Tim Williams, founder of Ignition Consulting Group, believes professional services firms including law are moving towards a specialist model.
“We are entering what some observers call ‘the age of hyper specialisation,’ where sophisticated clients know what they want and know where to find it,” he said.
“They are no longer dependent on the resources of a ‘full service’ firm, but rather have the knowledge and ability to access a global talent pool to hire world-class service providers in virtually every area from taxation to litigation.”
Mr Williams will be discussing this issue in more depth during his keynote address at the 2015 ALPMA Summit on the 10 and 11 September.
While integrated firms once had the upper hand, Mr Williams suggested there had been a shift towards firms “specialising in supplying on specific link in the value chain.”
In his view, many firms are trapped in a “more is better” mindset where they seek growth by adding practice areas or covering more industries.
“But the most successful companies don’t try to sell to everyone; they are squarely focused on a particular segment of the market," he said. "They know that depth is a much more profitable strategy than breadth.”
As an example, he compared General Motors, which produces a number of cars at a range of price points, to luxury retailer Porsche.
“For most of the past few decades, GM has been one of the least profitable car companies in the world. Guess who has been the most profitable?” he said.
While some firms may fear losing clients by going “too narrow”, Mr Williams suggested the bigger danger was continuing to believe broader is always better.
“If you put up a website that says ‘We’ll go out with anybody,’ guess what type of prospect you’ll attract? On the other hand, a business focus that clearly communications ‘We’re not for everyone’ produces a much higher-quality prospect,” Mr Williams said.
Nonetheless, he believes even large, generalist firms could take advantage of this shift.
“While it’s important to be aware of this trend, it’s even more important to understand the dynamics behind it. The disintermediated marketplace can become an opportunity – not just a challenge – if firms stay focused on what today’s buyers of professional services will continue to need in ever greater abundance: specialised knowledge and expertise,” he said.