Archive for November, 2015|Monthly archive page

The Coming Disruption in Professional Services

Is there a way for advisory service companies, which provide accountants, lawyers, consultants and marketing experts to other businesses, to adapt to changing demands?

Some pundits, such as the Harvard scholar Clayton Christensen, have questioned whether traditional consulting firms will get less work as more innovative business models emerge.

I think challenges bring opportunities and that firms which change with the times will remain relevant and flourish.

Like many other sectors, the advisory service industry has had its ups and downs. Its current slowdown may herald the start of a darker period thanks to three significant trends:

1. Democratization of information

Prior to the Internet, advisory service firms offered clients knowledge and insight, which they couldn’t find elsewhere. Now, a lot of information is available for free, or at low cost on the web, and that includes expertise through freelancer portals like guru.com. To find critical facts and figures on market trends, customer research, or industry costs, organizations no longer need to hire a traditional advisory firm.

2. Fewer intermediaries

It used to be that if you needed top talent to address a business issue, you paid the price and dealt with a blue chip firm or hired a leader in the field. Today, a manager has many more options, often with lower costs and faster turnarounds. The rise of the freelance and sharing economy allows companies to find talent and knowledge as needed on a global basis.

3. The rise of machine learning

Machine learning, also known as artificial intelligence, has the potential to disrupt many facets of the professional services industry. Using machines for rote and even complex tasks can reduce the need to hire firms to do mundane tasks, or for an expert’s analysis, judgment and time. For example, judges and lawyers are increasingly resolving small claims through “e-adjudication” as opposed to using the expensive and time-consuming legal system.

Power of disruption

Despite these disruptive forces, traditional firms aren’t going away any time soon: the fact that they have a wide-range of services and expertise to offer, the changing regulatory and technological environment and fickle customer needs will ensure it. However, they need to evolve if they want to stay relevant to their clients, outflank competitors and maintain juicy margins.

Terry Donnelly, chief marketing officer for Canada of New York-based MDC Partners Inc., an advertising and marketing company, agreed.

“The traditional ad agency model is dying,” Toronto-based Donnelly said. “Marketers want leading edge, unique and practical solutions that drive measurable results and provide a durable and sustaining competitive advantage. MDC Partners recognized the ‘new normal’ early on and built a unique portfolio of agencies that retains the visionary founders as partners, motivated to do great creative work, versus the staid multinational agencies that regularly lose their best people.”

Advisory service leaders who want to better assist their clients and avoid disruption might want to consider these strategies:

1. Become a virtual provider

Companies can leverage their strengths such as client relationships and a trusted brand to create their own, on-demand virtual offerings as a complement to their traditional business. This model could mean acting as an online skills, data or problem-solving hub, and delivering of the best services to suit a client’s needs.

2. Get more involved in execution

While people and expertise may be plentiful, that’s not the case for excellent execution. Advisory service firms can offer follow-through and even take on line responsibilities through a shared service model. This could go beyond being an outsourcer to actually embed adaptable and skilled individuals and tools directly into the client’s workflow process.

3. Focus on capability building, not projects

Advisory services should focus their work on addressing long-term projects and needs instead of short-term contracts that deal with a specific issue. They could help clients build strategic capabilities to ensure competitiveness. One way to do this is to train people to do the work themselves.

As an example, a lawyer would not just draw up a contract based on the client’s needs and then walk away, rather they could give the client tools to become somewhat proficient in their own right.

In addition, companies could provide regular advisory support to make sure long-term goals are met.

Mitchell Osak is managing director, strategic advisory services at Grant Thornton LLP.

Mitchell.Osak@ca.gt.com

Twitter.com/MitchellOsak

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Going global the smart way

Canadian companies need to look to global markets to drive growth, or even survive, in today’s economic climate.

The impetus for companies to go global is driven by a number of trends. The country’s market is relatively small, fragmented and grows slowly. Many firms face threats from emerging markets and rebounding American competitors, all spurred on by globalization and falling trade barriers and tariffs. At the same time, it’s never been a better time to export thanks to a weaker dollar, extensive ties between new Canadians and their home countries and the world-shrinking impact of technology.

How can companies prudently go global without incurring undue risk and blowing the budget? Consider this 5C strategy framework:

1. Country acumen

Companies need to deepen their analysis of target markets beyond counting the number of potential customers or identifying competitors. Businesses need a granular understanding of customer habits, distribution channels, pricing and regulations.
2. Competitiveness

Business will never take off if it’s not able to design and deliver a competitively priced product tailored to local needs. Expect to go through multiple executions to find the winning product and an approach to marketing it.

3. Connections

In many markets success hinges on finding and working with politically connected, reliable and experienced business partners. They’re vital to establishing initial credibility, overcoming hurdles and helping secure early customer acceptance.

4. Capital

Companies need not break the bank when exporting, especially when they’ve done their homework and have the right partners. However, managers shouldn’t be too frugal either. Business risks can increase when you under-spend in critical areas like customer care, logistics and local professional services.

5. Commitment

As with other major investments, having unrealistic short-term goals can lead to disappointment. Patience and fortitude are needed, particularly in the less developed markets where things that could go wrong often do.

Learn from others

Plenty of Canadian companies have successfully gone global and offer what they learned to those considering the exporting plunge. CSR Cosmetic Solutions, a medium-size firm based in Barrie, Ontario, is one such example.

CSR is a contract manufacturer competing in the global cosmetics and personal care product industry. It was established in 1943. Almost 80 per cent of the business is exported to Costa Rica, France, Germany and the U.S. among other countries. Here are a couple of top tips that helped them.

1. Raise your game

CSR believes companies have to be competitive on a global basis over the long term, regardless of fleeting advantages like favorable exchange rates. Businesses should also deliver superior products to compete against incumbents in their home markets.

CSR also raised its game by doing the right things, right. For example, they regularly aim to improve competitiveness by stripping out unnecessary costs, training employees and prudently leveraging new, productivity-enhancing technology and equipment.

2. Pick the spots that play to your strengths

CSR is very strategic in terms of which markets they target and how they penetrate them. They only choose markets where their corporate strengths – product innovation, organizational agility and delivering tailored solutions – can deliver a winning value proposition.

Furthermore, CSR minimizes risk by deeply understanding their target market including cultural norms, regulations and customer buying behavior. Finally, CSR strives to eliminate the client’s impression they are dealing with a foreign supplier. For example, in the U.S. the company uses American consultants for business development and account management. Marketing is tailored to reflect regional needs. And CSR’s logistics strategy is designed to virtually eliminate any border issues.

Steve Blanchet, CSR’s president and chief executive officer, says he tries to make its global trade seamless for the company and its customers.

“We continually review and understand the changing market conditions and regulations in our export markets,” Blanchet says.

There is no silver bullet strategy to winning in foreign markets. Instead, success is about keeping an eye on the fundamentals: being bold, doing your homework, demonstrating agility and focusing on continuous improvement from a cost and product perspective.

Mitchell Osak is the Managing Director, Strategic Advisory Services at Grant Thornton LLP, a leading Canadian advisory, tax and assurance firm. He can be reached at Mitchell.osak@ca.gt.com and on Twitter @MitchellOsak