Ten Obstacles to Effective Strategy
In this article I examine the main reasons why professional are firms are typically littered with uncompleted strategic projects and failed initiatives. The ten obstacles that I have identified can of course be addressed by better processes. However, in addition, I plan in an ensuing article to set out what I consider to be the four starting principles that provide both the foundations and the platform for successful strategic planning and execution.
I have been helping professional service firms – and particularly law firms – for over twenty years. So often I have found that strategic plans are never looked at again after formulation. It seems that firms are good at concepts, ideas and planning but less good putting those plans into reality by means of effective implementation.
Most professionals – lawyers, accountants, doctors and academics – are invariably quick to pick up and understand concepts. As intellectual workers, we are trained to reason, to analyse, to diagnose, and to create solutions. Transferring concept to action, however, is less easy particularly for professionals, such as lawyers, who can become totally subsumed in their professional work. Strategic and business planning can accordingly become an abstract piece of work, the perfect and glossy documentation of which may well end up filed in the cloud never again to see the light of day.
Professional firms are not alone in finding it difficult to execute strategy. There are many surveys of Global CEOs that find, for instance, that executional excellence is their number one challenge. Equally, those with no strategy execution process frequently report below-average performance of their strategies whereas having a formal strategy execution process makes success much more likely.
Why Strategic Planning can be Ineffective
The strongest argument about the ineffectiveness of strategy execution is that strategic planning projects tend to follow a confined linear process and assume a predictable world. The argument states that in a volatile and uncertain world, strategy instead tends to emerge over time and that accordingly a set-piece strategic planning process every three to five years is bound to be ineffective. Instead, it is argued that leaders and managers should rely on being responsive to new opportunities as they arise and react quickly and flexibly to unforeseen circumstances. They should furthermore reflect seriously on their everyday experiences of working together and servicing clients.
Taken to an extreme, this argument would be to dispense with any set piece strategic plans that will become quickly out of date. To an extent, this argument has some validity particularly if – as is so often the case – the plans are filled with meaningless platitudes, internal obsessions and mundane operational tasks. In many firms, events have happened so quickly that partners even find it hard even to recall the basic details of a strategic plan that had been concluded in the recent past. Unexpected trends and the possibility of emerging events should not, however, become a recipe for doing nothing nor should an uncertain operating environment result in confusion, chaos and anarchy. Clearly, any successful strategic planning should be highly responsive to the possibilities and opportunities of the unexpected and should be sustained by supervision, mentoring and feedback that helps the leaders to make properly informed high level strategic decisions involving larger and longer term investments and priorities at the same time as client-facing professionals make the day-to-day decisions that directly affect and influence business development, service delivery and client relationship management.
Both when defining the firm’s identity purpose and vision and then engaging in further planning and action, firms often need to confront ten main internal obstacles.
Obstacle One: Unrealistic Dreams
The first is that because concepts are relatively easy to formulate, it is tempting to create dreams and aspirations that are impossible to fulfil. To aspire to be the leading firm in the world or in your locality may be a worthy aspiration but unless the firm has the necessary strengths and potential to realise it, a lesser but more pragmatic aspiration may make more sense. Over the last few years I have consistently suggested a strategy formulation and implementation process that starts at thirty thousand feet and steadily moves down to a safe landing. Process is not everything of course, as strategic planning and execution is at least in part a ‘hearts and minds’ issue but due process can help to ensure that the strategic goals are clear, agreed, achievable and measurable.
Obstacle Two: Poor Data
Strategy and its implementation should not be isolated from the day to day running of the firm. In practice, professionals are constantly juggling clients and priorities, are brutally aware of the skills gaps in their team, battle with rivals to win work and are forced to set prices based on market conditions. The best and most practical strategies are based upon a deep understanding of the competitive landscape, take into account the available resources both tangible (such as investment resources) and intangible (such as skills and capabilities), and are set against a realistic view of the likely political and economic environment in which the firm operates. The problem is that factors such as competitors, client segments and pricing will all differ between the different parts of the firm. Collecting and analysing all the data needed to construct and deliver a compelling plan is therefore no easy task. In many cases, the decision-makers in the firm are armed only with limited historic financial data sets which do nothing to highlight the big opportunities and threats which face the firm.
Obstacle Three: Wrong Goals
Lack of data and ineffective planning can often lead to a wrong set of goals being set. In the absence of appropriate reality checks, the goals can become wildly unobtainable and impractical. Alternatively, many objectives are set (some small and some big) so that the firm drowns in its own mission. Many smaller regional law firms have, for example, long wanted to deploy strong corporate teams and many strategic plans contain objectives around the building or development of commercial teams – goals that in many firms are simply unachievable and take the eye off other more realistic opportunities. In other cases, failure to consult sufficiently has often meant that goals are set which client-facing lawyers know from the start are bound to be wide of the target, and therefore become ignored. In some cases, low hanging fruit is ignored in favour or aspirational and less achievable dreams.
