The Business of Expertise by David C. Baker

The Book In Three Sentences

A masterpiece on how experts can move the needle on behalf of their clients while creating wealth for themselves in the process. It explores the source and role of expertise, what makes an effective positioning, and how to demonstrate your expertise to support a price premium for your services.

Book Summary

This is my book summary of The Business of Expertise. My notes are informal and often contain quotes from the book as well as my own thoughts. This summary also includes key lessons and important passages from the book.

According to Baker, expertise stems from focus, which is achieved through positioning. He explains that intelligence is based on pattern matching, where individuals learn from similar scenarios and problems faced by specific people or organizations. To become an expert, one needs a tightly defined positioning. In the context of consulting, this means honing one's skills and focusing on specific areas of expertise to stand out.

Expertise makes one's work less interchangeable, granting individuals power in business relationships. As an expert, withholding expertise becomes a form of control. As David puts it:

"The stopwatch starts when they decide to find a replacement for you, and it stops when they find one that meets their new standard. Boom. That amount of time is a direct measurement of how compelling your positioning is."

David also explores how excess opportunity can lead to a price premium for expertise. In an interesting passage, he suggests that true expertise lies in delivering marketplace acceptance rather than relying solely on innate confidence. He emphasizes the importance of intentional positioning, which requires careful thinking, courageous decisions, and years of hard work to refine one's craft. In the realm of individual knowledge workers, this means actively seeking out opportunities to develop and demonstrate expertise:

"In a way, positioning is fake for a brief period of time. You've noticed just enough patterns to gain some credibility. Then you make the most of that driver's permit to keep exploring, keep learning, keep articulating insight. Eventually it feeds on itself and then you step into your expert clothes and really fill them out."

I particularly love how David sees the relationship between expertise and fulfillment. We need more people challenging patronizing narratives:

"We should be quite grateful if we do, indeed, enjoy our work. But that's different than having a right to enjoy it. Not only do I strongly disagree with the sentiment, I think believing it has twisted our expectations and those of our employees."

He argues that work should primarily serve three purposes: making money, moving the needle for clients, and creating a thriving culture. While enjoying work is desirable, it should be approached with gratitude rather than entitlement. Fair enough.

Next, David explores the connection between expertise and entrepreneurship. Based on extensive research, he identifies risk-taking as a consistent trait among successful experts:

"After looking at 1,340 examples of successful experts, the only consistent trait was that they were risk-takers. That means that they were wrong a lot - but that they were usually right about the important things. (...) It also means that they always made decisions. They weren't so afraid of being wrong that they froze, unable to risk the consequences that come from making a decision and then being responsible for it."

The section on self-awareness and expertise was also a great reminder that perfectly fit with what I've learned by working with consultancy founders. One's business must align with personal strengths and preferences. Or else sustaining growth becomes impossible:

"Your expertise is separate from how you apply that expertise. The expertise itself should be broadly applicable, true, and based on research and testing. The nature of the business that houses your money-making ventures, though, should be shaped to emerge from a particular delivery of that expertise that fits who you are."

Another section that made me laugh out loud was on risk and lack of regulation, which I often discuss with consultants:

"The degree to which expertise accompanies any specific segment is coupled inextricably with the possibility of malpractice or causing harm to the general public by exercise of that expertise. (...) As much as we like to say that we appreciate that the government is out of our business, they apparently think that consultants can't do enough harm - or good, if you flip that around - to warrant a second glance."

Getting to the "meat" of the book, David addresses the challenges of good positioning decisions, including lack of objectivity, scarcity mindset, and the perception that marketing is beneath professionals. He emphasizes the importance of bold and semi-permanent positioning, particularly for smaller firms and those located in less impressive areas. Narrow positioning helps ensure that expertise remains distinct and less easily exchangeable:

"Expert positioning is bold, proud, and (nearly) permanent. That's why it's called branding, because real branding is what you do when you can't tell the cows apart from each other (or all the experts look alike)."

