Jay W. Lorsch - Aligning the Stars: How to Succeed When Professionals Drive Results

Lorsch and Tierney have finally written, if not the last word, certainly the most definitive word, on professional service firms. There is nothing out there that comes close to catching the nuance, the complexity, and the subtlety of these important institutions and how they are led and managed. Aligning the Stars is a home run.

Warren Bennis, Distinguished Professor of Business, University of Southern California, and author of Managing the Dream

The stars of the title are those exceptionally talented people on whom successful businesses increasingly depend. The word is well chosen. Stars can be vain, greedy, insecure, and infinitely time-consuming. But they remain indispensable: Companies without stars will never come in better than second. This invaluable work gives comprehensive guidance on their care and maintenance: how to find, attract, motivate, and reward. A handbook for winners.

Sir Martin Sorrell, Chief Executive Officer, WPP Group PLC

With clear principles and many stimulating examples, this well-written book will provoke reflection and debate among professional firm leaders.

David H. Maister, coauthor of First Among Equals

Revenues for professional service firms have mushroomed nearly ten times in the past twenty years, and they now hire over 60 percent of the M.B.A.s from top schools. Finally, we have a first-rate book that explains the secrets of the very best of these firmshow they almost magically align their stars and their strategies, building trust as they build their own futures. Jay Lorsch and Tom Tierney are sometimes iconoclastic, often provocative, and always, always informative.

David Gergen, Director, Center for Public Leadership, John F. Kennedy School of Government, Harvard University

ALIGNING THE STARS

JAY W.LORSCHTHOMAS J. TIERNEY

ALIGNING
THE
STARS

HOW TO SUCCEED WHEN
PROFESSIONALS DRIVE RESULTS

HARVARD BUSINESS SCHOOL PRESS

Boston, Massachusetts

Copyright 2002 Jay W. Lorsch and Bain & Company

All rights reserved

Printed in the United States of America

06 05 04 03 02 5 4 3 2 1

Requests for permission to use or reproduce material from this book should be directed to , or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

Library of Congress Cataloging-in-Publication Data
Lorsch, Jay William.

Aligning the stars : how to succeed when professionals drive results/ Jay W.
Lorsch, Thomas J. Tierney.

p. cm.

Includes index.

ISBN 157851-5130 (alk. paper)

1. Professional corporationsManagement. I. Tierney, Thomas J., 1954
II. Title.

HD62.65.L67 2002
658dc21

2001051535

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Publications and Documents in Libraries and Archives Z39.481992.

To Nina and Te, two future stars!

J. W. L.

To my wife Karen, and our sons
Colin and Braden

T. J. T.

The discussions, research, and writing that created this book spanned almost five years. During that time, many organizations and individuals provided the resources and effort that led to the results you will find in the following pages. We are extremely grateful for this support, insight, and encouragement.

First, we wish to thank the leaders and professionals in the eighteen outstanding professional service firms that were the focus of our research. They were generous with their time, experience, and insights. We also wish to acknowledge the contribution of the executives of the first-generation technology consulting firms that we studied. Their cooperation occurred in the midst of an extremely challenging period in their history. We learned a great deal from all these talented professionals!

We also wish to express our gratitude to the two organizations that supported this effort financially: Bain & Company and the Division of Research of the Harvard Business School. Their support enabled us to complete the actual research and provided the flexibility for us to collaborate and write this book.

Numerous colleagues at Bain & Company and Harvard Business School were a source of knowledge and inspiration to us both. In multiple conversations, they provided ideas that found their way into these pages. We especially want to recognize several of Toms colleagues at Bain, including John Donahoe, Wendy Miller, Katie Smith-Milway, Fred Reichheld, Phyllis Yale, and Chris Zook, who read and reacted to various drafts, provided informal advice, and helped advance our thinking. At HBS, Paul Lawrence provided similar wise counsel.

Other important contributors included Jeff Bradach, Bob Buford, and Maryann Hedaa. A special thanks is due Jim Collins, whose experience and wisdom helped shape our final manuscript.

We also wish to thank the participants and faculty of the Leading Professional Services Firms Executive Education program at Harvard Business School, especially Tom DeLong, Jack Gabarro, and Ashish Nanda. Many of the ideas, particularly the concept of alignment, were tested and refined in interactions with them.

During the course of our investigations, several researchers assisted us in collecting and analyzing enormous amounts of data. At Bain we wish to thank Claire Alexander, Charu Chandrasekhar, Tamar Dor-Ner, Jason Jennings, Neil Kalvelage, Jodi Walsh, and Steve Wunker. At Harvard, we are indebted to Dan Erickson (who worked tirelessly on the project for two years), Lisa Haueisen Rohrer, and Sara Hindels.

Even with the advent of word processing technology, books do not appear without the dedicated and competent support of assistants. We are extremely grateful to Jane Barrett at the Harvard Business School, and Jennifer Judge, Linda Polmear, Ann Stapleton, and Bryan Teixeira at Bain & Company. It was they who coordinated the numerous meetings and made sure that the countless drafts were accurate and complete.

Nor can books appear without the support of experienced publishing professionals. We are grateful to Amanda Elkin, Carol Franco, and Melinda Merino of the Harvard Business School Press.

Finally, we wish to recognize three contributors in particular, who became an integral part of what came to be known as The Book Club: Katharina Pick, Nan Stone, and Regina Maruca. As a research associate at Harvard Business School for three years, Kat helped complete the field research, then led the analysis and organization of these data, and finally ended up providing editorial assistance. When it came to creating a title for the book, her suggestion, Aligning the Stars, prevailed!

Nan and her colleague, Regina, were the editorial and literary glue that held us, and the book, together. Nans skilled and insightful advice, her flair with words, and her editorial wisdom synthesized our two voices and sharpened our thinking. Reginas support and commitment similarly helped us improve each and every chapter.

The process of developing and writing this book has been something of a shared adventure. Every participant has played a role in a meaningful way over months or years to help produce our final product. The experience was challenging and exhilarating for us all. We are extremely grateful to everyone who contributed, and hope they take pride in our joint creation.

Boston, MA

December 5, 2001