Thursday, September 11, 2014

How to Improve Your Firm's Project Management

There is probably no operational shortcoming more widespread in our industry than the need to improve project management. Managing projects is a demanding endeavor, and many technical professionals struggle with its complexities. The result is a host of problems such such as dissatisfied clients, budget overruns, missed schedules, quality defects, increased claims, lost profits, and general organizational dysfunction.

Perhaps your firm is among the many seeking to improve how you manage projects. Where should you start? Having worked with several companies in this area, let me offer the a few suggestions:

Don't start with training. This is a common response, but a misguided one. There are some good project management training programs available, but you'll not solve your performance concerns simply by giving your PMs training. You need to first take steps to ensure that your objectives are clear, that systems are in place to support changes, and that you're prepared to reinforce putting training concepts into action.

Determine your priorities. You likely won't be able to address every significant project management deficiency at once. So determine which issues most need attention. Evaluate the extent of each problem, its ramifications, the relative difficulty in solving it, and the anticipated benefits in doing so. I recommend ranking the issues, then determining how many of those at the top of the list can reasonably be addressed at once. Later, after you've made significant progress on those issues, you can tackle the others on the list.

It's important to get adequate participation in identifying priorities. This should not be strictly a top-down process. You're going to need the buy-in of your project managers, so at a minimum they should be consulted. I advise going still further, involving a cross section of employees at all levels who work on projects. This will give you a more accurate understanding of the issues than talking to PMs alone, which will lead to better solutions.

Identify internal and external best practices. In most firms, there are project management practices applied on a limited basis that are worth replicating across the organization. Perhaps it's the project planning process in the electrical department or the cost estimating approach used in one branch office or how one of your better PMs manages client communications. Sometimes there are a few clients that demand a higher level of project management competency, and those practices may deserve consideration firm wide.

Looking internally for best practices has some real advantages. You can see the benefits firsthand and the individuals who employ those techniques can help teach them to their coworkers—thus internal best practices are typically easier to implement than those brought in from outside. Recognizing internal best practices encourages more PMs to step up and set an example.

It's also wise to look outside your firm for best practices. Consultants and trainers, who work with multiple firms and see a variety of approaches to project management, can be good sources. You should also talk with PMs you've hired from other firms, asking them what their former employers did that might be worth adopting. The Ultimate Project Management Manual published by PSMJ is another good resource. Don't be afraid to look outside our industry either. There are many good project management practices from other industries that warrant consideration.

Plan to stage the rollout of changes. As noted earlier, you can't expect to improve everything at once. That's why you start with determining your priorities, which should guide your implementation process. You might consider a two-tiered approach, identifying which changes are mandatory from the start and which will be initially recommended but optional. This enables PMs to see where the firm is headed in terms of reforming its project management practices, but keeps the pace of change manageable. Some PMs will immediately embrace the recommended changes, which will facilitate the ultimate rollout at a later date. You might also choose to pilot certain changes on a limited basis, such as in select offices or business lines.

Define performance expectations. While all firms track some parameters of project performance, I'm often surprised how little these metrics seem to matter. I've encountered many PMs who repeatedly fail to meet budgets and schedules, who have unhappy clients and disgruntled project teams—and yet continue to manage projects with impunity! Many firms have simply never really defined what they expect of PMs. This is a vital step.

Typical PM metrics include budget and schedule performance, project profitability and cash flow, client satisfaction, and repeat business. You should also track project team satisfaction, because an unhappy or dysfunctional team will be hard pressed to produce successful projects. Implementing regular project reviews is a great step toward improving PM performance. I also advocate establishing a deliberate process for preparing people for the PM role; too many simply end up in that role by default.

Update your project management infrastructure as needed. With changed project management practices, you'll likely need to modify the systems and tools that support those practices. This may be as simple as creating a new form to something as complex as changing your accounting system. Here's an important point: If you wish to discontinue certain practices, eliminate any forms, reports, or procedures that support them. This is the equivalent of "burning the boats." If you give people the option of not changing how they do things, guess what they'll do!

