Having a clear strategy is probably the most misunderstood concept in professional services.
The business often has a Vision. A clear picture of what it wants to look like, and what success means to the owners.The business often is excellent at Operational Planning. Perhaps because we are trained as planners there is a tendency to gravitate straight from Vision to Operational Planning. Many professionals move straight to working out details of the tasks and projects that need to be done, but without a clear idea of what their competitive strategy is or why they are doing some of the things they are doing.The result is they are busy being busy…and more often than not their service business gets “commoditized” because there is no clear focus on how they are going to differentiate and win in their chosen segment of the market. For the owners it simply feels like they are continually busy doing and creating systems and processes, but never feel like they are really getting any closer to achieving their goals.
Strategy is the missing ingredient.Strategy (if we strip out all the business hype) is simply:
What is your cunning idea for achieving the goal? It is the “how are we going to do it” question.If you wanted to really stretch this thought out and make it more complex then it could be expressed as: “where do you want to compete in the market and how are you going to win in that segment?”The best, and most famous, example of strategic clarity in this part of the world was demonstrated many years ago by Sir Peter Blake when leading an America’s Cup yachting challenge. He reduced the entire campaign to a simple concept: “to win, we need the fastest boat.” Every “business” decision in the lead up to the campaign and through the regatta was then tested with a simple question: Does it make the boat go faster?This testing question was applied to everything from crew selection, to boat design, through to tactical decisions. To achieve the vision the strategy was simple: Make the boat go faster.As a consequence of this absolute strategic clarity, supported by an excellent testing question which ensured that all decisions and issues which might consume attention or resources were assessed against the strategy, decision making became fairly simple. Communication within the team (which includes all the designers, manufacturers, sponsors, governance arm and so forth as well as the actual sailors) was focused. The goal was perpetually kept front of mind, as was the key for achieving the goal.Any business can learn from that…and emulate it.Good strategy is what guides and shapes business decisions to ensure that the business resources are actually being focussed on doing the right things the right way, at the right time. Knowing what it is that you want to do and also knowing how it is that you are going to do it is more often than not the key separator for those professional service firms which accelerate away from the average firms.
I have worked with many advisers and professional practices for many decades and seen all sorts of business models, leadership styles and the varying levels of ambition, confidence and competence. I am sure that strategy is what separates those that become truly great from those who could have been great.An example from an advisory business which I got to know well will highlight what could have been…This firm built a very good business by most people’s measures. Many advisers and many support staff, a strong brand and a willingness to invest in systems and infrastructure, and a impressive gross revenue. provided a typical example of the difference that strategic clarity makes. For years there has been a relentless focus on operational excellence, and they do many things very well. But they have struggled to be profitable. They experienced higher than usual personnel turnover. Owners are not satisfied with the performance of the business, or the performance of their investment in the business. But they work hard. They continue to invest in the business. They are persistent.So why the poor financial performance? Why the inherent dissatisfaction?The root of it is that they have become very good at doing a lot of wrong things very well. Many of the things which they do very well do not however lead them any closer to achieving the vision….yet they have continued doing them anyway.Were they making their boat go faster?No. They were loading their boat with excess….excess people…excess processes…..excess infrastructure…excess management…excessive focus upon the technical expertise in preference to relationship expertise…the list could go on. Their boat was slowing down and struggling to make headway.Why do smart people who know their industry extremely well overload their boat and slow it down deliberately, to the point where it risks capsizing?They don’t of course. They don’t do it deliberately. It happens because they don’t know how the decisions they are making impact upon the probability of achieving the goal. They know their goal and they are good at doing stuff. They have vision coupled directly with operational excellence, but the lack of a clear strategy results chaotic busy-ness.Lacking clarity in where it is they actually wish to compete and dominate resulted in them becoming obsessed with having systems and processes for everything imaginable thinking that this was “building a valuable business”. This included systems and processes which nobody else would really want or value. Processes had processes within the firm. The procedures manual and rulebook were bigger than War & Peace.Given that the end game for this business was fundamentally succession within 3 years, achieving strategic clarity in the first instance meant getting them to realise that actually they had to stop doing some stuff before they could get on with doing the stuff that would make a significant difference. The initial testing question became
“is this something that someone else will pay a ton of money for?”That’s the “does it make the boat go faster?” question for this business at this point in its development. It aligns the objectives of the business (the Vision) with the Operational decision making and allocation of resources and effort. It gets the business focussing the talent, time and money on only working on what is valuable to the eventual buyer. You know you have it right when you can come up with a simple “testing question” that reflects the strategy.Suddenly decision making got a lot easier. Suddenly figuring out what systems or processes mattered became a lot clearer. Suddenly everyone had the same decision-making framework. Suddenly all effort was focussed on achieving the vision, instead of just being busy creating superb stuff that nobody would ever really want.
Strategy suddenly made sense.In this example, the strategy was not externally focussed. It wasn’t about figuring out how to dominate a market segment…it was about survival in the first instance. Only when survival was guaranteed could strategic thinking then become externally focussed.It is this strategic clarity which is often the missing ingredient in otherwise great advice businesses. The cunning idea that unites operational planning and execution with progress towards achievement of the vision. Without clear strategy good businesses generally just stay good instead of being great, simply because they are busy being busy on stuff that doesn’t actually get them closer to the goal.Related:
3 Keys to Attracting Your Successors and Keeping the Talent
