Voiceover:
You’re listening to Rattle and Pedal, Divergent Thoughts on Marketing and Growing Professional Services Firms. Your hosts are Jason Mlicki and Jeff McKay.

Jason Mlicki:
Jeff, today we are going to talk about IC again, and I assume that means Ice Cold Coronas, right? No, no, no. That means intellectual capital. Last time we talked, we actually did a really good job of sort of making, or I think you did a really good job of making the case for intellectual capital and sort of it being the critical lever to brand relevance and then brand relevance being sort of maybe the most important objective of marketing in a professional services firm.

Jason Mlicki:
Today, I want to just go deeper into this intellectual capital framework that we’ve talked about. What I really want to do is just kind of dial in on the strategy setting. When you’re developing an intellectual capital strategy, what does that mean? What does good look like? Before we go there, what I’d like you to do is help us just think about how does intellectual capital as a strategy, strategy for IC, how does it fit into other forms of strategy? You know what I mean? The word strategy has become so watered down, but there are so many different ways you can think about strategy. How does it fit into the universe of business strategy, brand strategy, marketing strategy, thought leadership strategy. What’s the difference here? Help us kind of make sense of that.

Jeff McKay:
Wow. You start off with, again, what’s the meaning of life?

Jason Mlicki:
Well, crack open your quota and go, man.

Jeff McKay:
Well, let me start by saying, I agree with you. Strategy is definitely a watered-down word and everybody wants to be strategic. Right? Strategy, for me, is simply the process of making hard choices so that you can allocate limited resources to accomplish some outcome. It’s hard because there are opportunity costs associated with those choices. In professional services, because of the political environment, making those choices is even harder. You really can’t be effective in professional services or anywhere else for that matter if you’re not making choices to do A and not B. At its highest level, that’s strategy for me. Whether that’s a business strategy, or marketing strategy, or sales strategy, or as we’re talking about today, intellectual capital, you got to make some choices so that you can allocate resources.

Jason Mlicki:
Well, I was going to ask is intellectual capital tied at the hip with a firm’s business strategy then? Is it just that simple that directionally, the firm is going here, these are the markets where we want to be relevant. These are the buyers with which we want to be relevant. Hence, these are the issues we want to own and intellectual capital needs to solve for those needs. Is that essentially what we’re talking about, or am I mislabeling it here?

Jeff McKay:
Once again, the astute Jason Mlicki nails it. I think intellectual capital is at the heart of a firm. These strategies are not linear. They’re all interrelated. The intellectual capital strategy should be informing, influencing, I would even say driving to some degree, the business strategy. Then, the business strategy focuses the intellectual capital strategy. Because, if we take a step back and answer the question, “What is intellectual capital?” To me, intellectual capital is simply the intangible assets, the revenue-generating and differentiating attributes processes and thinking of a firm. So much of that is driven by the people in the firm, the processes of recruiting and training and developing the people that we talked about in our last podcast around that performance envelope. Essentially, intellectual capital is the commercialization of those assets to produce revenue. I don’t think most professional services firms think of intellectual capital in that way.

Jeff McKay:
Most professional services firms think our intellectual capital is thought leadership. You’re saying “What’s our thought leadership strategy?” I think sometimes those words can be used interchangeably, but carefully, because thought leadership any more seems to be more tied to content. Content is about lead generation, and maybe demand generation, but lead generation, getting eyeballs, getting interactions, those types of things. That’s only one dimension of intellectual capital in my mind. It’s why most firms underperform is they think about intellectual capital simply as thought leadership and white papers to do promotion. I have a much broader definition of what intellectual capital is and the thought leadership and content marketing is just very limiting. We’ve talked about this on other podcasts, that it’s not really what’s going to differentiate you and give you competitive advantage if you’re just out there sharing a latest partner’s thoughts.

Jason Mlicki:
It seems to me intellectual capital sits at the heart of how a firm solves for a client’s business problem in a better way than their current solution. Either a more efficient way or more effective way, a less costly way. Intellectual capital is all about that. It’s all about the core fundamental business problems you’re solving for and designing a better mouse trap, designing a better solution to those problems. It seems to me that the intellectual capital agenda needs to account for not only what are those main issues that we’re solving for as a company, firm-wide we are solving for these macro client issues that we can take stake ownership on over the course of 5 or 10 years, because those are problems that are evergreen, that aren’t going to go away and they’re problems that are evolving and changing and they require solutions that evolve and change and improve over time.

