Episode 70 Transcript

Brent Trimble: Welcome to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry. Once again, I’m Brent, and today I’m joined by Jacob Parks. Jacob is the president of Profitable Ideas Exchange, PIE. He’s also an author and has published research in academic journals on the topic of driving successful innovation in large corporations.

His recent book, Never Say Sell: How the World’s Best Consulting and Professional Services Firms Expand Client Relationships, coauthored with Tom McMakin, serves as a guide for consulting and professional services firms looking to expand client relationships and increase revenue by building trust and adding value to the client’s business. This is very relevant for our listeners and our target industries.

Jacob, welcome. I’m really pleased to have you on today.

Jacob Parks: Thank you. I'm delighted to be here. I appreciate it.

Brent Trimble: No, it’s great. Before we dive into some of the topics for today, it would be great to hear some background, the provenance of how you got started, a little bit about PIE, and then ultimately what led you to write the book.

Jacob Parks: Absolutely. Our firm is like so many professional services organizations. We are an offshoot of a former professional services organization. Our founder was a guy named Harry Wallace, and he was the first leader of business development at Arthur Andersen. Many people don’t know this, but up until 1979, there was a ban on direct solicitation in those industries, so modern marketing and sales techniques were a new thing in the ‘80s for accounting and legal businesses. He was leading business development at Andersen, then he spun out, actually, quite fortuitously, about six months prior to the Enron debacle. We started this company to help people with business development strategies, particularly in a professional services context.

But if we’re talking about the books, we did a book earlier on. Actually, my colleague, Tom, wrote it with another guy named Doug Fletcher, who’s a professor, and that book was called How Clients Buy. Basically, what we did in that book is we tried to unpack what are the elements to win a new opportunity with a client that you’re not currently working with. We were quite proud of that text. I did the research; I didn’t write that book.

But we got a call from a key client at IBM and he said, hey, congratulations, but you wrote the wrong book. The book that matters, the only book we need is a book about cross-selling. How do we land clients and expand relationships? It seems to most of us that if we’re just doing really good work, we’re going to naturally expand our mandate. But that’s not always the case. That’s what led us to write this book. We stand on the shoulders of all the really smart people that were nice enough to let us interview them. We just got their perspectives and tried to put it into a text that can be useful for people who are in this space.

Brent Trimble: That’s fascinating. Particularly, a lot of listeners wouldn’t understand that at some time, not so long ago, a couple of decades ago, leaders, principals in firms like Andersen weren’t doing direct selling. That’s really fascinating because, of course, now the model is folks reach a certain level differently, revenue targets going after trying to mine opportunities within big client portfolios. That’s really fascinating. We’ll do a recap of the books, both of them, at the close of the broadcast, and then where folks can find them as well as the Profitable Ideas Exchange. But give us a little bit of insight on PIE and what you do, what the focus is there.

Jacob Parks: We do a variety of things. We think of ourselves as end-to-end assistance when it comes to business development. On the front end, we’ll go into a client and do an audit of what they’re doing on their business development strategy. This might be looking at incentives, structure, outreach materials, all those kinds of things.

Another thing that we do quite often is we build communities on behalf of our customers. If you own a business and you want to serve, let’s just say you want to serve CFOs. We would partner with an organization to build a community of 30 CFOs with whom you want to work, with folks you want to get to know over the course of a year or so. We interview those folks, we put them on community calls, and most importantly, they talk about their key issues among one another.

As consultants, sometimes we’re so often required to have the answer that creating an opportunity to listen to our clients’ challenges can be enormously valuable for building trust. That’s the kind of work that we do on behalf of our clients. And, of course, there are a variety of other value streams that we help people with along the way.

Brent Trimble: That’s a great summary. Let’s dive a little bit into the book because it’s really topical, this notion of driving revenue, driving the right kind of revenue is extremely relevant. As you note in some of the hypotheses in the book, doing great work is not really enough anymore to have repeat clients. A lot of folks, certainly myself in consulting with my years spent there, this notion that good work will beget more work automatically isn’t really the case anymore. You have to do more. As you got into it and started doing some research and formulated the thesis in the book, walk us through the ways consulting, PS advisory firms need to approach clients to retain them as well as build and expand long-term relationships.

Jacob Parks: One of the things that’s just really important is to acknowledge the problem, that there are a lot of hurdles going on inside a client organization that may be preventing you from growing your particular workload with them. It could be that Brent is the secret sauce for this client. So, the client has hired Brent, our lovely podcast host, and they are getting tremendous results from Brent. But, oh, by the way, this person is competitive with the person sitting next to them, so they may not want to bring their secret sauce into the neighboring organization. There are a bunch of problems like that that exist that you just have to be aware of.

