Most mid-sized professional service firms are consumed by the desire for more — more clients, more partners, more revenue and more profits. Achieving these goals demands a strategically managed practice created by applying strategic management principles to the three areas that encompass any firm’s key business functions: client services, client development and firm administration.
Every client engages in some kind of strategic planning. A strategically managed professional service practice utilizes the client’s strategic planning as the basis for establishing the range of the firm’s engagement. A strategically managed practice enables the firm to understand its clients better, to become more efficient and effective in serving them, and to cope with fee, time and performance pressures that are greater than ever.
Here are some things a professional service firm can learn from a client’s planning process.
* Perceived strengths and weaknesses
* Market risks
* Major business initiatives and new areas of emphasis
* The identities and roles of key decision-makers
* Progress toward objectives
* The impact of changes in regulations and legislation
* The scope and focus of the professional services needed
Professional service firms traditionally do not approach a new client opportunity from a strategic management perspective. But a successful proposal depends on the ability to communicate an understanding of the prospective client’s business and to relate the firm’s expertise to the client’s goals, strategic initiatives, critical success factors and projected outcomes.
Investigating these issues using a strategic management-focused due diligence process is highly effective, but it must be institutionalized to be sustained. The solution is to build the strategic management questions into the standard due diligence document used to develop an understanding of a new client opportunity.
A strategically managed professional service firm should create a targeted economic outcome for everything it does. The firm also needs to develop a model that projects the anticipated costs and benefits of everything it does administratively, from recruiting and budgeting to education and marketing. The model should identify the responsible parties for every administrative action and track actual results against the projections.
The administrative objective should be not only to reduce costs, but also to increase effectiveness. Set targets and address issues of accountability and resource allocation as part of the firm’s regular strategic management and budgeting processes. Discipline produces better decisions. D. Michael McDowell is managing principal of McCrory & McDowell LLC, a Pittsburgh-based accounting and consulting firm. Reach him at (412) 281-9690 or [email protected].
