Stop Following "Best Practices"
LinkedIn Article by Tim Williams
September 26, 2016
The most highly-regarded firms on the planet aren't just good; they're different. They stand out not just because they're excellent at what they do, but because they have a deliberately different purpose, principles, and set of practices. In professional services, this is the 1%.
The other 99% are stuck on the treadmill of following "best practices," which essentially is just copying the way other firms do business. From a scientific perspective, this is understandable; anthropologists have show that the urge to copy is exceptionally strong in the human species.
Pursuing a differentiating strategy means literally going against your instincts, looking past the "best practices" of competitors, and instead identifying the "next practices" in your category -- the products, services, and solutions your clients will need tomorrow.
You can't place your firm at the vanguard of your industry by following a strategy based on some vague notion of “excellence.” The most prosperous firms by far are those with the sharpest definition of their core customer and core competencies -- what A.G. Lafley and Roger Martin refer to as "Where to play, and how to win."
A Tale of Two Firms
Imagine two architectural firms: one with a single-minded focus on designing state-of-the-art building solutions for the healthcare industry, and one with an unfocused business strategy that attempts to do everything for everybody. Which of these two firms would have:
1. The greatest earning power?
2. The largest geographical market area?
3. The fewest competitors?
4. The most leverage with clients and prospects?
5. The most sophisticated clients?
The answer in every case is the focused firm. Let’s look at each question individually.
Greatest earning power. It’s a simple fact that the specialist earns more than the generalist. This is true in medicine, law, engineering, architecture, consulting, construction -- you name it. This is because the specialist knows more, and we live and work in a knowledge economy.
Largest geographical market area. Firms with specialized expertise draw clients from all over the globe, not just from their own zip code. That’s because what they’re selling isn’t available from another firm down the block.
Fewest competitors. The easiest way to narrow your competition is to narrow your focus. There are far fewer specialists than generalists, and the law of supply and demand works in favor of those who offer hard-to-find services and solutions.
Most leverage. Expertise equals respect. A laser-like business strategy allows your firm to develop and leverage its intellectual capital. This makes you valued and respected not just for what you do, but for what you know.
Most sophisticated clients. In the boardrooms of professional firms everywhere is often heard the lament, “If only we had better clients.” These professionals forget that a quality value proposition attracts a quality client. A business that proclaims “We’re right for everybody,” logically is going to attract both the good and bad.
Top 10 Benefits of Narrow and Deep Over Broad and Shallow
Standing for something instead of trying to stand for everything gives your firm at least 10 major advantages over less-focused competitors, including:
- Well-defined criteria for identifying the types of clients who want you for what you do best.
- A stronger win ratio when soliciting new business, because you are playing to your strengths.
- Employees and associates who are energized by a clear direction and focus.
- Clear hiring standards for the kind of people you need to reinforce your brand.
- A website and new business materials that present you as exactly the right firm for the right kinds of clients.
- A marketing and self-promotion program based on a meaningful, unifying theme.
- More pricing leverage with clients, because you’ll be offering more differentiated services and expertise.
- A platform on which to build intellectual property that you can own that goes beyond the traditional “work for hire” model.
- The ability to create new revenue streams based on an ever-expanding catalog of knowledge, expertise, and intellectual capital.
- Ultimately, a clearer direction for how your firm should spend its limited time, money and resources.
How do you go about defining the most effective positioning strategy for your firm? Start by clearing your mind of shop-worn concepts like “quality,” “leadership,” and “delighting customers.” It’s not that these concepts aren't important; they’ve just lost their meaning. This kind of hyperbolic language also does nothing to distinguish your firm's offering from others.
Four Key Questions That Define Your Firm's Business Strategy
An effective business strategy for professional firms lives at the intersection of four key questions:
WHAT are our true core competencies? In which areas are we best in class?
WHO do we know best in terms of industries, business categories, or market segments?
HOW are we differentiated by our philosophies, methods or approaches?
WHY are we in business in the first place? Beyond making money, what is our purpose?
Most firms don't define their strategy as much as they discover it. It’s already there, deep inside their organizational DNA in the form of past experience and expertise. Half the work of productive strategic planning is to understand what is authentic to your firm: what you already know and do well. The other half is aspirational; identifying unmet needs and unserved markets your firm could constructively address with the right kind of commitment. You can leverage key parts of your generalist past, but the future belongs to the focused.