Part 6: Jonathan Corrie – Good Delivery Is Your Best Sales Pitch

Unlocking Value: Jonathan Corrie on Services-Led Growth Here's something I think about a lot. Most of us who run professional services firms only ever see one firm close up, and that's our own. People in this miniseries see hundreds. I'm John Howard, the host of Unlocking Value, and this is the 6th and final part of our miniseries about how to navigate the huge technology driven change that's going on in our sector. Most of the guests in this series are founders and leaders of companies that build a professional services automation software our industry runs on. That means we've been getting first hand insight from people whose systems support thousands of professional services businesses and 10s of thousands of users across the world every single day. These have been conversations about a time of huge opportunity and some significant threats emerging in our market. As you'd expect, we've talked a lot about AI and technology, but they've mostly been conversations about what's driving growth, how client expectations are changing, and what the most valuable firms of the future will look like. If you've not heard the others, they're all there to go back to in any order. The miniseries even start somewhere you might not expect with someone who is at the leading edge when technology turned a very different industry upside down long before it reached ours. Wherever you are with your own firm, I hope you've been able to take a lot from these conversations. Thanks for tuning in. My final guest in the miniseries is Jonathan Corey. Jonathan is the Co founder and chief executive of Precursive and he's seen professional services from just about every side. He built and sold his own services business some years ago, he spent the last decade building software for services teams and he also runs a community of services leaders called the Services Delivery Alliance. He's a man who doesn't hold back with his opinions and expertise, and the conversation has plenty of energy as a result. Jonathan looks at services through a hard commercial lens. His argument is simple. How well you deliver the work isn't just a cost to be managed. Do it well and clients come back, buy more and bring you bigger problems to solve. Done deliberately, delivery becomes one of your biggest sources of growth. He's frank about why he thinks so few firms run it that way and what it costs them. So we get into how he thinks great delivery actually works, why repeatable beats heroic, and why the firm's worth the most are the ones that have turned their expertise into something they can sell again and again, rather than starting from scratch each time. He's got a great line about being less scattergun and more sniper, and is passionate about knowing a client's business better than they do. He's also clear eyed about AI. His view is that the real constraint isn't the technology, it's whether a firm has the expertise to put it to good use. It's a sharp, energetic way to round off the miniseries. Jonathan Corrie's Background and Services Market Shifts Here's Jonathan. Speaker 2 Jonathan, great to see you welcome the show. Speaker 3 Thanks for having me on. Speaker 2 Good to see you as always. One of the reasons I was really keen to have you is that you've spent a lot of time around professional service business businesses from lots of different angles. You grew and exited some years ago. Very successful consulting and training services business. Founder of really successful PSA business in Precursive. And you talked to lots of leaders through your role in the services delivery alliance that you run. And with that, you've, I suspect, build up a really interesting view of kind of how tech, the role the technology can play in transforming how firms work. So really like no shortage of stuff for us to cover and what you're seeing in the market. But before we dive into things, can you just give listeners, I guess, a bit of context on you, your background, and what you and the team at Precursive are focused on today? Speaker 3 Yeah, sure. So yeah, Jonathan, sorry, I'm the Co founder and the CEO of Precursor. We're APSA that's built for visionary services leaders inside of SAS and AI companies. And so our customers are typically in the the mid market and enterprise technology software, SAS, AI type of companies and they use us to improve all elements of of of services execution because professional services is a key tenant to their, they go to market motion. And so we help them to execute what we call a services LED growth strategy, which as I said involves improving all elements of services execution from selling to delivering services to packaging services, resourcing, demand forecasting, P&L management, you know, all of that type of, of fun stuff. And I would say like across our customer base like the, the, the mission of services is like how do you maximize ARR and profitability at the moment? And I think, you know, whilst I spend and I've spent about 10 years really operating in that space, you know, I've also worked over the years with a lot of pure services firms, right, as, as customers, as partners. And so have provided some advice over the years to to those, you know, the people running those types of businesses. So have a pretty good appreciation for the operating model in services and, and how that world's evolving as well. So yeah, happy to share some points of view on today's conversation. Speaker 2 Yeah. And I know you've got some, some some strong and and really interesting points of view on that. So looking forward to getting into that. I guess just to step back a bit to get us started. I suspect because you work with so many different customers in businesses that will be unique but have lots of similarities in terms of kind of services within tech. Curious to see if there are kind of any I guess, patterns or big shifts that you're seeing and that stand out in terms of how what's happening in the market for services or organizations at the moment and kind of what what you're seeing change? Unlocking Sustained Growth with a Sniper Approach I think regardless of like whether you're talking about embedded services teams inside the software companies, AI native services organizations or traditional services firms, like the exam questions pretty similar, right? It's like how do you grow recurring revenues and how do you increase profitability? And that's true across both the public and the private markets, right? Public market companies are reporting that performance, private companies are reporting that performance to their board and their investor. So I think everyone is trying to do in, in, in my opinion, like it's not very complicated. I think everyone is trying to achieve much the same thing. I think forward thinking companies that that we work with are deploying what I've described initially is like a services LED growth strategy, right. So services is not pigeon holed or thought about as just like a delivery engine. It's not the post sale organization, it's the gross sale organization that is the the mindset of how services is perceived. And, and, and I think that could that strategy is like described as you know, at least again in software like services will lag software in margin, right. Typical gross margins and software is 80% plus. Ideally, you know, services inside of a software company will be lower margins than in a traditional PS firm. You know, like I would say the high performing ones, typically 50% GM, but more often than not it's neutral up to 30% is kind of the number. And so every billable hour drags down, you know, is, is, is actually eroding your overall company margin, right. So, but the mission of services broadly in SAS and AI native companies and, and in services is always like, like, how do you deliver