How will you set your strategy this year? Which firms got it right last year and why? How do firms devise strategies that will deliver long term, profitable growth? To answer these questions, Lighthouse launched a nine month research project last year among leading brands in the financial, professional and business services sectors.
The research revealed three stark truths.
First, the senior management of some of the largest advisory firms acknowledge that business strategy needs to be more rigorous now than in the past. The benign markets for professional advice of the last 20 years are behind us. From now on, firms that under-plan will under-perform.
Second, it's clear that many of the widely-accepted mantras in professional service strategy are tired. For example, some firms have spent years chasing the elusive ‘trusted advisor' goal without knowing if they've achieved it or made significant progress - and most important of all, whether their efforts have any positive impact on profits.
The third observation from Lighthouse's research, is that clients' interests are sometimes relegated behind other priorities. The analysis reveals that many advisory firms are orientated towards one or more of three focuses (i) the interests and remuneration of senior staff (partners and directors) (i) the development and sale of ‘products' or (iii) on the development of their internal processes.
So what's the answer? Is there an alternative approach? Our research indicates an appetite for a different anchor for strategy in the advisory firm.
"[Advisory firms] need to wake up to the fact that they have to utterly rethink how they do business."
Senior Partner, leading international law firm
The Client-centric approach
Successful professional firms do things differently. What distinguishes their management from that of firms which are struggling, is a determination and ability to align their firm's capabilities to a reliable understanding of the needs of its key clients. To these firms, strategy is not a laborious annual chore which results in a document rarely read, once written. Instead, it is an iterative process that rejects assumption-led, wishful thinking by management for rock-hard insight into the needs of existing clients and developments in their business sectors.
These firms root their strategy in hard fact. They combine internal billing information with an up-to-date, objective understanding of (i) the characteristics and growth prospects of the markets they serve (ii) their positioning relative to competitors, and (iii) the needs of clients and prospects.
The best management teams don't lock strategy in the top room. They understand that the intelligent and highly motivated professionals they work with can lend valuable market insight from the client ‘coal-face'.
Most important, they translate their strategy and vision into a single, simple objective and work hard to communicate that objective consistently across the organisation. It might seem an obvious point but the advisory firm is particularly susceptible to multiple and often conflicting strategic objectives. Our research shows how often, employees are unaware or confused by the direction in which their firm is heading. In organisations which provide advice through people, such confusion is a severe, sometimes fatal handicap and has a direct impact on levels of client loyalty, profitability and employee engagement.
By contrast, successful management teams synthesise their aims and translate them into a practical set of truly client-centric behaviours and guidelines for their people.
To find out more about Lighthouse's research among some of the leading advisory brands, join us for the launch of our first report on Tuesday 9 February at DTZ in London and hear more of the practical, decision-making frameworks we have developed to help our clients become profitable and truly client-centric businesses.
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The research revealed three stark truths.
First, the senior management of some of the largest advisory firms acknowledge that business strategy needs to be more rigorous now than in the past. The benign markets for professional advice of the last 20 years are behind us. From now on, firms that under-plan will under-perform.
Second, it's clear that many of the widely-accepted mantras in professional service strategy are tired. For example, some firms have spent years chasing the elusive ‘trusted advisor' goal without knowing if they've achieved it or made significant progress - and most important of all, whether their efforts have any positive impact on profits.
The third observation from Lighthouse's research, is that clients' interests are sometimes relegated behind other priorities. The analysis reveals that many advisory firms are orientated towards one or more of three focuses (i) the interests and remuneration of senior staff (partners and directors) (i) the development and sale of ‘products' or (iii) on the development of their internal processes.
So what's the answer? Is there an alternative approach? Our research indicates an appetite for a different anchor for strategy in the advisory firm.
"[Advisory firms] need to wake up to the fact that they have to utterly rethink how they do business."
Senior Partner, leading international law firm
The Client-centric approach
Successful professional firms do things differently. What distinguishes their management from that of firms which are struggling, is a determination and ability to align their firm's capabilities to a reliable understanding of the needs of its key clients. To these firms, strategy is not a laborious annual chore which results in a document rarely read, once written. Instead, it is an iterative process that rejects assumption-led, wishful thinking by management for rock-hard insight into the needs of existing clients and developments in their business sectors.
These firms root their strategy in hard fact. They combine internal billing information with an up-to-date, objective understanding of (i) the characteristics and growth prospects of the markets they serve (ii) their positioning relative to competitors, and (iii) the needs of clients and prospects.
The best management teams don't lock strategy in the top room. They understand that the intelligent and highly motivated professionals they work with can lend valuable market insight from the client ‘coal-face'.
Most important, they translate their strategy and vision into a single, simple objective and work hard to communicate that objective consistently across the organisation. It might seem an obvious point but the advisory firm is particularly susceptible to multiple and often conflicting strategic objectives. Our research shows how often, employees are unaware or confused by the direction in which their firm is heading. In organisations which provide advice through people, such confusion is a severe, sometimes fatal handicap and has a direct impact on levels of client loyalty, profitability and employee engagement.
By contrast, successful management teams synthesise their aims and translate them into a practical set of truly client-centric behaviours and guidelines for their people.
To find out more about Lighthouse's research among some of the leading advisory brands, join us for the launch of our first report on Tuesday 9 February at DTZ in London and hear more of the practical, decision-making frameworks we have developed to help our clients become profitable and truly client-centric businesses.
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