Before I begin the strategic planning process, I always ask what the values and purpose of the business are. Strategic planning is related to what the defined product of the business is. If you manufacture cars, the definition of your product is easy. But what are you selling if your business is a law firm? I have heard answers that include a financial settlement, justice, client peace of mind, or a settled case. When I ask about purpose, I have heard answers such as make money, be recognized as a leader, help people, serve justice, or punish evildoers. There is no one right answer; however, there is an answer that matches your values and your purpose.
I once asked a law firm owner what his secret to success was and he said to always focus on the questions how much and how fast. That set of questions would suggest that the business was focused on making money, but if you read their vision or mission statements, you would get the idea that their purpose was client satisfaction. When I asked which it was, making money or client satisfaction, he said both. I pointed out that most surveys by the bar associations would suggest that money was not the goal of most clients, he was shocked. I often find a mismatch between the vision of the business and what the perception of success is.
To continue with this example and the ‘how much’ component, I discovered another surprise. I asked for some good examples of cases that would represent the ideal and they were all high dollar settlements. That was no surprise, but what was a surprise was the realization that all but one of the examples lost money. By that, I mean that the return on investment for those cases was negative. When I looked at the performance measurements for the business, they were focused on how much revenue was being generated, not profit, client satisfaction or realizing the vision.
If I stand back and look at the big picture, it is not very clear what the business is about. That leads to my next question – what was the focus of the strategic plan? Well, no surprise here, there was no strategic plan. The business was being built on the brute force philosophy. This is my term for a process that pushes resources until they produce a profit.
One of the benefits of a strategic plan is a chance to look at all the elements of the business. To start the planning process, you identify the values and principles that are important. We talked about that element in an earlier blog (Get Ready to Build a Strategic Plan). The next step is to define the deliverable of the business along with its characteristics. Next, you develop a list of the resources you need to produce your deliverable. To stay on track, you create a set of metrics that will measure your deliverable. If you have all of that defined, you can stand back and ask how fast can I deliver and how much revenue can I generate.
Law firms measure financial results with real consistency, but beyond financial measurement, we find very little else is tracked and what we do find is often not connected to the firms’ strategies. What would be nice would be an approach that enables the business to track performance in four primary categories: financial, internal operations, client satisfaction, and staff. This is known as a balanced scorecard. Now you can get a true picture of “how much and how fast.”
It has been our experience that improving the performance of the staff enables the Firm to improve its internal process. This increases overall efficiency and improves the return on investment measured. This enables the Firm to improve the client satisfaction and financial areas.
Did you find some neat ideas in this blog? What are the exciting ideas you came up with, and how are you implementing them? Let me know by contacting me at email@example.com.
Catalyst Group is a national mentoring company that works with professional practices and small businesses in designing common-sense plans that incorporate profitable business practices with a balanced work life.