158 - What Makes Service Firms Irrelevant, And How to Stay Ahead
Many service firms are collapsing, not due to incompetence, but rather irrelevance. In this episode, discover the three forces reshaping service models and learn how to evolve before your business becomes obsolete.
Episode Summary: What Makes Service Firms Irrelevant, And How to Stay Ahead
Most service firms don’t fail because they’re unskilled; they fail because they stop evolving. In this episode, we explore how rapid technological and behavioral shifts are rewriting the rules of the service economy.
Today’s clients are informed, empowered, and increasingly self-sufficient. They no longer pay for access to information; they pay for transformation, for perspective, and for outcomes that technology alone can't deliver. Yet many firms still operate with outdated models built on billable hours and manual expertise.
Three forces are accelerating this decline:
AI democratizing knowledge: clients now have access to insights that once required expert intervention.
Client sophistication: buyers are better educated, comparing options and questioning value like never before.
Commoditization of services: when everything looks the same, price becomes the only differentiator.
These shifts are not temporary; they define a new era of relevance. Founders must choose between competing on price and speed, or redefining value through innovation, depth, and differentiation.
The episode challenges you to audit your relevance:
Are clients pushing you for lower prices?
Are they asking fewer strategic questions?
Are your services easily replicated by AI or competitors?
If the answer is yes to any of these, the market is already moving past you.
However, there is an opportunity in this disruption. The firms that embrace AI, reposition their expertise, and repackage their value will not only survive, they'll lead.
This episode delivers a framework for doing precisely that: staying ahead, staying relevant, and building a service business that thrives through the next evolution of the market.
Highlights:
00:00 The Beginning of Burnout
01:02 Realizing the Problem
02:27 The Indispensable Trap
06:06 Delegation and Trust
08:58 Building a Transferable Business
14:55 The Architect Mindset
Links:
Website: https://www.marcogrueter.com/
LinkedIn: https://www.linkedin.com/in/marcogrueter/
Transcript:
Speaker: Do you remember the first time you saw a really talented firm lose? Not because they were bad, but because they became irrelevant.
Marco Grüter: I, I've seen, uh, many companies in the past months and maybe years starting to become irrelevant, not because of being incompetent. But just because of missing where the market goes or where missing, where the client needs goes. And that's shocking because it's, it's really not about competence. It's about being relevant to the, to how clients evolve and being able to, uh, use technology and everything in a way that your service evolves.
And, uh, if you don't do this, that's. I think right now that's the hardest, uh, moment for every service company. If you don't do this, you, you don't survive the next couple of years in my belief.
Speaker: Can you describe the three verses that are killing services firms?
Marco Grüter: So what, what's going on right now is that all the knowledge or a lot of the knowledge is accessible by our clients. And that's even enforced with ai. So the three forces that are actually currently working on your business model is, number one is ai. Every information is just available. Plus clients can do your parts of your work if they want, use GPT or or other tools.
Um, and then it's the second forces Clients get more so sophisticated, they can inform themselves on how do we actually do that. Job, how much does it cost? What options are available? And with the help then of AI in combination, they can probably do steps and things without you. And the third model is then commodization of services.
So it's not about selling your hours anymore, everything, almost everything in services becomes a commodity. So you pay for a product and you pay way less than you would have thought that you charge today with ours. And these, these three forces, um, push your business model either to be irrelevant in the future or you understand what's going on and you start to adopt.
So that's really, it's really a pivotal moment, uh, in the current time, in the next, let's say two, three years.
Speaker: Can you give an example of a service firm that almost died?
Marco Grüter: I've One example that is, or one example that I want to share is a, a marketing company I've been, uh, working with. They had a client they were facing. For a marketing strategy. And when they went to the client to present, I don't know how much it was, 20, 30 pages, uh, of, of marketing strategy, the client actually put a document on the table done by themselves with the help of Chat GPT with 80% less of effort.
And that's how they confronted my client in, in saying, look, we have done this just for 80% less of, of, of cost. Why should we pay that much for your service? And that's the, the new reality. And, uh, being, being able to understand that and adopt your business model and being open on using new technologies gives you the chance to survive it.
Speaker: If someone's watching this, how would they know that they're already on the path to irrelevance?
Marco Grüter: There's three signals right now. You can test yourself to figure out if you're on the path to irrelevance or not. Uh, I think the strongest signal is about pricing pressure. If clients ask you to decrease your price, um, and. Not willing to pay what you were charging in the past. That's a clear sign that they don't value your service anymore in, in, in a kind of, uh, that level that you like to and, and more see you as a commodity.
So that's, I think that's the most, uh, pressing point. If that's happened, you are al already on a path to irrelevance. The other one, uh, I think is really the commodity pressure. Where clients are not willing anymore to pay you for hours. They want packages. They want a solution to their problem with a price, and they pay for value.
If the value of the product of your, of your product is high, you can charge high, but you can't charge hours in a lot of circumstances. So that's the second one. They're not willing to pay ours. And the third one is, uh, the relevant signal. So if clients start to ask fewer strategic questions, not as involved as they were, that's a clear signal that they don't see you and your service as relevant as it used to be.
And then a fourth one obviously right now is AI signals in terms of how can your service, your business model be evolved with ai? And if there is a lot of potential. To evolve it, it'll happen by someone. And if it's not you, then you'll become I irrelevant. So there is is already probably people creating a business model in your industry, in your segment with ai.
And if you're not involved in AI topics yet, you'll become irrelevant.
Speaker: When you look at the service firms out there right now, how many do you think are actually evolving?
Marco Grüter: Right now there's, there's a important moment to actually face what you want to be in the future and really actively choose this and you can choose. Option one is continue to compete on price, on service, on making sure your clients pay you as much as they have in the past. Going to this comm com, commodization, uh, uh, circle or, or even let's say Commodization Hamster Wheel.
You can choose that path or you can choose to define what makes you unique, what's your value you want to offer your clients and your bigger story and build this out. And option one will certainly put you in a, in a risky position, is a downward. Uh, raise option two gives you a future, uh, future possibility and probably the, the best way to survive.