Chapter 1
The Problem - Why Professional Services Firms Fail to Scale Business Development

Investors have a way of popping the balloons of our high hopes.

Andi and Jacob walked out of the meeting room at the Marriott Marquis Chicago after eight packed hours. They'd shaken about 50 hands and had five (or more) cups of coffee each while sharing the story of Profitable Ideas Exchange (PIE), our small but growing consulting firm based in Bozeman, Montana. Over the course of the day, they spoke with more than a dozen potential investors, practicing their pitch for capital that could help PIE unlock its growth goals over the next 10 years. Andi is the CEO and Jacob is the president of PIE, a firm of about 75 that helps large professional services firms build bridges to their target market.

The conference was organized around companies like PIE having "speed dates" with different investment firms. Andi and Jacob were excited to meet potential investors and had been eager to share the stories of PIE's success over the last 25 years.

They walked in that morning with freshly pressed shirts and caffeine-fueled excitement, but as the day progressed, the duo quickly found wrinkles emerging on their shirts - and their confidence. Each investor group kept asking how PIE planned to scale the firm's business development function to meet their revenue goals for growth. At first, Jacob responded by highlighting PIE's track record of success: "We've grown steadily for the last 10 years. We know how to win new business. We've grown 15% a year with the energy of our current team. We won't sleep at night unless we're growing." Jacob's confidence was met with skepticism.

Catching the L at the end of the day, furrowed brows replaced the morning's smiles. Jacob read the frustration on the face of his long-time business partner and felt it too. "They kept talking about the 'return on invested capital dynamic' associated with adding new salespeople and they seemed to get freaked out when we said that business development would fall to us as senior rainmakers." Jacob paused, reflecting on his 20-year tenure at PIE. "I mean, expertise and gray hair are what sell professional services. We might not be totally gray yet, but clearly, we are the growth strategy. It feels like they're saying they don't believe us - or believe in us."

"And that is exactly the problem," Andi confirmed, finally beginning to smile. "Sure, we could grow the firm to $20 million, but we know that what we're doing now won't be enough to get us to $200 million, or even $50 million. No two people could do that on their own in a business like ours."

When Andi and Jacob got back to Bozeman, they convened with Erika and Walt. The four of us, the authors of this book, realized we had a problem to solve.

"I know we've been working to operationalize our approach to client management so we can teach our newer, more junior consultants," Jacob reflected to the room of his partners. "We want to get more operating leverage on the business. I get that. It makes sense. I think those investors were saying something similar. They want to see us operationalize our go-to-market efforts. They want to invest in companies that have a real business development machine."

"You're right," Andi added. "We need to build a team that operates like an engine - that isn't so dependent on a few of us. We need growth of the firm to go beyond our own relationships and rolodexes, and we need to show how profits can be reinvested into strategic growth initiatives with knowable returns. We know we sell work based on relationships, but we still need a plan to scale those relationships."

Erika - PIE's chief client officer - chimed in, "Predictable growth. Of course. You weren't talking to venture investors. You were talking to growth investors, and they need a replicable growth model before they put cash in harm's way."

"And that's what we want, too," said Andi. "We shouldn't be investing our profits back into the company unless we see a path for that investment to help us scale."

Walt jumped in, nodding vigorously. "This is exactly the challenge nearly every firm runs into - trying to scale business development in professional services is like herding wet cats. Few firms have figured out how to do that well." Walt knew what he was talking about: a former McKinsey partner, global managing director at Accenture, and global head of sales for ERM, PIE's three leaders felt lucky to have him as a board member, trusted advisor, and friend.

The group breathed a collective sigh of relief - not that anything had been solved. Rather, it felt good to be on the same page and finally put words to what suddenly seemed obvious: PIE, and professional services firms more generally, need to operationalize and manage business development just as they manage other key parts of their businesses. Professional services firms need growth engines.

* * *

Indeed, if a firm is to grow, building a replicable process around business development (BD) is imperative and a prerequisite for sustained growth. Without a growth engine, professional services firms atrophy as the rainmakers lose enthusiasm on their way to retirement.

Even in a people business where growth is a function of reputation, referral, and relationships, we have conviction that there is a way to create a growth engine - an operation not solely reliant on a couple key rainmakers, acquiring other firms, or luck.

Why Building the Engine Is Hard

The four of us - Andi, Jacob, Erika, and Walt - collectively have more than 80 years running professional services firms. Our firm, PIE, adds another 25 years of growth history, data, and lessons learned to that resume. We've spent many of those years grappling with these exact challenges and listening to our clients share similar frustrations.

We knew we couldn't solve the problem of scaling a BD function on our own, so we talked to more than 100 of you in a year-long series of interviews. We asked Partners, CEOs, CMOs, and CGOs across consulting, legal, financial, and technology services firms: What does good look like? How do you build a growth engine? What's worked and what's failed? What made you want to tear your hair out, and what made you celebrate a banner year? What does best-in-class look like and, importantly, how do you get there?

If these interviews taught us anything, it's that everyone has this same question rattling around in their head: how do you build a sustainable, resilient, and scalable growth engine in professional services?

Good news: Hundreds of firms have found myriad ways to drive excellence in how they develop clients and lead go-to-market efforts; we can learn from their examples.

Our goal is to help those who are leading professional services firms or practices better understand how to successfully scale their growth function. We want to unpack how great firms go to market, how they define and expand their market, who they hire, and what they ask those rainmakers to do. We want to explore what training looks like and how success is enabled. We're here to understand the best tools to measure performance and how effective sales teams can be supported by structure. We're going to tease out when and how incentives are most effective and examine best-in-class business development processes.

Before we do that, however, let's look at some of the systemic challenges that make this so hard.

Challenge #1: Selling Professional Services Is Different

While this book is not about how to sell professional services (we have written about that previously in How Clients Buy), the unique way in which services are sold is an important piece of what makes building a scalable growth function so challenging. In How Clients Buy, PIE's former CEO, Tom McMakin, wrote about the Seven Elements (Figure 1.1) of a client's buying journey as they consider engaging with a professional services firm.

Figure 1.1 The Seven Elements of How Clients Buy.

The Seven Elements show the pre-conditions that must be in place for a client to engage with a professional services firm: The buyer must be aware of you; they must understand what you do; they must have an interest in what you do (it meets a need they have); they must find you credible and believe you can deliver on the work competently; they must trust that you will have their best interests at heart even when they don't fully understand what you are doing; they must have the ability (or budget authority) to buy from you; and, most importantly, they must be ready - the timing needs to be right.

Professional services firms share some of these same sales preconditions with those who market and sell goods. The difference is that buyers evaluate widgets and hardgoods based primarily on features and attributes (for example you buy a pair of jeans based on things like the fit, color, feel of the denim, hem length, and pocket style), whereas in professional services,...