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Posts Tagged ‘standardisation’

Standardisation – the path to commoditization or innovation?

Friday, October 5th, 2012

Standardisation has a bad name in the professional service community. It is seen as another name for ‘commoditisation’: the de-skilling, devaluing and ultimately the de-profitisation of services. So it is typically a four letter word in a law firm, accountancy or consultancy seeking to provide high-value services. But is standardisation really such a bad thing?

Standardisation certainly shatters the work paradigm in place at most professional service firms, where the individual ‘craft’ approach to work is applied. Experienced (and highly paid) professionals deliver services such as due-diligence, audit and business improvement using methods which are typically highly individualised. From a client perspective, professional excellence is of course valued. But inconsistency in service delivery between offices and between partners is not helpful. And in today’s tough economic times, high prices have to be justified.

I would contend that standardisation is actually a key stepping stone to raising service value. On the surface this seems counter-intuitive. But bear with me. Many professional services are repetitive in nature – e.g. commercial due diligence, audit, probate and are simply tailored for the client. Others have significant repetitive work elements in them – e.g. ‘discovery’ in litigation, ‘data gathering’ in management consulting projects. Repetitive work is is the rich soil in which standardisation can flourish. By codifying and standardising repetitive elements of work, it can then be effectively performed by a less skilled person (e.g. a paralegal or administrator). Of course this has benefits in reducing service cost – aiding service firms as they seek to respond to severe price-down pressures from clients. And of course it then frees up the most valuable (and expensive) employees to work on more complex (and profitable) activities for the firm – raising protitability. But it also has major benefits in two areas of service innovation:

1. It frees up the time for high value employees to spend on innovation – to enhance existing services and develop new services to add more value to clients and differentiate their firm from rivals. Service firms are waking up to the need to become more innovative, but are challenged in finding the available time from their fee earners.

2. Standardisation of a service (or service element) is the first step to enabling effective continuous improvement
of that service using Lean techniques (which are increasingly on the agenda of professional service firms).

So standardisation is not a word that should be feared by service firms. It is simply one of the key methods which firms need to embrace as they streamline themselves for the emerging new era of highly competitive, deregulated, globalised and internet-enabled professional services.

Alastair Ross
Director
Codexx Associates Ltd

Energizing Change

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