Now you can start training. Having identified what changes you're making and having taken the steps necessary to facilitate those changes, you're ready to provide PM training. The training, of course, should be customized to your firm's needs. Beware of training programs that focus too much on the technical aspects of project management (e.g., budgeting, scheduling, scoping, estimating, etc.). While these are certainly important, it's likely that your most entrenched project problems are related to the softer skills such as communications, client relations, and coordination with the project team.

Remember that effective training is a process, not an event. Expect to make a long-term investment in coaching, feedback, and reinforcement if you really want to see performance improve. But it's worth it. If you were only going to excel at one corporate initiative, improving project management is probably the one with the biggest payback.
 

Tuesday, September 2, 2014

Best Way to Improve Project Performance?

Dave Burstein of PSMJ is one of the smartest guys I've met in this business. So when Dave speaks, I listen. Several years ago I hired him to conduct a client survey as part of a comprehensive project management initiative I was leading for my former employer. When we met to discuss strategies for improving project performance, Dave offered several suggestions. Then he said, "If I was only going to do one thing, it would be instituting monthly project reviews."

We took his advice and implemented a process of third-party reviews for all projects over $50,000 in fees. The payback was immediate. During an initial training session to teach our senior managers how to conduct the reviews, our role playing exercise identified a looming problem with a major client. The project manager, one of our best, had simply overlooked the danger signs. Catching the problem and addressing it early saved us an estimated $600,000 in project losses.

I've been advising clients to do project reviews ever since. Well, trying to. It sounds so simple in concept that I've had trouble convincing clients of the substantial benefits. But having administered the review program for a national firm and participated in several reviews myself, I understand Dave's advocacy of them. So why are they so effective?
  • They provide an independent, expert perspective on how the project is progressing. Even the best PMs can miss developing problems, overlook solutions worth considering, or fail to be fully responsive to the client's needs and expectations. A review can avert a disaster, or help make a good project a great one.
  • They force PMs to properly track the status of their projects, something that many are negligent in doing. Preparing for the regular reviews means the PM must routinely evaluate how the project is doing relative to meeting goals, budget, schedule, cash flow, etc. Thus reviews provide an early warning system to identify problems before they become more serious—and difficult to solve.
  • Reviews are far superior to classroom training in helping PMs develop their skills. They are a great way to reinforce training, serving essentially as a hands-on coaching session. Done properly, reviews are welcomed by PMs. The tone of the reviews is crucial to their success. They are intended to be a collaboration between the PM and reviewer, not a fault-finding inquisition. The reviewer should serve more as coach than critic.
Review Content

I recommend keeping routine reviews to no more than 30 minutes unless problems are uncovered that take more time. In advance of the review, the PM compiles information on the following:
  • Budget and schedule status
  • Billing and collection status
  • Status of deliverables
  • Significant project changes
  • Potential risks or problems
  • Proposed corrective actions for variances
  • Assessment of the client relationship
  • Any other important issues
How Reviews Are Conducted

Typically, a senior manager is assigned to conduct the review. This is often the principal-in-charge or client manager. Ideally, the reviewer should not be heavily involved in the project so he or she can bring a relatively objective, third-party perspective to the review. For large complex projects, a review panel may be preferable. The reviewer and PM determine the optimum review interval, but monthly is suggested for most larger projects.

Dave recommended having the PM make a presentation to the reviewer, using a standard PowerPoint template to compile the typical review information. This provides regular practice for polishing presentation skills, plus it lends the review a bit more gravity. While the review should be supportive and comfortable for the PM, it's nevertheless serious business. Both the interests of the client and the firm are at stake.

How well your projects are executed determines how well your firm performs overall. Among the many elaborate tactics that your firm employs to try to improve performance, have you tried one of the simplest and most effective?

Wednesday, August 20, 2014

3 Dimensions of the Client Relationship

Firms survive when they find enough work to cover their expenses and generate a little profit. But firms thrive when they build enduring client relationships that continue to produce revenue and profit for the long haul.

