brand purpose in professional services firms - … · brand purpose in professional services firms...

Brand purpose in professional services firms - the fulcrum of differentiation

Warren Riddell Partner, Beaton Capital

George Beaton Executive Chairman, Beaton Research + Consulting

Ben Welsh Executive Creative Director, M&C Saatchi

March 2015

Global Issues Series

Fulcrum (n) the point against which a lever is placed to get a purchase, or on which it turns or is supported. Origin C17, from fulcire ‘to prop up’. (COED).

Never has brand purpose been more critical to the success of professional services firms, yet for many the need for brand purpose is dismissed as mere discretionary marketing cost.

What we will witness in the coming years – and you heard it here first – will be an irreversible differentiation gap between those firms that demonstrably establish their brand purpose now – and those that don’t.

The firms that out-compete will not be the largest by size, nor those with the greatest longevity. The winners in this race will be those firms with a shockingly clear brand purpose, the fulcrum on which they build both offensive and defensive differentiation.

2©Beaton Capital 2015

Independent research shows that, other than by size, there is very little that saliently distinguishes one brand from another within a profession. Too often brand strength is measured by reference to the number of fee earners or annual revenue, not their quality, capabilities, or value delivered to clients. Based on our own observations and shared experience with others, with a few exceptions1 very little is done to manage a firm’s brand strategically. Most effort and money goes into merely laying out an undifferentiated shop front stating the obvious in lengthy lists of features and people, including within many firms the personal brands of lead equity partners/directors. These days this is a superficial and fragile brand strategy.

How has this come about for professional services firms when in most other B2B sectors there is a deep and increasing appreciation of the importance and value of brand? We believe there are three primary causes of this behaviour: firms’ historic and successful reliance on the personal brands of their key fee earners2 giving rise to a culture of ‘why change now’; cynicism towards ‘things related to marketing’; and the absence of ROI methods being applied to brand investments.

It is also argued by some that a lack of differentiation amongst close competitors in any given strategic group does not really matter – after all, there is enough work to go around and being differentiated does not pay on cost-benefit grounds. The problem with this argument is that oligopolies such as the Big 4 accountants, or the Big 5 executive search firms, or the Big 3 strategy houses, or the Big 5 property consultants, or the Big 4 IT services companies, which are cited to prove the point have become just that, oligopolies.

Other professions, notably law and consulting engineering have not reached this supply polarity – yet. So, for example, whilst the globalising legal and consulting engineering markets are in a state of flux, brand and everything related to identity and differentiation have become critically relevant to clients, talent, firm growth, and – ultimately – profitability.

This is where the concept of brand purpose comes in. It captures the essence of business strategy: to find and grow a defensible position.


‘…other than by size, there is very little that saliently distinguishes one brand from another within a profession.’

The nature of brand purpose

Brand purpose, as a composite term, is far more than what an average equity partner/director will associate with mere visual identity. Yes, visual identity is critical in conveying cognitive and emotional connectivity (you love it, you hate it, you are indifferent etc), but brand purpose identifies and captures the differentiating synergy between the following three primal elements of a firm:

> Culture – What the firm stands for, how it behaves internally and externally, what it values;

> Reputation – What the firm is known for, the respect it attracts in the market, what problems it is asked to solve; and

> Relationships – Who is the ‘company’ the firm keeps, e.g. its clients and advocates, and into which circles is it invited, e.g. agents of influence, knowledge and power.

Brand purpose is the organising principle that directs everything a firm does. It is fundamental to differentiation and this is worth repeating – it establishes the binary relationship between ‘what a firm stands for’ (internally) and ‘what a firm is known for’ (externally).

Brand purpose provides seamless connectivity between the internal and external aspects of a firm, as one visionary professional services firm CEO we know puts it ‘by every person, every day, in every thing, for every client’. Brand purpose is generated from within where it is lived, and it is projected externally to stamp the firm’s differentiation on both its chosen client markets and chosen pool of future talent.

We like this profound pithy expression of the role of brand purpose: Through brand purpose a firm seeks to develop relationships with valued clients, thus creating competitive advantage and thereby maximising returns to the owners of the firm.3

But establishing brand purpose takes relentless investment and proof.