on the promise that you've made in sales, right? Like I mean kind of fundamentally that's what it's about. And if you can deliver that value more quickly than your competition and you can accelerate the flywheel of growth through having a very prescriptive approach to client acquisition. And then the way that you deliver and you can do that in a, you know, pretty scalable and repeatable or a repeatable way that becomes very scalable, then what you'll typically see is that those types of companies have a lower capital expenditure asterisks, not AI companies, but you know, services will be an accelerator of ARR. It will reduce your CAC, it will increase your net revenue retention, your NRR and you know, ultimately you're enhancing client loyalty, customer loyalty, and you'll facilitate easier expansion revenue through it, right? So that's kind of like, you know, what are people trying to achieve is, is kind of is kind of that, right. And then the route to that I think is everyone's taking a slightly different route, but there are some patterns as you described that are that are emerging that we can go into. Speaker 2 So what are some of those operation patterns, market facing patterns? What are the patterns that you're seeing that are unlocking that route to what is essentially top line and bottom line growth in a more and more sustained predictable top line about online growth? Speaker 3 Yeah. So I think firstly, like again going back to it, like a lot of people in services kind of start in delivery. They'd like that's kind of what they're obsessed over and that's flawed, right, Because, you know, the commercial engine room, if you're a if you're a services organization, most traditional services organization have got quite a narrow. You know, they've kind of got the pyramid structure. At least they did right that you can argue that that's going to change a lot. And that means that like the business development element was always going through like, you know, a handful of people at the top, which is challenging and not very scalable, right? Whereas I think the faster growing services firms that I see have put in place a software esque go to market motion with account executive salespeople and business development people who are doing that and you just aren't relied on like some founder doing the selling. So I think that commercial awareness is kind of one element. Speaker 2 Yeah. I want us to come back to that. Yeah. Speaker 3 Yeah, I mean world class services teams act a lot like product teams, right? Good ones at least because they prioritize efficiency, you know, over head count to like for scalability. And they focused on like orientating their GTM around and delivery mechanisms around outcomes, right? Which is a term that is thrown about a lot and very few people. If you ask 10 CSMS in a company, what are the outcomes our customers want to achieve, you get 10 different answers. But they are orientated around that a very clear set of things that they know that they deliver for their customers. And, and so they're not just like tracking hours and billable util and margin and all of that stuff because they've more thought about we need to package our expertise. We need to do more than just simply deploy people. And that approach really kind of emphasizes like repeatability, overreacting. So that model kind of diverges quite a lot, I think from the traditional way that that a lot of firms go about doing it because they haven't really engineered their services for scale, right. It's it's every deal is a different deal. Every pitch deck's a different pitch deck, every projects run differently and and that doesn't work. Speaker 2 Yeah. Well, it doesn't scale. It certainly does scale and. Speaker 3 Yeah, yeah, it might get you to like a couple of mil, but it's not going to get you to like 10 plus and then over that hump and onwards and upwards, you know, so. Speaker 2 That that kind of the thing about go to market motion, the thing about prioritization, you know, we talk about things you've got strong opinions on are, are, are in those buckets. I'd so I want to come back to those and dig a bit deeper. I guess before we do that. Are there, as you look across firms that you're working with that seems to kind of get it and be being successful, whether they're SAS businesses or services within or pure services? Are there things you're seeing that seem to be like types of firms that are either just structurally or from a leadership perspective, better position for where the market's heading? Like what are the traits that are that seem to be making people more successful than others? Speaker 3 I hate to use an analogy that like is linked to to violence, just spoiler alert, but like it's, it's a simple analogy. It's more, it's less scattergun and more Sniper, which is the firm that I grew up in, in services was a company called CB and we grew the services business inside of a subscription business which was publicly traded. We went from zero to 100 million pretty rapidly over a few years, probably less than four years, I would say overall, I think. And one of the parts of the business that I worked, it was the commercial excellence practice, right? So we were, this company had done had written the book The challenge of sale. They had done research on that sales model and then they built out a consultancy and training business that where I was a sales guy and, you know, we weren't going out to people and asking, hey, what do you want to do? Packaging IP and Repeatable Services for Scale Like what's your challenges? You know, we knew what people wanted to do, similar to what I said at the top of the show, right? Like we knew everyone's profitable growth. It's like, and we had a very specific point of view on how you'd get there because we understood intimately, which is something that I've always taken with me from that job. And that business was like, you've got to really intimately understand buying behaviours in your client's business. You got to know it better than them, right? And at that time in that business in terms of B to B selling in software, which is where I worked, even though I wasn't a software sales guy, I knew it inside now back to front and as well as C level executives in Fortune 500 for C250 type companies. But I wasn't trying to be a sales leader. But what I understood better than them was like commercial performance and how you were going to change performance across a sales organization, right? Because sales organization often has performance like a bell curve, right? So you've got small proportion of people delivering the lion's share of, of revenue. And if you move the middle up to the right, then that's where that a massive inflection point in terms of growth can come from. And so we had a very, very prescriptive point of view on how you needed to do that. And that's what we would go out to the market and teach people how we thought about the world and would take maybe how they thought about the world and break that down and show them that there was a better way. That led back to our value proposition which was highly differentiated, that was highly repeatable, felt very tailored to every customer that we were delivering a very high gross margins, right. So, you know, I think it's a bit of a long winded story, but like companies that can replicate that, right? Like what is your expertise? And often times I think they're very in the earliest stages, they're very, very focused on industry or proposition. So they're either like we work with marketing functions across industry or we work in high tech and telecoms. We don't do manufacturing, we don't do this. We are there and we're highly differentiated. We can move quickly and we've got very strong IP in that area. And that that's the other. The other piece is like they've got the focus and