How professional service firms build strong external brands on strong internal cultures.

In professional service firms, a strong external brand and a strong internal culture are two sides of the same coin – they are different things but so interdependent and fundamentally linked to each other that one cannot exist without the other.

Corporate zeitgeist

The interdependence of culture and brand has been rising up the corporate branding agenda rapidly for a decade or more – the meteoric rise of tech brands like Apple, Google and Facebook and the more sedate but nevertheless relentless rise of corporate brands like Unilever, Zara and Nike has demonstrated, to even the most cynical investor, that businesses with strong, authentic internal cultures produce external brands with sustainable long-term advantage, even in categories where customers and employees don’t even interact that much.

Recent research from EY and Harvard Business Review found that organisations with strong cultures and purpose performed far better across a range of performance measures than those without. In professional services the interdependence between internal culture and external brand is arguably even more intrinsic and important because the client experience is delivered directly and exclusively by people who work for the firm – with no 3rd party retailers, car showroom staff or franchised store owners to get in the way.

Culture has always been taken seriously by leaders of professional service firms – at least those with their eyes open. What’s new is that culture is being taken today to mean more than how the people in the firm ‘rub along together’ – for better or for worse – but rather, how they collaborate in the service of the firm’s clients and how they project the image of the firm to prospects.

First among equals

Two iconic professional service firms stand as shining examples of strong external brands that are fundamentally intertwined with strong internal cultures: Goldman Sachs and McKinsey & Co.

Anyone who’s worked with or for Goldman Sachs will know that the firm has an extremely strong and distinctive culture. There are enough anecdotes about it to fill a book (and they have) but Hank Paulson (Former GS Chair and Secretary of the US Treasury) captured it well in an Economist interview when he said, “It’s a hard place to be hired, a hard place to be promoted and a hard place to stay”. In a word the internal culture and the external brand of Goldman Sachs are connected by being totally ‘uncompromising’ in the pursuit of excellence. Not a place for everyone – but that’s not the ambition, the goal is simply to do whatever it takes be the best and only the best.

McKinsey has an equally powerful culture but one that although also dedicated to excellence has a slightly less aggressive and more cerebral approach to their goal – one of ‘rigour’. Legend has it that in the guise that led to the current McKinsey the partners sat down sometime around 1932 and produced a paper – some might have called it a brochure! ­– that laid out the principles of the firm that they intended to build. One that would bring a culture of rigour (borrowed from the legal training some of the partners had experienced at law firm Jones Day) to the then more anecdotal business of ‘management efficiency’ as it was called then. 1932 is a very long time ago but those who’ve worked at or worked with McKinsey in the intervening years will testify to the rigorous attitude towards everything from hiring, promoting and firing through to the focus on evidence and facts to support their recommendations on strategy to clients. It’s no accident that the McKinsey internal research lab is called the McKinsey Global Institute. Everything about it, including the name, screams academic rigour.

Stand for to stand out

So, what does all this history mean for leaders of today’s professional service firms looking for sustainable competitive advantage? Simply that a strong and authentic external brand is built on a strong internal culture – one which includes the important but more hygiene-level components of being ‘nice to each other’ and ‘striving to serve clients’ etc. but also elevates things to a level of focus and distinctiveness that not all firms could, or even would, sign up to. That level of differentiation, at the core of what a firm stands for, begins to become a source of external brand differentiation in the market place if carefully nurtured and appropriately channelled into the day-to-day work done at the coal-face for the firm’s clients.

Goldman and McKinsey may be genuinely iconic brands in their fields and tough to replicate but they can be studied and best practices disseminated that can be applied to firms today facing the challenge of differentiating themselves in the global professional services market. The start point is to look at what you’ve got already ­– any firm that is even alive today let alone thriving is without doubt doing something right already. The challenge is to identify what’s ‘useful’ and what’s just ‘there’ and then to ensure that the external brand is driven from the elements of the firm’s culture that have teeth in the market place and can be globally applied. No mean feat.

Ian Stephens

CEO and Founder of Principia, the world's most experienced branding and innovation consultancy for professional service firms.