It requires people in services businesses to be talking to a lot of people. I was interviewing a chief marketing officer for the book recently, and they were talking about this transition away from an ideal buyer persona because that’s not the way that corporations do buys. It’s more of an ideal buyer community or committee because many people influence decisions. Casting a wide net with your relationships and getting to know people is incredibly important for expanding your work.

There’s one tip that I stole from actually our chairman, Walt Shill, and he talks about the importance of doing change management as a cross-selling technique. I asked, what do you mean by that? He said, well, basically what happens is if you’re doing a project of any kind of significance, and I would assume your projects are of considerable consequence, you owe it to your client to go around and talk to everybody about the change management element that’s going to be happening, how it’s going to affect their unit, any changes to process or anything like that.

You do that at the beginning of a project and then you complete the project and of course, you crush it. You have an obligation to go back to each of those relationships and say, here’s what we promised to do and here’s how we did it. Rather than putting yourself in the position of trying to sell to other people, you’re just allowing them to see how you work. That’s incredibly important.

But when you think about it from the consulting side, there are also problems internally in our organizations that prevent us from wanting to cross-sell. As an example, I may have a relationship with a really important stakeholder over at Cisco Systems or something like this, just for example. My relationship with that person may be putting my kids through college. I may not want to introduce a partner from Des Moines who I’ve never met who does supply chain transformation because it risks me having a challenge with my client and bringing in something that might upset the applecart.

There’s a couple of things that are good to do about this. One is you have to actually understand the ways in which other people create value in your firm. There’s a simple thing about this, but again, as consultants, we are so prone to talking about what we do and how we solve problems and the work we put into that. I always encourage my clients to go through a slightly different exercise, which is to reverse that and put themselves in the shoes of their clients and say to their peers, this is the problem I solve for my clients. I reduce risk on cyber, or I create cost reduction services in their procurement function.

If we can get everybody talking about the client value, it can be really helpful for cross-selling. Then having an incentive system that drives collaboration is incredibly important. There’s a bunch of different ways that companies do this. But one example is some people will use what they call a collaboration tax where if I’m going to market by myself and I’m a lone wolf, I may be only eligible for 80 of 100 business development credits. But if Brent and I pursue a deal together, we’re both available for 100 credits.

This creates an incentive to actually bring people in. Most interesting in some of the studies we’ve done, one of the real benefits that we didn’t see coming is it encourages senior partners to bring out more junior folks, have them work on the proposal, have them come to the meeting, and it creates a natural mentorship program among the team that you didn’t see before when people were really just looking at it from a straight commission perspective.

Brent Trimble: That’s fascinating. It’s interesting because when a lot of folks, even clients, have an outside-in view of consulting firms, they feel that naturally this is occurring, when in fact, to your example about the competing partners, one partner might be selling a service and have a very specific niche in transformation, the other partner may be selling something like cyber or AI that’s more in demand, so it creates this disincentive type of cycle.

A lot of clients would naturally think, of course, you’re my primary conduit to the firms. You’re going to bring me the best knowledge, expertise, capability. But that’s really key, changing that incentive cycle to change behavior. Do you have any examples of where it’s worked? You don’t have to name the firm or brand or anything like that, but where there’s been some transformation.

Jacob Parks: Absolutely. There’s one from an engineering company where they did something just like this. They did a study and said, why are we not selling this with this? These two services naturally go together, but we’re not selling them together. They went with the collaboration tax, and they put this collaboration tax in place. Interestingly enough, this is pre-COVID, they even started moving people around in the office. One of the great things that drives business development is just bumping into each other and having trust for one another, so they actually started moving some departments around so that people would sit closer to one another. It’s been successful in many firms. I find it to be something that is really worthy of consideration.

That said, in many of our firms, you have to be careful with becoming too driven by metrics. Consulting success is a little cerebral. You don’t want to make it just like a one-to-one connection like you would if you were selling a product or something like that. You just have to be careful not to disrupt this growth and business development culture that you already have by making it feel too linear. I don’t think that the business development in our world is linear at all. We always tell people, don’t have a funnel, have a garden. Things take time to mature, so plant a garden, don’t have a funnel where you’re actually kicking people out.

The most important advice I give to people is to try to be at the center of solving your client’s problems. There’s this idea called design thinking that these folks at IDEO, a really interesting innovation firm, worked on. But this idea is that you put yourself at the center of the problem. One of the examples they did that I think is fascinating is they were trying to figure out why little kids wouldn’t brush their teeth. They did a bunch of different things from a marketing perspective, like Spiderman toothbrushes or toothpaste that tastes good, which is so bizarre because it probably has sugar in it. None of that stuff worked for the little kids.