‘Brand purpose is the organising principle that directs everything a firm does.’

Why brand purpose matters

As global supply chains are relentlessly revolutionised by digitisation and disintermediation, the business community will continue to change how it sources services and products. Whether we like it or not, this trend has a direct bearing on a firm’s brand and the immediacy of what it evokes in clients for the following reasons:

> Values will be as, or even more, important as functional benefits

> A point of view will be as important as a point of difference

> Building and facilitating communities will be as important as broadcasting to mass audiences

> Meaningful brand actions will be paramount to building authentic, genuine relationships with clients and talent.4

And last, but by no means least, brand purpose matters to the owners of professional services firms. It is readily shown that a strong brand positively and incrementally affects the levels, timing, sustainability and riskiness of cash flow. Those with a financial bent will recognise these four factors are major drivers of net present value.5 Critically, clients are central to the sustainability and riskiness of cash flow – what more does leadership need to be convinced of than the centrality of brand purpose?

Brand purpose in the professions is different

Unlike other industries, the intense human factor of professional services firms makes management of brand purpose particularly challenging. The inextricable relationships between practitioner and client, and equity partner/director and staff member, have a direct bearing on a firm’s brand in the broadest sense. Much of what professional services firms produce is a function of partner led relationships – both internal and external. Which is one of the reasons why some firms devalue the need for brand purpose – believing partner-client relationships are sufficient. But the opposite is true, it is because of this dependence on relationship that brand purpose is essential. Brand purpose provides an essential complement to relationships. It is pervasive, continuous and – critically to a growing firm – it is sustaining irrespective of changes in, or the performance of, individual partners.


‘Brand purpose provides an essential complement to relationships.’

Why brand purpose is important now

For many (almost all?) professional services firms their brand purpose is subjugated by the power of individual equity partners/directors. All too often rain makers and others with positions of influence use their power both to protect their own position and direct the rest of their firm – a classic case of the tail wagging the dog. But the world has changed. There is a secular shift from a sellers’ to a buyers’ market6, competitive rivalry has never been so intense with globalising firms competing where they used to refer work, specialist firms (i.e. boutiques) with lower cost bases are skimming the market of high value work, and increasing lateral hiring is undermining historic relationships between firms and clients.7

A threat to professional services firm status quo is the rupturing of culture, reputation and relationships that have been forged by and are reliant on individual equity partners/directors. Brand purpose is an answer to this threat by creating sustainability of a firm’s differentiation in an increasingly competitive market, independent of any one or group of partners.

Brand purpose is an offensive strategy

Brand purpose is an offensive, not only a defensive strategy. Individual relationships alone, both internally and externally, are necessary but no longer sufficient to provide the cohesion needed for a firm to grow. Whether firms are following their clients offshore or seeking new clients in new markets, a strong and robust brand purpose that permeates the whole organisation should mean that ‘what the firm stands for’ (internally) and ‘what the firm is known for’ (externally) is consistently understood by every person in in every office and in every market.

As competitive rivalry increases and as firms continue to enter new markets the imperative to establish a sustainable identity and a point of differentiation has never been greater. It will be those firms that achieve this through robust brand purpose that will prevail and prosper; they will become the ‘front of mind’ firms of choice for both clients and talent.


‘Brand purpose is an offensive, not only a defensive strategy.’

The competitive advantage brand purpose brings

In addition to the advantages we have discussed relating to mitigating the risk of a heavy reliance on individual relationships and the fulcrum it provides for growth, brand purpose has its own suite of measurable benefits. These benefits have been researched in many industries8 and a priori we believe there is ample evidence they apply too in professional services firms.

The self-reinforcing nature of a well-executed brand purpose strategy cannot be understated: clarity and congruence of identity, consistency of behaviour, organisational presence and stature, demonstrable values – all adding up to a very powerful point of differentiation.

But the most powerful benefit of all from a strong brand purpose is necessarily subtle, and often overlooked by firms. Well-managed brand purpose demonstrates shared values with clients – a fundamental tenet of being a trusted advisor.


