Marketing is dead! Long live marketing! A call to arms for professional service firms

Be warned! This is going to be a rant somewhat but also, I hope, a critical perspective of marketing and its role in the professional services firm. When Regis McKenna said marketing is everything, he wasn't joking, and neither am I. Since the days of the ground breaking article 'Marketing Myopia' in the Harvard Business Review (1960) by Theodore Levitt which implored businesses to define themselves by customer need, marketing has been on a topsy turvy ride of increasing and decreasing influence in the business world.

The influence I am talking about is its role in strategy and firm performance. It was Peter Drucker who back in the 1950s said a business has only two functions: marketing and innovation. How prophetic those words were as research now demonstrates that it is indeed marketing (in the form of a marketing culture) that has the most significant impact on firm performance and profitability. It is also marketing which enables the innovative capability of the firm.

So what is the problem? The problem is marketing as it is practiced and applied today in professional service firms (PSFs) is not the marketing Peter Drucker, Regis McKenna, or Ted Levitt were talking about. The way in which marketing and business development (BD) have been merged into the same function and meaning within PSFs is inhibiting its potential impact on firm performance. Additionally, the way in which BD people have been relegated to back office wilderness when in fact the most proficient ones should be leading the strategy dialogue of the firm, is a cause for extreme bemusement. The never ending stream of tactical level initiatives firms under go in the guise of enhancing client value is not only laughable, it is destructive. Some examples:

• New brochures
• New web sites
• Sales training
• Events and seminars
• Promotions such as ads, direct mail etc
• Flavour of the month publications and newsletters
• Premiums and other collaterals…

The list could be endless but you get the drift. What they should be doing is looking at the competitiveness of the firm (see my white paper on law firm competitiveness or this one for accounting firms) and understanding how, from a strategic perspective, the firm can enhance its competitive position.

So what marketing am I talking about? Think about it like this. A firm's profitability is contingent upon clients. Money comes from clients! But so does a lot more such as reputation, referrals, and loyalty. Marketing is the mind set and culture which allows a firm to ensure clients are satisfied.

What is it that makes clients do this? In theory it's simple. Clients want value from their PSF in terms of know how and knowledge, service quality and satisfaction, as well as having a meaningful impact on their business. It is marketing, in its truest strategic sense that gives a PSF the capability and platform to achieve this client value. Firstly, marketing makes sure your firm is client centric and that anything you do is oriented towards enhancing client value. Moreover, marketing recognizes that you cannot please everyone and hence forces you to focus your efforts where your capabilities give you an advantage in the market place. The obsession with full service by most PSFs is a path to frustration for all but the largest firms as clients choose providers based on their experience and expertise. Selective diversification is the key as is the ability to be truly differentiated in the market place. It is marketing that has the answer to these questions.

What is wrong then? There is a fundamental misunderstanding within PSFs of what marketing is and hence it has lost influence. The root of this problem lies with the senior partners and the culture they have instilled. Resistance among seniors is the biggest problem that is holding back many firms from changing. A faulty business model that relies on leverage, realization, and billable hours has not only left clients disillusioned but also a firm's most important asset, its people. PSFs compete in two markets, for clients and for talent. Since the product of the firm resides in the intellectual capital of the firm (the heads of its people), client value is determined to a large extent in the way that knowledge is shared, built on, and leveraged. Lack of work life balance, inequitable reward systems, unclear promotion track, as well as too many mundane tasks leaves the professionals de-motivated and disloyal. A marketing culture forces your firm to focus on the things that matter to clients which in turn forces you to attack the underlying problems which are preventing the delivery of client value. You cannot separate strategy, marketing, KM and HR in a PSF, if you think you can, think again!

So what should I do? Start again and re think marketing as it was supposed to be utilized, in the key strategic processes of the firm and as a culture that has the most significant impact on firm performance. Understand that strategy in PSFs is not the same as in other types of organizations. It requires firm wide involvement and most importantly, the input, commitment, and buy in from the firm's professionals. Eliminate the idea that your marketing and BD people are support functions and get them to help direct the strategic processes of the firm. Finally, stop equating marketing with BD, not all marketing initiatives can be measured using ROI and to think so is the ultimate fallacy. As Tim Ambler from the London Business School rightly points out, trying to measure the ROI on marketing in its entirety is like trying to measure the ROI on eating, if you don't do it you die!

