Professional services: Escape the innovation trap
Creating meaningful client value and competitive advantage through innovation strategy
True digital disruption is long overdue within professional services
Clients want to see the latest technologies proactively harnessed to create efficiencies and increased value for money; firms stand to benefit by increasing margin and revenues without additional headcount[1].
Yet for all the noise and column inches heralding innovation, few businesses have committed to the sort of transformative shift required to create real competitive advantage.
For the main part, what we see from firms are small signals of change – a joint venture here, an app there – without a clear sense of how technology will be consistently integrated into their client experience. Indeed, much of what is lauded as innovative is derivative (a variant of a service, tool or initiative recently launched by its competitors – or white-labelled from the same tech start-ups).
The old adage about the lack of differentiation in professional services is being reinforced for a new era, through the pressure for every firm to prove parity of innovation with its peers.
On every single pitch we’re asked for [innovation] and how we can bring value to the deal. It’s hard for firms to consistently sell to clients, but we can consistently engage them with innovation.
Ryan Taylor, Freshfields Bruckhaus Deringer
Speaking at the Legal Geek conference, London, 17 October 2017
The root cause is endemic: accountants, engineers and lawyers feel uncomfortable with untested ideas, as they’re professionally trained not to take risks (and until now, there has been little incentive for them to do so). Without demonstrable leadership from the top, it’s hard to encourage fee-earners to change how they approach innovation, even with outside help. In any case, most are allergic to traditional “jazz hands” innovation workshops.
In the absence of a clear innovation strategy, heavy lifting is taken up by more entrepreneurial individuals; or by bolting on separate “innovative” investments and acquisitions. This generates a continual stream of news to market, but without clear criteria to generate, assess, commercialise and present new ideas, efforts are sporadic and fragmented. The outcome can be a confusing portfolio of sub-brands and initiatives – where it’s hard to delineate what is truly of commercial and client value, versus what exists to “show willing” on innovation, or to drive internal efficiency.
Focus only comes from a clear innovation strategy, one which everyone understands and is committed to deliver. By creating a common view on where to play and how to win (based on the firm’s ambitions, distinctive strengths and deeper client insight), you maximise competitive advantage and mitigate the risk of billable hours spent without sufficient return.
From our work with clients, we’ve identified 4 steps towards an effective innovation strategy:
1. Start with the bigger picture
Be clear why you’re innovating in the first place (not just because it’s expected, but because it can measurably support your firm’s strategic goals for business and brand growth).
2. Find out what clients (really) want
True innovation is inspired by unmet human need, rather than technological capability. Go beyond traditional client listening, to get to more “irrational” personal value drivers.
3. Create the case for investment
Assess and prioritise which needs to serve (aligning with your firm’s strengths and its strategic objectives), then set innovation briefs and criteria for objective decision-making.
4. Build confidence and capability in change
Communicate your innovation strategy to establish collective responsibility, justify the involvement of colleagues and have them explain the benefits to clients.
Without a distinctive innovation strategy, a firm’s efforts will not create leadership or sustainable client value. Whilst it will always be important to offer “what’s expected” in driving efficiencies, it is also possible to showcase a commitment to creating something exceptional.
At Clear we specialise in delivering straightforward, insight-driven strategies, to unite and focus businesses on transformation.
Get in touch to talk about creating greater return on your firm’s investment in innovation.