If I Started A New Firm, Now

Someone asked this in a recent round of reader questions:

If you would start a professional service firm from scratch, how would you do it and why?

I left that one for last because I couldn’t stop thinking about it. I was actually headed out the door on a trip and so I had a lot of time to think about it. At every stop, I’d add something else to the list. And then I decided that I was having so much fun answering it that I’d try to write an entire article, just to answer that question, and so here we go.

But first a note. Some of these are absolutely what I would do, but a few of them are a bit aspirational in this sense: I’d really like to do it, but I don’t know if it would work. But surely we need some new thinking in this field? We don’t get a ton of respect, we’re always fighting for fees, and we’re an afterthought for some organizations. We need to try something new. We need to earn a new level of respect. I think that’s quite possible and I hope you agree.

Ownership + Leadership

• I wouldn’t mind having partners, but I wouldn’t have any equal ones. The bylaws and operating agreement might specify which decisions required a supermajority vote (like borrowing money above a certain amount, key hires, etc.), but I would always retain the right to trigger a clause to buy out any minority partner with a predefined valuation formula and equal payments over a certain number of years, and we could negotiate from there.
• We would start out from the outset with a strong board of advisors, from different business backgrounds. They would be paid, with specific expectations. Monthly written performance reporting, quarterly virtual meetings, and an in-person meeting yearly. There would be an employee survey every year before that last meeting, with the board receiving unfiltered results. Principals need more accountability.
• The leadership team would consist of all the equity partners and department heads, but not every member would be invited to each meeting. One rising leader would also be invited to attend meetings for a year, merely to observe as a leadership development tool.

Positioning + Marketing

• Since we’ve been the ones who have been trumpeting tight positioning for 30+ years, we’d obviously follow our own advice, here. We would look for a space that already has a few really good competitors and at least 10,000 prospective clients.
• The website would be simple, clear, somewhat mysterious, and quite inviting. The firm would be anchored to a location, and there would be pictures of the team. The primary CTA would be signing up for regular insight and not to have a conversation.
• We’d be front and center with client criteria, listing four mandatories and another half dozen “nice to have” qualities. The mandatories would be:
  • Direct access to the decision maker(s).
  • Clients must have worked with a firm like ours before, either here or in another business life.
  • Budget is already allocated, even if not disclosed to us.
  • Not an open-ended project but one that has a “use by” date on it.
• We wouldn’t enforce this strictly, but we would want new clients to either be “by invitation” or a referral from a current or past client of ours. Regardless of the source, we would require references from professional service firms they’ve worked with in the past.
• We wouldn’t be large enough to create a new category, so the category would be marketing, but it would have very little to do with what’s called “unaccountable spend.” In other words, it would be tied to business metrics, performance, changing consumption habits in the marketplace, etc.
• We would be required to spend a full 5% minimum of our fee base and 5% of our total labor on getting the word out to prospects.
• Account managers (yes, we would have the best account managers in the world) would close every piece of business, after an early handoff from the “fit qualification” people.
• If a client wanted to route engagements through an RFP, we would immediately transfer them to our own dedicated single-person department, run by Matilda, who was so smart and so on task that RFP people wouldn’t know what hit them. We’d call this the Department of Enterprise Value Engineering, the Office of Commercial Effectiveness, or The Vendor Exit Team. Or just ValueOps. Or maybe just VP of Demand Management. Either way, we’d start winning more by being better at it than they are.
• We would only supply client references after the new engagement was outlined, and at that point we would trade references.
• We would not offer case studies. They’re all pretty much made-up nonsense anyway, though we would jump at any opportunity to walk through how we solve challenges, assuring them that we can likely find success for them, too, if we are allowed to work in a prescribed (not “proven”) way.