Obstacle Four: Lack of Teamwork
A further problem is that, if left to themselves, different office and practice groups – and even individual professionals – will make their own plans and, without an overall firm plan, the firm may end up with multiple and conflicting plans and goals. If the culture of the firm is that short term individual performance gets rewarded above everything else, then cross-firm initiatives will be unsuccessful where (as it is likely) they require partners to have a long term mind-set, to devote large amounts of discretionary (non-billable) effort and to be prepared to work in a team. Lack of cohesion in a professional service firm – particularly in start-up phase – may not historically have been a strategic show-stopper, but in the face of the an increasingly hostile competitive environment, the most successful firms are those which have managed to create sophisticated degrees of overall strategic intent – that is, vision purpose and identity – and have developed into united and harmonious fighting forces with one overall strategic plan, and an integrated harnessing of resources, assets and capabilities
Obstacle Five: Feeble Excuses
Another problem is the oft-cited excuse that partners are too busy. I have lost count of the number of times in the last twenty-five years that partners have used that excuse to me as a reason for failing to take agreed actions. Sometimes, but by no means always, the excuse is borne out by a bulging book of business and high levels of utilisation, but more often the excuse appears insubstantial. However, professional service firms are people businesses, and this can mean, that the ability of the management team to get initiatives completed is constrained by client work pressures. In many firms the movers and shakers quickly become apparent – those who can be always relied on to implement projects. However this often results in a small number of partners always taking on more than their fair share of projects.
Obstacle Six: Lack of Partner Involvement
The demands of client work faced by busy partners is not the only reason why there is sometimes a mismatch between the firm’s leaders and the rest of the firm. When partners reluctantly attend meetings, fail to read papers or emails and otherwise seem to take little interest in the firm’s future direction, it is all too easy for the firm’s leaders to take control of the entire planning project to the exclusion of the working partners. Furthermore, ‘knowledge is power’ and the framing of the firm’s agenda to suit the firm’s leaders is all too tempting. Plans that are created in an ivory management tower usually however quickly run into trouble. It is no use at all just to rely on a vote obtained at a partner meeting, as partners often vote blindly without thinking through how any changes might affect them. I have found by experience that firms do better when their people have taken an interest in plan setting and are involved in implementation.
Obstacle Seven: Ineffective Leadership
It is difficult to be a leader of or in a professional service firm where the partners or members are all highly qualified individuals who generally want a capable administrator at the helm rather than a challenging and demanding leader, however inspirational. If the mind-set of the firm’s leadership team is administrative rather than strategic, they can tend to become engrossed in current problems and issues to the exclusion of long term thinking. Equally, some leadership teams make the planning approach so formalised (and sometimes secretive) that the process lacks flexibility, inhibits creativity and ignores the involvement of others. The most successful firms tend to be those with an effective set of leaders who encourage feedback and empower those outside the leadership team to make day-to-day choices.
Obstacle Eight: Poor Decision-Making
Professional service firms (and particular law firms) seem to have huge problems with their decision-making processes. As an example, lawyers are infamous for the glacial speed of their decision-making. Analysis can often result in paralysis. Caution and a tendency for risk aversion can often mean that decisions are delayed further and further until everyone is totally satisfied that there are no further avenues to explore, no more analysis to be done. Additionally, the professional’s desire for perfection leads him or her to seek the perfect solution. Even when decisions are made, they are often reversed on further reflection or when a vital constituency raises objections.
Obstacle Nine: Ineffective Project Management
A further obstacle that many professionals fail to grasp is that implementing strategy requires them to take on projects, to change behaviours and – almost always – to work harder or at least more effectively. In other words, most are happy to plan strategy as long as it does not materially affect them adversely. What is more, some professionals only consider themselves accountable for their technical work, and for revenue producing activities. Non-chargeable activities often then take a back seat.
Obstacle 10: Inadequate Resources
Whether a firm is expanding, opening offices, reorganising its practice groups, overhauling its compensation structure or merely trying to improve, they often fail to make an honest and realistic assessment of its internal financial, intellectual and people resources to achieve success. There is no reality check on unrealistic aspirations, nor are efforts made to understand the possibly huge or disruptive implications of the firm’s plans. The biggest issue often is time – or the lack of it. What are possible worse are situations where the investment cost of course has not been assessed or budgeted.
I have either worked with many firms to addrer4ss all or some of these issues or have witnessed where firms have achieved great successes in surmounting the obstacles that I have listed.
In my next article. I will propose four strategic principles that provide the foundation and platform for successful planning and execution – methodologies for setting horizons, framing the right leadership structure, addressing process issues and integrating planning and implementation.