Step 1: Have a strategy

What does it mean to have a strategy?

A business strategy has two essential parts: a direction of where your organization is going and a plan for how to get there. Both require a clear vision of your market context: to determine the direction, you need to understand your current strengths and to know where the growth opportunities are.

In other words, you need to develop a clear understanding of your market ecology: a map of market niches, customer segments, and key resources. This helps you see what the best niche is for your practice, which may be a different niche you are currently occupying. It will also help you understand not just where new customers and opportunities for growth are, but crucially, which of these opportunities fit your strategic direction, and which are a distraction.

In short, developing a strategy requires you to step back and see the big picture. The components of that big picture are:

• Your market environment
• Your position in the market
• Directions of flows and trends
• Locations of risks and opportunities

What makes a good business strategy?

Every business school teaches strategy classes. Hundreds of books on topics related to business strategy are published every year. There are TED talks, boot camps, online courses, and myriad blog posts on how to develop a winning business strategy. It’s easy to get lost! It’s easy to lose sight of a simple, intuitive fact that motivates most of these guides for “how to win the game”: strategy is no more—and no less—than a thoughtful plan.

A good plan starts with the right assumption and proceeds logically. Similarly, a good strategy makes the right assumptions about the market context and contains actionable elements that do not contradict each other. A strategy that is based on wrong assumptions about competition, risks and opportunities, or one that has contradictory steps and priorities will not only fail, it may be more dangerous for your business than having no strategy at all.

Making the right assumptions

A strategic plan is rooted in important assumptions about the business environment and its likely development in the near future. If the assumptions are wrong and do not reflect reality, even the most reasonable strategy is worthless.

The reliability of these foundational assumptions depends on having precise, relevant data about your market and your position in it. Before formulating a plan for next year, or the next five years, you need specific, actionable information on the following points:

• Your organization’s performance relative to competition and peers. For example, if your year-on-year customer growth was 5%, are you doing well? The answer depends on how similar practices in the industry did. If they grew at 1%, you are doing something right. But if they grew at 30%, you need a course correction before you start losing your footing in the market.
• Changes in your local market and neighboring markets will affect your ability to retain or expand your customer base. For instance, assuming that the demand for your services will remain at least stable may be fatal if, in reality, the demand is going into a freefall because of the AI disruption, or because your competitors are gaining ground at a high pace.
• Precise map of opportunities and risks in your market and any new market you may consider for expansion. This map should be a literal map. It should unambiguously point to ZIP codes and addresses where you are most likely to find your next best customer. Many marketing and sales tools now allow for precise geofencing of your efforts to find new customers, but most are not very good at suggesting where you should look.

Building from complementary elements

Once you are equipped with actionable data and start developing your strategic plan from the right assumptions, you have many dimensions to consider next. They concern:

• Marketing
• Human capital development
• Market niche specialization
• Relational capital investment
• Clear definition of the scope of your services

These building blocks have to fit together and be complementary. If, for instance, you decide to expand into high-yield, high-effort clientele, but your personnel turnover is high, you may get caught in a vicious cycle of client dissatisfaction and turnover, which in turn contributes to reshuffling—and maybe loss—of your professionals across accounts. Similarly, if your market niche requires a lot of contact hours with clients, but your technology strategy puts AI tools between your clients and your professionals, your well-intended actions are creating a detrimental change.

Alignment across these dimensions of the strategic plan is achieved with deliberate strategic planning exercises—something we will focus on in future posts.

What can you do now?

Start by getting precise information on your market position, threats and opportunities by requesting a custom report for your practice from our april.SIGHT Strategy Assessment Series.