A strategy to achieve and maintain high-margin work.

• Author: Young, Laurie

The pressures on private practices over the past few years have been relentless and powerful. Apart from the worst recession in 70 years and the banking crisis, they have had to cope with a variety of changes. Clients are, for instance, beginning to challenge items they call commodities; demanding that practices strip out these items and find ways to differentiate between valuable professional insight and routine tasks. This pressure itself results from a fast-growing international trend: the informed buyer. In law, accountancy, executive search and many other professions, the person who represents the interests of the largest companies now tends to be someone who is experienced in that discipline. Then there is that most difficult of all specialists: the purchasing director. Since the Enron debacle, business leaders have found that the introduction of specialist buyers into the purchase of professional services has reduced cost and mitigated risk; so they increasingly are appearing in pitches and roster reviews.

These pressures have prompted private practices to become more adept at pitching for work, packaging their services and stripping out costs by outsourcing or automation; in fact, all the activities necessary to succeed with effective, efficient business development. Conferences, blogs and websites are alive with tips on how to network, pitch and win business more effectively.

Leaving aside the naive opportunists and ambulance chasers, the relentless trend among private practices is to streamline, outsource, automate and even compete in ghastly internet auctions. In other industries, they refer to it as the industrialization of service. It leads to greater efficiencies, cheaper prices, industry rationalization and more volume services.

Let's Recognize Success

This depressing trend is not the full story. It is not recognized enough that the professions include some of the world's most successful, enduring and profitable businesses. The net margins of leading professional practices are often two to three times those of the business clients they serve. Whereas retail banks and supermarkets are targeted by their owners to achieve margins in single figures, private practices routinely return to their owners, the partners, net margins in excess of 30 percent.

As important is the scope and influence of the elite firms. The massive accountancy firm, Deloitte, for example, is very nearly 200 years old, is in every major business center of the world and has contributed to the creation of a number of new concepts (like "shareholder value" or "intangible asset valuation"). Whilst the consultancy firm Mckinsey still adheres to its founder's philosophy of applying science and intelligence to business problems; and frowns on the word "sales" as much as any partner in a major law firm. Each earns very healthy margins, year in and year out; and routinely makes the partners into millionaires.

By any measure, the professions represent a fabulously successful sector of the world's economies. Even during the recession, elite firms were still responding to demand for individual, unique advice that earned high returns. In fact, more than one major practice has had some of their best financial results during the last two years.

Some of the reason for this remarkable success is partnership culture, but some is also down to the intuitive application of sophisticated go-to-market strategy. Partners may not like the word "marketing" or might think that terms like "strategic focus" are a little too much business jargon for their taste. Nonetheless, an unquestioned consensus about what is important among the partners is exactly the type of leadership focus that strategy experts would recommend. In fact, a partner group often has a sharper strategic focus than many public corporations or family businesses. It is just not written down in...