The firm growth playbook: 5 keys for strategic growth
Professional services firms are either growing or on the path to becoming less relevant.
There’s no middle ground because the marketplace (other organizations) are constantly making investments in their growth.
The reality is that not everyone can grow, and certainly not at the same rate.
And if you aren't growing, you are falling behind.
So what separates the professional services firms that are growing 10%+ every year from the rest?
Having led Baker Tilly to aggressive growth ($475m to $1.5B in revenue in less than 8 years) and now advising numerous CPA firms and professional services organizations, I've noticed similarities between the firms that have high organic growth rates.
I've distilled those observations into 5 things high-growth professional services firms have in common.
Let's dive in.
My Recipe for Strategic Growth
First, we need to establish a foundational mindset:
Bigger isn't better; better is better.
When we're having conversations about growth, we're talking about strategic growth—not growth simply for the sake of more revenue.
Growth that's aligned to strategy and therefore likely to enable future growth. It's about creating firms that are better, not just bigger.
So, whether a firm grows independently or with a strategic/financial sponsor, the same principles apply.
Here are the keys to professional services firm growth:
1) A well-defined, documented, and distributed strategy.
A strategy is a framework. It’s a roadmap that answers:
Where are we going?
How are we going to get there?
Why is it important?
Effective strategies describe a future state and establish a guidepost that an organization's plans and actions will align to.
Strategies define what we want to represent and how we make a difference for our stakeholders.
Show me a high-growth organization and I'll be willing to bet that if we pulled back the curtain, we'd see a collective group of people bought into a vision and rowing rapidly in the same direction.
I can tell you from first-hand experience, there's nothing more powerful than an organization aligned on where they're headed.
Alignment enables speed, and in today's environment, speed is critical.
Faster decisions. Faster pivots. Faster results.
Alignment and growth start with a well-defined, documented, and distributed strategy.
I wrote an entire article about how to build strategies that lead to sustainable success here.
2) A truly differentiated solution/offer in the marketplace.
Organizations (and people) that grow at rapid rates have clear answers to the question: Why are we different?
Hint: It’s not going to be something like “we care about our clients”,“we’re advisors” or “we develop deeper relationships”. Everyone says that! It has to be deeper than that...
What's unique about the way you care for clients? How do you do it?
How do you approach advising in a unique way? Why is it valuable?
What value are you creating for your clients that others can't deliver like you do?
What is it about the geographies, industries, or sectors you serve that makes you different from everyone else?
Heck, if you're coming up short on meaningful answers to what makes you unique, go ask your clients. They should be able to point you in the right direction.
If you can't identify why you're different, well, then you probably aren't…
And that’s not conducive to your ability to grow.
Organizations that grow rapidly figure out their differentiator or unique focus and exploit it to become known for something in the marketplace.
3) Engines to do things with people, for people, and in spite of people.
When I refer to engines, I’m talking about defining systems and processes (sometimes built on technology and automation, but not always) to ensure important things get done in a predictable way.
For example, during my time "inside the ring" as CEO, I worked to build an engine for innovation within the firm.
The question was: How do we ensure we prioritize innovation to remain a forward-thinking firm?
My solution was to create an innovation lab. A (physical) place where all new hires to the firm would invest time during their first week with the firm.
Within the lab, we'd speak about and demonstrate what it looked like to bring innovation into day-to-day work to create a certain culture within the firm.
From day one, that mindset would be instilled into every new team member who joined the firm.
Once built, that engine would continue to produce a systematic experience that contributed to our ability to execute our strategy as a firm.
Engines are working in the background to create predictable results. Those predictable results start to compound, which leads to growth.
Other engines that support growth would include:
Sales engines
Client service engines
Cross-serve engines
For a more comprehensive guide on engines, refer back to this article.
4. Significant investment of financial capital and intellectual capital.
Growth requires significant investments of both financial capital and intellectual capital.
If you want to grow, you have to be intentional about having financial capital (cash) on hand to invest in your people, your technology, and expansion opportunities.
Likewise, you will need to make significant intellectual capital investments by having talented people, investing in their development, and partnering with those people to help create differentiated solutions and outcomes.
I was at a recent session with a client’s Board when someone suggested, "We want to be a technology-first organization."
When I asked the participant, ‘What will it take to be that organization?’, the response I received was "Not sure…"
It’s common that I hear organizations proclaim progressive visions without having a strategy or plan in place and without acknowledging the investment necessary to achieve their aspirations.
There’s no way around it. These investments are going to be required if you want to keep up with the most innovative organizations in your space, no matter how you decide to go about making them.
5. A horizontal operating model.
There are vertical and horizontal organizations.
When I refer to a vertical organization, think about the traditional book of business model.
A firm is organized vertically when each partner builds their book of business, and the firm's revenue results as a sum of the individual books that make it up.
In a traditional vertical organization, each practice operates in a silo—mostly irrespective of the others. There’s little to no overlap or collaboration.
What results is that practices have very little insight or knowledge into what the others are doing. At the end of the fiscal year, the firm's revenue becomes an aggregate of what’s been earned within each individual practice.
A horizontal firm, on the other hand, promotes collaboration between practices so that the firm is made up of its parts.
The firm’s revenue is a result of an intentional strategy to bring clients into the firm and provide integrated services across different practices within the organization.
Horizontal organizations embrace delivering value to clients which can only be done by cross-serving and prioritizing delivering multiple value-added services to clients.
Put the client at the center of everything.
What will they expect and need? Bring the entire firm in order to deliver differentiated value.
Practices and firms that embrace collaboration and are aligned to a single strategy are set up to fuel growth and enable scaling.
It will take what it takes.
Whether you decide to remain an “independent firm” or you choose to take on a financial/strategic sponsor, growth is the name of the game.
No matter which route you choose, it will take the same amount of ingenuity, commitment, investment, alignment, and a whole bunch of other factors to make it there.
On a foundational level, to grow and thrive in the future, you will need:
A well-defined and well-executed strategy….and the ability to consistently articulate it. (Sidebar - I believe this was the main reason we differentiated from all the firms we competed with for acquisitions)
A truly differentiated solution/offer in the marketplace.
Engines to do things with people, for people, and in spite of people.
Significant investment of financial capital and intellectual capital.
A horizontal operating model.
Whether you choose to do that all on your own or not, you will have to keep up with all the other organizations playing the same game in different ways.
I encourage you to act on these foundational elements that lead to growth and make a commitment to see them through.
Do that, and you’ll be amazed at where your organization can be in a matter of a few years.
I've recently traveled to Salt Lake City, Atlanta, New York and London to host growth & strategy workshops with boards and senior leadership teams of firms—it's been a blast applying these principles to their unique situation. I'd love to engage a couple more firms yet this summer.
If you'd like to discuss hosting a similar workshop for your organization, you can start the conversation here.
With intention,
Alan D Whitman
Whenever you're ready, here are 3 ways I can help you and your organization:
Follow me on LinkedIn for tactical advice and insights from my years of experience leading organizations and advising CEOs and their teams.
Advisory & Coaching: Book a discovery call if you'd like to have a conversation about working together to help you and your organization BREAK THE MOLD™ and achieve differentiated outcomes.
Mentorship: If you're a young professional, book a 1:1 mentorship call to ask me any questions or talk through a professional scenario to help you grow.