Ever notice how most business development efforts seem driven by a survivalist mentality? They're mostly transactional, focused on winning projects rather than clients. And as those projects are being completed, there's the constant push to find more of them. Meanwhile, the firm's ongoing clients provide the stable base needed to create a sustainable business.

I've long advocated that firms should devote as much attention to building great client relationships as they do to chasing new work. The best firms in the A/E business do, but most I encounter seem to favor fishing over farming. If you're going to get serious about relationship building, it might be helpful to recognize three important dimensions of the client relationship:

Business relationship. As professional service providers, our foremost responsibility is helping our clients be successful. The true value of your projects is how well they deliver business results. Unfortunately, technical professionals are often prone to neglecting the business performance aspect of their designs and solutions.

One of the best ways to differentiate your A/E firm in the competition for clients is to demonstrate a keen understanding of the client's business and how your services will help achieve business outcomes. Divorced from the client's strategic needs, your services are likely to be viewed as a commodity. Commodity purchasers are much less likely to form the long-term relationships with service providers that you desire.

Working relationship. This involves how well the two parties work together, another aspect of client relationships that gets too little attention. The working relationship defines the client experience, which surveys suggest constitutes half of the perceived value that you deliver to clients. Yet the working relationship is seldom mentioned in sales conversations or in proposals. Most firms lack any kind of standards for delivering great client experiences, nor do they regularly solicit feedback from clients on how they're doing.

There are three critical steps to excelling at the working relationship: (1) benchmarking the client's expectations, (2) developing processes and standards for meeting those expectations, and (3) getting feedback on your performance. Do these three things and your firm will be in rare company.

Affinity is how much you and the client like each other. Friendship with clients is a wonderful thing, but it's overrated. You can have a very productive relationship with a client who is not a friend if you deliver business value and a great experience. When I speak of friendship, I'm talking about a relationship where simply spending time together is valued. There is a personal caring for each other, a natural attraction, and common interests. 

In business, the term friend is commonly too broadly applied. Some seem to call everyone they know a friend. Others consider any client they get along with a friend. But getting along is a result of a strong working relationship, not necessarily a friendship.

Why are these distinctions important? I've seen too many friendships in business strained by the failure to deliver business results or tend to the working relationship. There are still sellers in our business who think that making friends is more important than meeting business needs. Too many firms think that quality technical work is all that really matters, without giving proper regard to the client experience. And our industry's neglect in linking our work to business outcomes is a significant factor in the commoditization of our services.

If your firm is serious about building more profitable, long-term client relationships, you'll want to avoid these common mistakes. Great client relationships result from helping clients succeed in their business or mission, delivering great client experiences, and—if the opportunity arises—being a good friend.

Monday, August 11, 2014

What Client Surveys Tell Us

I'm in the midst of doing another client survey, this one the sixth I've performed for a very successful engineering firm and long-time client of mine. It still amazes me that so few A/E firms do this on a regular basis. I always uncover a few surprises, revealing that firms don't know their clients as well as they'd like to think. Yet there are some consistent themes I've noticed in the many surveys I've done over the years: 

Relationships matter. This is stating the obvious. But many firms continue to neglect the basics of managing their critical client relationships. Very few have a deliberate approach, instead simply trusting their client managers and project managers to follow their instincts and do the right thing. Unfortunately, too many technical professionals are prone to focusing more on doing the work than serving the client. 

Not surprisingly, clients tend to judge the quality of your technical work in the context of the relationship. A client who enjoys working with your firm will be more forgiving of any shortcomings or mistakes. But a client who finds you difficult to work with will generally find fault with your technical work as well.

Flexibility is important. I know, this can drive you nutty. Clients who change their mind at inopportune times, who want you to dumb down your design, who expand the scope but not the budget, who have their own unique invoicing requirements. Indeed, clients' demands are sometimes unreasonable. But A/E firms are also sometimes unreasonably inflexible and slow to adapt to client needs.

The best way to manage these situations is to establish mutual expectations at the start of the project. Discuss with the client how changes will be managed, critical junctures in the project schedule when timely decisions are needed, how best to maintain good communication, how performance will be evaluated, what precisely is expected in work deliverables, etc. With mutual expectations, reasonable boundaries can be defined that help enable flexibility without compromising your firm's needs.

