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In contrast to the rigidity of the command-and-control model, professional service businesses such as legal and management consulting firms – as well as investment managers – often develop structures and cultures that better suit the nature of their work and the economics of their businesses.

Unlike manufacturers, which can carefully specify their standardized products, professional firms offer no tangible goods to sample or road test, and there are no set manufacturing processes: each lawsuit, audit, or financial market environment is unique, and a firm’s reputation and brand is built from past successes in contending with the varying circumstances. Accordingly, predicting product and service outcomes is much less certain for most investment managers, as well as other services businesses such as law firms, management consultants and medical practices. Prospective customers can look to firms’ prior work to understand their areas of expertise and skill, and even the reliability of their services in the past, but a firm’s success depends greatly on the context – for a law firm, the facts of a court case, or for a consultant, the state of a client’s affairs before a business is redesigned. Compared to a physical, manufactured product, the design of which can be reworked over many years, the environments in which professional service businesses work are often too complex, varied and rapidly changing to provide reasonably objective evaluations ahead of time.

The identity of professional service firms is closely tied to the people in possession of skills – individual lawyers, consultants or asset manager teams. (An investment industry bromide says that a firm’s most valuable assets leave by the elevator every night.) Accordingly, successful employees in these firms are highly compensated and often hold equity stakes, in order to tie their day-to-day efforts and resulting personal wealth to their firms’ long-term success.

Of course, professional partnerships have senior management teams: a completely flat organization, where everyone is enabled to decide and act on anything, would be chaotic. Senior management’s role, however, is more about leadership – guiding firm strategy, high-level business development and problem solving – as their detailed involvement in every client situation would be impractical and unnecessary. Professional partnerships operate by a set of rules, but don’t have a single absolute ruler, as do command-and-control organizations.

Senior management also typically sets compensation and controls the addition of new partners. Importantly, in less tangible matters, senior managers provide practical examples of the firm’s culture and what constitutes good behavior. Meanwhile, in handling client engagements, client teams apply their own experience and judgment to handling challenges as they arise rather than follow specific directives made at the top.

The differing characteristics of command-and-control versus professional partnerships will attract different sorts of people to each type of culture. Professional partnership careers tend to require more extensive training just to enter, and typically call for greater commitments of time to the job. Taking intelligent risks and raising individual initiative also are central to professional work. People with risk-seeking natures are more likely than not to be attracted to the more complex and challenging careers of professional partnerships, while risk-averse people may prefer a different environment.