go to market. They've got a clear strategy evidently. And then they've got IP, right? And that IP is either in the products that they're bringing to market or is the IP is in the people and the expertise that they bring to market, right? I don't think anything's changed in that regard. I do think that the speed at which, you know, you need to move these days is very, very different to what it was 15 years ago when I was working in consulting. It was like, you could have a project go for X amount of time, X amount of months, years, right? And people were like, yeah, that's all right. Not anymore. It's like, what can we do at about 8 weeks? It's going to drive some value and. Speaker 2 It's, I think it takes us nicely into let's talk a bit about prioritization because I know that's, that's an area you've got got, I've heard you speak about before and I think some really strong interviews on SO. And you talk about productization as somebody who runs a product company, which I think gives a really, you know, helpful perspective because like, you know, what a product actually is. Speaker 3 I hope, yeah. Speaker 2 And so when you think about services firms or services bit the firms like what do you mean by productization and what do you think kind of at a basic level people should be aiming for? Speaker 3 Well, I think, I think often times when people hear we should do, you know, prioritisation inside of a consulting firm or a services firm, they think like, oh, you mean build a software product, Like we'll build software products, right? And, and there's companies that have done that and be successful and, but there's lots that haven't. And it's more the second than the first because it's fucking hard. As someone who runs a product company, it's tremendously hard. You have to have a long term vision and patience and you go through a lot of you go through a long period of time often trying to get what's called like product market fit, you know, and I always hear these podcasts of founders where it's like, yeah, I had the vision for like how we were going to change and disrupt supply chain. I'm like, no, you didn't started somewhere else and you got there overtime and as often what it actually is a reality. I think Precursor originally was a, was a marketing intelligence platform for the in the gaming industry or something like that. It was before my time with joining the business and, and you know, several pivots later and we're PSA provider, right? So, but I think in a consulting firm it comes back to like this, this repeatability, right? So the, the way that I think about it is like the first step to productization is you want to find reoccurring problems that your clients or your prospective clients have, right? And to be clear, I'm not using the word recurring yet reoccurring, right? So for example, one time problem would be a new form of compliance and you have to make yourself compliant. Now that might mean that you have to do that on a longer, but the, the initial, an initial one time thing could be a, a new piece of compliance. It could be a, you know, a restructure, for example, you're, you're going to do once, you're not going to do 10 times over the next years. Hopefully a reoccurring challenge, which was what we had at, at CB was in sales enablement, which was training, right. And the reason why it was a reoccurring was because 20% of the sales team or more would leave a year. So you had a new influx of people coming in. So you had this natural user churn and then a recurring need, right, is audit. You have to do an audit every X period of time. So you know, most firms when they do their client journey mapping, they typically kind of do that over a one year time horizon, right? You've got client acquisition, onboarding, value delivery, rebook, right? It goes from left to right. You've got the teams, the moments, the matter, the metrics, all that bullshit. And it's very one-dimensional, right? It's very, it's, it's, it's a one year time horizon. And so like you're telling me you're running a consulting firm and you want to get clients for a year like you're going to be out of business. So what I counsel people to think about is like, right, if you started to map out what are some of these reoccurring issues or even what you may have within your client portfolios, you've got, we've got one time problems, you've got reoccurring problems and we've got recurring problems or recurring needs. Yeah. Now the thing that I counselled people to do is think about that client journey over a three-year time horizon. For example, now if your firm's only been in business for two years, do it over 2 years, a three-year time horizon and think about the operational run state you want your client to be in at that period of time and then work back from that. And that operational run state is they build a lot with us. And I'm getting a thumbs up from the the Riverside studio, which I love. Number one is they build a lot, but number 2 is they generate a lot of value. So I was, I was at a conference talking about this and, and like some old school, I don't know, consulting guy was like, Oh yeah, he's like this posh dude. Oh yeah, we rinsed our client for like, you know, this. And I'm like, you what your client, like, did you drive any value there? He's like, oh, not really. But you know, it's a big billing and it's like, well, they're not going to spend any more money with you, are they? Because you've, you've fucking done nothing. So it's not that, but it's thinking about right with your best, biggest customers, transformational customers. How did you get there? What were the deals you did? What were the projects you did? And break it all down, map it all out, right? And then go very simply, could we do that again with someone who looks like that? Or are we doing it again? Because when you start to do it that way, right, you, you, you avoid a mistake which many make is that basically you're trying to cram everything into project one or year 1. You know, what ends up happening is the client can't digest really the value or doesn't document the value that you've delivered. They disengage, they move on something else, right? And so, you know, once you've mapped that out, then you can then begin to see the patterns, right? And the repeatability of the things that you do. Then it's a case of like how you package those up, turn those, the first steps of productization is packaging your IP, right? So you're packaging your IP. So for example, in my old world, we sold commercial transformation, right? Now at the beginning of the era of where we have this new IP, nobody knew about it. Like everybody had heard of Challenger selling. It was a new thing that we had profiled, right? It was a thing that existed in nature, but no one had named it and no one had certainly thought about how to like train and develop the skills of it, develop a methodology and all this stuff. But so to begin with, when we're in market, what were we selling? We were selling training, right? We were selling skills development, right? And then over time we developed the proposition. Now to begin with, you know the average deal value is probably 50 to $100,000, right? But then people over over time as we were in market for a number of years, as we then began to deliver value to customers and we worked out how to do it better again and again and again and again. Then the average deal value was going up to 200 grand. And then I did a deal, I think it was like half a million, right. And people are like, how do, how do we do that? But and then, so then what's interesting is then by the time I left that firm, the way that that we went to market, the way that we can engage a client was very different to the early days. In the early days it was like scrap, get a logo, deliver value. But by the end we had a