Transcript

This episode is the first in a series on practices and services inside of professional services firms. In this first episode, Jason and Jeff discuss the mistakes firms make when they go about launching a new service. The next episode covers how to productize a service, and last episode covers how to put a practice to rest.

To start this episode, Jeff shares a common scenario where a firm has a great client experience and decides to launch a new service based solely on this. They run into mistake after mistake as they gear up to launch the new service, and in the end, the service ends up failing. But the firm isn’t sure where they went wrong.

Throughout the episode, Jason and Jeff unpack where the firm went wrong and it ultimately leads back to a lack of due diligence. Jason and Jeff share what proper due diligence looks like and how it can save a firm from wasting time, energy and money. They also share their opinions on who in the firm is responsible for doing the due diligence—firm leadership or marketing.

Resources mentioned in this episode:
Comedy & Tragedy: Leveraging 4 More Story Plots in Your Marketing Activities
6 Tips for Assessing Growth Opportunities in Professional Services Firms
Why Your Marketer Doesn’t Understand Your Firm’s Business

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Transcript

Jason Mlicki: So Jeff, I want to start with some confusion that you’ve given me in the last ten minutes. I came into this podcast all prepared to talk about launching a new practice. And then you started talking, and then we centered in on the fact that we really weren’t sure what we were talking about, whether we were talking about launching a practice, launching a product, productizing a service, launching a service, launching a solution, so that’s where I am. I don’t really know what we’re talking about at all.

Jeff McKay: That should be a comfortable place for you.

Jason Mlicki: Yeah, I’m used to that. I always find my way out though.

Jeff McKay: With a little help from a friend.

Jason Mlicki: Yeah, do you know one?

Jeff McKay: I do. That’s why I’m here. As we start talking about this, I don’t think we’re unique. I think there is a lot of confusion in professional services about what is this? Is this a capability? Is this a solution? Is this a practice? Is this a service? Is this a product?

Jason Mlicki: Is this a discipline?

Jeff McKay: Yeah, yeah, yeah. Or is this just some model or what is it? And there is a lot of time, money, and resource wasted in developing and launching products, solutions, offerings, services, capabilities, whatever you call it.

Jason Mlicki: Yeah.

Jeff McKay: And it’s really important, particularly, I think, as a partner whose money it is, as a practice leader who’s making investments for growth, and marketers who are trying to manage all this stuff, to get your arms around it. And it’s hard. So hopefully we’ll confuse people a little, or they’ll say, “Yeah, that’s exactly what I thought I thought.” And then we’re going to help them unwind all this confusion.

Jason Mlicki: Sounds like the comedic archetype we described in one of our storytelling podcasts. Let’s hope it doesn’t end up being a comedy at the end where everybody is just imaging Will Ferrell running around like an idiot.

Jeff McKay: No, I totally agree. I believe this is your refrain which is just how often do firms launch new services predicated on really just one client experience? So they do this thing with this client. It goes exceptionally well, and then they say, “Oh my gosh. We should build a whole service around that, and let’s go launch it,” without necessarily doing a whole lot of due diligence around whether or not this is something that, A, the market needs, B, the market doesn’t already have in spades, and C, does the firm have any relevance in launching something like this beyond where it just operated?

Jason Mlicki: I think next to cross-selling, productizing some client engagement like you just described it is the holy grail for professional services firms.

Jeff McKay: And it makes perfect sense on why they want to do it because it gives them scale. It allows them to package repetitive processes, increase profitability because you’re repeating those processes. You’re not learning from scratch. And what they really want is just a fast path to growth. I get why they want to do it. It makes perfect sense. It makes perfect sense. But when they say do it, here’s the typical process in my experience, and you tell me if you’ve ever had to be a part of this. You probably haven’t because you’re on the agency side. You haven’t been in there making the sausage on the-

Jason Mlicki: Usually what happens is is they’re trying to make the sausage and the sausage is toxic and someone is going to die a painful death, and so then they call us to try to turn it into actually something that is market ready.

Jeff McKay: Yeah, that’s edible. That will pass FDA approval.

Jason Mlicki: Yes, exactly.