A great analogy for crafting a positioning that is both attractive for buyers and supported by evidence:

"There's a time and a place for confidence, but your army (confidence) can't march too far forward of your supply lines (expertise) or you'll be caught without what you'll need in order to win the war. There's a healthy stretching that always pulls you forward, but you have to know enough about your field of impact. Crafting a positioning should tend toward the honest and boring side of this balance."

Positioning principles David highlights:

  • It's public: Many advisors don't have the courage to declare it and put a public stake in the ground.
  • It's semi-permanent: "More like a branding mark on a cow than the applique tattoo you wear to a party on Friday night. It should last at least five years, but ideally 10 or more."
  • It gets more important the smaller your firm is: "Nobody ever gets fired for hiring IBM." There are additional risks for buyers to hire your firm, and your positioning needs to be compelling enough to counter this.
  • It gets more important the less impressive your location is: Large organizations, in special, might prioritize a local firm over a distant one. A narrow positioning will ensure your expertise is less exchangeable.
  • Understand the distinction between strategy and implementation.

The last point - the need of separating strategy and implementation - deserves and gets more attention from David. When clients have a choice in cueing their positioning for you based on the higher-level things you do or the lower-level things you do, they are inevitably drawn to the lower things. And implementation brings far more challenges in client relationships:

  • Implementation draws your worst clients.
  • Unbundled implementation is what draws the most competition.
  • The key to making money in a volume business like implementation is high efficiency and low cost.
  • Your management and people problems are more pronounced when implementing.
  • Financial risk is higher on the implementation side, since it's a people-intensive business.
  • Deadline pressure is more concentrated on implementation work.

Still, most firms do some implementation since clients see some advantages in one-stop shopping. It is easier for them to deal with one partner. It provides more accountability, since vendors can't point fingers at each other. The solutions may follow the recommendations with greater integrity.

The book provides ideas for managing the strategy x implementation dilemma, such as crafting positioning based on strategy, designing an assessment-based first-time engagement, using the R21E to gradually expand strategy work. You'll need to read the book to get those.

Finally, in the last part of the book David suggests various tests for evaluating expertise positioning, such as gauging competitiveness, the number of competitors and prospects, and employee universe size. He also discusses the importance of continuous learning and explores longer-term ways to test your positioning. Some excellent questions include:

Are you getting smarter?

"In a properly positioned firm, you are building competitive advantage quickly as your insights grow deeper and deeper. In a poorly positioned firm you're expending that same energy to get up to speed with each new client."

Is your positioning yielding a premium?

"The final level of pricing is grad school. At this stage, you never think about hours spent multiplied by an hourly rate. You've applied your expertise so frequently in situations that are so similar that you've developed a process so unique that new employees would require weeks of training before they could ever be trusted solving the deep problems experienced by your sophisticated clients. Nearly every service is packaged and you don't customize solutions. You're the expert, you direct the relationship, and the price is bold and transparent and often paid up front."

Do you direct the client?

"Do you have reasonable policies and stick to them? Are you careful about spending time on the phone with a prospect or do you let tire-kickers pick your brain? Do you enforce scope creep? Are payment terms a little stiff to weed out prospects who won't be serious clients? Does every client get invoiced differently to make it easier for them?"

David closes the book with recommendations of avenues to deliver your expertise to a client who needs and wants help. They include starting with questions, offering unique perspectives, conducting research on behalf of clients, seeking opportunities for interviews as an expert, writing consistently, and engaging in public speaking.

"The Business of Expertise" is a unique and highly insightful book for every consultancy partner. The reading is easy and engaging, and this is a reflection of David's hard work in clarifying and articulating lessons learned from his own practice. It's one of the top 3 books I have gifted the most to friends and clients in the consulting space, and a title whose notes I revisit at least once a year.

If you haven't yet, go get a copy.

The Business of Expertise by David C. Baker

Buy the book: