The Free Management Library has some good information related to developing a strategic plan.  The site lays out several models that can be implemented for both profit and non-profit businesses.   The focus of this post is the "Basic" strategic plan.  This is also the one that most firms use when developing a strategic plan.  The process includes:

• Identifying your core purpose or "mission statement"
• Determining the goals that align with that purpose
• Determine the methods you will use to reach those goals
• Create action plans to implement these methods
• Measure, adjust and modify as needed.

Identifying your core purpose or "mission statement"  - this is the part that starts and sometimes ends the process.  Firms can easily get bogged down in determining the language for the firm's "mission".  If you look around at other's mission statements, you can find that they pretty much say the same thing - client-driven, quality, service, honesty, integrity, seeking justice, etc.  Be careful how you draft your mission statement - you will be judged by the words you choose; by your clients, your employees and your competitors.  The mission statement is the "big picture" so it needs to encompass everything you want to accomplish with the strategic plan.  Answer these 4 "whats" (adapted from The Lawyer's Guide To Strategic Planning by Thomas C. Grella and Michael L. Hudkins) and compress it into a single statement:

1. What areas of practice are our focus?
2. What is our goal in representing clients?
3. What market segment do we serve?
4. What are our core values?

Determining the goals that align with that purpose  - the goals are the metrics against which you will measure success.  Most people think of setting long-term goals.  I think for smaller firms, you should pick short-term goals with long-term objectives.  This is especially true when looking at financial goals, but with any change you have to set goals that are attainable in the short term.  Since strategic plans should be reviewed annually, you can set new goals next year.  It is more important that they are aligned with your core purpose than comprehensive.

Determine the methods you will use to reach those goals - the methods used to reach your goals require a review of all your processes.  Processes that are inhibiting your ability to reach your goals need to be eliminated.  While you are at it, those processes that are inefficient should be streamlined.  If you do not have a clear organizational chart, this would be a good time to develop one. 

Create action plans to implement these methods - who are we kidding here?  Attorneys creating action plans?  It isn't hard to see why firms get lost in the process.  However, you have to set benchmarks to measure success or failure.  The action plan is the blueprint for success that you follow based on the processes set up to reach the goals that align with your core values.  One idea for an action plan (again from The Free Management Library) requires the following to be addressed:

1. The goals to be accomplished;
2. How those results will be achieved
3. Who is responsible for achieving the results
4. When will the results be achieved (timeline)
5. What is the status of the goal (with an as of date)

Considering that action plans will have a short-term negative impact on productivity, many firms will not want to do this.  Understand the purpose and create your own method of accountability.  Some consultants do not promote action plans, but promote organizational focus to implement the plan.  Additional staff are needed and focus placed on them to ensure that processes are in place and functioning.  If it works, stick with it.  If it falters, you need to implement things that work.  How will you know if it falters?  Through measuring performance.

Measure, adjust and modify as needed - measurement improves performance.  In this case, measurement will hold people and processes accountable so that you can modify the processes and mentor the people (to the extent you can).  The largest issue I have found in firms that enact change isn't necessarily the processes - people eventually get used to processes.  It is the accountability.  It is imperative that there is buy-in by the principals or else plans can easily falter and a large investment in time and money is wasted.  If the firm is even-handed and consistent in its application of the plan, positive results will ensue. 

 

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When some talk of strategic planning, they are talking about retreats and consultants, about mission statements and long term goal setting.  Strategic planning can be all of this - however, it doesn't necessarily have to be a complex document that takes weeks or months to develop.

In a more simpler form, strategic planning consists of reviewing the current environment, setting goals to improve it, and implementing them, measuring performance along the way.  How you get from "review" to "do" is the focus of several posts this week.

 There are several different "models" of strategic plans.  Some listed on The Free Management Library include:

• "Basic" Strategic Plan - this is the plan typically implemented in firms that invest in developing a strategic plan;
• Goal-Based Model - this model is more focused on goal setting and performance metrics relating to meeting the goals;
• Alignment Model - this model is targeted to driving the organization to align itself with the firm's mission;
• Scenario Model - this model uses scenarios to help identify strategic issues and goals;
• "Organic" Model - this model focuses on embracing the shared values and evolving the plan through the continual dialogue that will hopefully eventually increase the values that are shared. 