Jeff McKay: So here’s a typical process. I’ve seen it, and I’ve seen it in every firm, every firm. You’ll get some consultant who does what you just said, “Oh, gosh, we just had this engagement. It was so good. Our client is so happy, and they think we should sell this to everybody. And we’re going to sell it to everybody.” So out of the gate, what do consultants normally do? They name it. They say, “We’re going to call this the name your acronym, the ART, the STEM, whatever, they’re going to try to get some silly name that’s an acronym that encapsulates the value of this thing.

Then they immediately jump to packaging it. So they’re going to reach out to marketing. And they’re going to say, “You got to package this for it. You got to brand it. It needs a name. It needs a logo. It’s looking…”

Jason Mlicki: So it needs another name? So there’s an acronym that defines the methodology, but then the service itself needs a name that lays on top of that, right?

Jeff McKay: Yes. Who knows?

Jason Mlicki: Or vice versa.

Jeff McKay: Or vice versa, right. And then they say, “Oh, we got ahead of ourselves. This is going to be such a hit. We need to go trademark it. We got to trademark it. So let’s protect it because this name is so good, we got to protect it. So let’s go protect it.” And then they want to market it. And when they say, “Market it,” what they really want to do is they’re like, “Okay, we need a brochure. We’re going to need a press release to launch this thing. And people are going to need a place to go. We can’t have them go to our website. We’re going to need our own website and our own vanity URL with our web address. And then we’re going to need to have a tour. We need to visit every office and talk about this product. And we need seminars. So let’s get some seminars out there, or webinars, and let’s get it out there ASAP.”

Then what they do is they say to all the other consultants, “This is the greatest product ever. You need to go out and sell it to your clients or give us your clients’ names, and we’ll go sell it to them because they need this.” And then-

Jason Mlicki: So the funny thing is I’m sensing a lot of facetiousness in your comments here. At this point, we’re in it for about 100 grand, 150 grand, 200 grand, I don’t know. But we’re in it for a pretty big number. And we’ve yet to do any real marketplace validation around is there a market for this thing? Is there a value proposition? Are there any competing things like it that are already there that we should be aware of? Do we have clarity on who the actual client even is for this thing that we have? And then I would even go upstream from that, culturally does it even make sense for us to be pushing product the way that you’re describing? Because what I love about the story you just told is like it’s almost implying we’re going to ram this product down your throat without ever even thinking about whether you have a problem that this product is designed to solve. And firms do that. They do that a lot.

Jeff McKay: Of course the market needs it because they had one successful client engagement.

Jason Mlicki: That’s plenty right there.

Jeff McKay: The market bought it, right? And you just accurately described the final step in the typical process. Nobody buys it. Nobody wants to go out and sell it because you only have one client that you’ve sold to, so nobody wants to take you into their client. And maybe they do take you into their client and that client is like, “Well, that doesn’t really apply to us,” or, “We don’t have budget. It’s not a high priority for us,” whatever the case maybe be.

Jason Mlicki: Sounds interesting, but-

Jeff McKay: Yeah, no thank you. And then it just falls short, and then you start over. And you’re like, okay, where did we go wrong? And you just perfectly described where you went wrong. You went on the assumption that because one client bought it that there was this huge demand for it.

Jason Mlicki: Giant market swell waiting to explode and we’re on the cusp of it, right?

Jeff McKay: Exactly, exactly.

Jason Mlicki: The interesting thing about the whole story, I love the story he just told, the thing I find interesting about it is to me it always comes back to what is the fundamental problem the client has that we’re trying to solve with this solution? And what’s shocking to me is how frequently firms can’t answer that question very well for services and solutions they already have that are selling quite well. They might have their whole practice is built around certain disciplines that are selling millions and millions of dollars of fees, but they’re really not clear on what the core problem is that it’s designed for.

And I think it gets heightened with a new service launch because as you’ve said many times you’re selling air here. You’re identifying a marketplace need. And you think you’ve got a solution to solve it because you’ve done it once or twice. But now it’s heightened because you really got to put a laser focus on this because you don’t have all the backing of scale that you have in the other services you’re already providing.

