Change Management and the Transformation of Professional Services Organizations

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We’re in the age of both digital disruption and radical innovation, which can cause many professional services firms to cringe at the implications. Why? Because how these firms adapt to change determines their success. Adapting alone to simply fit in with a trend, however, will not be sufficient for this next wave of global technological disruption. So what kinds of changes can be expected? For professional services firms there are two to consider.

According to a recent article in the Harvard Business Review, it’s important to understand the distinction between digital disruption and radical innovation. Authors Christian Hopp, David Antons, Jermain Kaminski and Torsten Oliver Salge looked at 40 years of research to identify the differences. They write: “Disruptive innovation research describes a process in which new entrants challenge incumbent firms, often despite inferior resources. Importantly, the research landscape we mapped out suggests that disruption is not about technology alone, but rather the combination of technologies and business model innovation. Radical innovations, on the other hand, stem from the creation of new knowledge and the commercialization of completely novel ideas or products.”

The Tipping Point

So where are we? Today professional services firms experience pressure from many sides, but only a few are updating or completely changing the necessary systems and new technology to remain competitive. Admittedly, change is not easy or inexpensive so many firms resist or are beginning to explore solutions that will help alleviate some or all of the pressures they face. These pressures have always been part of doing business, but today all impede the speed and agility needed to compete, indicating the timing is right for a change.

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According to the World Economic Forum, as part of the Digital Transformation Initiative (DTI) in collaboration with Accenture, the Professional Services industry is reaching a critical “tipping point:”

"The Professional Services may be proficient at evolving its offerings to clients’ changing needs, but perspectives differ on whether the industry itself has been significantly transformed by digital disruption. One school of thought sees Professional Services in the vanguard of digital transformation, with high levels of digitalization across most aspects of the sector. An alternative view holds that, despite outward agility, it has not yet been disrupted to the same extent as some other industries. Our assessment of digital disruption in Professional Services is nuanced. We believe that, though there has not yet been a seismic disruption to shake the entire industry, the shifts under the surface are stronger than many people realize. This suggests that the industry may be approaching a tipping point."

To support this we quote from a recent E-Book on The Modern Tech Stack: “What makes this moment in time especially unique is the speed with which change is occurring. Today, business agility is more important than ever. A startup can emerge tomorrow that will transform an industry and take down companies that have led a market for decades. This profound shift has the potential to transform every business model and every industry.”

What Knobs Need To Be Turned

To better understand what may be the critical elements that need to change we’ve unpacked the pieces that make up a professional services company.

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The next step is to address how each of these components can best be managed. Today there are systems already available to handle and better manage certain aspects of the business but not all.

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The odd man out is operations labeled as the “Hairball Infrastructure.”

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Operational System of Record

What’s missing most for today’s modern professional services firms is an operational system of record - a system that can function with the same rigor and visibility as a CRM or ERP. It also has to navigate with, and connect to all of the important aspects of managing the business.

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Looking to corral so many moving parts can be daunting. The change management process used to get there has be in lock step with management and its goals, as well as the people responsible for delivering the services you sell. And finally, the clients have to be initiated and even trained to work in a new innovative environment that is both disruptive change and new knowledge. More on Change Management to come.

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