Creating a Sustainable Professional Services Firm
Jan 28, 2008
This week’s special issue focuses on sustainability and green building. The guts of these ideas are not mere buzzwords, as the earth’s growing population and declining state of natural resources ensures we’ll all be dragged into it, like it or not. Public clients are mandating green buildings, and even private clients of A/E/P and environmental firms, such as Wal-Mart, are working with their suppliers to reduce their carbon footprints. Down here in Fayetteville, Arkansas, Wal-Mart is sponsoring a new Center for Applied Sustainability here at The Sam M. Walton College of Business. But while all of this is good stuff that anyone in our business better tune in to, it’s not the topic of my article today. I want to talk about what it takes to build a sustainable professional services firm. Let’s face it— this business of ours is a tough one to grow a “real” company in. Architecture, engineering, planning, and environmental firms are staffed with some smart, creative people who don’t always work well together. There’s a tendency for firms to fragment and create spin-offs over time. And that’s facilitated by low barriers to entering our business. It doesn’t take much cash or effort to hang a shingle and start one of these firms. Yet, if a firm is to grow, and survive generation after generation, it cannot create too many spin-offs. Some people need to stay— good people who could make it on their own— to keep the company alive and prosperous. They need to take care of the company and it needs to take care of them. Here’s more of what I’ve been thinking over the past 27 years that you need to have in order to build a sustainable firm in our industry: A continuously updated business plan with a long-term focus. If you want to build a company that outlasts you, you have to think about what will likely be long after you’re gone. That takes a long-term focus on your business, not one that revolves around your personal needs today. You have to involve many different people in that plan and you need to have a process that maintains itself over time. A widely-known brand name inside a very clearly defined target market (or markets). There’s no way your firm will outlast its current principals today without having a strong brand name. Otherwise, the brand comes— and goes— with the people who are there now. Companies such as Perkins + Will; Skidmore, Owings & Merrill LLP (SOM); Hellmuth Obata + Kassabaum, Inc. (HOK); CH2M Hill; EDSA; and others have built brand names that transcend their current staff. The momentum that comes from that is a powerful force that keeps creating opportunities to get clients and key people for a long time to come. An ability to generate the top leaders from inside the company. This first takes a proven track record in being able to attract and keep good people in the company over the long haul. That only comes from having a company that’s strong financially and one that has a real market niche that allows it to get projects and clients other firms can only dream about. The best people want to work in well-managed companies that provide them with career employment stability and projects that they find worthwhile and challenging. Specialized knowledge. It’s the only way to build a brand and be in a position to charge enough to justify the high labor rates you’ll have to pay to get really good people to want to work there. Institutionalized innovation. There has to be some sort of mechanism that encourages continuous innovation and improvement in all that you do. The business plan, the culture, and the leadership all must be in synch on the need for continuous innovation. Without that, you’re not going to adapt to a changing environment. Continuous reinvestment in the company. To keep a company that sustains itself, it has to be able to generate its own capital. One way to do that is by being profitable over time, and not taking all of the money out of the firm when you do make some. This is one of the keys to sustainability. An ability to charge more than other firms serving the same clients. This is the only way you will be able to attract the best people, invest in technology and research and development, and spend the money you need to spend on marketing if you want to build a brand name. A culture and history of ethical dealings. I am a strong believer in “what goes around comes around.” If your company does things that are illegal or unethical, it will come back to haunt you. There are firms in our business that have done some dumb things and the market rarely forgives and forgets. Sustainability— of your company— is what I care about. Take a close look at these eight points and see how your firm is doing on the path to sustainability. Originally published 1/28/2008
About Zweig Group
Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.