What IDEO did is they actually just set up cameras and watched little kids brush their teeth. Over and over and over again, they watched them brush their teeth. They came to a very simple solution that worked which was kids don’t have the dexterity to hold something as narrow as a pen or a toothbrush. They just can’t maneuver it with their hand. What they did is they just made really thick toothbrushes, and then the kids could brush their teeth with the really thick toothbrush. I would encourage us all to think about our clients exactly like that. What is the problem that they’re facing, and what is the actual solution? Not necessarily the obvious solution that comes to mind.

Brent Trimble: It’s a great example and gives us some ideas, maybe for a follow-up episode just on design thinking and what services firms are employing that. In the book, you interviewed key folks; principals, leaders, consultants at firms like McKinsey, Deloitte, in banking at Goldman, certainly Accenture. You referenced IBM and you asked about how they drive growth from existing relationships, the all-important land and expand, go horizontal, go deep. What are some of the things these firms do differently? What did you find in some of the research?

Jacob Parks: They tend not to be cerebral. They tend to have really proper account planning where they’re making a decision on what they expect from an account planning perspective for the next year with any given client that they have. Well, the large clients, they’re not account planning for all the small clients, of course. Then, I think they just have rigorous measurement. They measure what they’re doing. They have incentives tied to it, and there is just rigorous measurement.

One of the challenges in every single service firm out there, and I’m guilty of this, most of us are guilty of this, we’re all lousy at putting data into CRM. We’re all lousy at putting information in about the deals that we’re working on. I think those firms, by the nature of their size and their management philosophy, just do a way better job than most of us on that rigor, on that account planning and on that follow-up. It doesn’t hurt them, of course, that they have really great brands that open doors for them in a way that smaller firms don’t necessarily enjoy that, but those are the things that I would highlight that they just do a little bit differently.

There is one interesting anecdote that I sometimes notice is that it might be easier to have that rigor and management in a public company than in a partnership. Accenture, for example, is a public company. I think that starts to lend itself to more of the traditional management hierarchy that you see, whereas a lot of law firms are just like 300 partners running their own PnL. I think that those firms, it’s just much more difficult to establish that rigor when you have 300 separate PnLs.

Brent Trimble: One thing that I took from my time at Accenture, which you allude to, is interesting. Having come from different consulting services organizations, some private, nonpublic, I found that they were really good at extracting risk and volatility out of a service’s business and life cycle and being predictable. To your point, that’s not a cerebral exercise. Those are business processes and guardrails put in place that start at the account planning, some measure of CRM hygiene, then pricing to the client, and certainly, margin targets and so forth. They would try to look at all those available opportunities and really filter up, extract risk with lots of rigor, and then ultimately roll what was previously a pretty volatile industry to something a bit more predictable to the streets.

Jacob Parks: I couldn’t agree more. I think that’s exactly what’s happening, and it’s just fascinating to watch it unfold. The account planning process is also the first layer of risk mitigation. When someone shows up with an account plan that has seven pages from Yahoo Finance on it, that’s a risk. That’s a warning that we don’t know this client. When a client shows up with one page full of C-suite executive quotes about the work we’re doing, we feel pretty darn good about that account plan. But the account planning exercise, obviously, it’s helpful for growth, but I also think it is an early warning sign when we don’t know the client well enough or have their trust.

Brent Trimble: That’s a great insight. Let’s pivot a little bit to the here and now and what you’re seeing as experts at the Profitable Ideas Exchange and your interaction with services firms, both ascendant and large. It’s been bumpy post-COVID, and there’s a lot of ink being spilled in the business press about the boom time, now some flattening, even some reductions. We’ve seen the press around different reorgs with some of the firms both private and public. I think you made some notes around this notion of these firms and what they’re offering and whether it meets the needs of the moment. How is technology, the explosion of AI, and other adjacencies really impacting these businesses and their ability to land, expand, be stickier, and sell value that clients are really seeking at present?

Jacob Parks: This AI explosion, and I do not have a crystal ball, and I would definitely stop short of making any sort of predictions about AI, but obviously, it’s going to be a huge part of all of our businesses. The landscape for consulting is changing so quickly. Digital transformation was so hot for so long, and it feels like AI has usurped all of the conversation about digital transformation.

I see in the services economy, particularly professional services, I do see green shoots. I’m actually doing a call later today with 12 chief growth officers from different professional services companies, and the interviews I did in advance with this were cautiously optimistic. It doesn’t feel like a boom at all, but it does feel like hopefully, we’ve weathered the difficulty, and we’re going to move forward.

