March–April 2021
Article
Harvard Business Review

What Professional Service Firms Must Do to Thrive

Format:Print

Abstract

When the going gets tough, professional service firms (PSFs) often get desperate and chase all kinds of business just to keep the lights on. Consultancies, financial services firms, VC/PE firms, and the like offer services and sign up clients they should never have considered. This approach to shoring up short term performance can be perilous. If a PSF practice is diffuse in its strategic positioning or mix of clients, it ends up with a weak market profile, internal conflicts, and dissension among leadership about future direction. Conversely, if a PSF practice is disciplined about its positioning and client portfolio, the practice becomes stronger than the sum of its parts. In this article, we provide a framework that PSF practice leaders can use to proactively position their firms for long term success and offer two tools—the practice spectrum and the client portfolio matrix—to help make judicious decisions about the clients to serve and the capabilities to develop to serve them.

Keywords

Professional Service Firms; Client Mix; Strategic Positioning; Organizations; Performance Effectiveness; Decision Making; Framework

Citation

Nanda, Ashish, and Das Narayandas. "What Professional Service Firms Must Do to Thrive." Harvard Business Review 99, no. 2 (March–April 2021): 98–107.