Jason Mlicki:
It seems to me, it has to be a function of the problems we’re solving for and the process by which we will use to develop those solutions. That process should yield both thought leadership content, new solution offerings, maybe new delivery models, maybe all three of those are extensions of the intellectual capital strategy. That’s kind of how I think about it. Is that pretty close to what you’re thinking, or am I missing something?

Jeff McKay:
No, I think that’s an excellent way to articulate it. You said the problems we solve, which is one way of looking at it. I think it’s a really good way of looking at it. I might just tweak it a little and say, what’s the value we create and the value that we create for whom. My mantra is, and we talked about this last week, is we need to be speaking to people that value the value that we provide. If a firm has a certain, let’s call it core capabilities. Right? That intangible human capital, that thinking, the processes that enable it to create value. Every firm is different in this, because to a large degree, their histories and their culture are different. This, to me, is kind of the magic sauce of really differentiated brands. We talked about that last week. How I show up that’s simpatico and how I connect with that person.

Jeff McKay:
Well, a firm is going to, should, build it’s positioning and value proposition around that and around its ideal client. Intellectual capital, to me, has two dimensions, demand creation and supply creation. Traditionally, most firms think of demand creation. Right? Building market awareness, Big B Brand, as we talked about. The supply creation is every bit as important. That’s that performance envelope of how are we going to create an ever-changing, ever-expanding kind of stair-step brand relevance and value to our ideal client? Because the ideal client’s going to change, the core capabilities are going to evolve, and the intellectual capital agenda needs to be leading and driving that. The supply side is around understanding the market and business intelligence. Normally, I think that sits outside of marketing and the “intellectual capital or thought leadership agenda” it’s seen as something different, but it very much should be a part of this.

Jeff McKay:
The solution development really should be the result of that business intelligence and the client experience and an understanding of the buyer’s journey and where there’s friction in getting to the value that the client wants. Then, that really, I think, leads to what you just said all the way to service delivery. The intellectual capital agenda needs to drive, not from just Big B and have some magic happen at the point of client service delivery, but it needs to be a seamlessly connected and driven all the way down to the value is delivered. On the demand side, it’s just as important to take it all the way down to how does sales use this intellectual capital to actually close business? I think you have some great thinking about that out of your profiting from thought leadership and what the best firms do around that. But, firms can’t just think of demand gen and media relation hits, and let’s put a white paper out there. It has to all be linked seamlessly to the point where the value is ultimately delivered.

Jason Mlicki:
Yeah, it’s really interesting. I mean, we’ve talked about some of these disconnects and I think I shared this story once about an RIT firm and I was having a conversation with our client lead about the fact that another IT firm had come in and sort of identified some potential cybersecurity threats. I asked our client lead, “How come we’ve never had a conversation about cybersecurity in all of the years we’ve worked together as managed services provider?” Simultaneously, you’ve got the CEO of the firm publishing a lot of content around left thinking on LinkedIn around cybersecurity, so there’s just this kind of this massive disconnect between sort of the marketplace conversations the CEO of the firm is having and then the client service delivery conversations that the client service team was having. It’s sort of that perfect example of disconnect between demand creation and supply creation, right?

Jason Mlicki:
There’s nothing on the backside to kind of close the deal or deliver the service unless it was prompted by the client. To me, it was like an example of just that gap between using thought leadership to advance the conversations your client-facing personnel have every day or your business development people have every day. I actually think it’s really interesting, you used the phrase demand and supply and how you talked a lot in that kind of sequence about supply being about market intelligence and being about, I think, processes and people. Right? It comes down to do you have processes in place that would enable people to come into the organization and deliver against the promise that intellectual capital made in the first place on the demand side? Right?

Jeff McKay:
Exactly.

Jason Mlicki:
I guess at the end of the day, let me ask this. What does a good intellectual capital strategy look like? What goes into it? What are the parts?

