Here's a powerful idea most consultancy founders don't understand: It's impossible to create a great strategy. They need to be found.
Yesterday I wrote about the first step in every strategy work, which is to take a deep look at our consultancy. To bring new value to the market, we must understand what value we're delivering now. We need to create a clear picture of our current situation.
But then what? What do you do with all of this data and information?
If you have a clear, high-level vision of what kind of consulting business you want to build, some things will naturally stand out. Here's an example inspired by a recent client of mine:
- When you calculate your revenue and how much of it came from different clients, you find out your biggest client is responsible for 80% of your revenue. You don't need to look at any industry benchmarks to realize this is too much. Losing that client would leave you in big trouble since your cash reserves can only support you for a couple of months.
- Your first intuition leads you to rethink your vision: You'd like your practice to serve a dozen clients every year. Right now, you only have four ongoing engagements. When you counted the sales opportunities you have in the last 12 months though, you found out you only had five qualified ones. This indicated the main limiting factor is not sales - since even with a 100% win rate you wouldn't be able to build a large enough client roster.
- As you continue to analyze the numbers, you now take a look at your time use. You find out you and your team spend 75% of your time delivering client engagements, which leaves you virtually no time to serve additional clients. This means your idea of increasing your client roster is, at least for now, impossible. You would need to either hire more people to deliver work or make changes to how your services are being delivered now.
This is an example, but it works just like this in the real world. You will know a strategic issue when you “see” it. You are not creating a plan to address them, but finding one.
Client concentration. Low financial security. Lack of qualified leads. High utilization rates and poor service design. These are all strategic issues that, when laid against your mission, vision, and values, should inform your goals.
If you are working with an advisor or sparring partner, this process will be much easier due to their external perspective, objectivity, and industry expertise. But you can also do strategy on your own. I recommend you to call these issues out early so you and your team can focus on what matters and avoid getting lost in a sea of data and detail.
But what if strategic issues do not "jump out"? How do you find them if they're not obvious? This is when you can turn to strategy frameworks, methods, and approaches.
I'll talk about them tomorrow.