Ric Payne's Blog: The Consulting Accountant
Better Business. Better Life
It is quite common to see statements like:
“Our strategy is to become the preeminent firm in our community.”
“Our strategy is to disrupt our industry.”
“Our strategy is to disintermediate the industry’s supply chain.”
A sole business owner, might say “my strategy is to make a living doing the best I can.”
Continue reading “A Goal is Not a Strategy”One of the most important contemporary scholars in the strategy domain is Canadian-American Roger Martin. He has published extensively over many years and is, in my view, one of the very few, very important, writers on the process of strategy creation and execution. He, correctly in my view, presents strategy as an ongoing process of directing a business towards its the aspirational objective(s) of management. His book, co-authored by AG Lafley (ex-CEO of Procter & Gamble), Playing to Winn: How Strategy Really Works is a must read for anyone serious about building a winning business (or any other entity.)
Martin recently responded to a Twitter post in which the poster (Richard Hulse) expressed disappointment that there was not more reaction to his question on how strategy applies to natural monopolies as much as it does for “normal” businesses in competitive markets.
The question is a very important one and was brilliantly answered by Roger. His response gave me pause to realize that many businesses that have a loyal customer base due, in the main, to convenience and/or high switching costs enjoy a kind of natural monopoly.
As a consultant working in the public accounting domain, and I see many firms seeking to grow by acquisition and marketing rather than by innovating in ways to improve the value they deliver to their clients. They get away with this because their clients have high perceived switching costs not because they are delighted with the value received from the relationship.
These firms intuitively, or intentionally, ignore their existing clients (as Martin says, “get horribly out of shape and bloated” while seeking to win more business through price & promise marketing (or worse, through acquisition of an equally bad firm) which inevitably attracts poor quality clients and stretches their capacity utilization beyond its effective operating limit; which incidentally, is why they are so enamored with “tools” to improve efficiency. Interestingly, the disastrous effect of the pursuit of efficiency is yet another of Martin’s brilliant insights. This in turn lowers the value they deliver to all their clients including their good ones. Ultimately they stagger in mediocrity, are acquired, or disintegrate simply because they never played to win.
Continue reading “Accounting Practices Have the Character of Natural Monopolies Which is a Potential Source of their Demise”After a presentation I did on business strategy at Lake Tahoe’s Resort at Squaw Creek (now called Everline Resort & Spa) in the early ’90s, one of the delegates asked me if I had read Sam Walton’s autobiography titled *Made in America: My Story*. He said, “It’s a remarkable story. You should read it. You’ll notice Sam intuitively understood what strategic thinking is all about. I think you’ll enjoy it.”
Continue reading “What Sam Walton can teach you about creating and growing a successful business”Formulating a business strategy is essentially about making choices that will give you confidence that you’ll achieve a challenging goal which, if you’re intent on being the “best” in your class, that might be achieving an industry-leading ROIC from having created a sustainable competitive advantage. Of course, nothing is sustainable forever which is what makes formulating strategy a “forever” job of management.
Continue reading “Visually Thinking about Strategic Intent”I can say with confidence based on more than 30 years of research involving both desktop analytics and face to face interviews with practitioners that THE difference between the industry leading firms and the rest of the pack is NOT superior operational efficiency (although that is at a high level) it is a superior business model. Continue reading “Keys for Driving Your Innovation Potential”
Peters and Waterman published In Search of Excellence in 1982. It had a profound impact on the direction of my life but that’s not important. What is important is the 7-S model that they revealed in that publication remains today, one of the mainstay’s of the McKinsey consulting methodology. Continue reading “Soft is Hard and Hard is Soft”
As I prepare material for our up-coming Practice Innovation Workshops I’ve been doing a lot of research into the process of creative idea generation (specifically how to teach it and how to implement it) because at the end of the day that’s what ultimately gives business enterprises (and that includes accounting firms and their clients) a competitive edge. Continue reading “If You Want to Break From The Pack, Innovation is the Key”
I’m told the word “compete” has its roots in the Latin phrase con petire which means “to seek together.” That sounds at odds with the contemporary use of the word competition but perhaps that’s what it really is all about — seeking to actualize your potential by testing yourself against the best opposition. It’s not about winning, it’s about realizing your potential and if you’re not winning you know you have a way to go but in the process you are always winning because you’re moving towards the realization of your potential. Continue reading “Why Strategy Matters”
I was on a website the other day that focused on leadership and what team members considered to be the most important things that influenced their confidence in their leaders. The question was asked: what matters most to you in a leader? Continue reading “What Matters Most in a Leader”
A typical definition of the word strategy is a plan of action designed to achieve a vision, the two key words being “plan” and “vision”. I’ve been talking about strategy a lot lately because I believe the lack of a coherent strategy is the barrier that prevents firms from achieving their full potential. They either lack a vision, they lack a plan of action or they lack both. In other words they lack a strategy. Continue reading “Strategy in times of rapid change”