Collaboration will unlock innovation and new growth but is culturally challenging

In my article for Alternative Insights I opened by saying that collaboration is perhaps not a term that sits well with professional advisors who have historically built their entire business model and reputations around being the expert and getting it right first time.

While many truly customer-facing organisations have long seen the value of collaboration, both internally, and externally with partners and customers, it is perhaps one of many areas where professional services are playing catch up. In this article I will explore some of the thoughts from a range of contributors across the different sectors and seek to draw out some practical steps.

As I said in an earlier piece, perhaps the biggest challenge in adopting a more collaborative approach is that the majority of firms, when asked about their innovation goals, say that they are around delivering better client outputs, and yet at the same time most acknowledge that the majority of their innovation activity is around internal efficiency. As I wrote about in my earlier article for Alternative Insights, this disconnect in goals and actions risks leading to an “authenticity” challenge for firms. One reason I pose for this disconnect is the related statistic that 85% of people surveyed felt that not enough focus is currently on the client and transforming the outcome they receive. When we explored in more detail the reason for this, what was most surprising was that 77% felt that they were not collaborating more for fear of upsetting the status quo. 

This fear of upsetting the status quo is perhaps in some ways a false view that needs challenging. The fact is that there are many who are actively seeking to upset the status quo, and if firms don’t rapidly recognise this then they will face real survival challenges. Underpinning the reason for this fear of engaging in new more uncertain approaches is perhaps the statistic that 89% of firms felt that they were too risk-averse to really innovate in a revolutionary rather than an evolutionary way.

As I said before, the picture this paints is of a client model that currently isn’t broken enough to take many firms out of the comfort zones in how they work with clients. 

Culture is everything

Although most people buy into the benefits of collaboration, it will never really happen unless it is at the heart of the firm’s culture. Genuine collaboration is hard as it is uncomfortable, uncertain and needs skills that are often quite different from those that many in the professions have traditionally needed. In an excellent article from Rae Digby-Morgan of Wilson Fletcher she quite rightly points out that: 

“The term ‘collaboration’ is in danger of overuse in the legal sector - and yet few clients or lawyers can point to collaborative efforts that have changed anything to lasting effect….

It’s no surprise that a culture of collaboration in a firm benefits not only client relationships, but also outcomes, services and internal processes, yet there are few examples in the legal sector of a full culture shift to this new way of working. By adopting this approach as a competitive differentiator, might we see legal market disruption coming not from new tech or business models, but from new mindsets and skills within traditional firms?”

Part of the challenge for developing a culture of collaboration is not just the time it takes but also knowing how to effectively incentivise. As Rachel Barnes of HSF says in her article, “Collaboration takes time, commitment, patience and prioritisation. From a law firm and fee earner perspective the prioritisation of time to collaborate is one of the biggest challenges.” She goes on to say, “Over the past few years, law firms have launched various initiatives to give staff time: innovation hours, or investment hours, to have the time and space to work on projects; all with varying degrees of success.”

Perhaps the biggest cultural challenge though is embracing the unknown and engaging with clients. As Dave Eagle of Royds Withy King said in his article,

“In legal we are often guilty of thinking that we are the experts and know what the client needs. However unless we truly collaborate with them how can we possibly know this?”

He also raises a very valid point around the need to adapt culturally to taking along non lawyers to meet with the clients, “Having innovation involved from the outset means the business support teams aren't blindsided by a legal team promising functionality that cannot be delivered. Being able to gather specific requirements from the client during a pitch is invaluable.”

Collaborating with clients

It seems fairly obvious that focusing more on customer pain points and collaborating on solving these would be valued by the customer. Perhaps part of the challenge with collaboration, beyond risk aversion, is also a lack of experience in the way in which to structure this collaboration. In an article I wrote on the related innovation survey conducted by Spiranti I said that what struck me most was that only 16% of the 100+ professional services firms felt that they were achieving significant revenue growth as a result of their innovation efforts. There are a great many elements to consider but crucially over half of those surveyed said they had no formal innovation process. Without a process to engage clients in collaboration it would be impossible for any product business to survive.

The study also showed that only a relatively small percentage – 26% – were using established innovation techniques such as design thinking.

It would seem that professional services firms have a lot to do in the adoption of innovation techniques in order to set themselves up to succeed. This came through in an example from Rae Digby-Morgan relaying a story from an in-house counsel in her article. “The partner of the firm insisted that was not the way they did things, and was very resistant to all suggestions – responding that a more visual presentation would be akin to a comic book!” Rae went on to say that “It’s a common client frustration that firms aren’t proactively collaborating to create better value and frame advice in a more usable way for their business.”