But I do think going back to the design thinking, with all of the different technologies exploding so quickly, to the extent that you can be at the center of your client’s problems, having conversations with those and solving those as opposed to trying to pitch a blanket message about a productized consulting solution, I think that’s the place to be, at least for the next few years.

On our own businesses, I’m really excited about some of the technology that could come to professional services business development because of these revolutions. One example I always share is I think we’re very close to a world in which when I’m in my CRM system and I’m talking to a client and they’re talking about a problem that they have that one of my partners could solve, that I will very quickly be able to ask AI, what do we do in this space? Who’s the right partner to introduce, and what are the case studies? Within seconds, I can have enough information in front of me to help my partner get a meeting with that person.

Not knowing what to say is one of the great hurdles, and I am really optimistic that technology is going to help solve that problem in the next two years.

Brent Trimble: That’s a great insight. Any of us who’ve served business development roles, certainly at the partner level where you have to be a trusted advisor as well as sell, would think of those door openers or maybe a client comes to you in an adjacency with an RFI or an RFP and says, can you help me solve this? Then there’s that great scramble. It’s the scramble and search for the right person, and sometimes a vast firm, potentially hundreds of thousands of folks, and then that right case study, that right analog where we’ve done it before and AI helping in that internal practice. That could be fascinating. I’m sure there’s some smart folks out there trying to solve that, but that’s a great insight.

You referenced a call you’ve got coming up, and we’re recording this on June 6th, the D-Day anniversary, some just great historical context, but I’m sure some folks would love to be a fly on the wall as you relay some information, and what you’re seeing, tender shoots, green shoots in the services economy. Bloomberg came out with an article yesterday after some earnings and some different indices and noted that service providers are growing again after a period of retrenchment, to your point, not boom time, but maybe expand on that a little bit. What are you seeing? What are you hearing from the market?

Jacob Parks: I think that’s exactly right. It’s green shoots of positivity. People are finding opportunities for some of these new technology services. I also think that going back to your point about the COVID boom, most firms would report, at least privately, that they over hired during the pandemic. In many cases because of the great resignation, they over hired in a way that wasn’t surgical at all. It was blunt force hiring, so to speak. Some of the restructuring and things that we saw needed to happen because of economic situations, but it also needed to happen just because of the way that we all had to grow through the pandemic and try to have bodies and put stuff at different projects that we have.

We’ll see what happens. I’m also not blind to the fact that we have a very difficult election cycle coming up. There are thousands of storylines that are going to be impactful to our economic environment between now and November 5th. I just keep that in the back of my mind as there is a lot of uncertainty and risk on the horizon still, which in many cases can be good for services organizations because complexity and risk are the kinds of things that we solve. But I wouldn’t say that I feel great about the economy, but I also don’t feel quite as terrified as I did four months ago.

Brent Trimble: That’s great insight and something that our listenership will appreciate. I was at a small conference with some service organizations yesterday in Chicago, and they were noting the same thing, an uptick in new business opportunities. Certainly not a boom time, but we’re seeing signals of that as well.

Jacob, this has been great. I’m going to do a couple of things here as we close out. I want our listeners to be able to find the firm, the Profitable Ideas Exchange, so if you can give us the domain there. I’m going to presume your latest book, Never Say Sell: How the World’s Best Consulting and Professional Services Firms Expand Client Relationships, can be found wherever books are sold, Amazon and so forth.

Jacob Parks: That’s exactly right. Our URL is just profitableideas.com, all one word. You can find us there. Yes, Never Say Sell is available on Amazon and wherever you get books. Then, I am doing another book coming up. I’m actually on a writing hiatus right now. I’m taking these three weeks, and I’m writing. I’m writing this book with a guy named Walt Shill who spent a number of years at McKinsey and then a number of years at Accenture.

I would just add that he does a blog that is fascinating called Friday Thoughts. That’s another one that listeners should check out. It’s called Friday Thoughts. He used to do this at Accenture and send it out to the team, but it became a public-facing thing. We’re all encouraging him to pick up and write more of those again, so this is a good way to publicly call him to do so.

Brent Trimble: That’s great, and that sounds like another great topic. Maybe we could have you back and perhaps him as well. For our listeners, as always, thank you for listening to the show. If you have any follow-up questions for Jacob or myself or topical ideas, things you’d like to hear more of, feel free to email them to podcast@kantata.com, and we’d love to answer them. Jacob, thanks again. It’s been a great episode.

Jacob Parks: Thanks for having me on. I appreciate it.

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