The Simple Truth About the Professional Firm Business Model

As we slip into 2014 there is much talk- and even some action-about what business models are appropriate for professional firms in the 21st century.

Whilst some professional firms are still in denial and others struggle with how to make the change it is clear that the 19th century era partnership model, overlaid by the early 20th century industrialized notion of the leveraging of people x time, upon which most professional firms are still based, has run its race.

There are now many options for professional firms as to how they best structure themselves and create firms that are much more suitable for the people that work within them and to better serve the customers they seek.

In my view no matter what structure your firm is- or should be-for many years I have held a very simplistic view as to how really good firms look at themselves. This is represented as follow:



Let me explain.

I believe that only the best firms have an incredibly strong base that everything else is built upon.I call it their internal environment-their culture if you like. This is the way things are done around here,the way we treat each other, our values, our leadership,our behaviours,how innovative and creative we are,our goals,our vision and our aspirations. And I happen to think it is this internal environment and little else that attracts and retains really good people (at all levels in the firm); that really good people are inspired and motivated to do really good work; that really good work attracts and retains really good customers, and, finally, that really good customers pay really good fees.

And it is in that order. It is from the bottom up-not top down.Play around with the order at your peril.

Good luck in trying to attract and retain good people if your culture is crap. Good luck too in trying to produce good work and service if you have the wrong people.Best of luck trying to attract and keep the customers you really want if your service and work ethic sucks. And you will need more than luck if you are trying to extract top fees from average customers.

I know it is not MBA stuff nor worthy of a Harvard Business School program. Its not even new. Our parents might have even called this using common sense with common courtesies. But it is that simple.

Is it easy? No of course not. If it is was that easy all firms would be able to do it.

What do you think? Have I got this wrong? Is there something I am missing? Love to hear your thoughts.


  1. John, I agree with your post but do not think it, or your pyramid, actually represents a different business model. I am currently reading Maureen Broderick’s “The Art of Managing Professional Services: Insights from Leaders of the World’s Top Firms.” The firms that are profiled represent the “old guard,” but even they lead Broderick to the conclusion that values and culture are the most important driver of success for professional services firms.

    Do not interpret this to mean that I do not think business models need to change. But I think culture is already the base and the change is more related to what defines a “great culture” in today’s world, and, accordingly, the types of expectations that employees have, and what it takes to recruit and retain talent. Meeting these, in turn, will require a shift in the philosophy of value creation and hence operations. I know this is what you are referring to when you mention that leveraging people multiplied by time has run its course.

    • Totally agree with you Jim. Values & culture are the most important aspects of any business model-in fact life generally.What I portray above is not new and as I said in the post it is deliberately very simple.I just think some firms over complicate things and I am convinced many firms also get the order wrong.
      Perhaps it might be more accurate if what I am representing in my post are really the building blocks on which any good business model is based.Not dissimilar conclusions to Broderick’s is arrived by Charles Ellis in his book “What It Takes: 7 Secrets of Success From the World’s Greatest Professional Firms” which I have just finished reading.
      Thanks so much for your input.Have a good one.

  2. Ken Polotan says

    John, fantastic post! In more ways than one, I truly feel validated. As consultant focused on Strategy and Business Transformation, enterprise initiatives fail or succeed based on the culture of the company. As change agents, we believe we’re supposed to positively impact people, process and technology. And yet, we only really focus and manage process and technology. Why? Is it because the people aspect will have to consider the values and culture of the organization and not merely the roles, responsibilities, org design, etc? How does one address corporate authenticity?

    Thanks for sharing.

  3. Bill Hurton says

    John, I like the use of the pyramid. I also like simple. I have been using “Leadership” as the foundation of any great organization. Culture trumps all, and it is up to the leadership to create and maintain that culture. If you have not read it yet the Gallup Organization’s report on “State of the American Workplace” gives some stunning findings on the lack of engagement in the US workplace. The bar is so low that those that can create an engaging workplace environment have a huge competitive advantage.

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