A firm that seems to have some good examples of where it has really worked is Stephens Scown. Robert Camp’s article gives a great example around how they worked collaboratively with a client to give better access to real-time financial data, “I was at a legal conference and an in-house counsel was presenting. In the Q&A he was asked for the one thing his legal advisors could do to make his life easier. His answer was to provide financial information in a way that he could manipulate and easily present to his Board.” By actively collaborating with the client and supplier they were able to deliver through iterations what the client needed, and then go on to provide it to a number of other clients. 

It’s always good to hear the client perspective, as we do from Lara Oyesanya of Klarna Bank in her interesting article. As Lara says,

“The consumer of services holds all the cards with limited loyalty to suppliers. This means that businesses have to increasingly find innovative ways to engage with consumers to retain their loyalty.”

In this case Lara was talking about the challenges the bank faces and its need to innovate, but there is arguably not much difference in viewing professional services firms in this light also. The concept of using collaboration not just as a way of getting to a better outcome but also as the mechanism to better engage with customers to drive loyalty is worth bearing in mind.

Related to this point around the balance of power seemingly shifting to the client, many law firms are seeing the increased use of technology by in-house teams to drive efficiency. As Michael Tal of BusyLamp sets out in his article, “Ultimately, technology saves both the law firm and the in-house team’s time by automating simple processes and centralising and standardising information so the task of collaborating on tactics and strategy is more efficient. It also generates data, which becomes especially meaningful the more integrated tools you have in place, for both parties to use at reviews.” Perhaps this also highlights the challenge of innovating with clients in that you might help them to better reduce what they spend with you. However, my counter to that would be that if that were the case you would likely stand out from others and build real loyalty, and aside from potentially winning more strategic work if you hadn’t collaborated the chances are you would have lost out longer term to those that will.

Partners and suppliers

It is also worth exploring the use of collaboration with partners/suppliers. There has for example been an increase in the use of start-up incubators in the legal sector. The Spiranti innovation benchmark showed for example that 25% of those surveyed said they had used incubators in some way. There is some debate around the different ways that these are being used and how they can benefit not just upskilling employees through immersion in new technology but also paint a positive innovative picture of the firm to aid winning client work.

It will be interesting though to see how this area evolves as arguably were one to launch an incubator now it might seem rather passé!

What will also be interesting is how more established providers collaborate more effectively with professional services firms. These organisations are definitely not start-ups and have to battle the label of “supplier” which suggests that they are simply in it for the sale, which is unfair in many ways. We need to perhaps find the right models and narrative to break through this rather dated perception. Equally however we need these large software suppliers to show that they are seeking genuine collaboration and not the same “collaboration” window dressing that some services firms have adopted.

Robert Stark of MAPP sets out in his article some of the ways that they are working with technology partners to help their clients, “The rapidly evolving environment in real estate, and thus property management, means we believe collaboration and partnership with clients is ever more critical.” Robert sets out in some detail how they have adopted different technology partnerships in order to better meet client needs.

An interesting consideration in collaborating is how to achieve the collaboration whilst protecting your firm’s interests. This is explored in an interesting article from Coffin Mew. They outline three key areas to consider; the nature of the collaboration itself, security and confidentiality and the purpose of the collaboration. As they say, “Our advice to clients is that collaboration is a good thing but that seeking advice at an early stage can be a valuable investment for your business.”

In his article, Simon Farthing of LexisNexis also touches on collaboration of suppliers and also the regulators as he explores how the conveyancing process might improve. “This kind of industry-wide collaboration demands a brave step forward on the part of us technology providers, as well as collective entrepreneurialism and aspiration, transcending individual insecurities, to help facilitate change and innovation.”

From all the events that I have been at recently this perhaps feels like an area that needs more discussion. Technology businesses don’t want to become professional services business and most professional services businesses don’t want to become pure technology businesses. It is inevitable that where they are seeking to solve different parts of the client problem that it will help if they collaborate more. Clients are already beginning to voice their frustration in having to buy from different places and this noise will grow. For some thoughts around how productisation will play a role in this area see my earlier article.

Collaboration in the organisation

The final and perhaps most central area that we need to explore is around collaboration within the organisation. This sits right at the heart of what employees want, as per the future workplace transformation article. Employees want effective collaboration to drive better outcomes for clients and they also want the modern collaboration space and technologies that will enable this. In many ways this creates a challenge for some firms where they are operating a partnership structure with isolated but related practice groups which each have their own P&L without the effective mechanisms in place for recognising group efforts. It is still quite common to hear of these internal barriers getting in the way of genuine collaboration across the firm on behalf of the client. 

