Tag Archives: Contact

How Do You Maintain Your Culture as You Grow? Five Thoughts

Situation: A professional services company wants to grow while maintaining the small company atmosphere that has been the key to its success. There is a limit to how many clients a manager can manage, and with this the reality that if the firm is to grow they will have to bring on more client managers and support personnel. How do you maintain your culture as you grow?

Advice from the CEOs:

  • To maintain your boutique atmosphere, consider hiring to fit your needs rather than to maintain a culture. Use team meetings to direct team members while communicating and instilling the culture that you wish to maintain.
  • Don’t risk diluting the strength of your client relationships. A $250K client who is fully committed to your service may have more demands than a $1M client for whom you only represent 10% of their business.
  • Service companies with the highest profit ratios rotate customer contact among several qualified people. What matters is the level of service provided, not the individual providing the service.
  • Grow by adding locations. Instead of growing vertically in the same office, grow modularly by spawning additional offices.
    • Create an optimally sized model for the level of service that you wish to deliver.
    • Design the organizational structure for this model and identify the order in which slots will be filled as business grows through each office.
    • Develop a service and organizational template with standard operating procedures, metrics, technology, and reporting.
    • Once the model is created, spawn it.
  • Focus your business. Define a niche that you can serve better than your competitors. Focus on this niche and develop a sustainable advantage over your competition.
    • Assure that your service delivery is seamless to the client and make sure that it remains seamless.
    • Offer a menu of service options and price options by the level of service delivered. Some will want to buy a Mercedes, and some will be happy with a reliable lower priced sedan.

What is a Fair Revenue Split? Five Pieces of Advice

Situation: A professional services company is constructed as a network of members. The company’s contract specifies that if a member of their network goes to work for a client – even a client that the member brought to them – the client owes the company a fee of 50% of either the member’s salary or the annual consulting revenue paid to the member. This is onerous. What is the best way to respond? What is a fair revenue split?

Advice from the CEOs:

  • This does seem like an onerous provision. It is unclear whether the bite is as fierce as the growl.
  • Consult a lawyer. If you quit the network and go to work for the client, what is the level of risk that the company will successfully sue, and what you can do to mitigate this risk?
  • If the offer from the client is appealing, quit or avoid using this company’s services. Given their cut to your revenue you will see a net gain in your own pay for services rendered.
  • If several members agree that this stipulation is onerous, team up and start your own network with better terms. This can provide you and the others with an annuity revenue stream.
  • Integrity in professional circles is everything. Whatever course you decide on, be up front.

How Do You Survive a Maelström? Seven Strategies

Situation: Edgar Allen Poe’s “Surviving the Maelström,” is a tale is of three brothers whose fishing boat is caught in a monstrous whirlpool, and how the reaction of each brother determines his fate. Similarly, in times of uncertainty, our ability to react with either panic or a rational, reasoned response determines our fate. How do you survive a maelström?

Advice of the CEOs:

  • Based on Poe’s story, you need to replace fear with assurance, uncertainty with boldness, and doubt with conviction.
  • There are several potential financial bubbles forming including student loans and negative interest rate loans to sovereign governments. Both, in their own way, pose a threat to the international and domestic financial systems and could rapidly impact borrowing costs for companies. The solutions are to stay in ongoing contact with customers, and to stay light and flexible as companies so that you can adapt to market changes.
  • For Internet companies, the shift to Freemium offerings (a base product for free with pay as you go functional add-ons) makes it more difficult to design viable business models, and means new competition for established companies in low capital cost businesses. Again, a solution is to stay in ongoing contact with customers, constantly reinforcing your value proposition and the reality of switching costs.
  • Creative Destruction – particularly the emergence of new companies that threaten large customers and can change the value perception of suppliers’ core competencies. Solutions include ongoing communication with customers seeing what they see as “the next big thing,” focusing on continually improving our own core competencies, and possibly teaming with the more promising emerging companies.
  • The illusion that advertising will pay for everything – in reality, advertising dollars are a scarce resource like all other resources. Solutions include testing our own value-adds as an ongoing process, and creating fast-fail models to cost-effectively test our own promotions.
  • Definitions of value and productivity are no longer stable; all depends on the method of measurement. A solution is to remain aware of the innovator’s dilemma and to continually renew our value propositions.
  • A workforce in flux where young people don’t want to work for what they perceive as “old line” companies, as well as early-retiring baby boomers who may learn in 3-5 years that they can’t afford retirement. Solutions include focusing on employee engagement, building more flexible and “liberating” business models, and teaming younger with more experienced workers to cross-train each other.