portfolio of products packaged offering. So we had Rep training, we had manager training, we had messaging, we had assessments. And what that meant was that you could sell a whole transformation program, big ticket value where someone goes, I want to do everything, I want to get it signed off. I want to get them like this. Do it or you'd have a situation where a client's going. I don't have the budget, but I want to get started. What can we get started with? What can we get in? And do you sort of have these blocks where you could go, You've got you've got some manager issues. We'll do that. We want to do an we want to do a benchmark. We'll do that, right? So that's that's kind of like it's this everyone jumps to like, I'm going to go and build software products. And you could do that with Claude, right? Claude, great. Go have at it become a product company if you want vibe code your way to whatever. But again, if you're if you're going to be in the consulting model and you want to build this, it's all about repeatability. So then once you've got those building blocks, when you're going out to your customer base, you're not going out going, hey, what do you want to do? Like open bar. Speaker 2 Yeah. Speaker 3 You're going up to the bar and going up. You've got a choice of four drinks. What do you? Speaker 2 Want yeah, yeah, yeah, so behind the scenes then I'll come back to the to the kind of the sales and the go to market side of it. But behind the scenes so I've I've accepted I wanted productize. I've accepted that I'm not going to be a software company because that's like path to riches or path to lots of, you know, whatever you're going to do, you're going to spend a lot of money and it's going to take some time. And if you don't know what you're doing, you're probably going to make a lot of mistakes, right? Because it's different, right? So, so I'm not trying to be there, but like, what does it mean then to have a packaged service? What needs to exist as stuff or as capability in a business to actually be able to kind of have a package service? Crafting Repeatable Sales and Delivery Motions OK, got it. Yeah. So one is you'll have a a discrete set of problems that you solve with your clients, right. So like a good pressure test for that is where is like that elevator pitch or that elevator question is like, So what do you guys do? And so like back then, I'd be like commercial transformation anchored around the Challenger model. We do this, this, this and this. We've got at least 4 main things that we do. That's a part of that. You don't need to go make sense. They go, OK, that makes sense. So #1 you've got a clear understanding about like the challenges that you solve for your customers, right? You're going to have a sales motion associated with that. So you need to build a sales process, right? And that is so an example that I would give in my from my own organization, right, is like we have multiple products that we sell as a company, right? Our traditional product being APSA platform, right? And obviously, if you've heard of this thing called AI, it's come out. Speaker 2 Once or twice. Yeah, yeah, yeah. Speaker 3 So we, we, we also have agents that we use, our clients use and and that we sell. And so that's going to be now probably this year about 10% of our ARR, 10% of our, our revenue. But the sales motion for that is very different to selling APSA platform. It's some shared challenges, but it's it that it's actually slightly different ones as well. The evaluation process is different. The people that you would have involved is different. The level of scrutiny on your AI, TS and CS security is completely different, right? The way that you have to structure the sales cycle and build trust is completely different. So you've got these propositions, these set of problems, set of problems, I'm sorry, then you've got these propositions that then lead into services. You have to have a sales motion for those things, right? And then you close a deal, you better have a prescription and repeatable way of doing things. And so you know, again, usually there the bit where it falls over is people will maybe package something up, sell it fixed price and then they go in and they're like, So what do you want to do? We're going to do some design workshops. What are we doing? Like what are your challenges? It's like, no, no, no, we know what the challenges are. We've got to have prescriptive confirmationary, like requirements confirmation, not gathering confirmation, right? And then we're able to deliver a service, deliver IP, right, quickly and efficiently. And the emphasis is on speed and efficiency, to be honest with you, because really those package services are great land and expand mechanism and they should lead to spoiler alert, other package services, right? So you've got these kind of discreet. And that's why that client journey map is like, we can start here, we go here, we go here, we go here, we go here over a period of time, right? Because if you can't answer, so what's next from your client, you haven't done it properly because there should always be a next. And then you would have your pricing, your decks, your assets, your delivery framework, your level of effort, project plan, all of those types of things should all be, you know, if you've got a project management tool, it's in your project management tool. If you've got APSA, it's in the PSA. And it's just, we go through the same motion and you do go through the same motion. And The thing is, people think, oh, that's less tailored then they're doing it wrong. I heard this at an event that I spoke at. They were like, Oh yeah, we, we tried some of that. And people just said it just felt like it was just off the shelf. And I'm like, probably because you just didn't put the level of effort in to making it feel tailored, right. So everything like we were doing back in the day at CB was like, it all looked, I mean, it was phenomenally professional, like everything. It was like top tier. It would have been, you know, it would have come across very well from a top tier management consulting firm. And we were not that, but it, it felt that. But it was all templatized, right? The decks were templatized, the workshops were templatized, the talk tracks were. But because everyone knew it inside now back to front, it was just you could then tailor it to the customer. And we always worked through like 4 lenses. So anyone XC be listening to this from that practice will remember this. But it was like the industry that you will you were operating in. So I was in tech, right? You knew the industry back to front then the company. So was the company in a growth mode? Were they trying to retain market share? Were they actually declining and they needed to do something different? The function that you were working with and then within that function, the individuals that you were serving and it was all, you know, we would go through those four lenses so that we were like, this is what's going on in your industry. This is what you how it links to your company strategy. This is what that means for your business function and therefore for you, which was the personal element at the end. This is how this is going to benefit you in your career. So like there's a lot of stuff, there's a lot of stuff that goes into it. So again, you know, services, operations, having someone, whether it's internal or external, who's going to put together all your assets for you or whether you got to hire a freelance or an agency or something to make it all look good, whatever it might be. But it really should be like, I don't know if you've ever seen when people, companies do these brand refreshes, right? And you've got like the logos and this and all the stuff. It's that, right? That's everything that's under the hood is what you need. Speaker 2 