This is a key question to consider as so much flows from the answer in terms of how you set up, manage and run your firm. In many ways, the two types of firm are incompatible and if you are not clear you might very easily be running your firm/practice area in the wrong way. So, what are the features of each?
Solution providers help clients address complex, multi-disciplinary business challenges and opportunities. They do this by getting to know their clients intimately, which is facilitated by a clear sector focus and alignment. Their engagements are typically about solving wicked problems, of the “bet the farm” type. These are high value and high cost matters that can span several months. A good example of a solution provider would be McKinsey.
A talent agency, or as one colleague called them “hotels for professionals” focus on hiring talented individuals to handle matters competently for clients. These individuals tend to operate on their own or in small groups and deliver single practice areas advice. There is a pressure to deliver services efficiently and they compete on hiring talent. An example of a talent agency would be an employment law boutique.
It is possible to diagnose what type of firm you are in by looking at a number of attributes, for example as follows:
- How is your internal environment? Is it competitive (talent agency) or collaborative (solution provider).
- What are your key performance metrics? Are they individual revenue production (talent) or wider taking in other metrics and different by role (talent)?
- Do you have established work processes that you follow? No (talent), yes (solution).*
The implication for the way you run the firm are profound. If you run a talent agency, then the key is to put in place the minimum support that professionals need to deliver the service and then get out of their way and leave them alone. You should focus on recruiting and retaining the best individuals in their fields and keep overheads to a minimum.
If your firm is a solution provider, then it is incumbent on you to invest in R&D and systems that share knowledge and processes. To facilitate and encourage collaboration and teaming through your culture, what you measure and reward.
It is possible that your firm is a hybrid that varies by practice group, sector or geography. In our experience, it is possible to have such a hybrid, but you need to be clear about how you set this up as it can cause serious friction and lead to in-fighting.
*If you wish to take the full diagnostic please contact me.