LinkedIn: What is the point of professional services firms?
Charles Wookey, CEO, A Blueprint for Better Business
As more major companies commit to a purpose beyond profit and adopt a stakeholder model of creating value for society rather than just shareholder value, they are looking to their closest advisers – strategists, lawyers, accountants and others – to do the same. And given the scale of global challenges we face, society needs advisory firms to challenge and support their corporate clients to succeed in hastening and not hindering a just transition. That means helping them create profitable solutions to the problems of people and planet; to use technology in a way that promotes human and social well-being; and to operate as healthy social organisations which are better businesses, better for society and better for people.
Is such a metamorphosis remotely possible? In recent decades the largest and most profitable professional services firms have been key architects of the status quo, in some cases aiding and abetting some of most toxic examples of corporate and government excess. And many would argue that becoming advocates and agents of deep change in corporate life is not their job. Professional services firms, the argument goes, should have no purpose other than to use their specialist expertise to help and support their clients in achieving their purposes – within the law and of course avoiding reputational risk. The problem with this stance is that they become no more than bodies and brains for hire. As their clients outsource their needs, the professional service firms outsource their judgement and reputation to those who pay the piper and call the tune.
A very encouraging signal of change is that professional staff and associates in these firms are advocating from within for different business practices. When 1100 McKinsey staff signed an open letter to the firm’s leaders just before COP26 in October 2021 objecting to the firms work for the world’s biggest polluters the symbolism was powerful. The letter said “the climate crisis is the defining issue of our generation. Our positive impact in other realms will mean nothing if we do not act as our clients alter the earth irrevocably”.
The top professional services firms in law, accounting and strategy consulting also face increasingly tough competition to attract and retain talented people. There will always be some for whom financial incentives predominate, and the influence of major US firms particularly in the legal profession seems set to reinforce these impulses. But many younger professionals want something different from their predecessors, and the impact of the pandemic on highly paid but also highly stressed staff in professional services firms left many asking what the point of their work is, and as Adam Grant put it seeking “more net freedom than net worth”.
These professional services firms have powerful agency in the system if they choose to use it– both in what clients they take on and what matters they engage with, and especially in the way in which the firm conducts itself and the governing principles (such as on sustainability) which shape the support and advice it offers. Taking clear ownership of what the firm stands for and taking a principled approach to the positive social and environmental impact it seeks to help its clients create is becoming a competitive differentiator. But to become genuine and lasting agents of change demands thinking more broadly and differently about what counts as success, joining their clients in moving away from a core purpose focussed on financial returns – profits per partner – to assessing their impact more broadly, including the quality of human relationships they create and sustain.
An ex-senior partner of one of the big consulting practices said to me a few years ago, “you need to understand our business model. What is the purpose of the gig? The next gig. We are in the business of creating dependency.” Even if this cynicism is not an espoused part of the business model the incentives and measures of success can signal that this is the underlying modus operandi. And today in that mould some of the large consulting practices are building ‘purpose practices’ that invite their clients to depend on them in understanding and becoming purpose-led. This encapsulates the depth of the challenge and the opportunity.
The challenge is that the decision to orientate a business to become truly purpose-led cannot be outsourced because it is not just a matter of technical challenge, process or strategy. It is crucially about the shared understanding and belief of the company leadership about why they are in business together and how the world is a better place as a result of their success. Lasting change here has to come from inner conviction. The role of the adviser is to offer challenge, to provoke thinking and to help their clients own the decision and build their judgment and experience. The risk is that as clients turn to advisers to help they default to what they know and if all they know is how to implement their clients wishes – as they have not themselves understood their own purpose – we have the status quo reinforced albeit under another newly named income stream.
And here lies the opportunity: for the professional services firms – not just strategists but lawyers, accountants and others too – to use the provocation of purpose not as a sales gig but as a moment to catalyse true and deep introspection, and for internal dialogue across the whole business. What are we in service of now? How as a professional services firm could we use our collective expertise and agency for good in a world which is in such need of healing and hope? How could we create true partnerships with our clients, bringing our expertise and insights where relevant in a way that genuinely assists and empowers them to make the transition they need, guided by strong values and a shared purpose to benefit society? The paradox of course is that being clear and guided by a deep and principled belief about that is what will make for a valued trusted adviser in future – and indeed provided the platform on which the modern firms have been built.