Proactive client communication is crucial. One survey found that about 67% percent of clients who dump their consultants do so because of perceived indifference. Poor communication is at the heart of such perceptions. When the client has to initiate most communications or is contacted only on a need-to-know basis, it's easy for that person to assume that he or she isn't really valued by the service provider.

Technical professionals sometimes overlook the fact that good communication is a critical deliverable. Clients depend on timely information and updates to meet internal deadlines, manage budgets, satisfy reporting requirements, and allocate time and resources. Simply meeting contractual deliverable schedules is not enough.

Clients also want to know your thought process—how you reached certain decisions, why you favored one solution over another, what other options were considered. Many A/E firms are inclined to leave clients out of the loop in such discussions. That means the client's input often comes too late—after the deliverable is well developed—forcing expensive revisions and delays. It's better to engage clients early and often, starting with the project management plan, scoping documents, and preliminary design concepts.

Clients see our organizational dysfunction. Clients often know more about our internal workings than we'd like. They seem to recognize when departments don't coordinate well, when the PM doesn't keep the project team adequately informed, when deliverable review procedures aren't followed, and other such issues. They naturally associate these problems with the project screw-ups that happen from time to time. 

When is this a particular concern? When performance deficiencies persist or mistakes recur with ongoing clients. Most clients understand that a few problems are inevitable on every project, and most firms are responsive in trying to make things right when such problems occur. But clients grow frustrated when we fail to address the root causes of lingering problems. My interviews with clients indicate that they know the difference between your short-term corrective actions and longer-term, systematic fixes to recurring issues—and they'd like to see more of the latter.

The best solution isn't always best. Imagine you're shopping for an economical compact car and the salesman persists in trying to interest you in his line of SUVs. Irritating, isn't it? That's how many clients feel when we keep offering them the Cadillac solution when they wanted a VW. Architects seem particularly prone to this. Clients often wonder whose needs are driving the design solution.

There may well be compelling reasons for nudging the client toward a more elaborate and expensive solution—lower life cycle costs, easier operation, reduced liability, greater flexibility, etc. But sometimes we have to admit that it's mostly our subjective preference. We like delivering the "best" solutions because we want to be among the best solution providers. Yet budget-constrained clients are increasingly asking us to deliver "good enough." Keep in mind that a good-enough technical solution is often part of providing exceptional client service.

Bottom line: Make it easy for clients to work with you. Client surveys reinforce the research that reveals that clients value the experience as much as your expertise. Simply put, they want a project experience characterized by your concern and their convenience. They want service providers who are committed to understanding and responding to their needs.

Most clients have too much on their plate, so they're looking for low maintenance, trouble-free working relationships. That's why they tend to stick with their current A/E firms, even if they're not convinced that it's the best they could do. But clients don't like being taken for granted, and the apparent complacency (or indifference) of their existing service providers is the major reason why many eventually make a change.

One way to avoid appearing complacent? Get regular feedback on how you're doing, listen carefully, and make improvements where needed.

Friday, August 1, 2014

Is Your Sales Approach Aligned with the Buyer?

Years ago, I received a call from the environmental manager at a large manufacturing facility. He was interested in outsourcing operation of their wastewater treatment plant and wondered if that's something our firm could do. I was happy to respond that we could.

This seemed the breakthrough I had been waiting for. I had pursued this client, located in the small town where I lived, for years. Yet we had only been awarded a few small contracts. I called a couple experts in our firm and invited them to come to Colorado to meet with the client. I was about to learn another painful lesson about the need to understand where the client is in the buying process.

My biggest mistake was failing to account for the other decision makers involved—what's often called the "complex sale." My contact had done his homework and come to the conclusion that outsourcing was the way to go. So our team came prepared to talk about how that transaction would take place. But besides my contact, we would be meeting with the facility manager, engineering manager, and wastewater plant operator. And I had no idea what to expect from them.

