To Capture More Value, First Create More Value
Clients don’t buy ingredients – they buy outcomes. Agencies that list skills instead of solutions are missing the point (and the profit). By turning repeatable expertise into named programs and products, firms can demonstrate deeper value, create differentiation, and scale their impact. The key to capturing more value is simple: start by creating more of it …
The Unscalable Business Model
The faster you work, the less you earn. The more productive you become through investments in technology and training, the less you can charge. The expertise, intellectual capital and intellectual property you accumulate can never be directly monetized. Welcome to the world of professional service firms that bill by the hour. Meet the unscalable business model. But it doesn’t have to be this way …
Your Self-Imposed Profit Ceiling
If all your billable people work the maximum number of billable hours, you can hypothetically achieve your minimum profit margin. But no more than that. No amount of hard work, innovation or dedication will help you beat this figure, because you’ve defined your inventory as buckets of hours, of which there is a finite and limited supply. In effect, professional firms operating on the hourly rate system have a self-imposed ceiling on profitability …