Growth by Design
Is Your Strategy a Springboard for Success?
At its core, strategic planning is the generation of ideas and
opportunities that will bridge the gap between the current business and desired future business. The product of a great strategy should not be measured by the encouraging feeling that
often results from strategic discussions. While enthusiasm for a
strategy is critical, just like a sun tan, that warm glow will disappear quickly. Executive decision making and, most importantly,
action are essential for advancing shareholder aspirations.
This year, “The 2014 FA Insight Study of Advisory Firms:
Growth by Design” attracted more study participants than
any other industry-wide benchmarking study. New ground
was covered in the area of strategic planning, revealing the
practices of the industry’s most successful firms. This third
article of our four-part “Growth by Design” series provides
insight into how firms can better convert strategic thinking
into success (see past articles at the Growth by Design homep-age on ThinkAdvisor.com).
Planning Is More Common Than Execution
In 2014, 85% of advisory firms surveyed indicated that they
have developed a strategic plan. For firms generating over
$4 million in revenue, a group we call the Innovators, this
number increased to 94%. Despite strong adoption of strategic planning, effectiveness is limited. Of all firms that have a
strategic plan in place, 61% lack the necessary detail that will
enable implementation (see Figure 1, right).
In addition to the lack of implementation planning, a sizeable percentage of firms indicated that not all team members
understand the strategy. Furthermore, for a majority of firms,
team member performance objectives are not linked to the
strategic plan. For these firms, strategic planning efforts may
be in vain, with business-as-usual a predictable outcome.
Identifying the True Growth Levers
To achieve success, political strategists vigorously assess
competitors, anticipate changes in the political landscape and
plan for contingencies. They must also identify and accentu-
ate the positive attributes of their candidate to differentiate
him or her from competitors. This external and internal
assessment can unearth the opportunities that lead to a com-
petitive advantage. Business strategy is much the same.
For an advisory firm, market-based factors (e.g., legislation, access to talent, changing competition) must be combined with an assessment of business capabilities to reveal
opportunities. In practice, however, much of the heavy lifting
in strategic planning appears to be sidestepped.
When it comes to setting strategic objectives, the typical
advisory firm demonstrates a greater focus on financial milestones with less attention paid to the leading indicators of
success (see Figure 2, page 43).
The four most common strategic objectives set by advisory
firms are all lagging indicators. While they are critical mea-
sures of success, this result suggests a shortfall in the planning
t’s not that often that the private sector turns to the political arena for inspiration. At
best, those outside politics consider political processes to be unexceptional. There
is, however, one remarkable political skill that businesses should take note of.
There may be no better example of strategic thinking and execution than that
demonstrated by a major U.S. political party during an election campaign. For the
political strategist tasked with the election of a single candidate, strategic thinking is vital but
meaningless without execution. The breakneck campaign that follows strategy formation is
where the political strategist proves his or her worth.
For the advice industry there is much to learn when it comes to directing effort and
resources to achieve strategic outcomes. In business as in politics, implementation is crucial.
For advisory firms, strategic worth must be measured by tangible financial, client, people and
operational outcomes. In essence, “strategy without action is just hallucination.”
Source: The 2014 FA Insight Study of Advisory Firms: Growth by Design.
FIGURE 1: STRATEGIC PLANS ARE FREQUENTLY LESS THAN IDEAL
Lacks implementation details for meeting objectives
Is not understood by all team members
Does not influence staff members’ individual performance objectives
Shortcomings of Strategic Plans
Percentage of fIrms resPonDIng