Product or Service Firm – Your Most Important Career Decision
Coming out of
undergrad as a computer engineer in the late 90s, I joined a
young tech company like many of classmates. A few of my classmates, particularly those at the top of the rankings, went to investment banks like
Goldman Sachs and high-end management consulting firms like
BCG,
McKinsey & Co etc. At the time, I felt joining such firms was to waste my engineering training but I always wondered if I should’ve gone down that other path with its brand prestige. Years later I worked hard to get into a top consulting firm but when I finally did get into BCG I realized that my initial decision actually wasn’t a bad one.
This isn’t to say I was unhappy at BCG; far from it. BCG has a fantastic team and taught me several skills crucial to advancing my career. Many are soft skills – presentation and communication (particularly with executives), logical structuring of analysis, how to ramp up quickly and focus in a brand new area. However, the most important thing I learned was that consulting firms, investment banks, law firms etc are service businesses and not product companies - and that I personally am more aligned with product-driven organizations.
4 key differences between Product and Service firms
| Product companies |
Service companies |
| Your impact (via the product) can last long after you leave the firm |
Your impact likely ends when you leave that firm |
| Predictable work pace and lifestyle, even in seasonal businesses |
Unpredictable hours – you are always at the client’s mercy (I’ve worked many a Sunday and vacation)
|
| Relatively low variable compensation (and even gross comp.) until you get to senior levels |
Large variable compensation driven by yearly results - higher average comp. than product-companies. |
| Career development usually not a priority in firm as primary asset is product/equipment |
Career development usually a high priority as primary asset is people |
The distinction between service businesses and product businesses is not the typical career guidance that you get when choosing your first job out of school. Yet it sets your expectations about work lifestyle/environment and what you believe you’re good at. Hence, many who start in one path find it hard to switch later on because they become accustom to this style of work. That this innocent job decision can determine so much of your career is still astounding to me.