Team + Structure

• No interns. Maybe one or two lesser experienced people if we saw something unique in them, but generally only mid- and high-level performers.
• It would be all in person at a central HQ or all remote, but no hybrid. Reluctantly, it would probably need to be all remote to find the sort of people we’d need.
• If remote as envisioned, two yearly pre-scheduled working retreats that were mandatory (other than medical or family emergencies). People would do their regular work, mainly, with scattered corporate meetings during the week and lots of time together.
• Every person would be required to write and present for public consumption, but it could be a book, a blog, business poetry, a business novel, webinar, local events, stand-up comedy, etc. There would be funds for each person to engage a speaking or writing coach, as they preferred.
• Every person’s compensation would be comprised of some sort of incentive, developed with them in advance and publicly known to the group.
• No unlimited time off, but each person would have a required four weeks off, taken in one-week increments, as well as a mandatory one month yearly sabbatical during which their access to the company would be cut off. This would obviously help each person, but it would force us to lessen single points of failure.
• Twice-yearly 360-degree reviews, but not anonymous, including all the leadership.
• No non-competes for employees. They can leave whenever they want and do whatever they want, but client agreements would have a clause that prevented them from working with those employees for three months after they left our firm.
• We would aim for diversity, where possible. But the diversity we’d aim for would include rural/urban, male/female, and race. But only as tie-breakers. We would favor people who had a broad mix of friends across the political spectrum (rather than caring about that single employee’s personal beliefs). College background would be immaterial, though there would be a supervised writing test for each applicant.
• Employees would have individual interviews, a group interview, and a personality profile.

Financial

• It would be completely open book, but not just internally. Our summarized financials would be published on the website. If you can’t demonstrate success as an advisor, I’m not sure others should expect you to facilitate it for them. So internally, everyone would have read-only access to the accounting data, including all compensation numbers. If someone isn’t carrying their weight, at the top or the bottom, I want them to be nervous and fix it.
• Benefits would be very generous, but would be tiered and tied to actual business performance. So if we hit an “X” level of performance, we all get a “Y” compensation benefit, whether that’s related to how much retirement we match or something much less significant.
• But six months of operating expenses would be mandatory. Below that, tough choices are triggered.
• No debt of any kind. No capital or operating leases.

Service Delivery

• Whatever we did would feature heavy data collection, centralized and reported on. Our tight positioning would separate us from the other 95% of the firms out there, but proprietary data would separate us from the other firms positioned similarly to ours.
• We would have a “public perspective” or POV tied to an academic theory of change. This would infuse our work and we’d talk about it.
• We would have a committee to choose one pro-bono recipient yearly. The committee would accept applications, and would be comprised of one owner, one employee, and one client. The pro-bono recipient would be related to our focus.
• Our work would be loosely productized into roughly sixteen modules, combined uniquely into larger packages, but always heavily tailored to each client situation. This would promote better pricing and employee training…and data collection.
• We would have a very strong core of account managers, project managers, and research strategists. Those would be our role players. Our skill players would be more interchangeable. All business functions would be fractional, and not employees.
• No single person could have more than three standing meetings per week, and none of them could last longer than 45 mins.

Clients

• No client would be accepted without some element of performance participation. At least 10% of every engagement would be variable, based on results. Why? Not to impress them, but to ensure that we were very, very cautious about who we worked for and whether or not we felt like we could make a difference on their behalf.
• There would be no pure projects or longer retainers, but instead a prepaid road mapping exercise to start and then auto-renewing quarterly engagements that required a 45-day cancellation by the client or the agency, as appropriate. We would make one-time exceptions to this for some new clients if they needed a quick rescue.
• A team member would meet with the key client decision maker 2x/year, in person.
• We would always have direct access to the CEO of any company, even though we wouldn’t work directly with them.
• We would focus on mid-level companies. Small ones are too precious with their money and you aren’t going to get the attention of the big ones.
• There would be a limit of a dozen clients, concurrently. If a client dropped below a set level of spend, there would be a conversation to fix it. After a certain period, they would be subject to replacement by a prospective client on the waiting list.

For Your Consideration

Is this realistic? Yes. Is there any single firm doing it like this? No, but I assure you that every single element in here is being practiced by one of our clients, and I believe we should think a little bigger and set our own standards. The world is ripe for the taking. Think bigger, my friends.