That all makes perfect sense, Sounds completely logical. Why is it so hard? Speaker 3 Well, it, there's a lot to it, isn't there? Number one, like I've gone through in what like 5 minutes. I talk relatively there is a lot to that. I also think that it's not like a one and done exercise. So like in my own business, we, we have this, we have like versions of this for everything that we do and it gets refreshed. It gets refreshed every year properly, but then every quarter I'm personally working on this stuff and, you know, updating it and evolving it. Because as your understanding of your customer deepens, the sharpness to what you're bringing to market, the point of view, the sales motion, the delivery motion, it, it, it really should be iterating over time and, and, and like on a regular basis, like every quarter, you know, new, new stuff. So we just recently, so in Q1, we brought out a new set of service offerings, right? And, and we were probably 3 months behind where we wanted to be in terms of releasing it. And I was like, can't we just, you know, can't we just get the pitch deck and we just get it out there? And, you know, then I realized when I was chatting with Graham, who's our CCO shout out to Graham, which is like, yeah, shit, actually, if you're pitching something, you've really got to be able to deliver it, right? Like there's got to be, there's got to, you know, you've got to have the pricing, it's got to be in the CRM. You've then got to have, you've got to have the all of the decks. You've got to have how we're going to, you know, run everything and all the methodology underneath. So it's a lot of stuff. Focus on ICP and Building for Scalable Services It's just, I think it's just the level of effort that I think it takes to do. And that's why you can't boil the ocean. So for example, I think one of the things we're going to talk about a little bit later on is like, you know, the, what are the sort of the different, the services mix that, that, that, that kind of people bring to market. And I see like, you know, when I think about when we first rolled out our managed service offering, which is like our version of subscription services. And I remember we had like 5 versions of this package. And we looked back and we were laughing and we were like, why do we have 5? Like all it was was a different level of effort. Really. It's just like the players have two. You're either this door or this door. So the tendency, I think, is for companies to either boil the ocean and try and bring out too many things, too many services products, too many services propositions. And so you spend a lot of time trying to deadlift all of the things that we've talked about versus starting in a very targeted area. So for example, in my business, we rolled out an updated version of how we it's an onboarding motion that we have for our customers and it's an enablement motion. So when it's more them hands on keyboard guided by us, right. And like the mind that the the way that we frame it is built with you because what we know in our, in our set in our category is PSA tools are not uncomplex applications. They touch a lot of different areas. They touch capacity, planning, utilization, revenue, billing margin, huge amounts of data, quite expansive in terms of like object model architecture, all of these types of things. So they're not simplistic point solutions. They're they're enterprise applications. And traditionally, you know, you wouldn't like let customer hands on keyboard implement APSA tool be a fucking disaster. But we have a very elegant architecture. We've got a methodology and we can do that. And part of what we learned and we realized over time is like the for our customers, they weren't building up a sufficient level of knowledge amongst A broader set of people about how the application worked under the hood. And so we wanted to create a motion where we could better enable more people within the customer base to really understand the app because what that leads to is faster implementation, better adoption and actually more value realization, less cases and just like almost like a mini centre of excellence in the customer. Now, again, that's something that we've had now as an offering for best part of two years now and we are still iterating on that every week. So going back to your question, the reason why I think people probably give up, you got to stick at it. You really got to stick at it. And and that's why it comes back to so much of it is about, you know, do you know who your core ICP is, your ideal customer profile? I said that's a huge thing in software. I don't think it is well, I don't think it's done well enough in consulting. I don't think consultants, consultants by their nature, because you going back years, start from zero, right? Nowadays more firms are trying to get recurring revenues. But when you start from zero, you're like, we've got to go get some projects, we've got to go and get some deals, right? And you'll fucking take anything. So whereas in software you really need to know who your ideal customer profile is and get to know that really quickly and then you can do a much better job of selling and serving that customer. Speaker 2 I think you also probably in software have a like, you know, you're building a thing, right, That like it might be a kind of ones and zeros, but it's still a thing that has to has to exist. And so therefore kind of be as as as you're building the team that's going to work with you, you've got to have some engineers and some product people whose jobs is to make the thing. And I think that that making of things is not something that in in terms of making of the product is not really something that consultancies have historically needed to spend as much time on. Because the kind of product was what was in peoples heads and the the PowerPoint decks that were the system implementation or whatever that got deliberate. So therefore, I think there hasn't been the investment mindset that part of the business model is not just the people who are doing stuff, but there are people who are building stuff. And I think and, and, and you feel like, well, I can't really have them spending that much time building because they got to be out delivering. So I think there's a, there's just a structural mindset that's probably different that I think and it's kind of brings. Speaker 3 Us on correct yeah, yeah, the the product management element is is definitely is definitely a big part of it like to do productization. It is product management and it's cross functional, right. It's I think the other thing is, you know, you don't do it in a vacuum going back to like why do people what goes wrong? And maybe like so when we did it, you've got product in the room, you've got sales, you've got marketing, you've got services, you've got customer success, you've got support, you've got financial. Everyone needs to be in the room right at the beginning, not at the end, right at the beginning so that you can think about pricing and margin with the finance team, you can think about the sales and the go to market with the sales team and and that type of thing. So it's a cross functional initiative as well. Navigating AI's Paradoxes and Pricing Dilemmas Take us to You asked if heard of AI. Yeah, once or twice. I'll take us to AI for a minute if that's all right. I think it's particularly interesting in the context what we've been talking about because it's forcing people to kind of confront questions around repeatability, operational maturity, scalability kind of and at a pace they haven't had to do before. But I kind of sense from our earlier conversations that kind of what you're seeing in markets a bit more new nuanced than just AI replaces consultants. So from where you sit, what what are you seeing firms do with AI right now, kind