AESC – December 5, 2007

Developing Knowledge-BasedClient Relationships:The Key to Avoiding Commoditization

Ross DawsonCEO, Advanced Human TechnologiesAuthor, Living Networks andDeveloping Knowledge-Based Client Relationships

The weightless economy

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Source: US DoC;Cap Gemini Ernst & Young

Knowledge depreciates!

We’ve come a long way...

“Finite players play within boundaries;infinite players play with boundaries”

- James Carse

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

MegaTrends of professional services

• Client sophistication• Governance• Connectivity• Transparency• Modularization• Globalization• Commoditization

Clients get savvy

The rise of accountability

We love instant communication

Flows across boundaries

Information wants to be free

Complete transparency for clients

The power of modularization

Global supply and demand

Services become commoditized

MegaTrends of professional services

• Client sophistication• Governance• Connectivity• Transparency• Modularization• Globalization• Commoditization

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

Clients lead their suppliers

A relationship is a process

How do you create continued positive momentum in a relationship?

There is no such thing as a static relationship….

The spectrum of relationship styles

Client leadership

Stages of relationship development

Align Broaden Partner Initiate

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

Information and knowledge

Types of services

• Black-box: client receives an outcome, but is left none the wiser: readily commoditized and little scope for client interaction

• Knowledge-based: client and professional collaborate, integrate their specialist knowledge, develop mutual knowledge: far greater value, and drives interaction and a strong relationship

The virtuous circle of knowledge-based relationships

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

It’s a small world...

The network organization

Key junctures for value creation

Professional Firm

Client

Capabilities Opportunities

Integrating expertise to create unique value

Matching team structure to the client

RelationshipStage

Objectives Relationship team structure

Key actions

Initiate Access most relevant capabilities to demonstrate unique value to client.

Sales leader with broad internal connections. Small team represents key firm capabilities.

Select sales leader and team with relevant capabilities.

Support sales team’s access to key firm resources.

Align Establish clear communication channels to facilitate access to client.

Clearly defined membership of relationship team, covering scope of firm’s relevant capabilities. Establish peer relationships between firm and client executives.

Define relationship team roles, responsiblities, communication processes.

Potential transition from sales leader to relationship leader.

Broaden Bring in new contacts on both firm and client sides. Establish true organizational relationship.

Client contact extends beyond core relationship team. Tiered relationship responsibilities. Contact redundancy for key client executives.

Monitor and actively support relationship network that links capabilities to client opportunities.

Provide tools (social media etc.) to notify extended team of insights into client.

Partner Facilitate joint value creation through open relationship and access.

Core relationship leader team on both sides. Direct communication between specialists on most issues.

Support direct client interaction. Monitor effectiveness. Actively build innovation links across organizations.

Requirements for accessing expertise

Awareness of capabilities

Understanding of those capabilities

Confidence in those capabilities

Personal trust

Action!

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

Distinctive value

The heart of professional services

CultureFocus on enhancing client service and client knowledge Effective client relationship team communicationAttitude of client partnershipEffectively using processes and systems to enhance firm relationship capabilities

SkillsSetting and implementing relationship objectives and strategy Leading and participating effectively in relationship teamsCustomising relationship and communication styles to clientsManaging client expectations

ProcessesClient relationship team formation – selecting the right professionalsRelationship team communication and collaboration Developing and monitoring client relationship strategies Ongoing client feedback and its application

StructuresKey account selection and segmentationSelection and allocation of client relationship leadersCross-selling remuneration and recognition systemsAccount management and customer relationship management systems

StrategyRole of client relationship style in firm differentiationTargetted client profiles, client industries, service lines and service deliveryRole of online service delivery within firm strategyLong-term strategic directions and shifts in positioning

Enhancing

Client

Relationship

Capabilities

Thinking about commoditization

Firm

Service line

Client

Level Strategic choice

1. Eliminate

2. Automate

3. Outsource

4. Maintain

Are you an energizer?

How to be an energizer

• Have and communicate a compelling vision

• Seek and acknowledge quality contributions

• Make and fulfill commitments

• Be a connector!

The future of professional services

The SevenMegaTrends

Relationshipleadership

Knowledge-basedrelationships

Networkedvalue

Strategicaction

Online resources

“Dawson has pulled off the nigh-impossible: improved on what was already a terrific book. Even more than before, this is essential reading for professional service firms.” - David Maister, author, Managing the Professional Service Firm

www.rossdawsonblog.comInsights and free book chapters and articles at:

“I’m not sure that even Ross Dawson realizes how radical – and how likely – his vision of the future is.” - Seth Godin, author, Purple Cows

To contact Ross Dawson: rossd@ahtgroup.com

Accelerate into the dawn of a new era