Jeff McKay: Exactly, exactly. There’s no due diligence in it. Consultants carry the weight. The firm wants growth. And gosh, marketers love to brand stuff. And who doesn’t want to put a product launch on their resume? It’s a lot of fun. But they skip over the big step of doing due diligence. And I wrote a blog post on due diligence not too long ago. And they just take as due diligence that one client engagement and it just doesn’t make sense.

Jason Mlicki: Let’s lean into due diligence briefly. What does due diligence look like? What does good due diligence look like? I’ve already tossed some of them out there, right? Some of it is understanding the alternative options in the marketplace and then the relationship of our service relative to theirs. I think another layer of it is is there value in integration? Meaning that if we’re going to launch this new solution and it’s going into a space we’ve not been prior, is there value in the relationship of this new solution to the existing things we already do? Meaning if those things combine is it going to create more value for the client than if they were being bought separately as maybe they are now? What are the substitutes, right? What are the substitutes that are out there of other ways clients are solving this particular problem that are either inferior or maybe better and we’re not aware of them yet.

I also lumped in there this notion of what’s the point-of-view? Meaning what is the market lacking that we think is so broken that we need to launch this new thing? So that’s the first four or five things. What else comes to mind?

Jeff McKay: I think you nailed a lot of them. I might add, and you kind of hinted at this, how does it dovetail with our current business strategy? Where does it fit into that? What are the key assumptions that we’re making around this?

Jason Mlicki: That’s a good one.

Jeff McKay: Because really you know what due diligence main intent is, and this is so counterintuitive to professional services in the scenario that we described at the start of this, due diligence should disprove the viability of this. It should say, “This will never launch for these reasons.” And to beat up the solution in a way that makes it better in the end, but most firms don’t want to beat up somebody else’s solution. In that scenario that I described, consultants normally say, “I’ve already shown you that I can win business with this approach.”

Jason Mlicki: I already did it. And I had nothing. I didn’t have a name. I didn’t have a methodology. I had nothing. I sold air out of a bag.

Jeff McKay: Right. And nobody knows my clients better than I do, and I know my clients will buy this. And that’s normally what suffices as due diligence. And it leads to more failures. And maybe they’re not flame outs because in professional services firms, things like this tend to kind of morph. “Well, we did do that, but then we called it this. And then we moved it to that. Well, then we moved on into this market,” or something, and it kind of just goes away and all you’re left with is some trademark name in your brand portfolio that a couple of years from now a new marketing person is going to say, “What is this? Why are we maintaining the trademark on this?”

Jason Mlicki: Why do we own this? What are we doing with this? What are we doing? Yeah.

Jason Mlicki: I was thinking about, so a friend of mine from business school is a venture capitalist, and he has been for, I don’t know, almost 20 years. And I love talking to him about working in the VC space and what they go through. And what I find really fascinating is that one of his partners is kind of the euphoria guy. So every time a deal comes forward, he gets super excited about the market potential. He reads the story of what the entrepreneurs are trying to create and he falls in love with it and he’s all excited.

And my friend is really the due diligence guy. And so his job is basically to shoot everything down. So he’ll look at the business plan. He’ll come up with all of the faulty assumptions and identify all of the reasons this is going to fall flat on its face. And so he feels like his job is to constantly pull back the euphoria. Pull back everyone is so excited about this, and he has to ground them and say, “Here’s all the pitfalls that we’re going to fall into here. Do we really want to fund this or not?”

And I would argue in this category of launching a new service, firms need that voice. They need that person whose job it is to basically poke holes at the model over and over again before they start putting real heavy money behind something. And is that person in marketing? Are they a firm leader? A practice leader? I don’t know that even really matters. Does it matter?

Jeff McKay: It does matter. You touched on two very important points there, and I highlight these in the post I did. The first one is euphoria. These become emotional decisions.

Jason Mlicki: Right, that makes sense.

Jeff McKay: It’s my baby, you know? This is my baby and I’m going to launch it.

