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Stay ahead of the market with BTI's latest research

The post Dissecting Law Firm Strategic Planning — 11 Take-Aways appeared first on The BTI Consulting Group.

Stay ahead of the market with BTI's latest research

The post Law Firm Leaders Tackling 13 Strategic Issues — 4 Dominate appeared first on The BTI Consulting Group.

Law firms love to measure the growth. Not so much for market share.

Market share gains or losses tell you how much business and the extent of clients you gained or lost versus other firms. You can add a whole new dimension to your strategic performance by looking at profits at the same time. Profits tell you how much capital you have available to invest—in talent, technology, clients, and other key areas. The firms who gain more clients and generate more profits than anyone else on a regular and sustained basis have a clear advantage.

Even though the legal market is growing again, success still demands law firms steal clients in order to create the kind of growth which attracts talent, creates opportunity, and draws clients to your firm.

Only a small number law firms—12%—register big gains with big profits on a continuing basis. Another 14% are investing to earn these big gains and profits. 40% are losing share with lower-than-average profits. The rest are somewhere in between.

Stealing Clients and Making More Money than Anyone Else

12% of law firms are not just growing—they are taking clients and market share. These Pacesetters are generating superior profits—4 to 6 times better than everyone else. Everyone can learn a thing or 2 from these firms—no matter who you are.

The Pacesetters are using client-centric strategies. They are focusing on growing their existing clients and investing in only a few selected markets, practices, and clients—all with discipline and strategic patience. They are top client service performers—but that’s not enough—Pacesetters are committed to getting even better at client service. Pacesetters know exactly who their clients are and what they want. Better strategy, adding more clients than everyone else, and making more money while doing it—this is the business trifecta.

To learn who these firms are and more about their strategies, join us for today’s webinar: The BTI Market Outlook and Client Service Review 2018, at Noon Eastern (Click here to register).

Losing More Clients and Making Less Money

40% of law firms are giving up clients and share. These firms are shrinking or eking out minimal growth. Either way—they are giving up business and clients to competitors. These firms are the Followers. Follower strategies are the opposite of the Pacesetters. These strategies focus on the firm before markets, they market to broad groups of practices equally, and cast a wide net for clients—all of which make it harder to connect with clients or grow your market share.

Investing for the Biggest Gains

14% of law firms, the Investors, are making big investments to drive growth and market share gains. These firms are investing in client-facing programs, industry teams, client feedback and provocative content, and are reaching out to clients. They have one goal—become a Pacesetter. They are spending profits now for bigger clients, new clients, and bigger profits to come.

Harvesting the Gold

The Gold Miners enjoy outstanding profits but are slowly losing clients and share. These firms, some of whom have mega prestige brands, are losing clients—especially to the Pacesetters—who are much more aggressive in seeking out and cultivating prime clients. Gold Miners have some of the best clients, but they largely position themselves as destination firms clients will seek out. But other firms are starting conversations with these clients when the need arises—slowly taking business. The Gold Miners will sense this loss of clients at some point—driving a pivot to a client‑centric strategy or merger.

As we will discuss in our webinar at Noon EST today—the Pacesetters have increased their gains while firms losing share are losing more at a faster pace over the last 10 years. The Gold Miners are making more money but losing more clients. The gap between the Pacesetters and everyone else is growing daily.

The legal market has entered the 4th distinct phase of growth since the financial crisis. At this point, the most successful strategies place clients at the epicenter of their world, and build out from there. The more the market changes the more one thing remains the same—clients and the client experience drive short- and long-term success.

MBR

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Firms outside the largest 100 are more worried about their strategic plans than the largest 100 firms. The top 100 rank their confidence at 8.8 out of 10 with 10 being supremely confident. Firms outside the top 100 show a 7.6.

While confident—the large firms are concerned about accountability and pricing. These same firms want to boost talent development and business development. Large firm concern over accountability may in the end be a boost to success as accountability drives implementation. The large firms show a bias towards focusing on a more targeted group of markets and clients than their smaller brethren—which may seem counter intuitive but—shows the discipline associated with a well crafted strategic plan.

Smaller firms express concerns about their strategic plans being less robust—lacking a client voice and the analytical rigor which drives firms to prioritize one opportunity over another with conviction. In effect, the plan becomes hard to implement as designed or ends up with all opportunities being close to equal. At the same time, smaller firms are routing resources into capturing a wider group of clients and markets than the larger firms. We are also seeing renewed activity in lead generation, which is a much lower priority at larger firms. The majority of strategies outside the largest 100 are less focused.

Both sets of firms can learn from each other and improve their implementation and plans. Lessons from the most successful firms—small and large—include:

Focus:

More than 3 goals reduces any sense of priority—defeating the point of strategic planning.

Client Feedback:

Any firm who develops a strategic plan without client feedback takes on great risk by overlooking the best and lowest risk opportunities right in front of them—and missing the needs of the clients they already have.

Accountability:

Names, dates and how much—anything less is not measurable, and not enforceable, and can lead your firm astray.

