How to Think about Positioning a Professional Firm

To many professionals, the subject of positioning is both captivating and confusing. The whole idea took off around 1980s. Viewed as an element of strategic management, prominent proponents of positioning school included Michael Porter and Bruce Henderson of BCG.

From a slightly different angle, popularization came from Al Ries and Jack Trout through their bestselling classic Positioning: The Battle for Your Mind. The authors’ take on the matter was primarily about perceptions: positions in the minds of prospects; be it a product, a bank, or an island in the Caribbean. Either way, positioning is considered a matter of strategy.

Talking about (and witnessing other consultants discuss) positioning, I receive a lot of confusion from audiences, namely top management of professional firms, but also (!) management consultants themselves.

It appears, there still isn’t a universally accepted definition of what positioning is. This doesn’t bother me in the slightest. We still don’t have a consensus on many things such as Strategy or Marketing.

Perhaps, it’s for the better. Strict boundaries inhibit exploration beyond.

Market positions and positioning

First thing to keep in mind: there are management consultants who really understand positioning, albeit in their own way; which is fine. And there are practitioners who just say the word because it has a ring of mystique to it. Similar to car shop technicians who can apparently get away with anything they say as long as they keep throwing terminology at you.

Or worse, the latter consultants often jampack the definition with everything that sorta fits (although I have my doubts) — that positioning must be about creating a category of one, or it’s a brand strategy, a differentiated brand story (really?), a business model based on expertise as the only viable way, and so on. This kind of approach elevates the status of a consultant, of course; alas, at the client’s expense.

Second, when the former consultants talk about positioning, they imply existence of market positions. As you know, one can define and segment any market whichever way they want. However, there are unanimously accepted market categories (e.g. legal services), and folks refer to particular segments using (e.g.) NAICS and NACE classification.No data to analyze — no positioningPositioning (like marketing) is an action-oriented process. It’s a process of finding a position (niche, segment) in the market. The finding occurs through data analysis and calculations. Because one can’t analyze data for what isn’t there, available market positions have to be prominently existing for positioning to work. In other words, a positioning consultant (worth its salt) will not be able to help with your firm’s positioning if you don’t have enough competition, and your client base is all over the place (no way to establish meaningful buying pattern). Again, no data to analyze – no positioning.

Third, some professionals think of positioning as strategy (which itself, to this day, doesn’t have a standard definition). Others think of it in Ries & Trout’s terms, namely the “battle” for client’s mind. Actually, the notion of battle comes from the military language where the positioning school of strategic thought takes its roots.

Because positioning definition isn’t set in stone, I would like to offer my understanding of positioning. At least, how I use it in my consulting practice. (E.g., this advisory service is available in Client Magnet Firm solution).

Understanding positioning in professional firms

In my view, the markets, its segments and niches are to be found if you follow the people. Wherever, physically or otherwise, folks congregate, particularly out of their own volition, that’s where you find markets.

Positioning Poles: vertical markets

The vertical markets (industries) are what I refer to as poles. You may choose to position your firm based on the industry(-ies) you either want to serve, or assess to have competitive advantage in.

Let’s say you have access to decision makers in tile manufacturing, or perhaps a unique expertise in the field. That may be your competitive advantage which suggests tiling industry to be your pole. You can have as many poles as you like as long as it makes sense. To help with that (but this is optional), you can attend to the spans.

Here, NACE codes or NAICS classification are helpful and shouldn’t be dispensed with because these are well-established categories. Note, some newer “industries” may not be there. However, as long as you have people attending industry conferences, you will be able to identify market positions within.

Positioning Spans: horizontal markets

The horizontal markets are demographics, psychographics, geographic locations, and job titles that span industries. For example, a chief marketing officer in the tile business can easily transition into building products. Or a marketing officer at an accounting firm can rather smoothly jump to another pole of financial planning. Think of this as two poles with a span in between, and jolly CMOs, just like an electric current, running back and forth.

While job transitions are often industry-bound, other horizontal markets are less constrained. For example, expats coming (hopefully, legally) into the U.S. with their families will be interested in many professional service poles (real estate, accounting, tax, financial planning, estate planing, etc.). The same logic applies to (e.g.) retirees.

You may position your professional firm well just by focusing on the spans alone.

Using Positioning Poles and Spans together

Think about using poles and spans as a fence, or a boundary. Imagine you find yourself in the Central park in Manhattan (I live in NYC, so that’s what pops up first). You stand on a hill and watch the park, which is the market. You observe several groups hanging out together — you’ve found the poles.

Eventually, you notice some people moving from one group to another; you notice a pattern. These streams that connect groups (poles) are your spans. Like an electric current, this movement is more effective through a span rather than two poles communicating via radio waves. Therefore, people will always transition into other industries through spans. Hence, importance in positioning.

