In the last couple of weeks, a lot of copy has been written about the demise of KWM, and Martin Tolhurst joining the list of firm defections from Quality Solicitors.
The former illustrates the lack of wisdom of trying to drive profits and extract them all as they arise. It’s a bit like letting the tyres on your car get bald…as soon a you hit any significant bump, that’s it. A strong balance sheet, and in particular, a balance sheet with strong retained cash reserves is one of the best business insurance policies money can buy and means decisions can be taken on a strategic rather then a short-term tactical basis (as many firms remember annually just before 31 January).
Just having a good business or fixed assets does not necessarily give you access to cash: for example, I certainly always thought of the two rather elegant freeholds my firm owned as impediments to our progress rather than emblems of it. That’s for another day, though.
The link with QS is about financial strength and about strategy and I always think there are 2 questions one should always ask when considering any decision, especially when based on a pitch.
1. DOES THIS MAKE SENSE? (or is there another, equally plausible explanation,or more than one)
2. IS THIS THE BEST WAY TO DO THIS? Good is good. The best gives commercial advantage. Good is not as good as best. Just because something is good does not mean it should be done – especially if it means not doing or prioritising something better.
I never thought the brand proposition QS started with ‘made sense’ for two reasons. Firstly, I am not aware of any professional services advisory brand of national standing built on the back of the sort of advertising model they espoused. If anyone knows of one, I’d love to hear. The second reason is that when you see such brands, (KFC, KPMG, Holiday Inn, whatever) operating either as a single firm or franchises, they have a single system of operations aimed at giving a very highly consistent customer/client experience and which (crucially) also allows their marketing activity to be targeted towards capturing the sector identified as likely to be most profitable and which allows the service or products to be tailored to that and to reinforce the whole range of their service or product offering. If you read any leading texts on brand equity (I like Aaker), this will all fit.
QS’s problem now is its balance sheet https://beta.companieshouse.gov.uk/company/06616950/filing-history. The issue here is that the ability to change or do things differently suffers when the cash for investment is constrained in a way it is not if there is a strong balance sheet with free cash reserves. It will probably inhibit their quest for new members also – (BTW…when is the last time you looked at your critical suppliers’ filed accounts? You should…their risk is your risk and there are A LOT of suppliers to your market with really dodgy balance sheets).
And here we get back to the first question. Let’s accept that QS is a decent idea and will work for members. So what? The point here is that there may be lots of ways of building and running your practice that will work…but what is the best one for you? Good ideas are two a penny. Competitive advantage comes from doing things BETTER than your competitors, and that MUST therefore mean differently.
So, if you adopt the same business/marketing etc strategy as all your competitors do, you cannot reasonably expect superior results unless you do so at lower cost (‘better, faster, cheaper’). That is the exact thinking behind our words4business.com offering – we enable firms to do content marketing (which we’ve been doing since before the term was coined) at lower cost than any other way.
If you want to do add competitive advantage in process to that, well, that’s why we built legalrss.uk – it allows our client firms to get genuinely innovative in the way they share and distribute content and build influence and adopt market approaches other marketing tools (the ones used by your competitors) do not …and a lower cost as well.
And this brings me to my last point – there’s a huge difference between being entrepreneurial (which is just a fancy word for businesslike) and being inventive. There’s a popular misconception that entrepreneurs are inventive. Most aren’t. Good, workable creative thought is rare. When I taught the practical entrepreneurialism course on the MBA at Exeter, when my cohort presented their new business project plan (the final bit of coursework), they all but one essentially wanted to do the same thing. In those days it was retailing on the Internet. My question for them was, ‘If all of you, and presumably almost all the MBAs across the world, want to do the same sort of thing, what does that mean for your likely outcome?’ This is economics 101, isn’t it?
So…are your people really trying to differentiate your proposition for competitive advantage or opting to join the herd? If the former, are you giving them the resources and thinking time to make it happen? And are you asking the questions:
Does this make sense?
Is this the BEST way, not just a good way?
My next public engagement is at the conference for law firms at Reading on 9 March which can be booked here.
My topic – 3 easy and low cost ways of building your practice no-one else will probably ever tell you about.
Joe Reevy MSc FCA is the managing director of Words4Business and LegalRSS (www.words4business.com, www.legalrss.uk) which specialise in law firm content provision and marketing automation respectively.