Managing the Professional Service Firm: Part One: Basic Matters (1 of 3)

Why did I chose this resource?

MaisterThe organization and structure of Anant is based in large part upon the concepts outlined in Managing the Professional Service Firm. Understanding the foundations of how we approach our work will benefit the company as we refine our operational and profit models.

What did you learn from it?

The economics of a professional service firm is different than a more traditional manufacturing firm.  A profitable service firm depends not only upon the skills and knowledge of it’s employees, but also upon finding a good balance between high-level and low level resources operating on a project. I learned the three work category for professional service firms, and how they relate one to another.

Key Knowledge

  • Two characteristics intrinsic to professional services firms: high-customization and face-to-face interaction with the client
  • This leads to need to hire highly skilled individuals to work at the firm
  • Professional services firms compete in the “output” market for its services and “input” market for productive resources
  • Commonality among all professional service firms (shared vision): “service, satisfaction, success”
  • Three “types” of work:
  1. Procedural – work for which the solution/approach is well known, can be delegated to less experienced staff and to some extent the range of answers can even be ‘prescribed’. The key to selling this work is its efficiency. This area has greatest leveraging potential and so has been the focus of most business growth (and hence larger firms) over the last
    two/three decades. (Note: traditional IT firms operate here)
  2. Brain – work that requires a lot of creativity – calling for professional expertise and for which little can be specified in advance. While this favours sole-traders and boutique practices, larger firms can address it too.
  3. Grey hair – equally unique and difficult to proceduralize but where the delivery of the solution is based on the experience and breadth of the professional.
  • “Leverage” is the concept of finding – and tracking – the right mix of work type so as to maximize profitability
  • Profitability formula for Professional Service Firm:


How are you using what you learned?

We will further refine and implement the company’s ideal operational and profit models in 2014. The information in this book will filter down into Finance & Accounting (metrics and profit projects / actuals), Human Resources (bringing in new talent), Operations (improving project profitability, resource allocation and scheduling). We have already initiated improved tracking of metrics. The information I learned will help me develop better approaches to identifying and acting on trends.

Key Changes / Key Actions

  • More closely track the impact of resource levels on individual project and company profitability
  • Clarify roles / responsibilities at each level
  • Begin implementing project plans with leverage matrix in mind
  • Perform gap analysis to identify key holes in our resource capabilities that need to be filled

Additional Information

Article by David Maister titled The Anatomy of a Consulting Firm.


  • Name : Managing the Professional Service Firm
  • Author : David Maister
  • Dropbox: Link to Book

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