Strategy is the new centerpiece for growth because the market itself offers very little. Law firms now have to outsmart each other. In a profession with enormous brainpower the battle for clients and share will go to those who can not only develop the right strategy but can develop the culture to make it happen. A good plan is proven to drive culture—as well as market gains. All the more reason to engage in some healthy worry to avoid basing your firm’s future on false hope.

MBR

PS. BTI helps you sort healthy worry from false hope and assess your options to find the growth best suited to your firm: from least risk to highest return and anything in between. Contact me today for more information.

The post False Hope or Healthy Worry? Law Firms Rank Their Strategic Plans appeared first on The BTI Consulting Group.

Big goals are often wrongly equated with big risk. You are taking a chance. And you just might lose. But, a well-crafted strategic plan can reduce risk and point you to the strategies capable of delivering outsized returns.

Small Goals only Masquerade as if They Have Little Risk

The risk in small goals starts with your people. The influencers in your firm want something big and are often disappointed and feel stifled when constrained by small goals. Your people also become indifferent to the strategic plan—small goals end up sounding just another day at the office: maintain our market position; exceed market growth; become a preeminent player. Few people read or become engaged with a small goal strategic plan because they know exactly what to expect—more of the same. Small goals make strategic plans look more like operating plans complete with budget fights and negotiations.

Big Goals Eliminate the Understated Risks of Small Goals

The big goals catch and keep your people’s attention. Leaders and line partners become more engaged and invested in the outcome. These same partners will want to take bigger and bolder actions with their clients as they see these actions supported by the firm’s goals. Strategic planning documents are actually studied to see how they will reach this goal. Key people read the big goal plan and ask: What can I do to make this happen?

But the benefits don’t end here. Your mover and shaker partners—the ones who will implement the plan—will be looking for an active role. The challenge and excitement of the chase are the food keeping the movers and shakers alive.

The potential rewards from your big goal tell everyone the goal is worth changing behavior. The big goal, and its big reward, is one of the few proven tools to herd cats and get a partnership to march in a new direction. The big goal is more powerful than words as it shows intent. And big intent can drive big change.

Examples of big goals we have seen drive success include:

• Growing total fees from a firm’s top 25 clients 15% per year over the next year
• Establish clear thought leadership in litigation as measured by the number of inbound leads, new clients and new business from existing clients at higher rates
• Provide the gold standard in client service to surpass all other law firms serving our clients. (Backed by client service training for every partner and in-depth client feedback for the firm’s top 140 clients, including client service performance metrics as measured by clients.)
• To gain at least 35% of the market share of the 100 largest and most active acquirers of companies in the world
• Add 20 new clients (from a strategically developed list of 50 potential clients) in our 3 state region while growing revenue

Small goals will typically preclude exploration of opportunity. We aren’t looking for much so we can spend less time looking. The big goals drive exploration and new approaches which would otherwise go unnoticed. In short, the opportunity cost of small goals can be very high.

MBR

The post Itty Bitty Goals—Strategic Planning’s Fourth Deadly Sin appeared first on The BTI Consulting Group.

Most law firms want to know the trends, few want to face them head on. We can pinpoint 6 reasons:

• Trends require explanation and proof to convince partners, and often leadership, of their impact
• Leveraging anything but a growth trend is a relatively new phenomena which may demand new and untested tactics
• There are so many trends it is difficult to separate the driving trends from the inconsequential ones
• Trends connected with low growth or flat markets push law firms out of their comfort zone—and into dealing with the unknown
• The metrics used to drive success will be new and different and need to be developed
• We often don’t like the trends—slow growth, less work, rate pressure or increasing client expectations 

Trends are agnostic and have no feelings. Virtually every trend has an upside. Unless the practice of law disappears from society entirely you can find an approach to take advantage of any trend. Your approach will be viewed by other law firms as bold, wrong, counterintuitive and with puzzlement. But, meeting trends head on means you will be positioning yourself for leadership.

In 1994, the Defense industry was facing budget cuts and program cutbacks. Defense contractors Lockheed and Martin Marietta agreed to merge to create scale and efficiency in the coming down market. Lockheed Martin is now the largest US Government contractor and is almost twice the size of the number 2 firm—in a growing and redefined market. Law firms would not be confused with government contractors but Lockheed’s counterintuitive move redefined the company and the industry.

**

People think they pay attention to market trends. But, the reality is—they almost totally ignore them.

Knowing the trends means next to nothing. Even understanding the trends means little. Taking specific action based on the trends means everything. Take action: craft strategies and tactics specifically to take advantage of the current trends or use the trends to guide your plans.

What’s your next move?

** 

We discussed market trends and more in our annual BTI Market Outlook and Client Service Review. You can view the full webinar here: http://youtu.be/wRPnpEUi65s.

MBR

The post Ignore Market Trends: Strategic Planning’s Third Deadly Sin appeared first on The BTI Consulting Group.

“Their clients should be our clients.”

“We should offer the same services they do.”

“They use project management.”

“They don’t use Six Sigma.”

