There is an old joke that lawyers and accountants are rather like doctors – they tend to be more interested in the disease than in the patient. Certainly over the years, client feedback has tended to lean some credence to this ungenerous observation. Professions tend to attract clever people who like to solve complex problems but who can find the inner workings of their clients’ logistics or manufacturing business rather dull. But in this increasingly competitive world, the need to demonstrate, not just empathy, but a real understanding of clients’ businesses has driven a growing number of firms to overlay a sector focus on their conventional matrix of practices and geographies.
In one sense there is nothing new about this. The accountancy and consulting firms have had “industry groups” for 30 years. But for most of this time, such groups have been based on some level of common interest. Now firms are trying to make sectors a more substantial route to market. More than a decade ago, KPMG took the bold step of reorganizing all its fee earners into sector groups and running its business with these as the P&L accountable units. The experiment was ultimately short lived. In the end it created more fragmentation than cohesion. In the legal sector, firms like Norton Rose Fulbright have put sectors squarely at the forefront of their strategy, acknowledging that their most important sectors have been the driving force for their mergers as opposed to a retro-fit after the event.
Clients are noticing too. Research shows that a genuine depth of knowledge and expertise in a sector gives a firm significant advantage in a competitive bid.
But making sectors work is problematic. Very few firms since KPMG have risked driving P&L down sectors: most do so by office/region or by practice area. That leaves the sector head with the unenviable task of holding partners to account but without the muscle of profit accountability.
Ultimately as with all things in a firm, a large part of the success or failure of an approach will come down to the determined commitment of the Executive Management Team and to the charisma of the partners tasked with the leading each sector group. But even with this propitious environment, the firm needs to give some power to the elbow of the sector head.
In our experience some of the best approaches include:
Direct the marketing budgets down sector lines rather than practice or office lines. That is a good encouragement to partners to get involved.
Make sector leaders accountable for the key clients that sit in their sector. That has the twin benefit of providing sector intelligence to the relevant clients and the gives sector heads some clout over influential peers in the partnership.
Invest in thought leadership within the sector. That provides evidence of the firms understanding of the sector and commitment to it – but it also gives the sectors IP that partners value.
Organise regular conference calls or meetings where those involved in the sector, wherever in the world, can contribute to and benefit from knowledge of the sector.
Create good marketing and management information and reporting tools so that the firm can evidence sector achievements and make these visible internally.
For many firms, sectors remain a thin veneer overlay on the way they really work. Over the next few years, we believe the leaders will be those that demonstrate that sector knowledge and commitment really is at the heart of the firm.