74% of the respondents to the 2007 Law Firm Economic Survey from LexisNexis stated they did not have a written strategic plan.  However, 89% of those who did plan said that there was a correlation between their plan and income.  What is your firm's plan?

For a look at reasons why strategic planning has been a problem for law firms to implement, look at an earlier post on the subject:  Law Firms With Strategic Plans More Profitable.

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Survey after survey discloses that only about 20 percent of midsized law firms engage in a formal planning process.  Yet, the evidence is clear that those that do have a process outperform those that don’t.  If your firm is one of the 80 percent without a formal planning process, you still need to plan—to think about the business of the law firm and into what and how do you want the law firm to change.

 

I previously posted a step-by-step quide for structured strategic planning as a team, but in this post, let’s take a simpler approach—a “one-person planner” approach.  How do you proceed as one individual when thinking about the business of the law firm? Start by taking an inventory—what is the nature of the business today and then proceed to what you want it to be and what is required to get there:

 

• What do our clients have in common (who are they)?

• What do our clients think of us?

• Who are our Partners- professional strengths, people and team skills, business strengths, marketing strengths, aspirations, traits, ages, satisfaction with income level, satisfaction with status quo, retirement goals?

• What do our other lawyers have in common (who are they); are they the right people; do we have the right number; are we fully utilzing them; are we training and developing them as we should?

• How do we stack up financially—per-partner income, rates, leverage, realization, margin?

• How are we growing our business; where does our new business come from?

• What is good and not good about our facilities?

• What is good and not good about our administrative team?

• What is good and not good about our systems and equipment?

• Who are our competitors, if any, that really matter?

• What are we really good at?

• What do clients ask of us that we are not good at?

• What are our biggest threats, if any, that really matter?

• What are our best opportunities?

• What is the firm’s value proposition—what elevator response would we give to someone who asks, “Tell me about your firm”?

• Are you satisfied with who and what your firm is? If not, what do you want it to be?

• If you are not satisfied, what do you want your value proposition to be—what elevator response would you like to give?

• What is keeping you from being what you want to be?

• Make a list—what has to change to get where you want to go?

• Go back over your list and reshape it into a big picture.

• The vision: This is who we are and want to remain or this is who we want to be.

• What are the three to five main things that will determine the success of that vision?

• What strategies are we going to rely on to achieve those main things?

  • What tactics or programs will we implement to support the strategies and who is going to be responsible for what?

  • How are we going to measure and report progress?

  • How are those responsible going to be held accountable for their delegated role?

 

Now here is the caveat.  Now you have to sell your plan. A one-person planning team can only take the progress so far.  You need a consensus for a plan to work. Everyone doesn’t have to agree with every aspect, but they must agree to the destination and the road, the key strategies, for getting there.

 

I call that consensus “getting on I65 North”.  The message I65 North conveys is that we are going north and we are going on this specified road.  You can travel at your own speed as long as you are not endangering other travelers or impeding their progress.  But you can’t go South, East, or West.  If you want to go somewhere else, there are exits along the way.

 

The truth be told, the easy way to sell your plan is to move to the next level and repeat the process as a team.   You’ve gone through the process and, having done so, you are in a position to facilitate the planning process.  New light bulbs may go off during the process, but the team is likely to wind up with a plan very similar to the one you scoped out initially. Only this time, they have ownership.

 

When you plan as a team, you may want to use the strategic planning guide from a prior post or you may feel more comfortable initially by sticking to a modified version of the above one-person planner approach for now.

 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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The “plan” must be to change the “plan”! Strategic plans are based on assumptions, and assumptions are inaccurate temporary estimates about the future. 

 

The inaccurate character of assumptions is why planning must be a continuous process. Through that continuous process of changing the plan as the future gets nearer, successful organizations are distinguished by doing the “right things”. 