What you want to do next is to set a boundary using poles and spans. The reason is quite simple: because in today’s market you cannot afford to be a kid’s party planner by day and an estate planner by night. Although, some moms manage this in reverse. Ask them for positioning advice then. I refuse to understand or get involved.

Functional positioning for professional service firms

Once you have a structural boundary — be it just the poles or spans, or both — you will have to set the functional boundary, too. You’ve enclosed a territory, and now have to figure out what services you will provide to this encampment. Again, based on your assessment of market demand, internal capabilities, and your competitive advantage.

At this point, you are likely to identify competitors who, just like you, target the same poles and spans, and provide functionally very similar services. A space with similar needs to (e.g.) water tomatoes, uproot weeds, man the perimeter, etc.

While function is implied in both poles and spans, there are usually meaningfully different sub-functions that ought to be specified. For example, a law firm (all things legal pole) might specialize only in litigation (function). A consultant, like myself, may work only with top management (spans) of professional services firms (multiple poles).

Positioning lenses: distortion of reality

At last, you get to say to the residents of that encampment how your firm is so very different from all those other pesky service providers. Because, whether you like it or not, folks at your firm have their own perceptual frames, your firm sees the world as if through a pair of special lenses. They, obviously, distort reality; for better or for worse.

The trick is to find clients who share similar lenses. For example, if your firm and your clients are both myopic, you will see the same things better than farsighted folks.

What works as lenses is your point of view (POV), research data, insight, proprietary models (like these ones), gut feeling about the future of encampment and its residents, preferably backed up by anything mildly palatable, etc. You’ve placed surveillance in the encampment in special places, at special angles, gathered data, identified patterns and now, voilà — you have a way of seeing things competition can’t; or won’t.

For example, you observe guards patrolling the borders of the encampment, walking in pairs in two shifts; except mornings and Christmas. You decide to offer the residents a 24-hr video surveillance system with sensors, lasers, machine guns, whatever. You provide clients with reasons, and if they see the problem the way you do, they will be interested in listening to your proposal.

Again, you have to identify clients with similar perceptual frames. The significance of perceptual frames is often underestimated. Not only should prospects see the world as you do, you also have to see the world through their lens. And alienate the rest. Largest firms can skip this as they can force the market to wear lenses of their choosing.

Timing in Positioning

The last bit is often the trickiest — it’s timing. You have observed your target market closely, and noticed that something happens during specific times. Your firm’s positioning can be built around those moments.

Perhaps, CMOs moving along the span to another pole keep getting stuck at a hot dog stand for whatever mysterious reason, pungent aroma of charred pretzels notwithstanding. You can address (or exploit) that.

Maybe you’ve caught perimeter guards frequently dozing off on night shifts, and have a larger-stick-no-carrot solution. Maybe the palisade needs fixing every two years. Or perhaps, to avoid municipal fines Thuja hedge needs trimming every quarter. Better yet, the residents might desperately need you when barbarians are at the gates.

Perfect positioning for the firm

If you put several poles in the ground, attach spans to these poles, put cameras on those poles at a particular angle (POV) overlooking the spans, and you select the time (morning, midnight, summer, winter, frogs, lice, locust, flood, whatever) — you now have your garden to tend to. That garden is what I call a perfect positioning. It has clear boundaries; both physical and conceptual. It exists in four dimensions: space and time.

Your firm’s positioning doesn’t have to be perfect, though. There are several factors such as firm size, competition, demand, that will hint at what a good positioning should be. One firm may be well-positioned on (e.g.) poles alone. While another should add (e.g.) spans and timing. There isn’t one (or ten) recipes for good positioning.

Conclusions: Thinking about positioning

There you have it: my understanding of positioning professional firms. Of course, this isn’t all there is to the art of positioning. But it’s a start; a good one at that.

To reiterate: you have four components of positioning at your disposal:

1. structural poles and spans;
2. functional services;
3. conceptual lenses;
4. timing.

One additional point: positioning is part of strategy — perhaps critical today — but definitely not all of the strategy your firm needs. Positioning sits at the junction of corporate and business strategy. However, it can only be used effectively in established markets. There, market positions already exist, thus can be analyzed. Because it tends to look back for data to analyse, in times of rapid change positioning alone may be insufficient. Thankfully, there are other strategies to keep in your arsenal.

To conclude, can a professional firm thrive without a clearly defined positioning? Yes, it can. I will write about this in another article. Subscribe to be notified the moment it’s released.

I also intend to write about eight primary positioning categories available to professional service firms. Stay tuned, and keep in touch.