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The Magnificent (-ly insightful) Seven. Key questions to help refine your strategy

Updated: May 16, 2021

The pandemic and its long-term impact will drive the vast majority of professional service (PS) firms and their clients to revisit their strategy, likely resulting in three broad scenarios:

  1. Maintaining status quo. We don’t see this as realistic for the vast majority of PS firms.

  2. Defend your position by ensuring that the stronger elements of your business are best promoted, reduce focus on weaker areas.

  3. To capitalise on change and expand by, for instance, entering new markets and launching new services.

Strategy is about making complex decisions with material consequences under uncertainty. It needs thinking time as you assess market forces, stakeholder trends and your own performance and requires asking some potentially difficult questions.


I highlight below seven critical questions that can provide clarity around direction. Many successful strategies emerge serendipitously or organically and then require additional focus when the market shifts. If you are leading a firm or department, block off half a day to go through these, then make adjustments where needed - this exercise requires thinking time away from putting out metaphorical fires.


Where you can’t find that breathing space, focus on two questions to check your strategy is still relevant: Where do we play and how do we win?

 

1. Where are we now?

Try to review the business as an external consultant looking for improvements. It is impossible to develop a clear idea of your current position without:

  • Determining sales and profitability across your sectors and departments and the trends impacting both.

  • Understanding your cash position now and in six months.

  • Understanding what drives revenue and profits.

  • Possessing clarity around resourcing – what does the team do well across fee earning and business development and where might additions or changes be needed.

  • What does the team enjoy doing most and where are you best known.

  • Conversely, where might there be room for improvement.

This exercise can be a little uncomfortable as you highlight potential weaknesses, but transparency at this stage pays dividends when agreeing future focus and effort.


2. Where is the market heading (short and long term)?

It is essential to have an understanding of where the market is heading, or at least acceptance that some areas are unclear, so that you are as well placed as is feasible to capitalise on and react to market shifts.

Through desk research and interviews with the team and other stakeholders – clients, contacts and suppliers especially, within a few days you will have mapped out the market to understand:

  • Where the market is shifting and evolving

  • Where the competition is focusing or winning

  • What the regulatory appetite is and is it driving or restricting work

  • Are there opportunities for M&A, new services or market entry?

  • Which of these trends are short term vs long term

This last point is important – the current volatility and uncertainty in the market means you are likely to be juggling short and long term priorities, and these can conflict.


3. Where will we focus?

Once you have determined where you are strong and where the market is heading, you can select where to focus and/or to stretch your expertise. In the short term, competence and market awareness of that competence are both essential for delivering work that is in immediate demand plus your margins are often higher when linked to existing expertise.


Longer term, if you do not possess the immediate expertise demanded, examine how to stretch existing competencies, be that technical skills, geographies or industry sectors.


A current example might be how the research skills deployed in gathering intelligence pre-transaction are repurposed to support litigation or internal investigations.

There are likely to be significant changes to areas such as litigation and funding, M&A, distressed debt, impact and activist investing and infrastructure. Where will these shifts impact your business?


4. What shall we do more, or less, of?

Agree your greatest current strengths. What elements should you increase or at least proactively maintain? Challenge assumptions and the status quo here.


In the short term, PS firms should see greater returns focusing on areas in which they are already strong. There is often a temptation to enter a new sector, geography or workstream in reaction to market forces, when a great RoI can be gained by cross selling and up selling to your existing contact base. Consider:

  • Which services are most attractive (considering external demand and internal expertise)

  • Which verticals are you closest to and which are attractive over the next 12-24 months

  • Where you can improve existing products and services

Conversely, where you have revenue streams that, for example, have low margins, high acquisition costs, or are less reflective of your current skillset - look to redeploy resource.


5. How are our clients changing and what might they require in the future?

The key here is to ask them. You will have assumptions around billing models, the impact of AI and machine learning and other technologies. Gather client feedback around future service levels and support and synthesise with your own thoughts. We would suggest never embarking on strategic change without gathering client feedback first.


6. Where are the barriers and disruptors?

Brainstorm the challenges to performance, both external and internal, looking at what is holding you back. These will likely be issues you have battled historically, perhaps an improving competitor or encroaching technology, or issues that will worsen shortly such as the drying up of certain transactions. More positively - can you stimulate any disruptors of your own?

Sometimes, removing just one critical obstacle – often around BD - can turn your company into a more profitable enterprise.


7. Is the optimal team in place to deliver?

Determine the knowledge, skills, or resources required to achieve your strategic objectives. A gap analysis will identify areas of focus, be they technical knowledge, subject matter expertise, BD or marketing. Typical gaps include content, follow-up and lead generation. Plug these, or lower expectations.

 

These seven questions can define the direction the firm might successfully take, but it’s only a start. Execution and implementation are equally important and once you have defined your strategy, ensure that all employees and the board understand it and connect it to their core activities and responsibilities, feeding back on what is working.


Speaking of feedback, suggestions encouraged and feel free to contact me at paul@plyconsult.co.uk, I’d be keen to hear from you.

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