Strategy does not necessarily have to be complex, but it is still hard for most firms to do.
It is difficult because it forces people to make specific choices about their future which doesn't happen in many firms as most leaders like to keep their options open.
Thankfully, the days of preparing 5 and 10 year plans have all but gone due to the pace of change making it all but impossible to do this accurately.
However, due to increased competition, downward fee pressure, the explosion in the use of technology and the need to have succession planning in place, every firm needs to have a written strategy for the short and medium term.
As a result of the recent Royal Commission, many businesses are having to revisit the question as to why they exist beyond the need to make a profit, and rightly so. What is your Why? If anyone still hasn't watched Simon Sinek's Golden Circle Video on YouTube, I politely suggest you do so.
Having said that, most companies exist to make money and essentially there are only 2 ways to win. Higher margin through lower cost or higher margin through differentiation. Strategy is about shaping the business definition so as to gain competitive advantage. Competitive advantage provides the only protection a firm can have.
A recommended read prior to starting a strategy project is the book 'Playing to Win' by A.G. Lafley, the former CEO of Procter & Gamble.
Here he covers what the aspiration or goal might be, where are you going to play, how are you going to win, what capabilities will be required and what management systems are necessary to assess progress.
It is worth noting that great organisations choose to win rather than just play. I know many firms who currently choose to just exist.
In the last 2 months I have met with literally dozens of firm leaders and held discussions about the attributes of the winning firms of the future and the key strategies they will need to consider to be truly successful.
As a result of these conversations, the following 4 strategies appear to be critical to winning.
Get closer to clients. Sounds obvious doesn't it? But far too many firms still do not get out to see clients and discuss topics beyond the current transaction taking place. Some may do a once per year review. Very few run client listening or client satisfaction initiatives using tools such as Net Promoter Score. Relationships are key and in a world where referrals are required (if rarely asked for) you should be ramping up your client facing activity as you can bet your competition are very active in trying to get in front of your current contacts.
Innovation and the use of technology. Necessary to reduce costs and improve the experience of both clients and staff. Remember, a technology solution is not what they want. What is the strategy the technology is enabling? Law firms in particular seem to struggle in this area. Insufficient cash has historically been kept in the business to fund upgrades to both hardware and software and whist I understand that partners who are a few years out from retiring are reluctant to back capital expenditure, it cannot be put off forever.
The need to employ and keep the best possible human talent. You will not build a transformational business without transformational human capital. People talk a lot about culture yet the treatment of staff and the subsequent turnover remains high in many firms. Culture is about beliefs and shared values and what social order is expected by the group.The cost of recruitment, induction, on the job training, the change of client relationship holder are all very expensive to a business. Remember, clients will not fall in love with your firm until the staff do! Unmotivated staff, just doing enough to keep their job, do not deliver service at a level worth referring. If you want people to be accountable and collaborative and put in discretionary effort you better treat them well and give them a reason to do so. Putting cakes out once per fortnight does not make you Google!
Velocity. Speed in everything is important as it provides momentum. We live in a world of instant gratification. Client service is no longer just about comparing you with a competitor firm but what is experienced at places like Apple and Amazon. Clients want answers and solutions fast. You therefore need systems in place to make decisions fast. In some cases you may have to swap perfection for fast adoption. Try and get better, faster.
I don't expect you all to start going through the famous 'McKinsey 7s' model with your teams tomorrow but I hope this short piece may inspire you to take some form of action to future proof yourselves.
If you would welcome a catalyst in your firm to get you started with the process, be sure to give me a call on 0474 137039 or email me at email@example.com
I wish you well.