Assessing the strategic options for your firm

Many firms avoid devoting much time to strategic thinking, possibly because other activities
provide easier returns. But dont worry: as the Cheshire Cat said, if you keep on going you
are bound to end up somewhere.
For those whod like to take rather more interest in quite what somewhere that might
be, Alan Hodgarts presentation on how to think strategically was timely. It reminded
everyone of the value in stepping back and thinking about the bigger picture.
Alan defined an effective strategy as one that guides the resource use towards areas that
build long-term competitiveness. This is a very interesting definition because
understanding competitiveness requires understanding clients and the segments of market
you operate in, yet there is a general lack of analysis by professional service firms. For this
reason in his experience many so called strategic plans are rather more plans than they
are strategic! Only once you have gained a real understanding of what is going on can
you develop options to consider how best to move ahead.
It is difficult to develop strategic options without a long-term vision for the business. This
was outside the scope of discussions but one of the challenges for many businesses is they
struggle to establish a direction or goals that motivate anyone or that are worthy of
commitment. Nelson Mandela put it succinctly: "Vision without action is merely a dream.
Action without vision is merely passing time. But vision with action can change the world."
Perish the thought that any PSF might be more familiar with the middle statement.
Since establishing a robust long term vision of what sort of firm you really want to be, what
sort of market segments you really want to work in, and what sort of services you really
want to provide takes effort and time, and since having a reasonable idea of this a
necessary precursor to developing a good strategy, it is perhaps no surprise too many firms
still produce what Alan described as 100 pages of defence for what they are currently
doing plus a three page wish list.
Having highlighted the need for an overarching direction Alan focused upon a framework he
uses to help bring together external and internal perspectives, shown below.

Market position
Value proposition
Image / brand
Core clients
Core practices
Key competitors
Differentiation

Behaviour
Structure
Systems
Skills
Processes
Culture / values
Economic structure

As a rough guide, getting to grips with this might take some three months of hard work so it
is worth elaborating on the framework. Market positioning, for example, would involve
being honest about whether your firm is a high, mid or low value provider, what types of
clients you serve and what type of work you undertake for them. Branding is not logos it

is about delivering consistency, a big challenge for any people business. Core practices are
those few services that really make the money for the firm.
Alan highlighted that the word markets sometimes confuses people. There is no such
thing as a market: rather there are different segments each with differing requirements,
so choosing which segment is an essential part of building options. Partners too readily
believe they can compete in a broad market because they are very good professionals:
but for clients everyone in a segment will have broadly equivalent skills. Partners also
believe they can compete on service but few undertake sufficient research to uncover
the critical elements of service amongst their clients and how they compare against their
rivals.
The results of all this analysis will tell a story of who the firm is, whom it serves, and how
people behave. Only now can you think about strategic options, considering the firms
strengths, service lines and market segments. In this light it is obvious that a merger is not
a strategy it is an implementation step.
As part of the process of reviewing the handful of viable options, the framework above is
the re-used to define, in detail, what each element would look like in 3-5 years time.
Finally, Alan turned to implementation. One of the key stumbling blocks of implementation
is that partners outside management fail to fully understand the implications of the various
options, particularly in relation to how their own behaviour must change and a firm is
what it is largely as a result of how partners behave. If you are to gain competitive
advantage that means challenging the way things have been done. Changing will not be
easy or else everyone would already have done it.
What does this mean for management? It means is that they must focus upon a few, vital
issues then give them constant attention.
Neil May
Kennedys