Access and Speed. are the two primary things that are rapidly changing the word around us. Individuals all over the world have unprecedented access to virtually anything, or anyone, from anywhere. Tribesman in Africa now have access to more information than the US president did just a couple of decades ago.
Organizations have unprecedented access to: customers, competitors, and resources; human and otherwise.
How is this changing things for professional services organizations? Let’s take a look at a few examples.
Traditional software VAR (Value Added Resellers) have felt a significant pinch in the recent years. Business models built on software maintenance revenue and professional services have been disintermediated by Cloud software providers making better, cheaper, and more accessible capabilities available with limited need for long sales cycles, significant installation, and configuration expenses, and expensive customizations.
We see the continuing trend of technology absorbing lower value added tasks across the economy. In professional services, we see this trend accelerating as well. Lower value legal activities like entity filings and other forms have given way to do it yourself service firms like Legalzoom and Nolo.
However, the power of access has had a positive effect on another attorney I know. Most of his clients think “Jim” lives in Orange County, CA. However, he actually lives in Costa Rica. soaking up “La vida pura”, and doing most of his work near jungles, warm waters, and great waves. When he needs to be in court, he hops on the 6 hour flight back home, wows the judge and jury, and then flies back home to surf, sand, and toucans.
While it’s no surprise that technology has displaced generations of lower end workers, it’s now apparent that many white collar jobs may soon feel disruption.
Andrew McAfee, well respected research scientist at MIT, and co-author of Race Against the Machine, observes the following:
“There will be some very powerful technologies entering the economy over the next ten years. When I look back at the kind of things computers have been doing, my strongest impression is, “We ain’t seen nothing yet.” Many people in jobs ranging from customer service to various types of diagnosis to driving vehicles are going to be confronted by those technologies, and some will be displaced. And the rate of displacement will increase because technology improves at an exponential rate. It feels like we have recently crossed a tipping point.
Classic theory has it that technology is bad news for those further down the skills or education ladder. That will begin to change, at least slightly. Diagnostics is a good example. This is a large part of what doctors do, and one of the most advanced types of diagnosis is pattern-matching. What astonishes me is that computers have recently demonstrated pattern-matching abilities that make a mockery of everything that has come before. We have not seen such displacement of higher-wage, higher-skilled professions yet, but we are going to see more.”
In addition to doctors being vulnerable to having much of their diagnostic capabilities (and perhaps their prescriptive capabilities as well) being replaced by technology, one of the world’s most elite and respected management consulting firms, McKinsey, began to disrupt themselves a few years ago by building a new practice not centered around human capital for the first time in it’s nearly 100 year history. McKinsey solutions, instead, is built around data, and tools to help enable their clients to make better decisions.
I recently advised a professional services client to change their model from hourly billing to fixed priced packages, which could be easily consumed by their customers. It required a slight shift in delivery methods, and human capital, but the results have been dramatically positive.
Critical Core Competencies Evolving
We’ve seen a dramatic shift in the last 20 years. Talent and capabilities are largely distributed and accessible. Access to a broader set of capabilities, packaged up in easily consumable technology, or more cost effective human resources are seemingly as close as a few minutes on the internet. So if that’s not the challenge, what is?
The impetus today is harnessing these capabilities, collaborating across broader boundaries, and packaging, and distributing value in a manner that resonates with a more intelligent customer.
An evolving set of professional services models that seek to be more agile are showing us new examples of value creation. Along with the examples laid forth, technology analyst firms, Constellation Research and Altimeter Group, have recently brought new models that change the way that clients gain access to research and insights related to the world of disruptive technology.
More than $360 million worth of freelance work gets funneled through oDesk, where 9 out of 10 of their clients say using their freelance marketplace makes their business more competitive.
In Summary
Creating new ways to find, collect, package, and distribute service capabilities will continue to evolve as we become more connected, and technology provides increase challenges and opportunities.
Which new challenges are you faced with and what innovative professional service models are most interesting to you?
This post was sponsored by Work Etc. The opinions expressed in this post are entirely my own and don’t necessarily represent, nor have they been influenced by Work Etc.’s positions, strategies or opinions.
