Everyone In our profession knows the three-word phrase “thought leadership marketing.” It rolls off the tongue like a memorable pop song.
But nobody says the phrase “thought leadership service innovation.” “Huh?” you might be asking. What on earth am I talking about?
Well, remember those four words. They will roll off the tongues of executives who get religion about competing on thought leadership. When their content opens doors in big and high places that were previously uninterested in their services, these firms will be asked to deliver their services in volume.
Their clients will tell their authors of the groundbreaking management journal article, book, white paper or conference presentation to bring more of their colleagues in the door. If they can’t deliver the expertise with the skill of the firm’s designated thought leaders, clients will be sorely disappointed. They will want to know this: “Why did you sell me something your firm couldn’t deliver?”
Thought leadership can’t end with a marketing and sales campaign. It must end with a scalable, high-quality service. That only happens when thought leadership is treated as service innovation, not just as content marketing.
Thought Leadership = Service Innovation
Service innovation is the development of new services or the enhancement of existing ones. A consulting firm with a new strategy development process that pinpoints a client’s greatest digital product opportunities with unprecedented precision is creating an innovative new service. A law firm that concocts a new way for big companies to protect clients from entities that use AI to steal intellectual property is developing an innovative new service. An architecture or real estate development firm with a bold new approach to turning abandoned malls into vibrant community centers is a service innovator.
Compared with product innovators, service innovators live in obscurity. Product innovators that generate whole new levels of customer value rapidly gain riches. Think Tesla, starting in 2008, with electric vehicles. The year before, Apple with its iPhone, an easy-to-use, carry-in-your-pocket mobile device for calling, surfing the web, listening to music, taking photos and digital tasks. And go way back to about 150 years ago, Thomas Edison and the light bulb.
Service innovators can reap fortunes, too. Those whose inventions help businesses materially improve themselves command premium fees. Consider Bain & Co.’s Net Promoter Score, or Robert Kaplan and David Norton’s Balanced Scorecard. Or think about disruptive innovation, the strategy brainchild of the late Harvard Business School professor Clayton Christensen, whose consulting firm Innosight Holdings LLC turned it into a consulting service. Huron bought the 90-employee firm in 2017 for $100 million. That’s $1.1 million per employee if you didn’t do the math, which would be about three times the revenue per employee of McKinsey in 2022 (according to the McKinsey revenue and employee estimate of Forbes).
Innosight wouldn’t have fetched $100 million from Huron if the consultancy hadn’t turned Clay Christensen’s ideas into a scalable service.
At the end of the 1990s, consulting firm Marakon Associates brought a groundbreaking strategy development service called value-based management to the table, which fueled its rapid growth and billing rates higher than McKinsey’s at the time. That’s service innovation. In the 1990s, the consulting firm I worked at (CSC Index) brought an innovative operations design service to the world (business reengineering), which increased the firm’s revenue five-fold in eight years. But because it didn’t scale up those services to a consistent level of quality, it shrank. Yet the reengineering consulting market didn’t. Bain’s latest report of management concepts rated business reengineering the top “operations” management tool of 2023.
Service innovation should be the ultimate goal of thought leadership – not creating and marketing content that captures clients’ budgets. For sure, creating and marketing that content is crucial. But if the service that a thought-leading firm delivers doesn’t work reliably as marketed, all the market attention and revenue it initially generated will eventually go away as clients refrain from vouching for it. Delivering a consistently high-quality and innovative service is very difficult.
I laid this out in my book “Competing on Thought Leadership,” where I introduced a framework on the demand- and supply-creation dimensions of thought leadership. Thought leadership marketing and selling is what I put under “demand creation.” Service innovation happens in “supply creation,” after a research team investigates the differences in the ways successful and unsuccessful companies addressed a certain business problem. (When I say successful and unsuccessful, I don’t necessarily mean those companies’ eventual success or lack thereof in the marketplace; I mean their success in solving the problem at hand.)
The Next Wave of Thought Leadership Will Be Service Innovation
If I were running thought leadership research or marketing in a company whose executive team was favorably disposed to thought leadership but not yet convinced it can turn the revenue dial, I would not be stopping at the demand-creation part of it. To prove thought leadership should be a competitive – not just a marketing – strategy, I would focus on service innovation (supply creation) just as much as on demand creation.
But I would start small. Take one big, researched-based concept-in-the-making and assign a skilled methodology developer and an internal training curriculum developer to it. I would do this even before the big concept’s marketing campaign was launched. Train a half dozen people to deliver the service and get ready to train many more when clients start raising their hands to say, “Help us do it!”
The service delivery advantage is the best advantage in thought leadership. If your firm has more people than its competitors who can competently deliver the breakthrough expertise it created, you have a service innovation edge.
Our research suggests there’s a clear opportunity here. A survey we led last year of more than 150 B2B companies found less than a fifth (18%) regularly turn research-based content into new or enhanced services. Most don’t make it a habit to turn the ideas in their research reports or books into new methods, much less training their people on how to master them. A higher percentage, 26%, said they do this infrequently or not at all. (Note: We conducted the survey with Phronesis Partners and Rattleback.)
Responding to a different survey question, the majority (55%) said they were not very effective at turning thought leadership content into new service offerings. An even higher percentage (60%) said they weren’t very good at turning that content into service enhancements – i.e., improvements to the services they already sell.
This spells big opportunities. Let competitors continue to view thought leadership as a marketing-only endeavor. Clients want thought leaders who can deliver on their promises.