Jeff McKay:
The parts are relatively straightforward. Where firms go astray is what’s the outcome or the result we’re looking to deliver for that. To me, it’s, and this is very Drucker-ish, who said, “An organization only has two functions, right, innovation and marketing.” The purpose of marketing is to understand the customer so well that the product sells itself. Intellectual capital, to me, its purpose is to understand the customer, in our case clients, so well that we can develop the solutions that essentially sell themselves. That’s hyperbole, but that’s what we’re trying to do. The components of intellectual capital are really about the tools that more deeply understand your market opportunities. Right? In the short term, that those tools are always looking at your ideal client. The ideal client is the client that values the value that you provide. They share the same worldview as you. They’re looking for the same results that you can deliver, and they’re willing to pay for that expertise to get it done.

Jeff McKay:
We’ve talked about the ideal client, but that gets back to how we started this conversation. You have to focus somewhere, right? The focus begins on a deeper understanding of your ideal client. That’s number one. Number two is understanding your core capabilities and what, how they contribute to the value that that ideal client understands. This is the tension that we talked about last week around the performance envelope. You say this all the time, that professional services people fall in love with their solutions. Right? Solution, solution, solution, solution. Right? Hammer looking for a nail. You have to break that mold and the intellectual capital agenda should break that mold and focus on the different types of value.

Jeff McKay:
To keep it simple for me and my clients, I think of value in just three buckets. Growth, efficiency, or financial strength and performance. That’s what clients are buying from professional services. There are subsets of those, but your intellectual capital should be exploring those areas and looking for the white space to add value around issues that your clients may not know they have, and that provide the amount of growth your firm needs to, going back to our earlier conversation, achieve the business strategy goals. As we said, marketing’s job is to take that intellectual capital and build the relevance of the firm in order to have permission to play and deliver the value in those markets.

Jeff McKay:
The components, I would look at, and Bobby Day, I think, has done some great thinking around this. It’s business intelligence. Right? What’s the competitive landscape? What new technologies are out there? What kind of economic conditions and things are impacting? Pick your strategy model, right? To get a deeper understanding of the markets, be thinking constantly about how to better deliver solutions and be easy to do business with. Solutions need to be evolving. Then, because professional services firms, I mean, we’ve gotten to a point in maturity in this industry, David Ryan says this a lot, that what it takes to differentiate firms has gotten so narrow that we’re operating at the edge of these one-on-one interactions. A very intense focus on what does service delivery look like.

Jeff McKay:
I think those are the components of the supply side. Then, on the demand side, how do you take these ideas and make them understandable all the way down to the salespeople? That doesn’t get done. I’ve had so many conversations this year of marketers and salespeople saying this is just, I mean, that sounds great, but it doesn’t help me when I’m in with a client trying to sell. I think the intellectual capital component is how do you make enable sales with this. Boy, we’re going to have to go back and edit this podcast because I’ve just been rambling.

Voiceover:
You’re listening to Rattle and Pedal, Divergent Thoughts on Growing Your Professional Services Firm. Your hosts are Jason Milicky, principal of Rattleback the marketing agency for professional services firms, and Jeff McKay, former CMO and founder of strategy consultancy Prudent Pedal. If you find this podcast helpful, please help us by telling a friend and rating us on iTunes. Thank you. Now, back to Jason and Jeff.

Jason Mlicki:
Let’s close on this. We have a couple of minutes left and I guess let’s just take the inverse of this for listeners. What does a bad intellectual capital strategy look like? Sometimes it’s hard to kind of wrap your head around what good looks like, but it’s usually easy to wrap your head around what bad looks like. Kind of like that old saying drives every agency crazy when the client says, “Well, I’m not sure what I’m looking for, but I know what I’m not looking for.” And they give you this list of five things they don’t like. Let’s get at that. What does a bad intellectual capital strategy look like, other than an ice-cold Corona? It looks like that, that’s really bad. Right?

Jeff McKay:
Well, what do you think it looks like? You’ve worked with a lot of firms.

Jason Mlicki:
Too broad would be one issue, if there’s no clarity in the ideal client. In fact, one of the pushbacks I’ve gotten with firms through the years when you bring up the notion of an ideal client is they’ll say, “Well, we have too many, we have multiple clients, multiple ideal clients.” I say, “Really? Do you really? Or do you just have one ideal client and seven not so quite as ideal clients.” Right? Again, you’re kind of comment of limit the focus. I think sometimes it’s just too broad.

