My rating: 4 of 5 stars
A very good book, outlining some of the basic principles that one managing a (unit in a) professional service firm should remember, such as:
"If there is one single thing the professional service firms must do right it is attracting and retaining the highest-calibre individuals"
"Differentiation in the form of intellectual human capital is a barrier to new entrants"
"The highly competitive professional service firms will typically have a very low degree of client churn, as it becomes an indispensable part of the client’s value chain."
“The choice of client may dictate the professional development of the firm - it has to be made in full understanding that whatever else happens, the professional life of the firm will not be the same afterwards”
"The client relationships have “time economies”, the counterpart of industry’s “scale economies”. The firm does not need to incur acquisition, learning and start-up costs every time as with a new client."
"It is better to have an excellent general understanding of the issues facing a client and fashion the the professional service firm’s services to meet those needs rather than continuing to sell them the same solution to different problems. The power of the professional service firms is to customise, not to mass market."
"Most healthy PSFs compete on quality and not price. Their focus is achieving high enough levels of value added to sustain higher salaries that competitors and hence maintain the best professional talent."
I liked the systematic approach of the book: most of the principles (some of which are outlined in the quotes above) are substantiated by underlying economics, supported by charts or spreadsheet calculations.
The style of the book is rather dry, there are not that many examples - and those that are mainly come from the advertising industry. Many of the chapters are written with the focus on corporate finance, rather than company management - which might be too detailed if one is not concerned specifically about M&A.
All in all, a really good read and recommended for anyone willing to study economics of the service industry (as opposed to product-based companies / industrials that traditional economics focuses upon).