Ravens Wood Consultancy looks at developing commerciality.
The essence of commerciality is about providing advice to help clients maximise their profitability. Advisers can achieve this through better understanding the client’s issues, understanding the context in which they are operating and delivering advice that helps them reach their goals and outcomes.
- Understand the client’s desired outcomes
Advisers need to focus more diligently on how their advice is used in the boardroom during the decision-making process. Professionals will need to become more adept at helping the client implement their advice.
- Understand the business
Reading financial statements and annual reports is no longer sufficient to demonstrate an in-depth understanding of a client’s business. Instead, 75% of clients say they expect their advisers to know about their organization’s strategy and business plan and 67% expect knowledge of industry sectors and trends.
- Understand the economics
“In my 25 years of doing this I have met two lawyers who can add up, which means its difficult for them to be commercial. They will delineate between that which is a commercial point and that which is a legal point and there shouldn’t be that delineation. I’m not paying hundreds of pounds an hour to make all the difficult decisions. I’m paying that price for someone else to not just advise, but to make a decision.
- Understand the people
Being able to understand the people, their styles and drivers, is fundamental to being able to navigate successfully the complex world of business and deliver success in terms of the desired outcomes. Commercial advisers are able to use tools such as stakeholder mapping. They understand that giving advice is not a logical exercise based on technical expertise. They understand and respond to clients’ emotions.
- Agree the scope
It ensures that all different stakeholders are clear about the objectives, and that work is focused on meeting them (and not “nice to have” tasks)
It enables you to measure success at the conclusion of the project
It avoids scope creep, and therefore maintains profitability
It maintains high levels of client satisfaction – many client complaints about professional firms are about misaligned expectations
- Build practical solutions
This is the heart of the matter – how do you solve the client’s problems so that they achieve their goals?
Most professionals think that they are strong problem solvers, but unfortunately many clients think that professionals add complexity. Clients’ complaints fall into two categories – those who complain that their advisers don’t tell them what to do, and those who do tell them what to do but are too rigid.
- Communicate for impact
Match the communication style of your client. Do they communicate formally or informally? What language do they use? Do they communicate by PowerPoint or Word?
Communicate in a more visual way. Increasingly, business likes to communicate with dashboards, traffic lights and even mind maps
Recognize that getting buy-in is a process. It can rarely be achieved with one document. A better approach might include:
An initial debrief with the client
A more formal presentation to the board
A workshop to agree recommendations
A short presentation/video clips for staff
Co-present your conclusions with your client
How to improve professional firms’ commerciality
- Professionals need to be trained in problem solving
- Time must be chargeable
- Professionals need to be more specialised as regulation and business becomes more complex
- Professionals are concerned about being sued if they give commercial advice or contravene professional regulations
- Professionals are unconfident about having broad business conversations with clients
Appetite for change
- Clients will drive the change. They have buying power
- Professionals recognize the issue – 87% of advisers say they will need to develop a more commercial skill set in addition to their technical competencies
- Commerciality skills are seen by professional firms as a differentiator in a competitive market. The large accountancy firms are moving more into management consultancy, and commerciality skills are even more important for these business lines than for audit or compliance services.
Building commerciality skills
- Demonstrate leadership
This requires the leadership of the firm to embrace the change and drive it throughout the firm
- Develop deep insight
Advisers need to develop a deep insight into their clients’ business, sector and the wider business world. Develop Key client management, client feedback, sector groups and knowledge management functions.
- Redesign the client experience to provide more added value
Providing bespoke thought leadership insights, such as client round tables
Hiring senior level client facing account managers
Having a more rigorous client on boarding programme to ensure that the client’s goals and preferences are captured
Improving project management as a way to strip out cost
Providing multidisciplinary/consultancy propositions
Ensuring communication is client friendly
Evaluating the project’s outcome
- Tools and training
Training has traditionally been very technically focused with minimal commercial awareness training. Informal training being the norm
- Reward success
Focusing on billable hours is the biggest barrier to commerciality. Smart firms are addressing this by rewarding commerciality and celebrating mentoring and knowledge sharing
Advisers need to think through how the advice will be implemented; for example, this option may save you more tax, but it damage the company’s reputation.
Advisers need to collaborate with the client to come to a decision. They act as a coach to the client to think through the issues and make a recommendation, but recognize that the client makes the final decision.
Advisers should not be a soft touch. Great advisers ensure that the client recognizes the trade-offs associated with their chosen option. If regulations or common sense forbids a course of action, they say so.