“Our firm would enjoy those results…let’s do what they’re doing!”

We start with the best of intentions. We want to learn how to improve performance. Sometimes we’re simply satisfying our curiosity—who has the highest profits? Who’s doing the best deals? Who has the clients we want? The list goes on. We analyze the competition to understand what’s happening outside our own doors. Sometimes we see amazing, or even eye-popping numbers, and it’s hard not to look a little closer at what those firms are doing.

But, for many firms this becomes a misguided distraction. Instead of adapting a winning strategy, they adopt one. These distracted firms aim for market-leading results without understanding the strategy to get there. Unfortunately, these results are the tip of a large iceberg. Hidden underneath is the complex ecosystem of formal and informal metrics, training, tools, and even failures the firms delivering the best results have endured. This ecosystem is nearly invisible.  

Strategic envy—setting a strategic plan based on achieving the results of another firm—is the second of the 7 Deadly Sins of Strategic Planning. Strategies based on strategic envy will:

• Take focus away from market opportunities
• Undervalue existing operating strengths and sources of advantage
• Emphasize weakness in the organization 
• Ignore adopting metrics and operating standards 
• Aim for different results while clinging to their same culture—without realizing the culture drives the results
• Relegate clients to a backseat in the implementation and planning phases—meaning these firms become less client-centric 

The most successful strategic plans find new ways to leverage strengths, make smart investments in resources, and—most importantly—optimize the existing culture and behaviors of the organization with the goal of improving performance. The most successful firms:

1. Build goals around available opportunity—or create opportunity
2. Emphasize the needs of existing and aspirational clients
3. Use high-performing competitors as points of comparison—not the endgame
4. Set clear objectives based on the firm’s overall goal
5. Define how the objectives will impact resources
6. –  Do you need more—or less—resources in certain areas
7. –  Do you need different resources
8. Adopt clear metrics and operating standards to guide behavior
9. Identify the behavioral changes needed to ensure success
10. –  Hint: If you think you don’t need to change behavior, recheck your plan. A change in goals always requires a change in behavior.
    1. Understand how any changes will impact your current clients

This isn’t to say businesses should ignore what’s working in the market. It’s to take what’s working and make it work for you and who you are.

Plan accordingly.

MBR/JPD

The post Strategic Envy: Strategic Planning’s Second Deadly Sin appeared first on The BTI Consulting Group.

Strategic plans range from elaborate, formal, lengthy processes with large written documents to short, focused meetings outlining yearly objectives. No matter the format or approach, the goal is the same: find a direction for the firm to drive growth and sustain success. But each year, 72% of strategic plans fall short.

Working closely with professional services firms for 25 years has shown us success comes in many forms and the strategies are as unique as the firms adopting them. But the failures are universal and provide important lessons for every firm.

In this 7-part series, we discuss the 7 Deadly Sins of Strategic Planning.

Variety may be the spice of life, but variety will suck the life out of any strategy.

Many companies struggle with identifying the best options to drive growth. These firms attempt to “audition” different initiatives to see which will work best. The result: resources—money, time, and people—are stretched thin, investment in any approach is diluted, and most initiatives are abandoned quickly. Taking on too many initiatives or tackling too many goals not only dilutes resources, but divides the organization. Conversely, a selected set of limited goals unifies an organization by creating a single voice needing little explanation and leaving no room for misinterpretations.

Strategy is all about optimizing scarce resources. You can best leverage your most valuable—and rarest—strategic assets by focusing these resources on the smallest number of high-return options. Be prepared: you will miss out on an opportunity or two. Strategic planning means actively deciding what not to do because you can do substantially better elsewhere. The core purpose of a strategy is to define the best path forward to meet your goals—not find all the paths to meet a multitude of goals.

The first, and most important, step in strategic planning is to identify your unequivocal goal. This is the strategic guidepost you will use to steer all planning conversations. For example:

• Increase profits 5% by 2016
• Grow market share by 10% in 3 years
• Improve client retention by 10%

Now all you need to decide is how you will reach your goals.

To ensure your strategic conversations stay focused, develop a set of objective criteria to determine what opportunities or tactics will best drive the firm towards its goals. 

Outline 4 to 6 criteria to assess each proposed initiative:

• Total market size
• Current market share held by organization
• Nature of opportunity—growing, no growth, declining
• – Short- and long-term potential

• Client buying behavior
• Pricing pressure and rate structure
• Competitive players and current positioning
• Range of assignments available, by dollar size

Using the criteria agreed upon by the planning group, identify the 2 or 3 most attractive opportunities.

The organizations with the highest levels of success in their strategic planning perform one last, critical step: due diligence. These companies undergo a deep-dive analysis of the opportunities they plan on targeting to:

• Determine the critical factors required for success
• Separate speculation from market realities

In 2014, there is no room for strategic dabbling. Clients are slow to put new dollars into the market. Market success demands focusing resources on the highest impact initiatives to steal market share from competitors. Strategic focus is the proven strategy of successful professional services firms.

MBR/JPD

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