This is certainly not a new concept, even if it may seem new to some professional services firms as Rae Digby-Morgan points out,

“Outside the legal sector, big growth companies like Apple and Google recognise that collaboration and creativity happen with the collision of experiences and ideas through chance physical meetings.”

In the previous article on the workplace I talked about the use of space and obviously this has a direct linkage to facilitating effective collaboration.

It is perhaps easier to achieve this type of physical collaboration for smaller scale organisations. In the article from Coffin Mew they discuss this topic, “Many small-scale organisations are now operating from less traditional workspaces, such as co-working office spaces, which for many are not only cost effective, but provide the added value which comes from working with other entrepreneurs. If your product designer, marketing manager and web developer are all in the same room, barriers to information, communication and innovation fall away.” Certainly this is an approach I have used in the past where you are building a new product and you want to collocate all of the key resources in one place to get a real sense of team and have people collaborating on a constant basis. 

As Robert Stark says in his article, “One of the key aspects of good collaboration is the ability to cross-pollinate ideas from other businesses in your own, an approach that is arguably more difficult to achieve internally when your focus is relatively narrow.” 

While it might seem easier or perhaps more controlled to collaborate internally, it does need to be for a worthwhile purpose. Robert Camp in his article discussed how they addressed the challenge of increasing cross-referrals within the firm. Having put a collaborative approach in place to address this,

“The results speak for themselves, with the campaign resulting in an increase in the number of cross-referrals of 41% and growth in the fees from cross-referrals of 44%.”

Lara Oyesanya’s insights as to how they work as a bank perhaps illustrate how far professional services firms need to go in their internal collaboration approach. “Teams now work in matrix structures in different jurisdictions and time zones. Dynamic working is generally de rigueur with pressures on businesses to keep their employees agile and productive….. All domains within Klarna, including specialist teams such as legal, finance, compliance, marketing, risk, and audit use online collaboration tools and software to remain agile and productive.” This perhaps prompts another consideration for firms in how their clients are already collaborating and what this means in terms of their expectations of their advisors.

Daniel Teacher of T-Tech shared a perspective of what this needs to look like in the accountancy space in his article. “The workplace shouldn’t be a difficult place for teamwork and collaboration – essentially you just want the tools that work in the same way that you do. The growing collaborative culture brings a lot of positive change, which will go a long way in the accountancy sector, who are slowly starting to understand this will be their future.”

Whether the collaboration is internal across employees, with partners or with clients, it seems clear that it will be central to unlocking real revenue growth for firms. There is enough data that employees, partners and clients alike all value this activity. It is also true that this is not a new concept and that many techniques have existed and been used to good effect in other industries, but professional services firms now need to catch up rapidly.

Perhaps professional services firms can learn from product businesses around the value of collaboration, and perhaps indeed it will be essential that they do given the emerging consensus around the shift towards greater productisation of services businesses than ever before. 

Making it real

So finally, some practical thoughts around what firms should be thinking about when it comes to collaboration – clients, culture and capturing engagement and loyalty;

Clients in the driving seat. As Rae Digby-Morgan said in her article, “One thing is clear, the growing shift in client expectation will dictate the rules of this game.” Clients want outcomes that work for them, and if collaborating more openly helps them achieve these aims then they will expect this. Make sure you are talking with your clients and aware of how they want to work, how they work internally and how they are already working with other advisors. Above all, focus on client outcomes and how you can collaborate to make them better, not your process and what it means to you (that will follow on).

Culture is key. If you have people in your firm like the partner referenced in the story above then make sure you have a plan to address this before all your innovative staff leave! Think about the skills that you need to embed such as design thinking (which basically just helps you focus on problems and deliver solutions in a structured way) and generally think about how to get people away from a mindset that it has to be perfect first time. Also think about the physical space you need to help this cultural change and the technology that can help enable this.

Capture engagement and loyalty. You might struggle to get that senior client in a room for a pitch for 30 minutes, but may find that you can get their whole team for three hours for a “workshop” to collaboratively explore their problems and how you can work together. If you can engage people effectively and show empathy and commitment to fixing their problems, then you will drive loyalty. 

If you can collaborate effectively with your clients through changing your culture, you will capture engagement and loyalty. If you can’t, you might be okay for a while but long-term your clients and staff will migrate to those that can. 

Effective collaboration starts with being clear on what you are trying to achieve. If you are looking to collaborate with clients around the delivery of new products then do get in touch. www.earlsferryadvisory.com