Friday, February 19, 2010

Building a Culture of Growth

Over the past several months we've been asked frequently by our clients about culture and what it means for professional services firms to create a “culture of growth” in a slow growth market. Because the subject generated significant interest we hosted conversations on the subject in several major professional services markets: Boston, Chicago, New York and Atlanta. For those of you who couldn't join us, here's a snippet of the combined takeaways.

Growth Culture refers to the set of shared values and beliefs that help the professionals in an advisory services firm engage with the firm's sales, marketing and business development efforts. It provides professionals with behavioral norms related to client attraction and development. Growth Culture in a professional services firm (PSF) captures the importance the firm places on sales, marketing and business development and describes how revenue generating activities get done in the firm. Some Growth Cultures are weak and others are strong. Some positively serve the purpose of growth and others act counter to it.

Culture sometimes has a dark side - it does have the word "cult" in it - especially when the reality of colleague behavior doesn't match the cultural promises made to new firm recruits. So, a Firm's culture may also be described as the collective myths, stories, language and delusions around which the community concretizes and solidifies its thinking. When market conditions are stable, such solidity of thought and action can produce positive growth results. When a major market discontinuity strikes, however, strong cultures sometimes traps a company in its inability to adapt.

PSF Growth Culture Top Ten List:

1. Grow or No Go

When it comes to Growth Culture, each Firm is unique. But one factor remains the same: if you’re not growing in some way, you’re likely to be falling behind. Not only is each Firm’s culture different but so is its definition of “growth.” Andy Bosman said, “In terms of defining growth we can’t give one definition that is consistent across Firms, but we can acknowledge that the first step in creating or advancing a culture of growth is to understand what kind of growth matters most in your Firm – headcount, top line revenue, margins, growth in solutions offered or something else.” At Navigant, Andy leads the Firm’s efforts to gather perspectives and align on what “growth” means across his organization.

“A simple rule in our business is you grow or you “go away,” Andy noted, especially referring to the fact that Navigant is a publicly-traded professional services firm. “A few private firms survive in “status quo” but usually they become acquisition targets in an investment environment or slowly just fade away as the senior team retires.” As Bob Dylan put it, “He not busy being born is busy dying.”

2. Don’t Deny the DNA

When Murray Coffey joined the newly formed marketing team at Jenner & Block in December 2000, the 84 year old law firm had never before had marketing professionals on staff. Nine years later, Murray and his colleagues’ success in including a marketing and business development mindset into the firm may be credited, in part, to their work-with-what-you’ve-got approach. Rather than try to force a marketing culture on the Firm, the Jenner marketing team’s goal was to democratize business development beyond the rainmaker model by enabling more Partners to play an active market-facing role. But they didn’t do this by trying to do a “marketing makeover” of each professional but, rather, their approach was to “discover the DNA of each Partner, package it and communicate it” more effectively. As a result, Jenner’s marketing professionals helped each partner attract clients in a way that was consistent with their self-identity and the cultural DNA of the Firm.

Ignoring the cultural DNA of your organization can lead to significant trouble. As Arthur Andersen’s consulting group began to gain dominance, the Firm's accounting leadership felt outpaced by their consulting practice colleagues’ sales-oriented culture. As the accountants increasingly morphed their behaviors away from the Firm's long-held tradition of systematic, arms-length service quality and in favor of their consulting colleague’s approach, they opened themselves to the likes of Enron. Meanwhile Accenture - Arthur Andersen’s former consulting group – has shifted from a “sales-culture” and shaped its current Firm culture around an intense client-intimacy-focus on its “diamond clients.”

Where good culture has gone awry, the culprit is often culture envy. Andrew Dietz of Creative Growth Group described the challenges which a Europe-headquartered Global Executive Search firm faced when trying to chase the rapid pace of growth enjoyed by its U.S.-headquartered, publicly-traded competitors, Heidrick & Struggles and KornFerry, during the Dot Com boom. The European firm’s culture was inherently geared towards long-term, team-oriented growth and its professionals are hired for intellectual horsepower, collaborative nature and service quality rather than transactional selling competence. The Firm’s flat organizational structure, which required passing a 40-interview gauntlet before admittance, meant low leverage and slowness to scale. As the Firm jealously pursued the U.S. growth rates of competitors who sported highly leveraged and sales-focused models, it inadvertently eroded core elements of its innate culture: shifting more towards eat-what-you kill mentality over its former all-for-one ethic. The European Firm lost significant money, staff and market position by pursuing a U.S. growth approach which didn’t fit its DNA.

