social media and analytics.  Conversely, an advertising agency with a value proposition based around the idea of “efficient production and distribution of advertising” would be selecting a spot too far down on the value chain to have any real or perceived value in the marketplace.

If you analyze the value propositions of most professional service firms, you’ll find they are based mostly on widely available overdeveloped services; they are placing themselves on the wrong side of the value chain.  By focusing on the underdeveloped features or benefits of the category, you are in effect positioning the brand not just for where the profits are, but for where the profits will be.

Why your brand needs a box

How many times have you heard business professionals rail against the idea of being “boxed in”?  As the argument goes, a “box” prevents a company from doing whatever it wants and selling whatever it can to whoever might want to buy it.  Exactly.  No box means no strategy, no boundaries.  Brands actually need a well-defined box to help define what they stand for, what they sell, and who their most likely customer is.  A “boundary-less brand” is no brand at all; it’s a product in search of becoming a brand.

“The essence of strategy,” says Harvard’s Michael Porter, “is choosing what not to do.” No sacrifice, no strategy.  A box with four sides, in fact, defines your business strategy.  You can think of these four sides as the “load-bearing walls” that represent what your organization does best, as follows:

Calling Why are you in business in the first place? 
Customers What types of customers or clients are you best suited to serve?
Competencies What services does this type of customer need that you can best provide?
Culture What are the formal and informal standards by which your firm makes decisions?


All four of these “boundaries” represent immensely important strategic questions.  The answers form the basis of your firm’s positioning strategy.  Let’s take a brief look at each one of these boundaries individually.

Calling.  Without exception, the most notable companies have an ambitious reason for being.  This is not a coincidence.  In my consulting work, I’ve learned that the primary unspoken question on the minds of most associates in a professional firm is: “Where is this firm headed?  What are we trying to become?”  This means not just defining who you are, but why.

Customers.  Defining a clear value proposition means having a clear definition and understanding of your customer.  Think beyond all your customers and focus specifically on your best customer. For every company on the planet, there’s usually a big difference between the average customer and the best customer.  Generally, something close to 5 percent of a company’s customers generate 95 percent of its profits.  Closely examining the nature of this 5 percent can brings great clarity to your value proposition.

Competencies.  When it comes to your firm’s abilities, the task is to identify not just capabilities but competencies.  Competencies are capabilities of the organization that can be delivered in a dependable, differentiating way.  It’s not enough to just identify the things you do well.  Competitors may have similar core competencies.  You must go further to find what could be considered a distinctive competence.  This is often the result of disaggregating your short list of core competencies—breaking them down into component parts to find what’s truly distinctive.

Culture.  The final crucial element of the value proposition is the culture of your firm; the company personality that is reflected in everything you do.  Culture is a direct result of your values and principles, the standards by which your firm makes daily decisions. A strong culture provides a framework for decision making and defines your firm’s “rules of engagement.”  A company that lacks a set of strong beliefs, values, or principles almost always also lacks a differentiating value proposition. 

Defining your firm’s brand boundaries—calling, customers, competencies, and culture—is the most important form of strategic development you can engage in.  Unless you answer these essential questions, most other forms of strategic planning are pointless.  Your firm’s business strategy and tactics must revolve around a clearly defined value proposition. 

The fallacy of “all things to all people”

Remember, no company can serve all markets with all services. If you are absolutely right for one type of client, by definition you will be absolutely wrong for another.  If you expend all your energies in the impossible quest to try to make your firm appeal to everyone, you’ll ensure that it doesn’t appeal perfectly to anyone. 

The most successful enterprises never attempt to be all things to all people, but rather specific things to specific people.  Defining those specific services that are uniquely valuable to specific people is the essence of an effective value proposition.

Excerpted from ‘Positioning for Professionals: How Professional Service Firms Can Differentiate Their Way to Success” by Tim Williams.  Tim leads Ignition, a consultancy devoted to helping professional service firms create and capture more value.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Latest Blogs

ITB in your inbox

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.