Aligning the Stars: How to Succeed When Professionals Drive Results

by Jay W. Lorsch, Thomas J. Tierney

Most businesses rely on talent to succeed, but none so much as professional service firms. Within this rapidly expanding, trillion-dollar industry, professionals--and how they're managed--are the primary source of competitive advantage. In fact, success in this sector is determined more by the people you pay than the people who pay you. This path-breaking book provides readers with a practical and integrated perspective on how to win in the unique and tumultuous world of professional services. From strategy to organization to culture, it offers customized insights for businesses in which professionals drive bottom-line results and long-term company success. Respected academic Jay W. Lorsch and accomplished practitioner Thomas J. Tierney apply their broad experience to the realities of "Monday morning" decision making. Their work reflects decades of personal experience, combined with a rigorous study of outstanding professional service firms in industries that include law, information technology, accounting, advertising, investment banking, executive search, and consulting. Aligning the Stars explains what differentiates the "best of the best" within professional services. By describing how to attract, retain, motivate, organize, and lead the stars that shape a company's destiny, this book provides valuable lessons for the current and future leaders of every talent-driven business.

Genres: Business, Buisness

256 pages, Hardcover

First published April 1, 2002

Reviews

[Chike Darnayla]

Great readings in the industry and life of Professionals and the world level of playing field they are in. Lorsch and Tierney combined experties in Academic and Corporate experience has expload helped me to better understand how this Stars are aligning and how they make and break the world of success - in their point of view. I also recon to read the 'Teaching Smart People how to learn' by HBR Press

[Ronald J. · Rating 3 out of 5]

Stars are the talent who have the highest future value to their firm. Alignment is creating firm practices and structures that fit the strategic requirements of a firm and the needs of its key employees. Simply employing stars is necessary but insufficient; they must be aligned to the firm’s goals, even at their own expense. The authors looked at 18 different firms that evolved well beyond their founding generation (average age was 70 years). Business models are all the same: “selling high-priced time and services on a sustainable basis.” True, but the book is a paean to the billable hour and utilization (“Explicitly or implicitly, you’re selling your time to others: your clients and your firm.” “Time and skill are a professional’s only real product”). They never challenge it, never admit it is suboptimal, etc. They at least say the customer is really buying results, not so much time, and mention Bain’s innovative pricing model of taking equity. But the “time is money” attitude is annoyingly explicit and implicit throughout the book. They do, briefly, mention knowledge workers—and Peter Drucker—but never explore the full implications of this fact. They point out economies of scale really don’t apply much to professional firms. Bigger is not better. Better is better. They also repeat the “cliché” about the audit being a commodity—along with other services. This is nothing but an excuse for lousy marketing.

The book is structured around the “Strategy Pyramid”: with strategy at the top, the People Systems, Structure and Governance, Culture, and at the base, Leadership. There are many good insights about each of these, though I think the Performance Reviews and Rankings they tout are overrated. There are superior systems for knowledge workers, such as the After Action Review. Some other insights I liked:
• The people you pay are more important than the people who pay you. The customer comes second. You are who you hire.
• Great firms worry just as much about losing out on great talent as great customers.
• I loved the story of Young & Rubicam agency hiding out to catch graffiti artists just outside Warsaw, not to punish them but to hire them!
• Values, ambitions and dreams cannot be measured amongst your talent [they can, however, be experienced. Evaluations of people are subjective, like value itself].
• The three-hat challenge: simultaneously being a producer, a manager, and an owner. [Requires tradeoffs, no solutions].
• Compensation don’t have right or wrong answers, it depends on culture, etc.
• I liked some of criteria used to evaluate partners/talent: judgment, relations with customers, technical skills, mentoring, coaching, recruiting, leadership, hopeful, inspirational, helpful to colleagues, energetic, one-firm behavior, people building, knowledge contribution, etc. [notice the lack of billable hours; yet, how many firms still manage the hell out of this metric?]
• Culture can be the defining the competitive advantage since it’s impossible to copy. Explains why mergers and acquisitions often fail.
• It’s more about mind share than market share.
• The CEO of a PSF lives and works among the “shareholders.” He can’t use compensation as a motivator, nor drum someone out of the partnership. Span of influence is more important than span of control.
• I like the “re-potted” metaphor better than today’s “pivot.”


The partnership model is a consensus model, which makes leadership and innovation difficult. As Margaret Thatcher said, “Consensus is the absence of leadership.” I would have liked to have heard their views on alternative structures, such as Goldman Sachs going public and moving to a corporate governance structure. I also think the authors give too much credence to leadership, which is full of a lot of stories but little results. See Jeffrey Pfeffer’s Leadership BS book for a takedown of the leadership literature, along with Healing Leadership by Howard Hansen and Stephen Geske. They mention “systems thinking” but don’t really explore it in any detail, though they seem to recognize a firm is an interdependent system. They also mention leading indicators, and provide these examples: What extent has the firm made progress against its strategic goals? And How is it performing in the marketplace, against direct competitors, in serving its target customers? Also, knowledge and attracting stars, clients share of total business. Not bad, but very difficult if you don’t change the underlying business model of selling and measuring time.

The authors also think you can measure profitability by service, client, and partner, but this is absurd. Clients don’t have costs, organizations do, so allocations are completely arbitrary. The total belief in the accuracy of cost accounting continues to amaze me, especially after the work of Goldratt (The Goal), H. Thomas Johnson (Profit Beyond Measure), and Reginald T. Lee (Lies, Damned Lies, and Cost Accounting, and Strategic Cost Transformation). Harvard seems to be the last to understand this. One last quibble. The authors write: “Success in a PSF is 10 percent strategy, 90 percent implementation. I disagree. Try to implement a crappy strategy [see socialism, communism, etc.]. The old business model of “We sell time” is a perfect example. No matter how well we execute, it’s a sub-optimal model in a knowledge economy. The book is blind to this. It’s a major weakness.

For those interested, my book with Paul Dunn, The Firm of the Future was published roughly the same time as this one (2003), and I would say (I know I'm biased) our book has stood up much better against time, offering a real alternative to some of the clichés found in this work.

[Gumble's Yard - Golden Reviewer · Rating 3 out of 5]

Interesting if not brilliant book on the management of professional service firms (PSF).

The two key concepts of the book are alignment (that a PSF succeeds best if not exclusively when every element of it is aligned to strategy) and the importance of stars (both up and coming and established ones). The third key concept is the intrinsic distinctiveness of PSFs.

The book starts very well – starting form examining the concept of a single professional and how such an individual relates to clients and the moving into considering a large firm of many professionals and the two additional dimensions this introduces: the relation between the firm and its professionals (and the book’s key contention that this works best when a firm finds a way to align its interest with those of its star professionals) and the relation between the firm and its clients (for example in common marketing, positioning etc) which nevertheless relies on the individual professionals for day to day delivery/execution. The book has some interesting sections on some of the resulting challenges and differences of PSFs: one strong example it gives is of the importance of not just managing the alumni network but even the network of failed applicants and ex-clients, arguing that this group of individuals over time has a huge network effect and a greater impact on brand than either firm marketing or current professionals’ delivery of projects.

The book has a very strong focus on a partnership model (even explicitly when the legal framework is no longer relevant) and in this case overstates the distinctiveness of professional service firms by assuming that such a model is in place (so that for example leaders are commonly elected and have for example little in the way of autonomy over say compensation, and that promotion is via some form of consensus). On one level the authors argue that such a model is essential to Professional Service Firms success, but miss the opportunity to draw out how a firm without such a model still needs to adapt some of its better features and to live with the need to still have some form of consensus.