Research suggests that people go through five stages in making a purchase decision (or most any kind of decision). These are:
  1. Recognize the problem or need
  2. Search for information about both the need and possible solutions
  3. Evaluate the possible alternatives
  4. Make a decision (or purchase)
  5. Assess the decision (post-purchase evaluation)
In selling, it's important to recognize where in this process the buyer is and to align your approach accordingly. In the complex sale, of course, different buyers can be (and often are) in different stages of the decision process.

You can guess where this story goes. The environmental manager was ready to make a decision, and we came prepared to help him do just that. The facilities manager, however, was still searching for information, aware that there were problems but not sure what course of action to take. The engineering manager was a little further along, considering various options, with one being outsourcing...but he was leaning against that option. Finally, the operator was incredulous. "What's the problem?" he wanted to know.

It was a rancorous meeting, one we were hardly prepared to moderate. The outsourcing opportunity never materialized, nor did any other contracts with this client. My primary contact, the environmental manager, left the company shortly afterwards to become a consultant. Perhaps he thought he could do a better job than we did that day!

Obviously, I could have handled the situation better. Before committing to flying people from different parts of the country, I should have asked what concerns or questions the other decision makers might have had about the outsourcing option. If my contact didn't know (and he seemed surprised at their resistance in the meeting), that would have been a red flag suggesting that more consensus building was needed before pitching a final solution.

But I'm not alone in making such mistakes. In my experience, not many sellers among A/E and environmental firms excel in managing the complex sale. It takes time and can be difficult to navigate at times. That's all the more reason to give it priority. Understanding the players involved and where they are in the buying process enables you to calibrate your sales approach to maximize your chances of success.

Sunday, July 27, 2014

5 Essentials for Recruiting Success

Before the financial crisis, the biggest challenge facing A/E firm executives was finding enough qualified staff to meet growing workload demands. The resulting recession solved that problem temporarily. Now firms are hiring again, even though the economic recovery is hardly robust. Some of my clients are scrambling to add a sizable number of new staff.

So recruiting is a hot issue again and, barring another recession, will be for the foreseeable future given the projected shortage of technical professionals. Perhaps it's time to rethink your approach to competing for top talent. Here are five steps that I think are essential to getting the edge in recruiting:

1. Define your value proposition. Why should someone consider working for your firm? The better candidates have options these days, so you need to determine how to differentiate your firm from the competition. Can your firm pass the comparison test?

You need to understand your value proposition. What can your firm offer that the others cannot? Tough question? Well, in a tough talent market you can bet candidates will be asking it. So you need to come up with the answer. At a minimum, you should address the following factors that today's workers value most:
  • Workplace environment. Do you offer personal attention, flexible hours, a supportive boss, effective teamwork, interesting work? Can you provide any evidence (e.g., employee surveys, workplace awards) that yours is a special place to work?
  • Career development. Does your firm have a strong training program, clear career paths, active mentoring, ongoing performance feedback, meaningful incentive compensation? Can you make a compelling case for your firm being a great place to build a career?
Yes, the standard is high. That's why the process of developing your value proposition is so important. You need to determine what your firm can realistically do to distinguish itself in the competition for talent.

2. Create recruiting-oriented marketing materials. With your value proposition in hand, you now need to communicate it effectively. There are two primary audiences for your message: (1) specific candidates you are pursuing and (2) unidentified prospective candidates out in the marketplace. Both can be served by targeted marketing assets such as your website, brochures, fact sheets, social media, and videos.

One reason firms struggle in this area is because the HR department is handling it versus the marketing department. What's needed is a cooperative venture between the two functions—or the use of an outside consultant if necessary. Keep in mind that promoting your firm to prospective clients and to prospective employees involves much the same messaging. So it shouldn't be viewed as diverting the marketing department from its primary task.

Committing a portion of your website to recruiting or having materials on hand for job fairs are no-brainers. But here's another option to consider: Take recruiting materials to conferences and trade shows where you are exhibiting. While clients are the usual targets at these venues, many of the attendees are also potential employees. And your firm may be the only one there that is marketing for candidates as well as clients.

