David Maister - Professional Business, Professional Life

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David Maister - Professional Business, Professional Life

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Some Good Advice

by Andrew Heathcote 2006

This article appears in the June 15 issue of Business Review Weekly in the Features section.

Times are buoyant for Australia’s accountants, but there is room for improvement in defining their roles, marketing and building relationships with their clients.

As the world’s leading consultant to professional-services firms and a regular visitor to Australia, David Maister is well placed to comment on the state of Australian accounting firms. He does not pull his punches. Maister is a doyen to many local firms and practice management consultants and his advice does not come cheap. Reports suggest he charges up to $US 20,000 a day to run his eye over a firm.

Below is an edited transcript of a BRW interview with Maister, who was born in England but lives in the United States. He discusses the evolution of Australian firms, the dangers of running multidisciplinary practices, common mistakes in marketing and why many firms are not as confident about their own businesses as they want their clients to believe.

BRW: What is your take on Australian professional-services firms?

David Maister: The honest truth is that I see as much diversity in Australia as I do in other countries. In other words the best is as good as the best anywhere and the dumb stuff is as dumb as it is anywhere else.

BRW: Have Australian firms improved the way they do business?

Maister: When I first started coming to Australia 20 years ago, there was more mateship around than, say, in the US, which tended to be less tolerant [of poor performers]. It wasn’t that Australian firms didn’t know better, it was just that they waited to tackle issues until they really had to. But I have seen that change. There is now less willingness to run their businesses like a family.

BRW: How similar are the operations of multi-national firms in Australia to their offices in other countries?

Maister: They are not really very similar at all. The only firm that really had a very strong “fit in or leave” culture was Arthur Andersen. All the other firms are built on what I call the hunter model. This model says that it is everyone’s job to go out and chase them buffalo. And if buffalo die out, chase deer. And if, in your country, a flock of geese go flying by, you don’t have to check with anybody because there is no worldwide strategy that dominates your opportunities. Most of these big firms, particularly since the demise of Arthur Andersen, are very entrepreneurial in their approach. They share things such as tools and processes, but fundamentally they are very decentralised operations.

BRW: Many professional-services firms try to set themselves up as multidisciplinary practices. What are the dangers of this strategy?

Maister: If you really want to be known for something in the marketplace you can’t do a little bit of a lot of things. If someone walks into McDonald’s and says, “I would like a curry please”, you are not going to get McDonald’s saying “Let’s close down the grill and make this chap a curry”. Theoretically they are capable of doing it, but it would be an unwise strategy to say we will make anything for anybody who will pay. It will just result in being very unfocused and not having a particular reputation for any one thing.

But you can see where the temptation lies. If you are running the McDonald’s store in Woolloomooloo the temptation is to sell the next customer anything he wants. It actually takes courage to stick to your strategy. I am not trying to say that the firms that do it are stupid. It is a natural business temptation but it will lead to you being unfocused and not special. It takes courage to stay special.

BRW: The market for professional-services firms is quite healthy. Many firms make comments like, “If you can’t make money at the moment you never will”. Do partners think about their own businesses enough when the market is strong?

Maister: It is an old trade-off. It is kind of like asking: “Would you ever go to university if you can get a job tomorrow?” If you only judge your success on how well you are doing this year then no one would ever go to university. So, of course, when there is lots of business around the temptation to sit back is huge.

But a good career or business strategy doesn’t just depend on this year. It needs to position you well for the future. Am I setting myself up to be able to ride out the bumps?

BRW: You mention in the articles on your web site about how firms should avoid one-sided conversations in their marketing. Can you explain this?

Maister: Everybody talks about how they want business relationships with clients. But when you look at what they are doing they are not going after romance at all. What they are going after is a one-night stand.

What I have tried to point out is that if you are trying to build a long-term relationship with someone, a mutually beneficial relationship, then the tactics you use are 180 degrees different to what you use if you want a one-night stand. You can succeed at either but you better not get confused about which you are trying to do.

If you truly do believe in the business benefits of having relationships then what you need to stop doing is these quick-hit marketing activities that are all about saying how wonderful you are.

BRW: What are the most common mistakes professional service firms make with their marketing?

Maister: Let me give you a little catchphrase. People believe what you demonstrate, not what you claim. If I want you to believe something about me, then I can’t stand there and say that if you pay me, everything I do for you will be fabulous. It is just not very persuasive. What you need to do if you want to improve at marketing is to actually do something for the other person. Demonstrate your ability to help by actually helping.

When I go into firms to evaluate their marketing materials, what I look for is whether they are actually offering the prospective client an idea or a suggestion or a piece of analysis that they have never seen before. What is really surprising is how often it is not there. Prostitute marketing, or “once you start paying I’ll show you something”, is really ineffective. What a lot of firms have to learn is that the best way to market themselves is by doing and not by telling.

BRW: Many firms like to talk about how their culture is unique. But how is this possible? What does culture really mean in a professional-services firm setting?

Maister: More firms claim to have a culture than actually have one. It is an easy word to throw around. To me, a strong culture is where there are rules about what you must do to stay a member of a society. “If you don’t fit this kind of behaviour then we reject you because we operate this way.” It is a club with rules.

That can be very powerful in attracting new employees and for operating internationally or across borders within Australia. As a client I want to know that every one in the club will follow the same set of rules so I can trust people in other offices and other parts of the business.

But in order to develop this kind of trust you have to have the courage to throw people out who don’t follow the rules. I would report to you that there are very few professional businesses that have that kind of courage. In most professional businesses you are allowed to break all kinds of rules – if you bring in large amounts of cash.

I am not saying that is immoral. I am just saying that there is a price to be paid for it if you don’t have rules that everybody follows. If everybody knows that the rules are optional then the internal trust and collaboration goes away. Strong cultures are very powerful but it takes real effort to create them. It takes courage.

BRW: What are the trends in how successful firms are charging clients? Are there more instances of fixed fees?

Maister: It depends on the profession. Lawyers keep talking about it but the truth in law firms is that most of it is still done on an hourly basis. I would say there is movement but I wouldn’t say it is a revolution. People have been talking about it for decades.

BRW: Are you supportive of it?

Maister: One of the things that I do, that I always advocate despite few people taking me up on it, is giving clients an unconditional satisfaction guarantee. Every bill I send out says that if you are anything less than completely satisfied pay me only what you think I was worth. My point is that everyone talks a good game but what we really need to be doing is value billing. The trouble with many firms is that they are trying to have it both ways. They don’t have the courage or the self-confidence to give a guarantee but want to figure out ways to get paid more. You can charge very high fees if you are prepared to stand behind the quality of your work and guarantee satisfaction. This is very powerful but very few firms have copied me. These firms are a lot less self confident than they would give you the impression.