The provision of Business Advisory, Consulting, Coaching, and Mentoring services has been largely unchanged over the last 100 years. Many thought leadership papers (such as the recent October 2013 Harvard Business Review article entitled, Consulting on the Cusp of Disruption) argue that the Advisory industry is on the cusp of heavy disruption over the next 5-10 years due to a steady invasion of hard analytics and technology into all client’s businesses . Some Advisors feel strongly that things will continue much the way they are and that there will always be a need for their current services.
Commoditization of traditional services is accelerating the need for change in Advisory and Professional Service Firms globally. It is now at a tipping point and by 2020 the Advisory industry will have well are truly tipped. Whether you are working independently or in a firm with a team of 1000 this loud beating drum of change that has been building for the past 10 years is now at a point it cannot be ignored. Some have successfully adapted their models, some are still playing at the edges, and others have pulled the shutters down saying it’s just too hard. What will you do between now and 2020?
“Management consulting’s fundamental business model has not changed in more than 100 years. It has always involved sending smart outsiders into organizations for a finite period of time and asking them to recommend solutions for the most difficult problems confronting their clients”
Harvard Business Review, Consulting on the Cusp of Disruption, Oct 2013
Helping 1000’s of Advisors globally build successful advisory businesses over the past 20 years has shaped the insights provided in this paper which looks at:
- Why change?
- What will the Advisory industry look like in 2020?
- What are the emerging opportunities for Advisors?
- What will be the ideal business model for success?
- What will be your competitive advantage?
- Why we need to target the root cause of the key issues not the symptoms
- Brand. What are you known for? Is it Authentic?
- What needs to change for Professional Service Firms and Advisors?
- 3 Key elements for success. How to generate 5k per day returns?
Why Change?
Quite simply it has reached a point where it will be impossible for most Advisory businesses to survive in 2020 if they have not adapted their models dramatically. For some time now the Advisory and Professional Service Firms of the world have felt the pressure to change; this was accelerated by the GFC (Global Financial Crisis) in 2008/2009 and new cloud based technologies. Shrinking margins, outsourcing, increasing demand for Advisory support, commoditization of traditional services, and an increasing difficulty in attracting and retaining staff, have been just some of the signs that change is needed urgently. The early adopters of the industry, comprising no more than 16 percent of Advisors, have recognized the need to change and started this journey some years ago. Have you?
These early adopters have tended to go for growth by acquiring firms in order to achieve economies of scale. This strategy requires transformational leadership, unfortunately such leaders are rare, and the firm is at risk if something happens to their charismatic leader. The other option is to become a boutique full-service firm, an even more difficult strategy, also requiring an early adopter leader with transformational skills. There is normally passive resistance from the older Advisors and increased frustration from the younger members of the firm resulting in the risk of a split. Making no change is not a viable option as it is a strategy that will ensure your firm will struggle to survive by 2020. So do you go for growth or move to being a full service firm? A choice is required and it needs to be made now.
What will the advisory industry look like in 2020?
Nine key factors will have a major impact on the Advisory industry in 2020.
- Thought leadership will differentiate you – The ability to simplify the complexity in your area of business specialization and communicate that effectively with your target market will provide you a clear point of difference in your target market. Effective use of social media channels will be a critical success factor.
- Opening up the global playing field – Businesses are now seeking out the best Advisors from a global, rather than local, pool. By 2020, this will have further increased through innovative platforms allowing coaching, accountability and training to be delivered seamlessly anywhere in the world.
- Changing consumer buying behaviour – Businesses will be more risk adverse, want to have their views challenged, and will be looking for custom solutions to specifically suit their commercial needs. Your sales approach and model needs to adapt.
- Efficiency boosts through new technologies – Many Advisory innovators have already started using Virtual Assistants and by 2020 this will have moved to the early and late majority who will leverage a global talent pool for almost all non-front line activities in their business. They will use technology and outsourcing to provide big efficiency boosts for 2020. Become an early adopter and experiment with efficiency improvements now.
- Virtual teams – Many leaders will find retaining their innovative Advisors together in a large consulting group more difficult so will instead focus on their niche (rather than go full-service) and partner with other specialists globally in virtual teams to deliver full services to a client. Common values and the ability to deliver on time, on specification, and on cost will be critical.
