At various times over the years I have had privileged access to inter-firm comparison data for the Profession. A couple of things jump of the page from my analyses: (1) firms with the highest net profit per partner (let’s say top 5%) get there through a variety of legitimate strategies; (2) these firms are not usually the biggest firms; (3) occasionally some firms get there via short term-doomed-to-fail tactics like putting undue pressure on their team that leads to insanely high resignations and/or insanely high pricing that leads to massive client (and reputation) loss … typically these firms rapidly drop off the superior performance list.
The really important thing to note is that every one of the superior performers was at one time a start-up idea in the mind of the founder(s). Some of them took many years and several leaders to hit the point of inflection where they took off to greatness. Others started that trajectory from the beginning. What differentiates the superior performers from the rest of the pack was the strategy they conceived and their implementation of it.
Most firms in the industry forfeit the opportunity to realize their full potential because their “strategy” is totally focused on the pursuit of operational excellence. That is, they are doing the same thing for the same clients that everyone else is trying to do and they just end up drifting somewhat aimlessly in the sea of sameness through a process Michael Porter describes as competitive convergence. This is not to say operational excellence is irrelevant. However, Porter argues that this is not really a strategy but is simply a choice by management to behave like most of the other firms in the industry. Operational excellence is absolutely necessary but it is not sufficient to take a firm to greatness, only a robust strategy and determined implementation will do that.
By his definition, strategy is the means by which a firm achieves superior performance by implementing a unique set of activities that deliver a customer value proposition that yields a superior margin in a way that can be sustained.
My goal in this year’s Practice Development Challenge series is to help people who want to set their firm on a superior performance trajectory to conceive a strategy that will work for them and then build a bridge between that strategy and its implementation.