The professional services industry is on the verge of a significant transformation. This transformation will be powered by a combination of forces, by far the most impactful of which is the rise of artificial intelligence.
As we’ve discussed on our AI Knowhow podcast, a recent study from Bain found that more than 40% of labor time in professional services can be automated using generative AI. It’s incumbent on leaders of professional services companies to understand the need for ethical leadership, agility, and innovation as they look to the future and embrace these changes.
The Onset of AI: A Disruptive Force & Paradigm Shift in Professional Services
Unlike other industries that have been significantly reshaped by digital innovation — think of the massive shifts that have taken place in industries like Media and Financial Services — professional services have largely maintained traditional modes of operation until now. The industry’s reliance on knowledge work has prevented the type of digitalization experienced in other sectors.
In Media, for example, the digitalization of content has completely upended distribution models, not to mention consumer expectations around what they’re willing to pay for. Distributing a song, book, or newspaper digitally today costs publishers next to nothing, a far cry from when the Media industry centered around the sale of physical products. Further, the advent of self publishing has disrupted the existing supply chain.
The Financial Services space has seen similar digital disruption. For better or worse, long gone are the days when access to buying and selling stocks required a financial advisor. Trading apps like Robinhood put those same capabilities in the hands of anyone with a mobile phone and Internet access. And payment platforms like Venmo and Apple Pay have completely changed how people exchange money amongst themselves and/or pay for goods and services.
AI introduces a similarly unprecedented potential for disruption for companies that operate in professional services. For example, in legal services, AI algorithms capable of performing tasks such as legal research and contract review are already changing the nature of legal work. In accounting, AI is being used for predictive analysis and risk assessment, areas traditionally reliant on human expertise.
The key to harnessing AI in professional services lies not just in its potential to streamline processes but in its ability to accelerate knowledge work, offer new insights, and introduce new service paradigms. Firms that can adopt AI to enhance their core offerings may well find themselves miles ahead in a marathon that has just begun.
So how should leaders of these companies prioritize guiding their companies through this period of transformation? I see the following three areas as musts for leaders in professional services as they navigate the coming wave of AI disruption.
The 3 Key Priorities for Professional Services Leaders in the Age of AI
1. Ensuring Ethical Leadership in the Digital Disruption of People-Intensive Businesses
With the advent of AI, ethical leadership takes on a new dimension. In an industry dominated by knowledge work and reliant on people, moral questions and ethical ramifications abound. Leaders must ensure that their teams are well-versed in the risks and limitations of AI. Several notable examples of the risks of using AI in the legal arena have made national headlines, including Michael Cohen citing non-existent case law in his attempt to receive parole.
Professional service firms are now navigating uncharted territories where decisions have far-reaching consequences on data ethics, privacy, and the impact of automation on the human beings that make up their workforce. Leaders must balance the pursuit of innovation with the responsibility of guiding their firms through these complex moral landscapes, ensuring that the transition to AI-centric models respects both individual rights and societal norms.
2. Embracing Agility Amidst the AI Transformation
The integration of AI is shifting client expectations and market dynamics at an unprecedented pace. Throughout 2024, the professional services industry will experience unprecedented disruption at a breakneck pace.
We’re only a little more than a year into the post-ChatGPT AI era, and I’d equate where we are now with AI to the dial-up modem and Netscape or Prodigy days of the Internet boom. This is an analogy I wrote about more extensively in another post with a few predictions for what AI holds in 2024.
What does this mean for professional services leaders and their companies? They must cultivate agility not just in their operational strategies but also in their organizational culture and, perhaps most importantly, their ways and modes of thinking. This agility involves being quick to adapt to/adopt new technologies, flexible in rethinking business models, and resilient in the face of market fluctuations.
3. Understanding the Symbiosis of AI and Human Expertise
As AI becomes more embedded in professional services, the industry must find a balance between technology and the irreplaceable human element. The unique value of professional services has always been deeply rooted in personalized advice, nuanced understanding, and trust-based relationships.
While AI promises to create leverage for professional services firms for the very first time, the future is likely to be characterized by a synergistic relationship where AI enhances human expertise rather than replacing it. Microsoft CEO Satya Nadella frequently speaks of AI serving as a co-pilot in this regard, and I think that’s an apt analogy for how AI can complement human knowledge and expertise without riding roughshod over it.
AI & the Year(s) Ahead for Professional Services Leaders
The AI revolution presents a unique opportunity for the professional services industry to redefine itself. The firms that will emerge as leaders in this new era are those that embrace the potential of AI to disrupt and innovate while maintaining the core principles of their profession. The journey ahead requires a blend of agility, ethical leadership, and a strategic approach to integrating technology, with a continued emphasis on the human touch that is the hallmark of professional services.
As we move forward, it is our belief that the Marketing agencies, PR firms, accounting firms, and law firms that not only adapt to but drive this transformation will set new standards of excellence and innovation in the professional services industry. We’re in the process of developing an Intelligent Enterprise Operating System that will help professional services leaders increase client retention and make smart, strategic decisions. Leaders interested in getting early access to the Knownwell Client Intelligence tool can learn more and join the beta waitlist here.