- Senior Advisors will get another 10+ years – Those Advisors who traditionally retired at 60 or 65 in search of greater life balance will no longer stop but rather leverage technologies to allow them to have their cake and eat it too. As many change their views on ‘retirement’ there will be an influx of quality Advisors with a wealth of wisdom working part-time providing valuable advice to their target market clients through new technologies. This will extend the working life of many Advisors 10-15 years past where they have in the past.
- Embedding of hard analytics into businesses – Leaders will be making more decisions based on the analytics they derive from their internal systems / technologies. This will force Advisors to challenge clients and then customize their offerings to deliver solutions to meet the needs determined by these internal analytics.
- The power of referrals – The impact of traditional marketing channels will diminish as business people no longer trust the ‘hype’ they are being sold. They will rely on the referrals of others they trust to help shape their Advisory service buying decisions. Influencing that process with your own community of clients, social media, and opening up opportunities to refer will be critical to success in 2020.
- Just-in-time / micro learning / development – Busy business people will no longer sit in day long programs where they only retain a small percentage of the knowledge and skills they are taught. They will instead want access to online learning only days or hours before they need it. They will want to address a tangible commercial goal with a fast 30-60 minute fix of knowledge to allow them to get their successful outcome.
The differences between the typical Advisor of today and the Advisor of 2020 can be seen in the following table.
Emerging 2020 Opportunities?
There are eight current key opportunities for Advisors.
- Implementing change successfully for businesses – Statistics show that 70% of new change initiatives by businesses fail and only 30% succeed. The cost this imposes on a business in direct monetary terms, time, and energy is something that cannot be ignored (and is an opportunity for all Advisors in 2020). Understanding how to help businesses pull the right levers to achieve successful change will be critical for success. How will you assist businesses implement change effectively?
- Analysis of Big Data – Big Data is the current buzz word relating to the avalanche of data that is now accessible from businesses to help make more robust, strategic decisions. This could include, marketing campaign results, hit rates on websites, customer surveys, sales conversion rates per salesperson, profitability per product or service and much more. The challenge is in distilling all this information into a meaningful / simple format that enables clients to make commercial decisions to help shape their business. How could you help?
- Professional development of leaders – The advancement of technologies like youtube.com, ted.com and sharepoint.com (as well as hundreds of others) have helped put FREE professional development at the finger-tips of all professionals. Everyone now feels they know what they ‘should be doing’ to be a more effective manager but they lack the ability to transfer the hundreds of insights they have gained into commercial reality in their business. What ‘root cause’ training / development do they need to improve their ability within their current and future roles? How can you help, coach and mentor them?
- Refinement / Challenging of business strategies – Planning days 10-15 years ago used to be a big 2-3 day retreat at a nice resort with the entire management team re-setting their strategy for the year ahead. The plan would be written up by a facilitator, locked down by the management team for the year with a 5 year vision, placed on a shelf and never looked at again as everybody got back to ‘business’. In 2020, most businesses will have a good basic plan, vision and strategies so it may be a poor use of time to go over the same old ground. Instead, strategies will need to be evolved and challenged on a monthly or even weekly basis. The vision and purpose of an organization may remain unchanged but the volatile business environment change will require businesses to be reflecting and challenging their strategies on a more frequent basis. This support may include an Advisory board. How will you assist?
- Re-shaping models for doing business – Changes in customer buying behaviour (as highlighted in books such as The Challenger sale and by papers such as Sales Shift 2020 by the Banjar Group) are changing the shape of an organization’s sales force. They are moving from traditional ‘order takers’ with a product orientation, to ‘insight sellers’ with a strong customer orientation. Business Models are also adapting quickly with businesses outsourcing, insourcing, and leveraging technology to create new service offerings, new distribution channels, globalization, and more niches. How will you assist them develop and implement the change?
- Business Renovation – The opportunity for well leveraged Advisors to take equity in clients business will accelerate leading into 2020 as Advisors seeks ways to grow their wealth without adding complexity into their business model. Advisors then use their Advisory business as a cash-cow and connector to discover more business renovation opportunities. Business Renovation is typically an opportunity that should only be embraced when your Advisory business has been capitalized to a point where the value you derive from it has been maximized. Is Business Renovation an opportunity for you?
- Continuity Planning – Helping business prepare for the retirement of the current generation of owners and leaders and handover to the next generation by either the sale of the business or transitioning of the leadership will continue to be in demand services in 2020. Much of the support will be required in improving the growth, profit and leadership skills of the existing team to get the business ready for the next stage of its evolution. Do you have opportunities in your pipeline and skills required to help?
- Outsourced Continuous Improvement team – New change initiatives can be disruptive to any business and many organizations in 2020 will prefer to get their existing team focused on operational issues and use an outside team (or person) to drive efficiencies. Improving the efficiency (driving out waste) of the business even by 5% annually will drive more positive changes over and above a direct bottom line impact. How could you help your current clients improve their efficiency?
What Advisory Model Will Best Suit You In 2020?
Business Advisors in 2020 should aim to generate 80% of their revenue from set retainers (value priced, monthly fees) and 20% from one-off projects. We recommend a multi-tier retainer model to provide different levels of intensity to which a client can work with an Advisor dependant on the size of the issue / opportunity, depth of interaction within the business, and the speed at which they want their issues or opportunity resolved. The starting point support package in 2020 will be a virtual support / advisory relationship with the client moving up to the most intense will involve a custom, internal training / development solution with a mixture of face-to-face and online support provided to achieve maximum learning retention and accountability. Email use will continue a steady decline and by 2020 the core channel of support / collaboration will be via an online learning / development platform for discussions regarding strategies and actions. A majority of a client’s training needs will also be provided via group webinars (leveraging a variety of specialist presenters / facilitators) and self-servicing their needs via their online learning / development platform.
“No longer should an Advisor be speaking about the ‘stuff’ they provide but rather clearly defining the outcome the client wants to achieve. The solution(s) will then become crystal clear.”
A variation (to suit the specialisation of the Advisor) of the model shown on the next page will work for Advisors in 2020 regardless of whether they are:
- An Advisor, Coach or Consultant operating independently and seeking to evolve their business model
- A Partner in a Professional Service Firm seeking to attract and retain new clients by offering more value added services as ‘part’ of what they do
- A Business Development team within a Professional Service Firm 100% focused on Advisory services
Example of a Business Advisory product / service offer in 2020:
What Will Be Your Competitive Advantage To Ensure You Retain Your Client For Life In 2020?
Our suggestion is:
“We will win by being the single biggest impact on the performance improvement of our clients”
The above (SCA) Sustainable Competitive Advantage is very difficult for many Advisors or Professional Service Firms to adopt because of the changes it will drive in the business. However it’s one that if achieved, will drive dramatic success both now and in 2020. Imagine if you were the single biggest factor in your clients improved business performance on a continuous basis. What would that do for your business and for theirs? What would it do for referrals? For starters, you are likely to retain the Client for life. Their investment in your services becomes self-funding. Referrals and word of mouth sales become your major growth mechanisms. The average fees per client would double every few years as they continue to work closer with you and utilize a greater range of service offerings.
Need To Address Root Cause Issues Not Symptoms
If you surveyed your clients each year leading up to 2020 you would find that their core business needs will more often than not remain the same. For 90% of companies it will be a combination of growth, profit, people or sales that they are focussing on for the year ahead. For 90% of the people it will be a focus on: strategy development ability, implementation skills and their ability to coach and develop their people effectively. So if a client’s support needs won’t change dramatically year on year, what will change? The answer is found two or three layers down. A simple but effective tool used by many Mindshop Advisors globally is a tool called 5 why’s. Simply ask the question “why?” 5 times in relation to an issue or opportunity to get to the root cause of the problem. In a business context this could be:
Client: “My sales have stagnated”
Advisor: “Why is that?”
Client: “We aren’t sure”
Advisor: “Why is that?”
Client: “We don’t have any data”
Advisor: “Why is that?”
Client: “We don’t have a CRM”
Advisor: “Why is that?”
Client: “We haven’t got around to implementing one”
This is a simplified example but one that highlights that many organizations will say that they have an issue with ‘sales’ (for example) but really their core issue is poor implementation. That is where the opportunity lies for 2020, for Advisors getting to the root cause of issues and helping clients with a specific solution.
Brand: What Are You Known For? Is It Authentic?
Your brand is important but what you are known for in the market is even more critical. You may be asking yourself, “aren’t they the same thing?” They are not. Many Advisory firms have a brand, image, logo and website that portrays the perception the firm would like existing / prospective clients to have of them. It is common to find that there is a disconnect between what the firm is known for in the market and how the leadership / team members actually operate. For instance, the website may state the firm is “innovative / strategic” but in reality they offer no value added services and rarely challenge their clients about their strategy / profit. Be authentic with your brand. Have the self-awareness of what you are known for in the market place, and if it needs to change, adopt the right strategies for this to occur. However don’t fall into the trap of thinking a new logo and website will be enough in 2020.