of, for better or for worse? Speaker 3 Well, so I thought I've thought about this like with spoiler everyone, we planned for this, but I think that that so a few framing points around AI, right? Like #1 is human intensive services lend themselves to automation, right? If you're a people based business, there's element that work that will lend itself to automation. Human intensive services for those operating like the technology or the AI space will be required and always have been required for transformational software or transformational AI. And then three, the biggest blocker to AI adoption inside of a consultancy or inside of, you know, the companies that you serve if you're selling AI solutions or in the market in general is like knowledge, right? Is do we have the knowledge, do we have the expertise about AI to use it, to use it safely, securely and in a way that's going to create value for our company, for our people, drive more revenue, increase EBITDA, etcetera, etcetera. And So what you see, God, if you open the newspaper, you know about AI, you see a multitude of things that are happening, right? Which again, is all important context. So you know, services firms depending on who you, you know, talk to are either all dead tomorrow or actually there's a massive market opportunity. You know, because companies like Open AI and Clawed who are doing, you know what's clawed up to now 40 billion run rate in a year. They're going to have quite a buoyant partner ecosystem, me thinks. So a lot of our clients in, you know, in technology consultancy are becoming Claude partners. That's a market opportunity. Fantastic. So, you know, there's all these things kind of like sloshing around. The other point is like a is being blamed for job losses by certain companies and probably nefariously in a number of instances, right. So then you've got this scenario of I'm, I run that consulting firm and I'm telling everyone, Hey, we've got to be using AI and I, my staff opened the newspaper and X amount of people have been fired from Y consulting firm is of AI. It's like, that's kind of like giving people a packet of cigarettes, like with all the terrible pictures on them and saying you should be speaking more. It's like, well, I don't think I should. So, so I just think it's, it's, it's like really, it's really interesting. There's a lot of paradoxes, I think going on to the question right about the impact like AI within services, whether it's impact strategy, how are people, what are people doing? I think everyone underestimates the inherent complexity and the impact on like of your foundational operating model of a services firm if you are going to layer AI into the mix. We've been working with it extensively inside of our business. We have it in our products, but we use it extensively inside the company for 3 1/2 years. I think our first AI hackathon in the in the development team that I went to was like September 2023 when the first big, I think it was open AI is one of the big open AI models had come up, whatever it was. So, and we are still, you know, learning and working at it and working out where it can drive value, what it displaces, what it improves because what you find is you can create loads more problems to solve or it can make it seem that anything is possible, right. So actually embedding it into like ways of working is difficult. You have to monitor that. There's a lot of work that goes into making people feel safe, surveying members of the team, ensuring you have the relevant training, security policies, all of these types of things, which nobody does. They think we're going to do something with AI as I get Gemini or I get copilot or I get whatever and I'm doing something with AI and you're not. And that's just a route to like AI slop. And you've seen it from the big firms, right? You've seen like Deloitte got busted. Some consultant has run something through a pen AI and they've come up with a big report. They haven't proofread it and it's got a load of bullshit references and data in it. It's like, I've seen that happen a lot. And that's why you have to not really understand how to work with AII, work with Claude every day, right? Ask Claude to do something and got it wrong. I said like, you got that wrong. Or when I'm showing people outputs from Claude and I'm like, and they go, oh, that's amazing. And I go, yeah, that bit's wrong. And they're like, oh, oh, it doesn't work. Then I'm like, well, everything else that you see there is absolutely correct. And there's no way that I could produce that in that in, in 30 seconds. That would take me 3 hours to do so. Yeah, one line's wrong. Where is this sudden, this bar of excellence? And like, oh, it gets things wrong has come from like, have you never made a mistake in your, in your career or mistyped something or got something wrong? You know, there's, there's all of those types of things. Just something that I wanted to to go through, which I think was, which I think speaks to the complexity is like one of my first interactions with kind of AI and services was I went to a Simon Kutcher and partners, their pricing strategy specialist event. And one of the partners was taking the group through an example of where I think it was an audit firm had figured out a way to take a task that would take an associate 2 weeks to automate it with AI, right. And you know, they were kind of patting themselves on the back that that was, you know, so special, but they build TNM. So they were like, well, what do we do? Because it's two weeks, you're right, of of an associate, but it's two weeks times hundreds of engagements per year. What do we do? Do we go fixed price? Do we go outcomes based? Do we not tell the client just build them for it anyway, right. So, you know, it's complicated and that's why I was saying like it goes back to kind of like the fundamental, the operating model in the services industry is based around the billable hour labour effort. So therefore, if you have got something which reduces the level of effort to do something, what is going to be the expectations of your client base? You charge me less. That's the answer, right? Like this should take you less time and cost less than it did last time because of AI would be probably my my anticipation. Speaker 2 So let's talk about pricing some of it because I think we've talked before about growing pressure on traditional TNM models kind of what that means partially what that means operationally. What do you think? And you might see it in, because I suspect your, your, your software helps people with pricing decisions or pricing structuring and that kind of thing as as most PSAS too. So like either in what your clients are asking you to enable functionally or just what you're seeing and talk about or or think about, what do you think's changing in the way pricing and packaging is being thought about by service firms? Diversified Services and Proving Value to Clients Well, I think the services firms are inherently inward looking, right? It's always like, you know, how should we price this? You know, what's our billing method, what are the milestones, what's our margin going to be? And I prefer to look at things through the lens of the client, right? And going back to what we talked about right at the start is everyone that you talk to, it's like we got to move faster. You know, I don't talk to anyone who goes, you know, what I really need to do this year is make less money. I need to make less money, grow less. Ideally, I want a haemorrhage to some margin. That would be awesome. Like no one, no one is, no one is only going one way, right? So like that's the kind of consistent behavioural dynamics I think across most any client. And therefore, like, what do they want from you? They want, like I was talking about, they want you to be direct. Yeah, have a point of view. They want you to move quickly. They want you to have expertise. And so when you translate that into the world of services and you think about pricing and packaging, it means that you have to be more prescriptive. You have to be more challenger orientated. And then your delivery mechanism needs to be that way as well. And what you can't do is like sell a tightly scoped high value piece of work and then immediately diverge Dilu and you know, haemorrhage margin. So I think what I see is that the best companies have got a suitably and I've I've used again, use my words carefully, A suitably diversified set of services, right. So, so to my point earlier, you don't want to be all things to all people, but it needs to be sufficiently diverse to take that customer on that multi year journey with you and your firm, right? So I think across both technology and services firms, the types of services that I see being most successful is #1 you've got that packaged in some cases highly productized service offering that is often like the land and expand the initial project, the initial piece of work more and more. I think now people want that to be fixed price and you can deliver it rapidly, get on to that expansion sale that second order revenue. And different companies will look to achieve different margins using that type of motion, right? I mean in software you, you will have some firms that will run that at a loss because it's an investment service. You'll see that less so in services, but it might be that we'll take 4050% margin on that engagement versus our traditional 70 or 80%, right, because we want to get in and deliver quickly, right. The second area is then subscription services, like so recurring services that are sold ideally on a multi year basis, you know, at a minimum, maybe one year. But you know, there's also nothing wrong with you rolling out like a an offering, which is like you sell someone for three months and then you turn it into a recurring thing, right? And you get them to renew it once. Then they're into they've done it with you for six months and you say, hey, then you then you roll try and roll them into an annual contract as an example. I mean, if you look back, I think traditionally maybe PS firms would have had like 1020, maybe 30% of the book coming from recurring. I think everyone wants that to be over 50%, like the best firms want that to be over 50%. And the ones that will achieve the highest EV exit time will have more than 50% of their revenue coming from recurring services. I think there's traditionally been this maybe this impression sometimes that that's done at a lower margin, not necessarily in, in technology companies. It should be done at a much higher margin actually in, in reality, I think inside of software companies, right, what you typically see is that there's a direct correlation between people that consume services on an ongoing basis and product consumption arr growth, average revenue per account goes up. Like one company that I know they looked at it, they said people who buy ongoing service from US versus those that don't grow 100% more than this other cohort, which is a lot. And then the other services motion that's kind of rising to the top is for deployed engineering, right? So that is kind of the, I hate the term, but like it's one of the hot topics right in go to market inside of SAS and technology companies. We actually have it inside of our company. Speaker 2 What does that mean? Just for anybody who's not familiar. Speaker 3 So I mean, it's, it's been popularized by a few companies where what they do is they effectively they don't separate their software and their people. They sell a platform, they sell their software with a person embedded into that proposition. It can be an individual or a group of individuals, right? Highly skilled engineers who are working with that customer on high value issues with the product in a production environment. Right now, the traditional kind of go to market motion in software organizations in terms of selling is like show and tell, right? We do discovery. You tell me your problems, I show you how my product solves those problems, right? Show and tell. They're kind of the, again, going back to like the market pressure, the level of scrutiny on any type of spend services, software AI is much higher than it's been. So what you've got is a world where the customer is going prove it. I want to see proof. I'm not spending XI want to see some proof. There's a version of that in consulting. Like I love the sound of this idea of this transformation, but I need to see some proof. And so for deployed engineering has emerged really is like a a mechanism to bridge like a trust gap and it's less show and tell and it's much more proven move. I'm going to show you that this thing works. We're going to work in your production environment with your needs, with your challenges, with your use cases. And the other thing that's impacting driving that as a market dynamic is the shift in how software and technology is priced. So you've got, you know, traditionally seat based licensing is moved towards consumption based pricing, outcomes based pricing. So for example, support vendors like Zendesk, Salesforce Thin, which is the new name for Intercom Sierra, which is Brett Taylor's new company, like their contract structure will be that support case that you have. When we resolve that, we resolve that with our AI. And when we do that, you pay us a RIP. I call it a RIP. It's we've resolved that case pay SX. And so you'll see in their case studies, it's like 80% resolution, right? Which means of 100 cases, 80% of them are getting resolved by AI, right? Which means they're getting tick, tick, tick, tick, tick, tick, tick, tick. So that that's kind of one of the drivers. So, you know, those are kind of the core services that I, I see in, in, in the market at the moment. I think some of the principles can be brought into consultancy, but again, that's sort of the mirror of the FDE motion would be you have highly experienced consultants going in and doing less of the, we sell the A-Team, we put in the B team and we sell the A-Team and you get the fucking A-Team, right. And we actually the senior guys have to do more of the work now and a kind of expected to and maybe can because of AI, yeah. Speaker 2 Yeah, yeah. Well, and, and I think increasingly we'll get paid, if not all, at least a decent part when we've delivered something for you, which is not to say that we haven't always, you know, consultants and deliberate things, but I like, like that kind of tangible, visible something is different or something has happened. And yeah, and, and that's hard. I think it can be, particularly with different kinds of consulting work can be harder to articulate. Put a monetary value on that. Speaker 3 Going back to your AI point, like how is AI being used or how should it be being used, right? The one of the key things that I'd kind of leave, you know, final few final thoughts, but key thing that I would counsel people to think about is like, we do a very poor job of documenting the value that we've delivered with the client, right? So we've got this business case, we've scoped out this ROI we've and have you actually documented the change, right? And what's happening? And you got to do that over time. You can't just do it once like 3 months, you got to go back. So example, I was talking to a client this week and we've been working with them for four years, right? And I'm like, OK, I was asking some questions. I'm like, what percentage of projects do you deliver on time now, Right. And it was 86%, right? Like, cool, what was it 2 years ago? She's actually got all of her data there. She's got a pivot table. This, this particular client, she's great. She's like 79%. I'm like, OK, cool. So getting