One last thing, you don't need a marketing department to be successful, many successful firms don't have distinct marketing departments. What they do have is a common understanding that marketing is everyone's job. Take that double in a PSF, the most important marketers are the ones who interact with clients everyday, the professionals themselves!!!

Where to start? Take a long hard look at the list below from Harvard Business Review (Feb 2009) on the reinvention of management. It is as good a starting point as any and you could just as easily call this the reinvention of marketing:

1. Ensure that management's work serves a higher purpose. Management, both in theory and practice, must orient itself to the achievement of noble, socially significant goals.
2. Fully embed the ideas of community and citizenship in management systems. There's a need for processes and practices that reflect the interdependence of all stakeholder groups.
3. Reconstruct management's philosophical foundations. To build organizations that are more than merely efficient, we will need to draw lessons from such fields as biology and theology, and from such concepts as democracies and markets.
4. Eliminate the pathologies of formal hierarchy. There are advantages to natural hierarchies, where power flows up from the bottom and leaders emerge instead of being appointed.
5. Reduce fear and increase trust. Mistrust and fear are toxic to innovation and engagement and must be wrung out of tomorrow's management systems.
6. Reinvent the means of control. To transcend the discipline-versus-freedom trade-off, control systems will have to encourage control from within rather than constraints from without.
7. Redefine the work of leadership. The notion of the leader as a heroic decision maker is untenable. Leaders must be recast as social-systems architects who enable innovation and collaboration.
8. Expand and exploit diversity. We must create a management system that values diversity, disagreement, and divergence as much as conformance, consensus, and cohesion.
9. Reinvent strategy-making as an emergent process. In a turbulent world, strategy making must reflect the biological principles of variety, selection, and retention.
10. De-structure and disaggregate the organization. To become more adaptable and innovative, large entities must be disaggregated into smaller, more malleable units.
11. Dramatically reduce the pull of the past. Existing management systems often mindlessly reinforce the status quo. In the future, they must facilitate innovation and change.
12. Share the work of setting direction. To engender commitment, the responsibility for goal setting must be distributed through a process where share of voice is a function of insight, not power.
13. Develop holistic performance measures. Existing performance metrics must be recast, since they give inadequate attention to the critical human capabilities that drive success in the creative economy.
14. Stretch executive time frames and perspectives. Discover alternatives to compensation and reward systems that encourage managers to sacrifice long-term goals for short-term gains.
15. Create a democracy of information. Companies need holographic information systems that equip every employee to act in the interests of the entire enterprise.
16. Empower the renegades and disarm the reactionaries. Management systems must give more power to employees whose emotional equity is invested in the future rather than in the past.
17. Expand the scope of employee autonomy. Management systems must be redesigned to facilitate grassroots initiatives and local experimentation.
18. Create internal markets for ideas, talent, and resources. Markets are better than hierarchies at allocating resources, and companies' resource allocation processes need to reflect this fact.
19. Depoliticize decision-making. Decision processes must be free of positional biases and should exploit the collective wisdom of the entire organization.
20. Better optimize trade-offs. Management systems tend to force either-or choices. What's needed are hybrid systems that subtly optimize key trade-offs.
21. Further unleash human imagination. Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.
22. Enable communities of passion. To maximize employee engagement, management systems must facilitate the formation of self-defining communities of passion.
23. Retool management for an open world. Value-creating networks often transcend the company's boundaries and render traditional power-based management tools ineffective. New management tools are needed for building complex ecosystems.
24. Humanize the language and practice of business. Tomorrow's management systems must give as much credence to such timeless human ideals as beauty, justice and community as they do to the traditional goals of efficiency, advantage, and profit. 
25. Retrain managerial minds. Managers' traditional deductive and analytical skills must be complemented by conceptual and systems-thinking skills.