I can always tell if a firm hasn’t got a working strategy. All I have to do is ask a partner what the strategy is. What I typically then hear is a list of activities – and that isn’t a strategy. Of course, the firm might have one, but it’s not much use if the partners can’t articulate it! Because that means that partners aren’t enacting it. They’re just ploughing their own furrow.
Firms now need to reflect on their future and undergo some kind of strategic review, asking important questions, such as:
- What markets should we focus on?
- Which clients should be given particular care and attention?
- How are we going to stand out from the crowd and ensure we deliver best value?
- How can we better use technology?
- How should we address under-performance?
Most firms have only partially addressed these questions to date.
Also there appear to remain some misunderstandings about how to develop and implement a strategy.
Here are some important things to bear in mind about strategy.
- Let’s start by reminding ourselves why strategies are important. Strategies are needed because firms benefit from enacting a series of coherent actions. If Rome can’t be built in a day, a profitable new practice can’t be built overnight either! Too many one-off initiatives don’t work. They don’t create a sustainable change.
- Strategies should be based on market intelligence. You should base a strategy on facts not whims, flights of fancy, a list of ideas generated late at night at a retreat or personal egos.
- Strategies act as a decision-making guide for partners. They help tell partners what to do and what not to do. They help partners determine what’s important and what the priorities are. They also relieve partners of a good deal of stress. Instead of partners having undue anxiety about what other partners think about their actions or performance, a strategy gives partners clarity and permission to take action.
- Developing a strategy is fundamentally a relatively simple process; it involves analysing the market (what’s growing, profitable etc) and reviewing where you stand in terms of what you’re good at, who you know etc. It’s a matching process, comparing external trends with internal capabilities. It’s not a wish list!
- Don’t make the mistake of thinking that low fee rate work is unprofitable. Many firms make more profit on low charge out work, through developing efficient processes and appropriate leverage, than on the so-called sexy deals with higher charge out rates, but lower utilisations. The relevant questions are what kind of work is needed and what are you good at?
- Where strategies can add a lot of value is through aligning the strategy for the firm as a whole with the strategies of each of the practice groups with the personal business plans of each of the partners. This helps avoid partners ploughing their own furrows in separate fields and increases the chances of synergy being created.
- It’s much harder getting partners to enact the strategy than to put one together! And this is, in the end, what determines whether your firm generates a sustained competitive advantage.
- Getting buy-in to the strategy is absolutely key. And don’t make the mistake of thinking that a partner nodding in agreement really is agreeing. They might just be nodding ‘yes – I hear you!’ You’ll need at least 9/10 on the commitment and enthusiasm scales for a strategy to be enacted successfully.
- Strategy should be an ongoing process. Don’t get your slabs of marble out and chisel! In an uncertain world, a strategy needs to be a living, breathing thing and adaptable. Smaller firms can have huge advantages over bigger firms because they can be nimbler.
- Management needs to be fair, but merciless in driving your partners to deliver. Under-performance should not be tolerated. It can be hard not focusing on immediate, operational day-to-day issues. But I advocate less time being spent by management choosing Xmas cards and more time on the bigger issues, such as:
- New project management processes to deliver work more efficiently
- A pricing survey
- Competitor analysis
- Client satisfaction reviews
How about the board fixing agendas every three months or so to look just at these important issues?
I hope firms find this review helpful. If you’re interested I can provide several case studies on how I’ve helped firms make progress on important strategic issues.