Jason Mlicki: We don’t have time for due diligence, Jeff. This is going to be so huge. We’re going to be on the front of it. We’ve got to act now or we’re going to be on the outside looking in. We’re going to miss the market opportunity. That’s happening in those VC firms all the time, and sometimes they fall victim to that. The example was one of the books where Horowitz, I can’t think of the whole firm, but they invest in Google Glass and they’re all about Google Glass. And as we all know, Google Glass didn’t pan out that well. There was a lot of euphoria around that stuff, and sometimes they get caught up in the euphoria and they miss the mark of what is this supposed to do? Anyway, move on, sorry.

Jeff McKay: It gets that way in professional services firms because most of the people in these firms are very successful people. They don’t fail very often. They are valedictorians or quarterbacks or whatever coming up through the system, the education system. They’re not used to failing. They’re high achievers. And to question their decision making ability around a service or a solution, it’s a personal affront. It’s like, “Hey, have I not delivered year after year growth in my practice? How could you question my judgment around this?” And that suffices. I think a situation like that is even more predominant, and this is the second point you made, about who should be asking the questions and where?

The larger the firm you’re in, I think the chances of you launching a successful product are less because you’re farther removed from the scrutinization of the top business leaders. If you’re in a small firm, leadership team’s going to beat up every possible solution fairly well. But if you’re a partner developing a solution within a practice within a geography and you’re three or four layers removed from top management, you can get away with a lot of stuff that you can’t in smaller firms. Top management should be the people scrutinizing this. I don’t know that most marketers would have the credibility or the gravitas to challenge it and knock it down. But there has to be-

Jason Mlicki: Shouldn’t they though? One of the fundamental flaws of professional services marketing in my opinion, I’ve said this before, is that it’s upside down. Meaning that in any great company, the marketing leadership is the one that’s identifying the marketplace opportunity and making the hard decisions around what to fund and what to kill. That’s really the case in professional services firms. To me, that’s the big opportunity for firms is to really become a marketing organization where the marketer has both the gravitas and the ability to step up, ask those hard questions, and say, “No, we’re not doing this, and here’s why.”

And if I’m the firm leadership, that’s what I believe I should be wanting out of my marketing function even though I’m probably not getting it right now.

Jeff McKay: Well, if you’re in a growth school, that’s what you want. If you’re in a productivity school, you want them to just brand it and trademark it and package it.

Jason Mlicki: Yeah, just do what I told you to do.

Jeff McKay: Right. And if marketing doesn’t have the ability to say, “No,” it should at least have the chops to facilitate the conversation for the people that can say, “No,” to do the due diligence. Because if your heart’s in the right place, and I think most marketers’ probably would be, is you’re beating it up in order to make it better, to improve the chances of its success. Because by saying, “This is a threat. This is a threat. This is a threat,” you can then engineer that threat out or at least minimize that threat.

But most marketers, they don’t have the business… And we talked about this in Why Your Marketer Doesn’t Understand Your Business, that they either don’t have the business acumen, they don’t have the operational experience, they don’t have the confidence, or they haven’t earned the right to give that type of feedback to people. But if anyone is going to understand how to launch a new product service solution offering, it should be your marketing person.

Jason Mlicki: Yeah. What are we talking about here? We’re talking about launching a new service right? Let’s be clear on that before we go any further along. No, I totally agree. And it frustrates me that marketers infrequently are either at the place to be that due diligence voice or are not seen as the people to be that voice.

Jeff McKay: We’re going to change that because we’re going to have a couple of more podcasts on how to do this and how to do it right.

Jason Mlicki: Okay, so we got to probably look at wrapping up this episode, but I want to just summarize what we’ve talked about. When we went into this conversation, we both agreed that there was a lot of fuzziness and noise around what is this? Launching a practice, a product, a service. I would say we settled in on really highlighting the typical mistakes firms make when they launch a new service. And as we look at this in a series, the ones that we’re going to do next are going to be one on killing a practice, so how you put a practice to rest, and one on productizing a service. So how do you take a service and turn them into a real tangible product for clients? That sound good to you?

Jeff McKay: I like it. I think if our listeners can take what we’re going to share with them, if they’re not already doing it, this is going to add a lot of value and credibility to their role in their firm.

Jason Mlicki: All right, let’s do it. Talk to you next week.

Jeff McKay: See you, buddy.

Jason Mlicki: See you.