Blog3

To create value, professional services networks need to help member firms build their 'intangible assets'

Written by guest contributor, Quentin Vaile

A professional service firm creates ‘value’ (which is derived though a combination of satisfying a client’s needs and generating wealth) by solving a client’s problem faster, better or more effectively than the client is able to do itself.

 

It does not produce a product from the input of raw materials, but rather solves a clients problem by using its intangible assets. These assets may include having better information, more specialist knowledge, greater expertise, innovative tools and systems, or broader and deeper relationships than the client.

A successful professional service network – defined here as a formal or informal association of local independent firms - adds value by helping member firms enhance their intangible assets e.g. by giving them greater knowledge, building their expertise or developing their connections.

These new connections help generate inwards referrals and also facilitate outwards referrals to trusted ‘partners. Greater knowledge and expertise enhances the competence of the local firm making them better able to need the needs of their local clients. Finally being member of a network of good quality firms may enhance the firm’s ability to attract new higher value work.

The following presents six ideas for networks to help them enhance the intangible assets of their member firms.

1.  Individuals co-operate, firms don’t

The first point is a principal of human nature. This is that individuals co-operate and collaborate and not firms. It is vital, therefore, that a network enables individual professionals to build their connections, rather than expecting a whole firm to buy into a network strategy.

The aim is to get individuals working together on a bilateral or small group basis. Once this occurs, other partners in a firm or network will see the benefits and are more likely to want to get involved.

The second point to this is that while we are able to “communicate” by phone, email and Internet with people all over the world, the gold standard in activating contact and maintaining strong ties is face-to face contact.

Networks, therefore, must institute and encourage a wide range of activities that create face-to-face interaction between individuals.

Conferences, seminars, roundtable discussions, one-to-one meetings, social events, cultural and sporting events can all be used to help people get to know each other and breed a spirit of co-operation.

2.  Focus on “knowledge networking” not just relationship building

A key part of relationship building is the ability to share ideas and create new streams of knowledge.

Many networks organise a range of events and activities to help firms network and build relationships. The events themselves should not though be the objective, but rather act as a mechanism for sharing and generating knowledge.

For example, a conference organised by a network needs to have theme and knowledge-based purpose, rather than just an opportunity to meet in an attractive venue.

A thread should run through the entire conference that ensures that any speakers contribute to the insight on that theme and breakout sessions are used to help attendees to share thoughts and ideas around that theme. This in turn enhances their knowledge, helps create the relationships and drives future activity.

3.  Encourage referrals by devolving power to the regions

Many networks have a broad international reach and, as such, enable referrals between firms from different corners of the globe.

However, a recent report on referrals by Martindale Hubbell showed that for Western Europe and the US, over 60% of referrals made between law firms were inter-regional – i.e. between firms in the same region.

Furthermore, while the US accounted for significant volume of referrals to other markets, such as Latin America and Asia, the inter-regional volume of referrals in these markets was still significant.

Given this, it is important that networks actively encourage inter-regional relationships including devolving power to regional committees allowing them to take responsibility for membership development, firm engagement, knowledge sharing and networking activities within their area.

4.  Create robust quality control procedures

One of the reasons a local firm may join a network is because of the brand profile and the credibility of being part of a wider network. This credibility is largely based on the assumed quality of other firms in the network.

Attracting new members, retaining existing members, referring work and potentially serving multi-location clients can only be done if there is an underlying assurance of quality across the network.

To achieve this, networks must take a robust, consistent and systematic approach to quality control.The network needs to have service standards that all firms adhere to, new members need to be subjected to robust due diligence as to their reputation and service quality as well as ensure the capabilities of these firms are aligned to the needs and expectations of the network.

All firms should be systematically reviewed and any problems rectified early. If a firm or individual consistently falls below the expected level of service then the network needs to be able to quickly eject them from the network.

5.  Embrace social media

For professional service networks and their members firms, an active presence on social media sites such a LinkedIn, Twitter and Google+ is vital for four reasons.

  1. Promotion and Marketing - social media sites provide a low-cost online platform to promote the existence and activities of network and its member firms to a global audience of over 1.8 billion active users. While a firm needs to be very selective as to which social media sites they use, the mere volume of users makes being on social media a vital marketing tool for any network or firm.
  2. Engagement and know-how development - social media enables members of a network to readily engage in conversations and share ideas related to topics of common interest. This can be done within a private group on social media sites such as LinkedIn or as part of a public group. Either way, this can help the network share information and ideas, enhancing the knowledge of member firms and creating connections.
  3. Market intelligence – one of the key aspects of adding value by a firm or network is having good intelligence on markets, clients and competitors. Social
    media is a hugely powerful tool for “client and market listening” – providing insight into the latest topics and trends.
  4. Demonstrating expertise - being a "visible expert" is one of the key activities for professionals keen on attracting referrals. Blogs, articles and participating in conversations within social media help to demonstrate an individual’s interest and expertise in a subject, which is the start of establishing a trusting relationship.

6.  Engage with clients

Professional service networks have traditionally been set up to facilitate interaction and referrals between member firms, in case they have a need for advice in another region or country. With a few exceptions, they are typically not however organised in a way to co-ordinate firms and manage multi-jurisdictional advice for clients.

Even if a network is not able to provide such co-ordination services, it does not mean they shouldn't be actively engaging clients in the activities of the network.

Inviting clients to internal conferences, setting up and utilising a client advisory panel, seeking client opinion on the quality of services delivered by member firms, all help in enhancing the knowledge and expertise of member firms, not to mention raising their profile with potential buyers. As importantly, it also helps to ensure that the discussions and activities of the network are grounded in the realities of what clients want from professional service firms.

Conclusion

The goal of any professional service firm is to deliver a high quality service that satisfies the needs of clients and meets the financial objectives of the firm.  A network of independent local firms is ideally placed to help local firms achieve these goals by creating structures and organizing activities that engenders a spirit of co-operation.

While commentators talk excitedly about multinational clients and global deals, the bulk of professional service work is done locally and despite the rise of international, multi-location firms, good quality local firms still provide the best value to clients.

A network’s job is to help their member firms enhance this value.