What Needs To Change For Professional Service Firms And Advisors?
Professional Service Firms
For Professional Service Firms the right Partners and Managers (who have the desire for change) need to become specialists at supporting clients in the improvement of growth, profit and people in their business. Their current knowledge of accounting and tax issues is a natural stepping stone to becoming specialists in waste reduction, sales and marketing. The services they deliver will be 80% value priced, retainer’s that support implementation of change and 20% one off projects. Dependant on the personality and skill-set of each partner or manager the depth and time they invest in this area could alter from just 10% of their available time to over 50%. A lot of firms are a long way down this path and already achieving great success, others are struggling to find the right balance, and some have not started at all. Why then is something so simple, so difficult to implement?
Typically either the older Partners lack the confidence to change, or the younger partners are concerned about not having all the answers for their clients in these strategic profit / growth areas. Both the old and young are still making good incomes from traditional accounting services (for now) but remain under-leveraged. Partners intellectually understand the need for change and that their clients desperately need help to improve their businesses. They are however un-willing to learn the new skills or risk applying them to clients. Many tend to look for “magic bullet‟ (quick) solutions, with a piece of software or a prescriptive Advisory process to address their client’s issues. This only results in poor outcomes for clients as the core issues are not addressed and the lack of results becomes a further reduction in confidence for the Partner or Manager to work on these issues. Firms need to be selling customized solutions rather than a menu of prescriptive services. This is easier said than done, as the committee-like decision making structure in a Professional Service Firm makes it difficult to make the required strategic decisions to change especially in a market that is growing in unpredictability
Great leadership is essential in a 2020 professional service firm. There needs to be a transformational CEO leading the professional service firm who has been chosen on leadership capability rather than technical skills or seniority. Leadership in most firms is a full time occupation yet the CEO’s retain client contact and fee-generating budgets to protect themselves in case of losing their CEO role. Leading with one arm tied behind their back is difficult, if not impossible, and only exceptional CEO’s can pull it off. They achieve this balancing act through working long hours resulting ultimately in burn out. Younger Partners have no ambition to pay the price of poor life balance, so succession planning is also a problem. The solution is to make the CEO’s role full time after a 2 year trial of the best candidate. Dropping off the chargeable work and replacing it with new fee generation activities will ensure the CEO maintains the respect of the organisation. Which is better for the firm, 1200 chargeable hours or new business of 2400 hours? The leader brings vision, discipline, and energy to the firm. They ensure the strengths of all the key people are used effectively and ensures that there is accountability to the strategy development and implementation process across the firm. No longer should it be a requirement to be a qualified accountant to lead the firm.
Advisors / Coaches / Consultants
For Business Advisors, the focus needs to be on adapting their business model (embedding new offerings), improving their ability to sell in a 2020 market, and fluency of delivery. They need to ensure they are well leveraged to maximize their available delivery time (through resources such as Virtual assistants) and reduce the time it takes to develop new material (through resources such as Mindshop). This will prevent a typical feast and famine approach to both revenue and profit that leads to the demise of most Advisory firms. High self-awareness of their strengths and weaknesses will ensure that they are providing advice to a target market well suited to their skill-set. Advisors need to build a great story around their specialization or target market to explain how they do business. Learning to try things and fail fast in areas such as their sales process will ensure that if something doesn’t convert as quickly as they had hoped they can adapt and try again. Tenacity is the trademark of many of the most successful independent Advisors we have worked with.
3 Elements To Advisory Success In 2020 – How To Achieve A 5k A Day Return?
You now have a better understanding of the changing landscape of the Advisory industry for 2020, the emerging opportunities, the required business model, the competitive advantage, and know what you want to change, so what elements should you focus on first to start the journey? The following three areas were suggested by Mindshop founder, Chris Mason, as areas to focus on if seeking to gain success as a Business Advisor:
Business Model
- Value priced, Retainer model must make up a large % of your model
- Take equity in clients business
- Consulting is a means to an ends
Fluency in your material
- Get fluent in 50 business tools / processes
- Builds confidence in your ability
- Practice tools / processes daily
- Life long-learning – don’t stop learning
Client quality
- Ensure they have the capacity to pay
- Willingness to learn
- Want to grow / change
- Networking with other like-minded people
- Value quality Advisory work (not looking for a quick fix)
Click to view a 6 minute video by Chris Mason on ‘How to charge out $5k per day?’