‘…all adding up to a very powerful point of differentiation’

Clients Talent

Enhances saliency and reputation Enhances organisational cohesion

Maintains and builds competitive advantage Improves staff discretionary effort and moral

Sustains premium pricing and margin Enhances ability to attract and retain talent

Creates differentiation Consolidates and aligns ways of operating and service levels

Provides a heuristic for quality and perceived value Improves service performance

Facilitates expansion and diversification into other areas (brand permission)

Brand purpose in practice

In practice brand purpose is typically executed through a wide range of programs and initiatives; these include:

> Client selection criteria – who are the ‘right’ clients for the firm and is the firm ‘right’ for these clients

> Client service standards – quality, consistency and specificity

> CRM approach – coordinated in a credible manner that is seamless in action, not just words

> CSR – evident, demonstrable, meaningful

> Thought leadership – focused, effective, truly innovative, relevant

> BD and pitching – professionalised, fully invested, imaginative, proactive integrated with intelligent in-bound marketing

> Employer brand – exemplary, treatment of staff mirrors treatment of clients, unlocks discretionary effort, work-life balance is lived

> Partner and staff selection and performance management criteria – reflecting the values of the firm, feedback given respectfully and continuously

> Training – management development, professional skills, technical skills

> Internal communications – consistent, inclusive, empowering

> PR and profiling of leaders at all levels – authentic, comprehensive, relevant, congruent channels

> Sponsorships – consistent with CSR, across all markets

> Digital face – reflective of contemporary standards and expectations

> Events – integrated and thought provoking pre-event, during event and post-event initiatives

> Industry programs – demonstration of leading expertise, combining practice groups and geographies with powerful testimonials.

As this list suggests, consistency, focus, relevance and respect are common themes. A brand purpose strategy is about embedding these values into a firm’s fabric and being.


‘Well-managed brand purpose demonstrates shared values with clients – a fundamental tenet of being a trusted advisor.’

In conclusion

In the words of that CEO: ‘Every person, every day, in every thing, for every client’. This is the promise and benefit of a well conceived and executed brand purpose.

To close we paraphrase David Aaker, greatest authority on brand, “It is a watershed moment when a CEO realizes you can only restructure so much in response to a changing environment–you also need to grow….”9 The key is brand purpose – the fulcrum on which all turns.


Authors

Warren Riddell Partner, Beaton Capital

[email protected] www.beatoncapital.com

George Beaton Executive Chairman, Beaton Research + Consulting

[email protected] www.beatonglobal.com

Ben Welsh Executive Creative Director, M&C Saatchi

[email protected] www.mcsaatchi.com

‘Brand purpose establishes the binary relationship between ‘what a firm stands for’ and ‘what a firm is known for’.’

1 The exceptions are the Big4 accounting firms, the major IT services providers (e.g. Accenture) and the major global strategy advisors (e.g. McKinsey).

2 We observe there’s a prevailing urban myth that suggests it is universally true that clients hire individuals, not firms. Our research suggests that while the personal brand remains important in some situations, the brand of firm (in the full sense of brand used in this paper) is becoming increasingly important – to the point that it dominates the client’s decisions.

3 We acknowledge this way of thinking about brands and brand purpose is based on the work and writing of Professor Peter Doyle in Value-based Marketing (2008) John Wiley & Sons, and Professor David Aaker in Building Strong Brands (2011) Free Press.

4 Michael E. Porter and Mark R. Kramer Creating Shared Value: Redefining Capitalism and the Role of the Corporation in Society in Harvard Business Review, January 2011.

5 Peter Doyle (2008) Value-based Marketing John Wiley & Sons pp52–54.

6 Warren Riddell (2014) Life Cycle Maturity and the Professions, Beaton Capital white paper at http:/www.beatoncapital.com/thought-leadership/white-papers/

7 George Beaton (2014) Why the economics of free agency should worry partners more at http://www.beatoncapital.com/blog

8 Analysis of case studies published in Advertising Works, the Institute of Practitioners in Advertising (2005–2012) by Richard Storey and others.

9 Frank Viviano interview with David A. Aaker (2014) The Plato and Newton of Branding: Berkeley’s David Aaker at http://alumni.berkeley.edu/california-magazine


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