In the previous chapter (The One-Firm Firm) I attempted to describe one (not the only) success model in running a professional firm. What I hope became clear in this description is that making this “collaborative” approach to practice work requires more than just an elusive “teamwork culture.” Rather, it is achieved by making some definitive decisions on “hard” business systems such as compensation, hiring, training, organization, and choice of service lines.
In recent years, I have come to call these firms “Farmers” because, like such communities, these firms deliberate about what crops to sow, arrive at a (gutsy) decision, and then “bet the farm” on that crop. In other words, one-firm firms are focused on the services they bring to market, and build their success by investing heavily in the chosen areas. They succeed through focus, muscle, and concentrated efforts in a few hand-picked areas. The collaboration and teamwork that are the hallmark of the one-firm firms or Farmers derive not from an aesthetic preference (for team spirit) but from the simple fact that since the firm has “bet the farm,” the success of the community depends on whether the crop comes in (ie, the firm has bet successfully as to what the market wants), While some individuals may sow the seeds, others mend the fences, and yet others cook the meals, all, must do their part to make the farm succeed. What counts is not individual performance, but contribution to aggregate success. Teamwork comes from truly “being in this together.“ There is no way for an individual to do well unless the organization as a whole succeeds.
The reason for the Farming model’s success should be easy to see. If we know what we are trying to bring to market, then it is easy to figure out what tools we need, what framing to do, what kind of people to hire, how and where we should focus our marketing. The fact that one firm firms are known for their training methodology, development, hiring, and focused marketing is no accident.
The Farmer’s greatest virtue is also his greatest weakness. As we have seen, most of the strengths of this approach derive from focus: the fact that large numbers of professionals do the same thing or take the same approach to practice. Farmer firms enter new markets “big or not at all.” However, while focus is a business virtue, it is not the only one. Successful businesses can be, and have been, built on virtues such as entrepreneurialism, opportunism, flexibility, diversity, and quick responsiveness to emerging new client needs. None of these particularly plays to the Farmer’s strengths. Rather, they are virtues of what I term the “Hunter” system.
Think of it this way: You have a firm of five partners, and you must make one of two choices. The first choice is that you collectively decide to practice the same specialty, in the same way, and develop a joint marketing plan. On a firm-wide basis you make collective investments using the same methodologies and practice tools. Your firm will, if you succeed, become known for something very particular. Your other option is to diversify your risk. The five of you choose different specialties, thereby being able to offer your market a range of services. You will have a harder time figuring out what methodologies to develop, bounce each of you practices in a different area, but you will have willingly given up the benefits of focus to obtain the strength of diversity. Your success will now depend on the entrepreneurial ability of each of your fixed partners.
Hunters thus attempt to maximise the entrepreneurialism of their members, by creating the maximum possible degree of individual autonomy. Rather than being “constrained” by firm wide choices on what markets to serve and which services to offer, Hunter firms encourage each individual and each small group) to respond and adapt in the local market. The benefits (and limitations of firm-wide consistency in services, in markets, and in approach) are sacrificed in order to capture the benefits of local market opportunities.
Like the Farmer system, the Hunter approach only works when it is done properly. Very concrete management systems are required to pull this strategy off. To succeed, the Hunter firm must attract, motivate, and reward the best entrepreneurs. In contrast to the Farmer model, where rewards must be structured to emphasize teamwork and group contribution, the Hunter system requires that individuals rise and fall according to the results of their own entrepreneurial efforts.
In essence, in a Hunter firm, it is everybody’s job to “chase the buffalo. If buffalo die out, individuals are free to chase deer. And if, while out hunting, they spy a flock of geese, they don’t have to check back with any central committee or managing partner to see if geese are “on strategy.” The message is simple: There is no central strategy-just kill meat!
In order to succeed, Hunter systems need to be more short-term focused in their rewards. Those who kill meat get rewarded. Those who can no longer kill meat-well, it would be nice to support them, but if we divert too much reward from the best hunters, we may suppress their entrepreneurialism. So, the message inevitably ends up that you’re as good as your latest numbers.
A key point about the Hunter-Farmer distinction should be stressed immediately. First, while I have made it sound somewhat “brutish,” the Hunter approach is, indeed, a success model. Entrepreneurialism, flexibility, responsiveness, and fast adaptation to shifting marker needs are powerful business virtues. Any firm that could successfully maximize these will be a formidable competitor.
Next, it is important to note that the terms do not refer to differences in marketing aggressiveness. Similarly, the reader should not think of Hunters as “business getters” and Farmers as “doers.” Farmer firms are not “wimps” when it comes to marketing, Indeed, the best Farmers are superb at marketing. The key distinction is that Farmers approach marketing as an organized, joint activity done as teams, while in Hunter’s view marketing is a matter of individual responsibility.
Excerpted from ‘Managing the Professional Service Firm’ by David Maister, pages 321 to 323