3. Activate the Cultural Levers of Growth

Andrew Dietz described growth in a professional services firm as the result of actions and behaviors which emerge from and simultaneously influence the firm’s culture. Growth is both an input to and an output of culture. He also introduced the framework of the Growth Engine Index, turning the amorphous idea of culture into a quantifiable attribute which can be managed as a practical tool to help achieve client and revenue growth. The Growth Engine Index evaluates the four common elements – or levers - which impact how a firm approaches its growth efforts: power, efficiency, structure and sustainability. The behaviors, practices, values and assumptions which shape the firm’s overall culture infiltrate these four growth engine elements. Andrew noted that all firms – intentionally or unintentionally – address these levers when making sales, marketing and business development decisions. However, firms choose to accentuate one lever over another depending on their inherent culture.

Power - Emphasized by market leaders & bold competitors - Refers broadly to Firm’s market and brand strength and ability to effect change or exert control over clients, prospects, colleagues, referral sources, markets.

Efficiency - Emphasized in frugal and ROI driven cultures – Focus is on how smartly resources are used to derive desired impact of reaching enough of the “right” clients, prospects and referral sources within a given timeframe.

Structural Design - Emphasized by cultures which value standardization of service delivery and messaging – Focuses on how marketing & business development teams are organized & equipped to best support professionals’ client/prospect interactions.

Sustainability - Emphasized by cultures which value longevity and steady, safe growth. Concerns the degree to which a Firm’s marketing and client development systems remain diverse, healthy and reliably productive over time.

For additional details on the Growth Engine Index and to compare the growth culture of your organization to other professional service firms’ please email andrew or mira

4. Demonstrate Client Benefits of Cultural Difference

In professional services, the benefits we offer clients are delivered through the advisory professionals we provide. Since our Firm’s people are the source and embodiment of our Firm’s culture, then our Firm’s culture is an integral part of the client experience. If that’s true, then our Firm’s culture could be a key marketing tool assuming you show it and don’t just tell about it.

Consider how your firm communicates about its culture in the marketplace. The details of your firm’s culture – especially its growth culture – do not explicitly benefit prospective clients. The fact, for instance, that your compensation structure fosters greater collegiality and collaboration doesn’t necessarily translate to benefit for your client. Without you making the explicit link between your culture and client benefit, yapping about your firm’s culture is mere dullard talk. Can you, instead, quantify or otherwise prove that your collaborative approach leads to faster, better, more cost effective results for your client? Demonstrating – not just telling – how your firm’s culture leads to significant and tangible benefit for clients can be highly persuasive.
5. Link Strategy and Culture
Professional services firms often put tactics ahead of strategy. This often yields near-term, unsustainable marketing and business development spurts. One sage, Sun Tzu who authored The Art of War, said, “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”

Similarly, Firm culture and strategy go together. Culture integrally ties to the focused mission, means and measures of the Firm. It is also what enables strategy and tactics to be successfully executed…or not.

Paul Zellner reminded us of what Merck CEO, Dick Clark, once said about strategy and corporate culture. "The fact is culture eats strategy for lunch," Clark explained. "You can have a good strategy in place, but if you don't have the culture and the enabling systems that allow you to successfully implement that strategy, the culture of the organization will defeat the strategy."

After his famed turnaround of IBM, former CEO Lou Gerstner said that earlier in his career when he was a consultant at McKinsey & Co, "I probably would have told you that culture was just one among several important elements in any organization's make-up and success. I came to see in my time at IBM that culture isn't just one aspect of the game - it is the game."

Remember that games and their rules have a way of changing on us when we’re not looking. Just as strategies evolve over time, so does culture. In order to maintain a flexible perspective regarding how a firm’s culture may be tapped in the service of growth, remember that culture is an evolving process rather than a static one.

6. Walk the Growth Culture Walk

A Firm’s leadership is the source for articulating, codifying and maintaining a firm’s growth culture and the number one way they can do that is through “walking the walk.” That is, they consistently embody and communicate through their credible actions, their firm’s cultural norms.

