Cultivating a Product-Driven Mindset for Service Firm Leaders

Service firms are facing an inflection point. As digital transformation reshapes industries many are witnessing shifts to the make-up of client problems, the automation of their core services, disruptive business model innovation, and subsequently changes in client expectations. These dynamics present both a challenge and an opportunity for service leaders considering digitisation or product-driven models.

This paper addresses an often underemphasised aspect of product transformation: The profound mindset shift required of leaders transitioning from services careers into product leadership. Success is seen by leaders who can leverage their expertise while relinquishing their old ways of working to adopt new decision making models.

Moving from client to market-centricity

What does a strong service leader's mindset look like?

It's client-obsessed, laser-focused on solving problems with excellent quality. They're constantly scouting top talent, monitoring the sales pipeline, and steering the business through market shifts.

At its core, a service firm must resource, win, and deliver, with leadership managing talent, brand, customer experience, and financial performance. The most valuable lever is the client book—securing the right clients and aligning them with the right deliverables for happy teams, excellent customer outcomes, a stronger brand, and more profitable business. With a high lifetime value per client, it makes sense to solve client problems at (almost) all costs.

When it's time to look up from day-to-day operations, service firms tend to evolve their offerings through the rich insights gained from close client relationships and direct feedback.

In contrast service excellence, product leaders thrive on pattern recognition, constantly scanning for problems that affect entire market segments. Success comes not from perfecting individual solutions, but from finding product-market-fit—the sweet spot where a standard offering can serve the market majority simultaneously. Rather than being driven by client needs alone, they balance user feedback with market research and strategic positioning.

The result drives future value creation without customer reactivity, allowing the business to build intellectual property that represents an asset of distinct value; and their view of success shifts from client satisfaction to market adoption, user engagement, and solution efficiency.

The Path Forward

Focus on a market problem: Shift from managing individual requests to anticipating the broader challenges faced across your industry.Test ideas rapidly: Validate potential value propositions and feature sets broadly and quickly to identify the ideas with the highest potential for market impact without overcommitting resources.Don’t build a panacea: Solve one highly recurring problem exceptionally well, in a way that can scale efficiently across different market segments.Sell to the market: Like all else in product, sales should be built around appropriate scalability. Minimise acquisition costs through efficient channels and replicable go-to-market strategies.

Product success requires market centricity. Those who maintain a client-centric approach will find themselves building increasingly complex, hard-to-maintain products that fail to capture true market opportunities.

A clear focus on market problems will help you find clarity in what’s worth addressing, and will weed out the individual issues that wont provide scalable returns.

The tax of dual-operations

One challenge leaders face while running a hybrid business, or businesses with competing operating models, is mental clarity. Here we outline some structural practices that can help manage the gulf between investment needs, return expectations, and operational decisions.

Service firms typically operate on a cash-flow-positive basis, with client payments sustaining daily operations, whereas product companies often require substantial upfront investment before generating returns. This critical difference can go under-appreciated, leading service firms to fund product development out of service revenue. The result is often an unsustainable hybrid model where neither the service nor the product business succeeds.

The Investment/Return Paradigm Shift

Service firms operate on a linear investment-return model: hiring additional talent directly translates to increased revenue capacity, creating a predictable growth trajectory. Risk management focuses primarily on utilisation rates.

The investment patterns of product businesses stand in stark contrast. Product businesses face non-linear returns. New hires don't guarantee immediate revenue, payoff horizons stretch longer, and returns hinge more on achieving product-market fit than execution alone.

When investment/return expectations are not carefully managed we have seen leadership look to recover resource costs by monetising product discovery as paid client engagements. This approach often compromises both the client experience and the product discovery process. Where client projects demand specific deliverables and outcomes, effective product learning requires the freedom to explore broadly, fail fast and/or pivot quickly.

The Resource Sharing Trap

One of the most tempting—and dangerous—tactics is co-opting service resources for product development. This shared resource model appears attractive on paper: leveraging existing talent, maintaining utilisation, and seemingly reducing exposure. However, it creates several significant risks.

