Professions under pressure.............
Article posted on 27th November 2006
How do I deal with fundamental changes to my market?Over the last two years I have worked with a number of the professions in the UK who are having imposed on them de-regulation or other fundamental changes to their markets. Many are reacting very negatively to this with a combination of fear, concern, and maybe anger and in some cases severe depression about the future of their business.
The problem is, of course, that once you have got yourself into this negative frame of mind it is very difficult to see a way out or indeed to see any cause for optimism.
There are, however, two sides to every coin and what I seek to do is to show the new opportunities that have now opened up as a result of the market changes which, in fact, represent significant new opportunities to facilitate the sustained profitable growth of the business.
Let me talk about two of the professions - pharmacists and solicitors.
Earlier this year, as a follow up to a speech I did at their conference last year, I ran two short workshops with groups of 20 to 30 pharmacists - and I have to tell you I have never seen so much negativity gathered together in one room!
The background here is that the UK government, through the National Health Service (NHS), has changed completely the way in which pharmacists are both regulated and remunerated. Under the 2005 "New Contract" pharmacists no longer receive their NHS income just from the dispensing of drugs but from three areas:
Essential Services - which include dispensing but also areas of waste management, public health, self-care and clinical governance.
Advanced Services - where they are remunerated for Medicine Use Reviews.
Enhanced Services - which might include emergency contraception services, smoking cessation programmes, diabetes checking etc.
- and, needless to say, the new remuneration rates for dispensing are now at a lower level than previously.
What I found in the workshops was that so many pharmacists were seeing the New Contract solely as a threat to their income - and a threat about which they believed they could do very little.
I set out to convince them, however, that what in fact the new regulations are really doing is to encourage all pharmacists to look upon their practice as businesses like any other whilst at the same time helping the pharmacy to take up a central role in the local community.
This change does, of course, mean that pharmacies will have to act like other 'free market' businesses and seek to attract customers through marketing initiatives and provide a levels of service that encourage customers to remain loyal - something that really wasn't necessary in the past when customers had little or no choice or means of differentiation between pharmacies.
In the workshops I had groups of five or six pharmacists spend just 10 to15 minutes looking at ideas and new opportunities they now had to develop their businesses, the actions they should take and, very importantly, the specific additional income generation they believe they could achieve.
I have to tell you that by the end of the workshops, across all the groups, the average, quantified, improvement that they believed they could conservatively achieve as a result of the initiatives we discussed was in excess of 50% growth in profits by the end of the first year. As you might imagine the room was audibly humming by now!
The lesson here then is simply that in times of enforced change, you must force yourself to always look for the opportunities that the change enables, rather than to simply view it as a threat. For those of you with whom I have shared "The Change House" model it is about ensuring that you and your business get into and remain firmly within the confines of the "Room of Renewal".
Dare I say that some pharmacists may have allowed themselves a to be firmly anchored in the comfortable, but dangerous, "Room of Contentment" for too long!
Many solicitors in England now see themselves facing similar "threats" to those the pharmacists saw coming one or two years ago.
As a result of the recommendations in the 2004, government commissioned, 'Clementi Regulatory Review of Legal Services' their market is being opened up further to competition and they see the ultimate threat as, say, Tesco being providing legal services.
At the same time new regulations in the housing market see the introduction from the middle of next year of ‘Home Introduction Packs' (HIPs) whenever a property is being sold. Many solicitors are seeing these also as a major threat to their conveyancing business.
I have met with and spoken to many solicitors this year and I am seeing many similar reactions to those of the pharmacists - fear, confusion, anger and depression.
The reality however, I believe, is that here also solicitors are, in fact, being given a major opportunity and encouragement to turn their practices into modern businesses - with significant opportunities for sustained long term profitable growth by challenging their current business models and exploring other income opportunities.
In Scotland it has been the practice for many years for solicitors to provide a ‘one stop shop' for house sale and purchase by also acting as estate agents. Many have been very successful at this and earn significant additional revenue as a result.
The largest and most successful grouping of Scottish solicitors/estate agents is ESPC, based in Edinburgh and they are keen to share their successful model, suitably tailored for the market differences, with solicitors south of the border.
ESPC will be launching this programme at a conference in Leicester next year and I have the privilege of being invited to speak.
This has to be an opportunity for all solicitor practices in England to consider - a true ‘one stop shop' for house buyers and sellers with conveyancing, HIPs, estate agents and maybe surveying all under one roof.
I strongly encourage any English partner to the take a day out to attend this important conference - it just may represent THE turning point for your business.
As with the pharmacists solicitors also need to now embrace all the customer- centric activities of the very best businesses - including market research and market promotion, selling techniques, key account management and a constant focus on providing outstanding service levels.
Every paradigm in the practice needs to be challenged. There may be a need, for example, to move completely away from the traditional partnership model and also from the, often ingrained, fixation on the generation hourly fee income as, firstly, the only source of revenue and secondly the only basis upon which performance is judged.
So what are the lessons we can all take from the pharmacists and the solicitors? If you are facing an apparent major "threat" to your business - imposed or otherwise - the message must be to work out just how you can turn that "threat" into an opportunity.
To do this you need to get up into your helicopter and view the big picture of your business.
If you, genuinely, find that difficult - and many do - then have someone like me come and help you because it truly is vitally important to your future.
The more businesses I see, the more industries and sectors I research, the more places I go around the world, the more convinced I am of these truths:
- There are no longer any ‘givens' - no longer does any business have a divine right to exist.
- Life cycles are collapsing as technological developments are accelerating.
- Change is endemic - and the highest risk strategy is now to do nothing and seek to maintain the status quo.
This means that no business - whether a major quoted corporate, a successful family business, a technology start-up, a ‘not for profit', an architect, solicitor, accountant high street shop or pharmacist - can afford to be in any room in the Change House other than firmly located in the Room of Renewal. In here they will be constantly challenging everything they do and how they do it and always ‘raising the bar' of acceptable performance.
You need to develop a mentality and culture in your business that celebrates, rather than fears, change - be it imposed by regulators or otherwise.
©2006 Roger Harrop Associates
