Business strategy can drive stellar performance. But, leaders of professional services firms tell BTI the planning process is often constraining, restrictive, and frustrating. Some see it as glorified budgeting and others describe it as “a millstone hanging around my neck.”
Strategic plans range from elaborate, formal, lengthy processes with large written documents to short, focused meetings outlining yearly objectives. No matter the format or approach, the goal is the same: find a direction for the firm to drive growth and sustain success. But each year, 72% of strategic plans fall short.
Working closely with professional services firms for 25 years has shown us success comes in many forms and the strategies are as unique as the firms adopting them. But the failures are universal and provide important lessons for every firm.
In this 7-part series, we discuss the 7 Deadly Sins of Strategic Planning.
Variety may be the spice of life, but variety will suck the life out of any strategy.
Many companies struggle with identifying the best options to drive growth. These firms attempt to “audition” different initiatives to see which will work best. The result: resources—money, time, and people—are stretched thin, investment in any approach is diluted, and most initiatives are abandoned quickly. Taking on too many initiatives or tackling too many goals not only dilutes resources, but divides the organization. Conversely, a selected set of limited goals unifies an organization by creating a single voice needing little explanation and leaving no room for misinterpretations.
Strategy is all about optimizing scarce resources. You can best leverage your most valuable—and rarest—strategic assets by focusing these resources on the smallest number of high-return options. Be prepared: you will miss out on an opportunity or two. Strategic planning means actively deciding what not to do because you can do substantially better elsewhere. The core purpose of a strategy is to define the best path forward to meet your goals—not find all the paths to meet a multitude of goals.
The first, and most important, step in strategic planning is to identify your unequivocal goal. This is the strategic guidepost you will use to steer all planning conversations. For example:
- Increase profits 5% by 2016
- Grow market share by 10% in 3 years
- Improve client retention by 10%
Now all you need to decide is how you will reach your goals.
To ensure your strategic conversations stay focused, develop a set of objective criteria to determine what opportunities or tactics will best drive the firm towards its goals.
Outline 4 to 6 criteria to assess each proposed initiative:
- Total market size
- Current market share held by organization
- Nature of opportunity—growing, no growth, declining
- - Short- and long-term potential
- Client buying behavior
- Pricing pressure and rate structure
- Competitive players and current positioning
- Range of assignments available, by dollar size
Using the criteria agreed upon by the planning group, identify the 2 or 3 most attractive opportunities.
The organizations with the highest levels of success in their strategic planning perform one last, critical step: due diligence. These companies undergo a deep-dive analysis of the opportunities they plan on targeting to:
- Determine the critical factors required for success
- Separate speculation from market realities
In 2014, there is no room for strategic dabbling. Clients are slow to put new dollars into the market. Market success demands focusing resources on the highest impact initiatives to steal market share from competitors. Strategic focus is the proven strategy of successful professional services firms.