Service team members often struggle to balance immediate client demands with long-term product development, causing the urgent to overshadow the important. Switching between service delivery and product work leads to inefficiencies and lost focus, which are often underestimated during planning. Additionally, the differing skill sets required for service and product development dilute expertise when shared resources are used.

The Path Forward

Distinct funding: Design appropriate capital structures for product development, independent of service revenue. Resist the temptation to fund product development as an operational expense.Define operational boundaries: Establish separate product and service units with dedicated resources and leadership; product teams may be as small as one person at first.Build Awareness: Separation doesn’t mean silo. Help the broader business understand the distinct operating models and their unique requirements. For senior stakeholders, use revenue roadmaps to communicate investment decisions and their potential returns.

Organisations that successfully navigate this transition recognise that they're not just launching new products—they're building a fundamentally different business with its own investment requirements, operational needs, and measures of success.

Leadership alignment and ambition

The shift from service to product leadership demands an alignment and unification of ambition and governance. While service organisations can thrive with diverse leadership objectives across different client segments or practice areas, product companies require singular, focused direction where all feature decisions and investments serve a unified purpose. This alignment challenge often proves particularly difficult for service firm leaders accustomed to maintaining multiple successful but independent or practice areas.

Adapting Risk Appetites

Once grand ambition is set, reality must follow. A deep reset of leadership dynamics and risk tolerances is generally required. Service leaders, comfortable with predictable project-based risks, must adapt to the binary nature of product success—where larger investments might either scale dramatically or fail entirely.

Three changes that can help maintain comfortability: centralise decision-making around product strategy, ratify acceptance of longer-term investments, and develop shared goals underpinning the vision.

Governance Reimagined

Traditional service firm governance, rooted in professional liability, quality assurance, and partnership dynamics, must adapt to meet the demands of product development, which thrives on rapid iteration and market responsiveness.

A key factor is developing a new outlook on risk that supports controlled experimentation, enabling faster decision-making to accelerate product refinement. This must include functional autonomy for teams closest to the customer to enhance feature performance and development speed. Governance must also resist the temptation to co-opt management responsibilities by establishing clear accountability for product outcomes and maintaining their focus on strategic goals and risk.

The Path Forward

Leadership establishment: Evaluate current leadership team's product aptitude, identify gaps in experience, and take difficult decisions about leadership composition.Vision building: Build a ratified product vision, align all feature and investment decisions to this vision, establish communication frameworks to maintain alignment.Risk management evolution: Rethink your approach to risk management and get comfortable in pre-revenue environments.Reframing success: Implement product-specific measures (such as OKRs) relevant to your journey - early stage measures might look as simple as interviewing 10 customers in a month.

Success hinges on leadership's ability to unite behind a transformed operating model, often requiring difficult decisions about which leaders are truly suited for the product journey versus those better positioned to maintain service excellence.

Conclusion

Throughout this paper, we've explored three mindset shifts required: moving from client to market-centricity, rethinking investment and operational decisions, and aligning leadership.

Success in this journey will transcend perfectly executed plans or technical prowess. It emerges from leaders who can embrace uncertainty, think at market scale, and build organisations capable of operating in fundamentally different ways.

Despite the unlearning required, your deep industry expertise is still your greatest asset and it’s elevation presents a significant strategic advantage if unlocked through a product model.

For service leaders contemplating product development, the first step is honest self-reflection. Can your leadership team carry a single longer-term vision? Could they foster the culture required to facilitate it? Are you prepared to make difficult decisions about organisational structure and resource allocation?

Are you ready to guide your organisation through the social, emotional, and practical challenges of building an essentially new business?

The rewards for those who successfully navigate this transformation can be substantial—ongoing customer value creation and brand presence, true scalability and new growth horizons. But, these rewards will only come to leaders who recognise that the journey begins with themselves.