3. Commit to a "we find them" approach. There are two basic recruiting strategies: (1) the traditional "they find us" approach that amounts to placing your ad in various places hoping to attract qualified candidates, and (2) the "we find them" approach that involves identifying and actively pursuing the people you want. Many firms in our business use the latter approach in part when they hire a headhunter. But they are often uncomfortable with doing direct recruiting themselves, especially from competitors (see this post exploring the ethics of recruiting). 

I'm convinced that the passive "they find us" approach will be increasingly inadequate as the talent market in our business tightens. So how will you find the people you need? Much the same way that you find clients. With clients, you identify who you'd like to work for and actively pursue them through a sales process. A fundamental difference with prospective employees, of course, is that most aren't advertising their availability like clients do through solicitations for proposals.

In fact, most potential employees aren't even looking. One study found that 54% of all workers are passive job seekers, meaning they would seriously consider another job offer. But only 16% are actively looking. That means only a small percentage of potential candidates are going to see your ad no matter how widely you broadcast it. If they're not looking for you, you need to go look for them. The best place to start is to leverage existing relationships.

4. Leverage relationships for recruiting purposes. Your greatest recruiting asset is your employees who know people. They all have former colleagues and classmates, friends, neighbors, and family members among whom some could become a valuable addition to your firm—or a valuable resource in identifying candidates. The secret is getting employees actively engaged in the recruiting process. I know, most firms offer a referral bonus for this purpose. But most lack a true "recruiting culture" where everyone is constantly looking for candidates to join the firm.

This gets back to having a genuine value proposition. Are your employees passionate about your firm? That naturally spills over in their active engagement in recruiting (with a little direction). At my last place of employment, I felt I was working with the best firm in the business. So without prompting, I pursued friends and former colleagues who I thought not only would be great hires, but would be grateful for the opportunity to join our firm. We were successful in hiring some of them. Now imagine multiplying that effect by the number of your current staff.

The important point is this: Begin transitioning from activity-driven to relationship-driven recruiting. Sure, there's a lot of things you should be doing. But the ultimate goal of all your activity, as it should be in business development, is to develop strategic relationships. 

5. Offer a competitive compensation package. This one's pretty obvious. I only mention it because many firms, for various reasons, struggle to keep pace on salaries and benefits. Small firms often find it difficult to compete. Same for firms that provide mostly cost-sensitive commodity services. Other firms are constrained by high overhead. The problem of salary compression will resume once the economy recovers, driving up the cost of labor and throwing existing pay scales out of whack.

Solutions to these problems are elusive and beyond the scope of this post. But you'll have to deal with the challenge nonetheless. Here are some suggestions:
  • Pay for high value. In other words, be willing to invest above the norm for special talent. This is particularly true for those who have a demonstrated ability to bring work in the door or who are dynamic leaders (where their impact is multiplied among those they lead). Focus on ROI, not just qualifications and pay scales.
  • Deal with underperforming employees. What does this have to do with recruiting? Paying for underperforming employees limits your ability to pay for better performers. Plus they occupy positions that could be more capably filled by others. Of course, one of the reasons we don't let poor performers go is we're afraid we won't be able to find suitable replacements. That's another reason to be continually recruiting, regardless of openings. Keep the pipeline full and you'll have more options.
  • Hire more non-degreed professionals. Many of these individuals represent some of the best values for the money you can find. They generally command lower pay than degreed professionals, but can perform most of the same functions (assuming a similar level of experience). They also are less likely to be wooed away by a competitor because they tend to be undervalued. Finding good non-degreed professionals isn't necessarily easier than finding degreed ones, but they are certainly an option worth your attention.
  • Close the gap with incentive compensation. This involves offering a lower base salary with the opportunity to earn above-average compensation through performance-based incentives. Generally, this option appeals only to a small segment of prospective employees, but they tend to be top performers who are confident of their ability to maximize their pay. For this option to gain traction, you usually need to meet the following criteria: (1) the base salary is within the median range of the industry, (2) the earning potential through incentives is substantially above the norm, and (3) the performance metrics are clear, objective, and reasonable.
While compensation is not the most important factor in hiring and retaining talent, it is still important. If you simply cannot compete on salary, you'll have to compensate with a compelling value proposition. In that case, you want to have the candidate "hooked" on the advantages of joining your firm before the subject of compensation even comes up.

