As an MBA student, I admire successful bankers, consultants and asset managers and more importantly I admire the organizations that they lead. I hope that one day I will do something as great as they have. Yet sometimes I struggle to understand what it takes to be there – why are these organizations so successful? What are the traits that they uniquely possess? How have they managed their business and their people? Or simply put, how have these organizations achieved “Professional Excellence”?
My interest in this topic stems from the growing feeling in me about the tension between being good at what we do for our clients – the “Professional Excellence” and being good at making profits for our investors – the business goals. Professional Excellence is usually what an individual wants while business success is what a firm wants. For job prestige and other obvious reasons, sometimes I feel the impulse to direct myself or advise others that getting a job in a global professional services firm and working really hard is the obvious path to mundane success. However, increasingly I realize that what is obvious is not what the truth is.
Enlightened by a professor at my business school, I started to see that the influx of incredible talent into professional services field has fundamentally changed the industry. Changes are happening in a way that is profound but very concerning. For each and every firm that offers professional services – banks, consulting firms or asset management institutions – the chance to win has become slim and success has become temporary and easily replicable. In other words, the talent in this business is so great that there is no reasonable hope that any one of these talented groups could beat the other. Just look around: consulting firms struggle to differentiate themselves and therefore compete on the basis of “loss leader” – they compete for client mandates by out-offering upfront free services to prospect clients. Asset managers, specifically the ones practicing active stock-picking, failed across the board to deliver the performance results that they wished for and many have no choice but to merge with each other or just close their businesses. Investment banks find themselves operating in a market where the fee level is running to zero, both in its sales-and-trading operations and in its corporate finance business, which leads to the upsurge of cost-cutting activities and business consolidation events. In essence, professional services are now largely commoditized. Commoditization makes it extremely difficult for a professional services firm to stay true to Professional Excellence – to do what is good for their clients. And commoditization kills.
During this summer I had the luck and the luxury of working among brilliant people at several professional services firms: two consulting firms in the U.S. and one investment bank in Hong Kong. They are all great firms and I learned a great deal of things. I saw the payoff of painstaking work but I also felt the conflict of deciding what is good for the firm and what is good for individuals. It is really easy to claim that Professional Excellence and business success are inherently in conflict, yet this is not entirely true. I believe they are two distinctively different affairs and I argue that being good at the former will bring you to the latter. So, why Professional Excellence? And what should an organization do in order to maintain Professional Excellence?
Professional Excellence is making sure the team, eventually the firm, is placed above its individuals. Individual success is easy to achieve and easy to be replicated, but a skillful team is not. Developing a skillful team demands well-targeted recruitment efforts and good leaders. At recruitment, candidates should be evaluated primarily by their commitment to team-success rather than by their drive towards individual-excellence. Successful candidates understand they are part of a team and commit to it. When leading teams, good leaders should delicately empower rather than mechanically control team members. Successful leaders use the right people and put them on the opportunities rather than on the problems. Because everyone can copy almost any product and no individual can outperform a team, a skillful team supplies the gigantic unfair advantage that helps a professional services firm differentiate itself from its competitors.
Professional Excellence is putting people ahead of projects. This is because professional services are all about people and excellence. Good people are nice to work with, are incredibly relational and can manage themselves horizontally and vertically in and out of an organization. They invest in themselves wisely and they protect themselves from their own weaknesses. They know what not to do and they do the rest with integrity. They exert a proper degree of self-control and they exude a profound level of positive energy. They drive for performance while they do not “perform” in their job. (Note this difference.) They are sensitive to office politics thus they frequently conduct checks-and-balances. Having achieved great things in their life, the talented do not come from a place that is exhausting and insecure but they dispense personal joy to others and turn others on. Therefore, the best thing that a professional services organization can have is these wonderful talents, because there is really nothing much that needs to be done after that. So the natural question to ask ourselves is this: are we giving enough time and attention to the first-rate people in our organization?
Professional Excellence is prioritizing long-term relationships over short-term transactions. Too often we see corporate management push for quick completion of transactions and turn a blind eye against developing relationships. People are blind towards their blindness, however, it is exactly these kinds of transaction-driven motives that are jeopardizing businesses. For example, sending out emails at a high-frequency does nothing but transfer emails directly into the clients’ junk inbox. Moreover, prioritizing relationships encompasses the idea of staying customer-focused. In my five years at the professional services firm, it became clear to me that active listeners bring themselves closer to clients thus selling better in the long-run, while aggressive sellers simply irritate clients. Putting emphasis on completing transactions comes at the expense of long-term relationship and will eventually hollow out an organization. So, stay laser-focused on building long-term relationships.
To be as successful as those people and organizations who I admire is not all that easy. For both individuals and organizations, staying true to Professional Excellence is critical so they can continue to be relevant and competitive in this din of commoditization. Across the Pacific Ocean, the Chinese economy is maturing and institutionalizing. Surely it will ask for more – more professional services in particular. For those organizations that do not get Professional Excellence right, they will find themselves getting commoditized, under pressure to consolidate or even close. For those that get it right, however, the reward will be substantial.
(Big thanks to Charley Ellis and Nina Scherago whose teachings brought me to this level of understanding.)