Jason Mlicki:
The other piece I would say is it’s usually, they don’t tackle the demand and supply side like you said. Frequently, they’re focused on the issues that they want to convene thought leadership around, but no one’s talking about how that stuff is going to be used to actually deliver service better. Or, if there’s research underlying it, there’s all this research happening, but no one’s looking at how to use the research to improve the way they work with clients at all. The research is just being used to draw out research-based content. There’s a sort of big missed opportunity there. They’re only looking at half the equation, as you said, demand only not supply.

Jeff McKay:
As a result of that, Jason, when they do research, the structure of the research is not as strong as it could be, because the research, the questions, the focus, even the approaches and sources of that information differ by what you’re trying to produce. It’s not like you say, “Let’s go ask these questions and hope some answer cascades out of them.” You have to have some hypothesis and go out and test it. The research needs to have those goals and objectives in common. Most research is like, “Hey, let’s take this data set. Let’s see what the trends are. Or, we can just put out some simple facts and figures. Firms are doing X this way. Other firms are doing Y that way.” It’s not very thought provoking. It’s just reporting.

Jason Mlicki:
A simple way to look at this is, this is how we’ve approached our research at Profiting From Thought Leadership through the years is that it’s a separation between the what and the how. Most marketing driven research, content driven research focuses on the what, what are you doing, what activities, what tasks, and not the how. The how being well, how are you solving for that problem? How are you organizing around solving for that problem? I’ll just give a real simple example. Bob and I are in the midst of trying to stand up a research study around data visualization. It’s a funded research study for sort of large producers of thought leadership that are interested in understanding how to visualize data better. It’s pretty easy to fashion a research study that looks at the what around data visualization.

Jason Mlicki:
What does good look like? What do the best organizations at data visualization, what are some examples of great data visualization? That’s not that hard. It’s even fairly easy to describe how good data visualization is done. Understanding how an organization builds capabilities around data visualization and makes data visualization a competency across an editorial function is hard. That’s sort of where the research needs to go for it to be of value, right? It has to answer those how questions that most marketing research doesn’t answer. It only answers to what questions. To your point, I think bad IC strategy kind of doesn’t get over that line. It Just focuses on well, what’s happening. It kind of ends up being a survey of the market landscape. Now you know there are more private equity deals done in the fourth quarter of 2020 than there were in the second quarter of 2020. Really? Shocking. Right? That’s not really hard to figure out.

Jason Mlicki:
How are deals getting done in a pandemic? That’s a different story. That’s interesting to know. Right? It’s sort of that separation point, I think, that makes a big difference. Other elements, I guess I would throw a third element in there of what makes for bad IC strategy is when it stops at marketing. I’ll be the first to admit that I’ve made this mistake time and again, which is that you’re focused so much on the thought leadership and the content and then the delivery of that content in the marketplace to create demand that you don’t actually take it one step further to cut across the three elements of the organization, as you always talk. That kind of marketing sales and client service delivery, that it’s all one unified experience for the client, which is ultimately the IC strategy needs to go all the way across that.

Jason Mlicki:
Ultimately, which is why we’re talking about this right now, because I think that’s the magic of the issues, the solutions framework that you, Jeff, use in that it doesn’t stop short at marketing. It extends through sales and through client service delivery. On that note, I am going to wrap us because that is our topic for next time, which is we’ve kicked the tires on intellectual capital, why it matters, we’ve beat up what good strategy looks like, and really what bad strategy looks like. Next time, I really want to get inside your head in terms of how do we develop one? What does the process look like? Again, this is the hard part. Right? How do you do this? It’s one thing to say, “This is what good looks like and what bad looks like.” It’s another thing to say. “Here’s how you actually get at good.” I want you to walk us through kind of your process for that, because I think it’s really compelling.

Jeff McKay:
Good. That should be fun. A third episode on the meaning of life.

Jason Mlicki:
You got it. All right, man. I’ll talk to you next week.

Jeff McKay:
See you, buddy.

Voiceover:
Thank you for listening to Rattle and Pedal, Divergent Thoughts on Marketing and Growing Professional Services Firms. Find content related to this episode at Rattleandpedal.com. Rattle and Pedal is also available on iTunes and Stitcher.