Stories of a leader’s behavior often become the legendary underpinnings of culture in a firm. For instance, when Lou Gerstner took the CEO position in 1993 at the then faltering IBM, he wanted to cut through the company’s bureaucratic communication style. In his words, here’s what Gerstner did: “At that time, the standard format of any important IBM meeting was a presentation using overhead projectors and graphics on transparencies that IBMers called – and no one remembers why – “foils.” Nick was on his second foil when I stepped to the table and, as politely as I could in front of his team, switched off the projector. After a long moment of awkward silence, I simply said, “Let’s just talk about your business.” This story almost instantaneously made its way around the IBM global network and became part of the firm’s new lore – an indication of cultural shift from political presentation to substantive dialogue.

Death to the bland and meaningless mission statement! Professional services leaders will better serve their Firm’s culture by modeling it, not by yapping about it. Kevin Cook described Edelman’s client, Starbucks, like this, “As Howard Schultz goes, so goes Starbucks.”

Alan Deutschman is an alliance partner of Creative Growth Group, a renowned business journalist and the author of four books including “Change or Die” and his latest, “Walk the Walk: The #1 Rule for Real Leaders.” The story of Howard Schultz and Starbucks’ tremendous growth from 400 stores to 14,000 is included In Alan’s new book. Schultz came to realize that in their pursuit of market domination and growth, Starbucks had lost its vision and diluted its coffee culture which had originated with a cafĂ©-like experience, the aroma of fresh ground coffee beans, and personal interaction with the barista. Schultz realized that he had to lead his company back to the basics and “walk the walk”.

“Even the most well-intentioned leaders often fail to walk the walk. Howard Schultz of Starbucks didn't live up to his own vision of the customer experience by putting relentless growth and expansion ahead of quality (as he admitted in a leaked memo),” Alan wrote. In a January 2008 memo describing his “Transformation Agenda,” Schultz wrote to his employees:

“If we take an honest look at Starbucks today, then we know that we are emerging from a period in which we invested in infrastructure ahead of the growth curve. Although necessary, it led to bureaucracy. We will now shift our emphasis back onto customer-facing initiatives, better aligning our back-end costs with our business model.”

Schultz said that he returned to his operational leadership role at Starbucks because he felt that the way out of crisis was not a simple change in business strategy, but instead– in his words– “love and nurturing.” His key to turning things around was revitalizing the investment in his people, recommitting to the core purpose of the organization and providing employees with hope and inspiration.

As a demonstration of his commitment to Starbuck’s cultural DNA, Schultz took 10,000 of his best people and brought them together in New Orleans in late 2008 for a leadership conference where they spent 50,000 volunteer hours helping communities re-build after Hurricane Katrina. Schultz summed up his thoughts about the company culture this way: “When you love something, when you care so much, when you feel the responsibility… you find another gear.”

Clearly, the culture of a professional services firm – growth-oriented or otherwise - is a function of leaders commitment to nurture it. But, Firm culture is also often a reflection of ego and charisma of its leadership. Kevin Cook told the story of a former client in the commercial real estate business which neglected its backend operations in egotistic pursuit of growth and novelty. The Firm had to ultimately restate earnings and fell into disrepair. Charm and charisma don’t equate necessarily to great leadership or decision-making but they do have a persuasive impact on culture.

“We fall into the clutches of toxic leaders who promise us the moon, knowing full well they cannot deliver. In the worst of all cases, toxic leaders fall under the spell of their own grand illusions and believe that they can. Jeffrey Skilling, former CEO of Enron, predicting an astronomical spike in the next year's stock price just as the company was imploding, is but one classic example.”
- Jean Lipman-Blumen, “The Allure of Toxic Leaders”

7. Build Growth Culture One Professional at a Time

Because, in professional services, the functional professionals are the walking embodiment of your brand, developing a culture of growth must include activities and behaviors which help individual professionals successfully contribute to the client and revenue development effort. Investing in opportunities for professionals to learn and practice client development skills in a safe environment or under the tutelage of a senior partner goes a long way in driving growth culture down through the organization. New recruits to the firm – at the earliest levels of their career – should be involved in the marketing and sales efforts at least in proposal development or thought leadership research roles. Lateral hires should demonstrate the ability to fit or, at least, adapt to the Firm’s growth culture before they’re hired. Once hired, laterals should be “onboarded” in terms of marketing and sales activities, not just on where the files are stored and coffee maker kept.

Matt Rebro, Director of Business Development with Pepper Construction asked the panel, “How do you shift the functional professionals in your Firm to a sales mindset?” Since this is one of the challenges that Creative Growth Group is often asked by professional services firms to address through workshops and coaching, we offered the following tips.

