How does your company win projects? If you are like most companies, relationships play a big role. Somebody knows someone who has worked together on something and had a good experience. Relationships are important. And in the absence of any other information, they are as good a way as any to decide who to hire for a project.
But there are problems with depending on relationships to define projects or to choose a firm to work with.
At many large companies, the procurement function has been built up to manage the limitations of choosing vendors based on relationships. Increasingly, professional services are being forced to thread the procurement needle and this is having a serious impact on how professional services companies can win work. Procurement tries to manage vendor selection in two main ways.
Standardization and the search for alternative vendors can come into conflict. In many cases, especially with knowledge work, it is the differences between skill sets that creates differentiation and it is differentiation that will drive business success. Why is this? If everyone adopts the same processes and benchmarks the result is commoditization. Commoditization drives profits down across whole industries. Current procurement processes contribute to this commoditization. Successful companies will find ways to introduce their unique needs into procurement and to search out vendors that meet their needs in a unique way.
This is difficult in professional services like business consulting, design, engineering and legal services. It is difficult because most firms lack a formal way to present the skills of their people and to validate these skills. Instead, they rely on thought-leadership marketing, investing heavily in research, authoring white papers, speaking at conferences and in the best firms pro bono and demonstration projects. These are all important activities, and can help to build skills and not just awareness but they are no substitute for an actual understanding of the skills within the organization and how they are applied to real work. Thought-leadership marketing can also lead to the ‘bait and switch’ phenomena in which a team of very impressive senior people sell the project but the actual work is turned over to much less experienced juniors.
The solution to this is skill and expertise management. Professional services companies need to have a deep understanding of the skills of their people and how they are being applied. This can only be done with a system that is constantly gathering data about each individual’s skills and how they are being applied.
Providers of professional services need to get beyond relationship and thought leadership marketing. They need to be able to document and demonstrate their skills in ways that are compelling for buyers. It is very difficult to do this from the lists of white papers and example projects that populate their websites. We need to find a better way. A dynamic record of the skills of each person and how they are being applied to project work is needed. The record needs to include the patterns of skills that are used together by different people on the same team and give insight into how these skills are driving results.
Finally, there needs to be a way to demonstrate these skills to potential customers and show how one will go about staffing a project and what skills are available. The normal way to do this is by listing relevant projects or by providing the résumés of the people proposed for the project team. These should really be seen as inputs into the skill portrait for the project and not as the portrait itself (TeamFit’s Skill Inference technology is able to infer skills from all these different types of information). A way of extracting and organizing the skills is needed. Doing so gives both the vendor and the buyer clarity as to what skills are needed and how they will be applied.
For buyers of professional services, relying on relationships can lead to poor outcomes that are likely to get worse over time. Assuming that the skills you need can be found in your existing relationships, even when second degree relations are included, is a poor assumption. What is really needed is a way to define the skills needed for a project and then to see if these skills are being offered. Generally, the buyer will not be able to identify all the skills needed. The best approach is to start with outcomes (what impact is the project mean to have), and then work with a number of providers to understand how they would deliver the outcomes and what skills are needed to do this. If you are working with good providers each will have their own approach, and you will need to find the service provider that maps best to your own business and the skills you have internally. Projects tend to have the best outcomes when the provider and buyer have complementary skills.
Skill management is how professional services companies can get beyond the limits of relationship selling. Building on a skill management platform makes the process scalable, evidence based and provides the data needed for continuous improvement.
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