Wednesday, July 16, 2014

Three Value-Adding Strategies

Value drives business success. The premier companies are those that provide distinctive value. The more value delivered to the customer, the more value is typically returned (in the form of revenue, profits, loyalty, etc.) to the provider. The management mandate seems clear: Find ways to create more customer value than your competitors.

Yet value creation as a strategic objective is rarely mentioned in the A/E industry. We prefer concepts like quality, expertise, and experience. Unfortunately, these assets generally don't differentiate us; they are expected by our clients. Added value, by contrast, differentiates. Has your firm made value creation a strategic priority? If not, let me encourage you to give the matter serious consideration.

So what is value? A good working definition is: Value is the perceived benefit received minus the associated cost. Added value, then, is when the client receives more benefit for the cost than was expected.

It's important to understand that there is more to "benefit" than services rendered and more to "cost" than fees paid. To understand value creation, we need to recognize that:
  • Value is a personal and subjective concept that exists in the customer's mind (if you need proof, consider some of the items that people will pay good money for on eBay!). Value cannot be adequately quantified monetarily; purchase price is a helpful but incomplete measure of value. Nor should we presume what any given client values; we must uncover it.
  • Since value exists in the mind, it is delivered in both tangible and intangible forms. Thus the client may value that your firm is easy to work with as much as the quality of your work products.
With these principles in mind, let's consider what my research indicates are the three most common value-adding strategies. These are not specific to our industry, but they are all certainly relevant to us.

1. Satisfy unmet or emerging needs. This is the classic sweet spot in the product/service life cycle. When you are among the few firms (or the only firm) that can meet a client's specific need, the solution you deliver is inevitably of high value. Yet supply and demand are only part of the value equation. One study of professional firms found that the less the client understands the problem, the more valuable the solution. Getting involved early in helping clients solve emerging, unfamiliar problems is a clear opportunity to provide higher value—and reap the greater profit and client loyalty that comes with it.

Among the three value-adding strategies, this is easily the one most commonly pursued by A/E firms. No doubt your firm has periodically added new services to address emerging markets less populated by your competitors. Unfortunately, this strategy is typically short-lived. As the need becomes better known, more firms move to meet it. With more choices of providers, the perceived value (and the profit) declines. A/E firms are also routinely slow to respond to emerging opportunities. By the time most invest in new services, their competitors usually already know about it and are doing the same.

2. Meet clients' strategic needs. Strategic needs are those that affect the overall success of the client's organization. They commonly relate to financial, competitive, political, or operational factors. Given the critical nature of strategic needs, clients are usually willing to pay a premium for good solutions. That's one reason, I'm convinced, why other professional service firms demand higher multipliers than we do—they do a better job meeting strategic needs.

A/E firms once played a much larger role in this arena, but we have forfeited many of the high value, strategic services to other professionals like management consulting firms. The role of "trusted advisor" is at the heart of meeting strategic needs. Many A/E firms find themselves merely filling orders for design services rather than helping clients define their needs and choose the optimum course of action. We are often focused to a fault on doing what we do best, unable to connect our work to the strategic needs that drive our projects.

3. Provide distinct, valued customer experiences. This is the fundamental asset at the core of what is called the Experience Economy. Businesses that command the highest profits these days usually have tapped into the value of offering superior customer experiences. Consider the entertainment industry (including spectator sports), theme parks, adventure travel. Consider how the "Starbucks Experience" multiplied the value of a commodity like coffee. A five-star restaurant is defined as much by its ambiance and service as by the quality of its food.

Among the three value-adding strategies, I think this one holds the greatest promise for our industry—as I've written about in this space. While A/E firms routinely claim to provide "great service" (i.e., great client experiences), rare is the firm that has embraced this strategy as a management priority. That oversight is your advantage. For an overview of effective client service practices that enhance the value of your services, check out this previous post.