One size fits none - Specialists look at the world in a unique way. A Specialist is someone who thinks differently than anyone else and likes to own personally any project he or she works on. When specialists are expected to be part of the herd and always come up with the expected response, they will always be working against themselves. Because professional firms are made up largely of specialists, a one size fits all approach to business development – expecting your specialist professionals to all be great connectors for instance – is doomed to failure. Instead, fit individual strategies and tactics to your individual professionals.

Celebrate Incrementalism – Professionals are generally high-achievers if not over-achievers. They like to get the right answer and achieve results quickly. Alas, client development is an ambiguous activity fraught with paradox and delayed gratification. As a result, professionals who fear failure do nothing instead. They just won’t play the game. You can help them by focusing on simple, short-term, sure-to-win steps. Then celebrate each forward step. “You made one call to a prospective client today? Hooray!” “You sent an e-mail to a friend describing what you do for a living? Yippee!” No kidding.

Start with who they know – Ask your professionals, “Who already knows you, likes you and trusts you? Who is already willing and able to help you grow your practice?” Have your reluctant marketers start there. They’ll encounter much less initial rejection and discover the warm and fuzzy fact that client development success is deeply rooted in reciprocal relationships and friendship…and that’s when it is fun.

Retool their brains, – Reinforce that you are not asking your professionals to be salesmen. They are likely to view sales as sitting on the opposite side of the table from some sucker and manipulating the poor schmoe into buying something they don’t want and won’t help. Client development in professional services is not selling. It is attracting clients to you. Client development is about putting yourself in a position to be bought. It is about sitting on the same side of the table (figuratively) as the prospective client and helping them to solve a challenge they can’t surmount without you.

Group them – Human beings – even introverted professionals - are social creatures who grow and develop by having adequate and meaningful exposure to social situations. We learn and change well in group settings with the help of peer support and peer pressure. By bringing professionals together in regular group sessions for collaborative and cooperative accountability, learning and networking (“The Rainmaker Council” program) Creative Growth has been very successful in converting reluctant professionals into active business developers. A safe, confidential group setting provides a forum for professionals to practice their client development approaches out-loud and get feedback to improve and gain confidence before they face the real thing.

Send them a Sherpa – Sherpas are a Nepalese ethnic group of elite mountaineers and experts in their local terrain who accompany adventurous Westerners on mountaineering expeditions in the Himalayas. Who will be the client development Sherpa for your functional professionals? Whether from inside or outside your Firm, assign the professionals (individually and by group) one or more business development coaches who can serve as a role model and steer them on the right path.

Provide the platform – Equip your professionals with ways that they can “sell without selling.” A great example of a platform which makes it easy to connect is the CFO Roundtable program created by Cushman & Wakefield. Originated in Atlanta and led in Chicago by Dougal Jeppe (who was one of the attendees of our 12/10/09 event), the CFO Roundtable provides learning and networking for Chicago’s leading Chief Financial Officers. But it also provides an easy way for Cushman & Wakefield’s real estate professionals to gain direct and credible access to their best prospects. Dougal’s colleagues just need to show up. What kind of programs, content, and other tools can you provide your colleagues at a Firm or Practice group level which make it easy for them to attract clients without even knowing it?

Measure progress and deliver consequences – Nothing beats paying attention to actual results to make sure people take action. Track a pipeline of business development activity and results and deliver positive and negative consequences visibly and consistently to encourage the right behavior.

Leaders first – If you’re Firm’s leaders aren’t demonstrating the right client development effort and aren’t paying visible attention to progress/consequences, you won’t succeed in helping your functional professionals become active marketers.

Change the people – If you can’t change the people, change the people. If you’ve really done your best to support your functional professionals in their business development efforts but you still see no change in them you may need different people on your team.

8. Practice Patience AND Encourage an Anticipatory Culture

Here’s patience: Navigant Consulting made a commitment in 2009 to sustain the brand reputation they worked so hard to build since its inception ten years earlier. “The Firm gave up profit this year – despite Wall Street’s displeasure – to keep investing in the Firm for the long run,” Andy Bosman said. That doesn’t mean the Firm wasn’t more careful than ever with its marketing spend. Like many, it shifted budget from broader, mass marketing initiatives to more targeted and measurable electronic marketing programs.

