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This question haunts many executives.
At a recent strategy retreat, executive management gathered to review
the
“first draft” of the strategic plans
for the business units and the overall corporate strategic plan.
Questions they kept asking: What are we missing? Are we focusing on the
right initiatives? Will this lead to better financial returns? Here are
some questions to consider that can help uncover common gaps or
overlooked areas in your strategic plans.
Is the Strategy Focused on the Right Goals?
CPA firms
often get caught up in the details of a particular strategic initiative
without fully considering how their activities will lead the firm to
superior financial returns. For example, a firm may be considering the
recruiting of a marketing director and this idea may be on the minds of
all the partners. The problem, of course, is that this initiative is not
a true goal of superior business strategy – it is a means to an end.
What goals should any new initiative be focused on?
• Fulfill unmet clients needs,
and
• Dominate increasing market segments
These are two
of the major goal tenets of Return Driven Strategy (see CPA Leadership Report May 2003
or www.returndrivenstrategy.com). So when
contemplating any strategic initiative like the one mentioned above, you
need to consider,
“How will
this new initiative better serve clients’ otherwise unmet needs? How
will it help us to further dominate existing or new market segments?” If neither of these questions can be answered
credibly, then forego the plan, and go back to planning. Recruiting a
marketing director may be the correct operational initiative to achieve
the goals that have been set; however, the selection of the marketing
director and the description of his or her job will be profoundly
affected by the nature of the goals.
At a recent strategy workshop, the advantage of this
approach helped management focus its attention on the overriding big
picture of its plans and avoid being buried in the details. Much of the
discussion had been focused on internal processes and existing offerings
for existing clients in existing market segments. By refocusing on the
goal tenets of the Return Driven Strategy pyramid, we led the discussion
in the right direction.
How Well Do You Understand
Clients’ Unmet Needs?
Firms seem to
miss this point in partner retreats, at least in terms of the level of
knowledge required to achieve the goal. Often you see them conduct
“client surveys” to better understand the client. Unfortunately,
you can’t run your firm’s strategy on a survey.
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“How will this new initiative better serve
clients’ otherwise unmet needs? How will it help us to further
dominate existing or new market segments?” If neither of these
questions can be answered credibly, then forego the plan. |
Management may fail to take other necessary steps
to truly understand client needs. Are client surveys useful? Definitely
– if written properly, if the information is collected well, and if
other basics of good market research are followed.
But the
survey alone won’t do justice to truly understanding clients’ unmet
needs. Put yourself in the shoes of the client. If you took a survey,
even a well-written one, would it allow someone else to peer into your
work, into your real needs, and how well? The best companies show an
uncanny ability to know the client so well that they can produce
services and products that the client would never have known it needed
in the first place.
Some other
methods include face-to-face client interviews. Since much of
communication today is nonverbal, hasten a guess as to how much is lost
on paper surveys or even phone interviews. Another tactic is the
“day-in-the-life” of a client, spending some time with key clients
to see just how the services or products are being used. If
planned creatively, this activity can enable you to gather incredible
information in every industry.
Better-defined client needs can be targeted and fulfilled more
effectively. The path to value creation is always through the customer
which requires more in-depth, superior knowledge of the client gathered
in creative ways.
Better Defining Unmet Needs
Here are a few points on unmet needs that have helped management teams:
• The more
potential substitutes, in any form, the less
“unmet”
the need. Often firms consider their
industry as competition. Real competition isn’t based on industry but on
any potential service that fulfills a client’s need better than your
firm can.
• The goal is to continually find new needs, fulfill
them, and then find more. Done on a continual basis, firms can create
sustainable competitive advantages.
• Focus on the client, not on your internal processes.
Moving Forward
Once a thorough client-needs analysis is
completed, management can focus on innovative partnerships that can help
create new offerings that target the need. The firm can then see what
kinds of operational initiatives are the most beneficial and how to
prioritize its activities. Every initiative can be considered within
this framework, or management has to consider whether it should even be a strategic initiative at all.
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Mark I.
Frigo, Ph.D., CPA, CMA, is the director of the Center for
Strategy, Execution and Valuation and Eichenbaum Foundation
Distinguished Professor of Strategy and Leadership in the
Kellstadt Graduate School of Business at Depaul University. He is
also a leading expert in strategy design and execution, including
balanced scorecard initiative.
Click here to send Mark an e-mail |
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