In the first of a series of articles, Ben Kent and Adrian Furner explore how advisers can better achieve their client’s desired outcomes. [Habit 1]
Success needs to be defined by achieving the client’s outcomes rather than excellent inputs or outputs.
Too often advisers confuse deliverables, with outcomes. This mismatch arises because professional services firms tend to adopt pricing models that reward their advisers for providing deliverables, whereas clients’ businesses are usually only rewarded when they achieve certain outcomes. In the context of the 7 Habits of Commerciality, being truly commercial means being able to bridge this gap. Advisers need to focus more diligently on how their advice is used in the boardroom during the decision-making process.
Focus on the client’s objectives, understand what success means for them
Take an M&A transaction as an example. An adviser is accustomed to providing advice and support for the negotiation of the opportunity, focusing on the execution of the sale and purchase agreement. However, for the client having this document drafted and signed is merely a milestone en-route to success. Success often does not occur until many months or years further on where the final objectives – achieving cost synergies, expanding the company’s geographic footprint, and bringing together IP to launch a new product – are fully realised.
Realise that the desired outcome is often personal and rarely contained in the brief!
It is often not taken into account that the reasons for a desired outcome may also be personal. A commercial adviser
acknowledges this and tailors advice to help the client get to their individual outcome.
Ask the right questions
With modern account management tools it is easy for advisers to assume that they know their clients well. However, the real skill is to truly understand clients in the context of the advice being given. Why is a given matter or engagement important to them? How does it link to the corporate strategy? What are their plans for the future? It is these types of questions that can give true insight into what matters to the client.
Be closer to clients, before, during and after – collaborate
Much of this understanding will only come from being closer to clients, before, during and after they need an adviser’s technical services. Professional advisers are often only brought in when there is a transactional need for their skills, by which time the client is often a significant way along in their decision-making process. Being closer to clients earlier in the cycle can really help advisers to better understand desired strategic outcomes. How many advisers really know the timing of their clients’ strategic planning cycles?
Help the client implement their advice by offering implementation services or handing over well to the implementation team. The Big Four accountancy firms have now developed post-merger integration capabilities.
Don’t rush in, build in space and time so that things are not overlooked
When trying to understand their clients’ desired outcomes, advisers often rush towards the solution almost immediately, often feeling that that they are offering the client value for money by converging on the solution from day one.
In the drive towards the solution, opportunities may be missed and the need to understand and test the solution against the client’s desired outcomes may be overlooked. Increasingly in complex and interconnected transactions, space and time needs to be built in to allow for more divergent thinking.
Case Study: What can strategy consultants teach the professions?
The top strategy consultants have a reputation for being extremely results focussed. What can they teach lawyers and accountants about commerciality?
We recently interviewed an ex-partner from one of the top three strategy consultancy firms. He believes that the rigorous professional training that young lawyers and accountants undergo can be a hindrance. “It is very easy if you are a lawyer or an accountant to believe that the only thing you provide is technical advice, and you probably feel nervous outside that space. They rock up and show off their technical expertise. Strategy consultants don’t have the crutch of a professional qualification so this forces them into a different space”.
Three techniques are particularly powerful:
1. Problem statement – At the outset of the project define very clearly what is the ‘problem statement’, i.e.. what is the problem you are trying to solve for the client, and how can the benefits be quantified in terms of ROI? Make sure that the consultant’s activities are focussed on achieving the outcome and cut the fluff.
2. Value proof letters – At the end of the year this partner’s team would write a value proof letter that said “over the last year we have worked on these three projects, this is the value of the work we have delivered to your organisation relative to the fees we charged. We were looking for multiples of twenty times our fee rate.” This forces consultants to focus on implementing change rather than just delivering a report. Without change there is no value delivered to the organisation. It also creates a mind-set shift: “It takes people away from focusing on the technical and towards the business outcome,” he says.
In his experience clients absolutely love this approach, and it overcomes the complaints that advisers get about deliver a presentation, going back to their office and leaving the client with a turkey. “It becomes the basis for a meeting with very senior people to say this is what we do, and this is how you felt. It completely opens up real honesty in the relationship.”
3. At-risk fees – “We often put part of our fee at-risk. We are paid the full fee if the results were delivered and the client was delighted. There is a discount if the client is only satisfied.” In the right circumstances, it is a terrific way of ensuring that the client’s and consultant’s interests are aligned. At-risk fees work best when success can be measured.