Process, responsibility, and accountability

We spend a lot of time, as a management team, just making sure we are aligned in our ambition.”
— Steve Gunby, former Chairman, North and South America, The Boston Consulting Group

We don’t really look at strategic planning in isolation. What we talk about is a continuous process throughout the year.”
— Brett Marschke, COO, Duff & Phelps

It is so simple to articulate the strategies. The question is whether you can in fact deliver on them.”
— Rajat Gupta, former Managing Director, McKinsey

Five Essentials for Successful Strategic Planning

It doesn’t matter what your job in the organization is; you should be able to figure out how it leads to the firm’s strategic imperatives and its success.”

I just spent four hours with a whole group of people going through a scenario planning process, looking at different possibilities and timelines for when the economy will either get better or worse. I highly recommend it for other firms.”

Five common characteristics emerged from our interviews that are fundamental to successful strategic planning:

Integrate long-term strategic planning with annual plans. Many firms favor a comprehensive approach to strategy formulation that combines periodic long-term visionary planning events with annual operational and financial planning exercises and goal-setting. In general, the issues dealt with at the highest strategic planning level have to do with decisions that have major implications for firm direction, service delivery, internal investment, and resource deployment. Such far-reaching concerns range from geographic expansion and investments in intellectual capital to adding new services or restructuring from a country-centric operating model to one based on practice areas. In contrast to broad issues such as these, annual operational and financial planning exercises tend to be more tactical in nature, mapping out short-term goals and revenue targets.

View strategic planning as a continuous cycle, not a one-time event. Given the volatility of global markets, many leaders stress the importance of not viewing planning as an isolated, finite event or exercise, but rather a fluid, ongoing cycle of review and adjustment. To accommodate rapid market shifts, new opportunities, and unexpected threats, strategic planning needs to be adaptive and responsive. It should be treated as a creative, nonlinear process, and the plan should be revisited periodically.

Sometimes a lightning-rod event or external environmental issue surfaces with the potential to transform the firm’s business in some fundamental way. When this happens, it’s inevitable that long-term plans will be affected; in certain situations, the firm may even be forced to rethink its current operating model. At times like these, flexibility is essential. A firm has to be willing to take stock, regroup, go back with a blank piece of paper, and really challenge the entire plan. In anticipating circumstances like these, scenario planning—an underutilized tool in the professional service business—can be especially helpful.

Incorporate external as well as internal analyses into strategic planning. It is vitally important that service firms avoid organizational navel gazing. They must look beyond their own windows and walls to identify long-term trends and market forces that could affect their businesses or point the way to unmet client needs and new service offerings.

Savvy firms are constantly taking the pulse of their clients and the industries they serve. Planning is never done in a vacuum, with a group of leaders sitting in a room talking to themselves. Incorporating solid external data into a realistic assessment of internal strengths and weaknesses is the foundation for successful business planning and decision making. Some professionals we have worked with have been adamant that they don’t need to talk to the market, because “we know our business.” Although this is largely true, surprises almost always come up when the firm conducts a bit of research. The market perception of the brand is weak or spotty, clients are not interested in buying some of the services the firm is selling, or, as discussed in Chapter 5, “Services,” opportunities to expand into a new service or market have not been explored.

To ensure buy-in, collaborate with stakeholders to develop plans. Generating support at all levels for the strategic plan is as critical for professional service firms as it is for the clients they counsel. As many of the leaders we spoke to noted, in a partnership, collaboration is the touchstone of strategic planning. If partners don’t feel they’ve been heard and don’t own a plan’s objectives, they feel no obligation to embrace them or measure their performance against them. However, as many respondents stressed, achieving total consensus on goals and directions is rarely possible. After feedback is solicited and processed, it is up to the firm’s leadership team to move forward decisively, usually without unanimous support.

Knowing when to discuss, debate, and, finally, decide on a clear strategic direction is a sensitive timing issue. Firms charting strategies on a global scale face a further challenge in orchestrating inclusive planning and review processes. CEOs at the helm of enterprises with global footprints find it immensely demanding, but critical, to ensure that major stakeholders at country and regional levels are actively involved in planning. It’s also vital that any strategy envisioned is tested—not just in current markets, but in emerging ones as well.

Communicate constantly, and regularly review progress against goals. Once key stakeholders are onboard, it’s equally important to keep them fully engaged and in the loop during the execution phase. Many leaders also strongly advocate driving the key elements of a strategic plan down to the staff level so that employees in support positions have a clear view of the direction the firm is taking and recognize the importance of their own roles in helping the firm stay on track.