Business consultant Tim Williams authored a recent LinkedIn post that highlights the emerging trend among professional services firms toward “decoupling,” or consciously separating the high-value services that are scarce from the low-value services that are plentiful.
He references advertising agencies, which differentiate between “magic” services (problem-solving work such as concept development, strategic planning and recommending new marketing initiatives) and “logic” work (the production, execution and implementation side of the business).
While both of these service areas are important and must be done well, they are valued in vastly different ways.
The client view is that advertising production services can be procured using the same methods and procedures as office supplies, because most production work is standardized, repeatable and widely available. “Magic” services, in contrast, are not standardized, repeatable and widely available.
“In law, ‘magic’ services are still provided by expensive firms in expensive cities, but ‘logic’ services like discovery work and contract review are being done by lower-cost talent in lower-cost geographies,” he writes. “Accounting, architecture and IT services are all being decoupled in the same way, due to the same dynamics.”
Williams observes that many firms fight mightily to continue to provide their clients with both the high- and low-value services, which they proudly point out they can do as a full-service firm, all under one roof.
“Worse, many of these firms bundle these services together with a blended hourly rate, which is the absolute worst solution because it makes the ‘logic’ work much too expensive and the ‘magic’ work not expensive enough,” he continues.
He advocates that professional services firms innovate their business models, taking inspiration from the progressive firms that are choosing to proactively disrupt themselves, often by turning their firm into two different brands.
“Because if we don’t do it, the buyers of our services will do it for us,” he warns.
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