more consistent then Yep, I'm like, cool, OK, what about what's going on in mid market, which is where a lot of that stuff, it's like, Yep, 15% faster. Cool, great. You said that you saved X amount of hours per month previously. What was the total FTE savings on that? She's like 70% of 4 heads like cool. Now one of those things I knew the two other ones we knew. So I had to, you got to keep coming back to them and being like, what was the value that we actually got? And then socialize that internally, be like, have you told anyone this in your business? Oh, no, not well, can can we? Because that's what's going to get you in software. That's what gets you the renewal, right? And in, in services that which should be like, well, what else can we do with these guys? Speaker 2 Yeah, yeah, yeah. Well, I think there's something about. Speaker 3 And then AI can help you to accelerate that. It can help you to accelerate the analysis on what the business case should be and then the impact if you can track a baseline to a change. Now, if you if you can't do that in your particular area, it's much more difficult. But you know, that's the game in my opinion. Long-Term Value and Client-Centric Approach Yeah, no, I agree. I mean, look, it's been a really interesting conversation and it's kind of it's, it's, we've been talking for longer than we normally do. It's been like there's so much more we can keep on with. I won't keep you any longer. I close all of these with the same couple of questions. One kind of looks back in time and one looks a bit more forward. And I'll throw this in your direction if that's all right. You know what they are so. Speaker 3 We didn't prep for this bit. Speaker 2 But OK, well, there, there you go. Speaker 3 There we go. Speaker 2 So if you go back and do one thing differently, whether that's in your business or in career, what would that be? Speaker 3 One thing, know who to listen to, Know who to listen to and compare yourself. Go on. It's very easy in software to like can try and compare yourself. Like imagine being someone in software now and going, oh, shouldn't I be growing like anthropic? Yeah, yeah, they just did like 30 billion in a year. I just yeah, like, I like, I'm a failure, like or, or just like what are they doing? I should be doing what they're doing, you know, so it's very easy to compare yourself to completely irrelevant like other organizations. You just kind of kind of, I think I would have been a lot more focused on myself and knowing like knowing that I should have just been more focused on us and less worried about what some other folks were doing. It wasn't a big distraction, but it has a great way of if you're, if you're setting up a business of making you feel like shit. So don't do that. What's the second? Speaker 2 Question I noticed that sometimes when I when I pay too much attention to what others are doing, I start questioning myself it's like you kind of need to see the competition but like they're they're a different world do your thing so. Speaker 3 Yeah, there's a version. I don't go and say I'm not on social media, but there's a version I guess of doom scrolling in business so. Speaker 2 Yeah, yeah, yeah. You can doom scroll LinkedIn if you if you choose to do so. Second question, but one piece of advice, if you're talking to somebody who's looking to build long term value in a services business, what one piece of advice would you give them? Speaker 3 You've got to think about, and this again comes back to that kind of like have a vision of the future. You've got to think about how you architect your firm around meeting your client where they're going to need you, where they're going to need you. Not like, again, not reactive, but this is where it goes back to you've got to try and understand your customers business better than them, right? So in my, in my world, we're a software company. There is more to running in a successful services organization inside of a software company than APSA tool, right? That was one of my, one of my learnings actually. I was like, you know, it's all about this PSA tool to run a services shop. I was like, no, it's not actually quite the opposite. So I realized that unless we built this community called the Services Delivery Alliance, which is like a global network of services leaders, about 1000 people participate in events every month. And kind of the principles of that I learnt a long time ago, which is if you're in a certain role in a certain businesses of a certain size and complexity, you'll share the same challenges. So don't reinvent the wheel. And therefore, if you want to drive like long term value, you got to be ahead of the market. You got to help your market in in some shape or form, improve the industry that you're serving and really give a shit, right. You can't just like bang a load of values like on a poster on a wall and make it so like the number one value in my business is put clients 1st and actually mean it. And it it's true right now. Like I remember going to Facebook. My friend works. Works for, yeah, works for Facebook. We used to go to their offices in New York. And whenever I'd go to New York, I'd go to their offices because they had all this free food. And I go in one year and there was this poster on the wall and it said move fast and break things. And I go back the next year to see my buddy. And at the poster change, they said move fast with stable infrastructure. And I said, yeah, Matt, what happened to the the move fast and break? He's like, Oh yeah, we broke too much stuff. And I was like, is all of this stuff like you got a load of stuff on the walls here? Is it true? Or is it some, a lot of it's bullshit And he's a he's, he's a Yank, but he lives in London. So he's, he's worldly and he's just like, now some of his bollocks. And and that's true, right? You've got to like that. That's true in terms of like, you can't fake it. Like you've you in going back to that example of like this terrible dude that I met at this event who rinsed his clients. That's not going to get you anywhere. You genuinely got to think about like how, how am I going to change the industry for the better that we, that we serve or if you're not in industries like the role we serve, right, a marketeer, A procurement person, whatever it might be. But hopefully that's that's that's reasonable guidance the more customers feel that you care about. Speaker 2 Them and their problem and them, you know, particularly them as a human being as much or more as anything else. That's the better success you have, at least in my experience. So Jonathan, so grateful your time and all all all you've shared really interesting conversation. And so if somebody wants to get in touch and you're not LinkedIn, the what's the best way to find out more about you or precursor, go to our website. We made the company name really. Speaker 3 Difficult to spell. And then if they can guess my mobile number, they can give me a call. Excellent. All right. Well, we can. We. We'll play. Speaker 2 That game. All right, well, listen, great to see you. Thanks for making the time and we'll speak to you again soon. All right, brilliant. Thanks, John. Cheers. Bye. Speaker 3 Thanks for listening. That brings our. Speaker 1 Miniseries to a close, there've been 6 conversations about how to navigate the huge technology driven change that's going on in our sector. If you found it useful, we'd love for you to follow the show, share it with others and go back for any episodes you've missed. We'll be back soon with more conversations on building and growing great professional services firms and we'd love for you to join us. And do connect with me on LinkedIn, the links in the show notes and I'd love to hear what you made of the series and who you think I should be talking to next. Thanks again and see you next time.