Professional services and consulting firms have a front row seat to their clients’ problems in multiple markets. These service providers see and are tasked to solve multiple types of problems across all types of industries. So why are these service providers not the world’s greatest innovation leaders? Why can’t service firms create reusable products from the solutions to these problems? What is it that’s preventing service firms from creating, commercializing, and monetizing great products to solve their clients’ greatest challenges?
Much like corporate functional structure prevents large corporations from monetizing their innovations, service firms’ employee incentive structure prevents them from creating products.
Billable Hours Rule The Day
When your organization is structured on service hour billable time, all employees are incentivized on how billable they are. The billable hour rules the employee incentive structure of service firms, and is the number one metric for the revenue and profit of any service bureau.
In order to develop, commercialize, and monetize a product, you have to dedicate a team of people to a risky venture for 18-24 months before generating any revenue, and then potentially years before scaleable revenue. In the world of professional services firms, it is very difficult to take someone out of billable hours for 18-24 months on the hope of someday seeing revenue from that venture. There is no structure in the service firm that allows for it. In fact, all the metrics of the service firm penalize it!
Service providers make 2-4 month investments to do deep analysis to determine specific market viability. That time is meaningful in that market space. However, that time is spent much differently than the 18 – 24 months (minimum) required to generate revenue from a new product.
Move Innovation Outside Your Four Walls
The Combine provides a way to take that idea outside your firm. Our process allows the service provider to keep key employees (inventors, technical experts) billable while they work to commercialized the product. We take the innovation outside of your service structure.
Our client, Thornton Tomasetti, is a great example of how we do it. Thornton Tomasetti has created dozens of innovations as byproducts of solving complex problems in the AEC world. Some of those innovations address a large market problem. We identify those particular ideas and put them through a structured process to determine their market viability. Then we launch a new company built around a great innovation.