Other leading consulting firms took a lesson from the market downturn in 2001 and are not over-reacting in the current slowdown by slashing people and programs. One example is Deloitte which – though some cuts have certainly been made - has managed to balance expenses and investment in people. The challenge for Deloitte is also balancing the four different cultures which exist among its four business units - three of which operate with through regional practices and one of which – consulting operates through a national, location-agnostic team. At Deloitte, a shared compensation model on signature accounts is helping enhance the firm’s growth culture.

Here’s anticipatory thinking: “When the market isn’t causing growth and you have reached a market share point where each extra percent of growth is much harder to capture, your (the CMO or Firm leader) role is to be the driver of thinking differently to look for new growth opportunities – and this isn’t typically just doing more of what you are already doing,” Andy Bosman told us. “It requires stepping out of the comfort zone and making bets (risk is always “fun” to sell in professional services). Good examples of this are our investment over the last several years in Clean Energy (a topic that is just now cool) and FTI’s investment in a strategic communications practice.”

Jay Godla is a big believer in Anticipatory Culture…though he may not phrase it exactly that way. Jay is the Consulting Markets & Strategy Leader at Hewitt Associates. During our session, Jay described a 2007 article from McKinsey Quarterly (Jay is a McKinsey & Co. alum) titled, “The Granularity of Growth.” The article (which we’ve attached alongside this summary) is based on a study showing that the biggest factor in a company’s successful growth was its ability to pick a market with a “huge tailwind.” Wayne Gretzky once said, ““A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” Culture plays an important role in institutionalizing the ability to find and mine micro-markets in hyper-growth. It is especially by fostering a culture of curiosity, resilience, forward-thinking and entrepreneurial spirit, that a professional services firm can anticipate where its future market and clients will experience the strongest need.

9. Merge Culture not Just Cash Flow

Mergers and acquisitions of professional services firms are on the rise as some seek market relief and others opportunistic inorganic growth by joining forces. Yet, we all know how often mergers fail to achieve objectives. In the land of inorganic growth, culture is also a make or break factor.

Jim Farrell is a Management Consultant at JP Farrell & Associates, Inc. and author of the blog, A Management Consultant At Large. Jim shared this quote about a troubled merger during our session, “The only thing we didn’t do right was ignore culture.” Jim continued:

“The quote came from John Terry, President of the Transportation Group of IU International, speaking about the merger of Pacific Intermountain Express (P-I-E) and Ryder Truck Lines in 1984, the largest trucking merger in the U.S. theretofore. Both companies had been subsidiaries of IU International for six years, but had been operating independently. During the merger, John took care to have leaders from both organizations participate in all phases of the planning. However, he did not anticipate that the rank and file would find the integration so challenging. While no workers were let go, many changed workplaces, as several hundred duplicative facilities were eliminated. The highly detailed merger plan had hundreds of tasks, relating to the timing of various regulatory requirements, announcements, and systems changes. John was surprised at the extent to which people had emotional connections to their workplaces, brands, titles and co-workers, which were disrupted when reporting relationships, were realigned and the new “Ryder/P-I-E” name was adopted. Looking back, he would have paid more attention to communication with the rank and file.”

Though Jim’s story references a trucking company, the issues he highlights are equally true when combining professional firms. Successfully merging professional services firms starts with making sure that the Firms’ cultures fit. Paul Zellner described Russell Reynolds Associates’ Executive Assessment Practice which uses a competency-based diagnostic that helps clients ensure that they have strong, unified teams that can react quickly and effectively to new opportunities and challenges. The Firm’s “Culture Analyst” system examines cultural fit of organizations including those in an M&A situation.

Beyond assessment, cultural integration planning and close, constant communication with key professionals is core to firm merger success. But to acquire true cultural insight, may require both parties to take part in each other’s culture. By sending professionals from each firm into the other organization for some time or by creating dialogues between members of the two cultures, differing assumptions about growth, marketing and client development can surface and be addressed.

10. Treat Culture as Opportunity, Not Excuse

“Playing the culture card” can no longer excuse the failure of Firms to evolve a culture of growth and to activate the business development behaviors of their professionals. It is the responsibility of Firm management to close these cultural gaps in their organizations. Instead of an excuse, your Firm’s culture provides an opportunity and a basis to grow in a way that succeeds in the marketplace even at it stays true to the core of your Firm’s values and mission.

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