 

I often wondered why so many consultants to the legal community tend to discredit the value of strategic planning.  Rob Millard’s post titled Why Committing to Success Leads to Failure sheds light on the reason.  It is because too many law firm leaders they deal with see the “plan” as the end product.  It isn’t.  It is the planning process, not the plan, that leads to success. Strategic planning is a way of thinking—strategic thinking. The plan must be to change the plan!  

 

The need to continually change the plan is the reason that I emphasize that the tangible product of strategic planning, “the plan”, should consist of words, phrases, and sentences, not paragraphs, pages, and chapters.  It is a living document that coordinates and shapes an organization’s actions and decisions and that is changed by those actions and decisions in reaction to an unfolding future.  Taking a line from the Pirates of the Caribbean, “It is more of a guide than an actual code”. 

 

Periodically, the organization must come together and revise the guiding product. They must come together to agree on revised assumptions about the future, to identify the changes in the opportunities available to the firm, and to adjust or reaffirm the law firm’s goals.  They must agree on the key strategies the law firm will rely on to achieve those goals. Then they must set out the programs and responsibilities for implementing the tactics in support of the agreed upon strategies

 

Rob Millard wrote: “All too often, I find myself facing blank stares from clients [law firms] who want me to help them to only craft a plan that will lead them to greatness. This is only possible where the future is certain. Which, of course, it is not.”  His point is clear. If you unwaveringly pursue a plan based on inaccurate assumptions, you will eventually implement the wrong strategy—you will successfully fail.

 

Rob Millard’s blog is The Adventure of Strategy. He is part of the Edge International consulting group.  For more on this subject, you should also read my previous post, Strategic Planning Will Not Predict the Future, But It will Prepare the Law Firm for It, which referred to an earlier and also insightful post by Millard.

 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Law firms that set objectives, measure performance, and hold people accountable outperform others. And the difference is big. Partners in the top performing 25 percent of midsized law firms earn twice as much as those in the next highest 25 percent.

That was one of the points Stephen Collins, Juris, Inc. CEO, made in his opening remarks before the 300 attendees at the 21st annual educational conference of Juris Users International Group on October 27, 2006.

There are two ways to be successful—by accident or on purpose. Accidents do happen, but accidental success seldom lasts. You lose at life’s lottery just as quickly as you win. What is the old saying—“Easy come, easy go.”

Lasting success is achieved through purposeful determination. The steps for building long-term success as a law firm are the same as those followed by other well run businesses:

• Engage in structured Strategic Planning
• Have leaders agree on core beliefs
• Practice budgeting and goal setting
• Engage in benchmarking and competitive intelligence
• Measure performance against budgets, goals, and benchmarks
• Lead through constant communication
• Hold people accountable:
  • Recognition
  • Compensation
  • Promotions
  • Terminations

Magic happens when people pursue a common set of goals bound together by a core set of beliefs—but it doesn’t happen by accident.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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If you don’t believe in strategic planning, you must read Rob Millard’s post Creating Prepared Minds. His post includes an excerpt from an article by McKinsey & Co.’s Eric Beinhocker titled Creating Strategy in an Unknowable Universe.

Breinhocker gets it right. If you think strategic planning is about predicting the future, you are dead wrong. If that is why you are not doing it, you need to revisit the issue. Assumptions (predictions) are inaccurate. If you get one right, it is just the luck of the draw. The first rule of the planning process is that you must plan to change the plan. As the future gets closer, you continually change your expectations and reactions to it until you arrive on target.

Planning gets the entire law firm team playing from the same play book. It prepares the team for the future and capitalizes on its opportunities. Rob’s post is a must-read that may inspire you to read Beinhocker’s entire article.

Chance does favor the prepared mind. Top performing firms do it. If you want a good reason to start, consider this reason: more than an eight fold difference in per-partner income. A soon-to-be-published survey of midsized law firms by Juris, Inc. discloses that the top performing 25 percent of firms earn more than eight times the per-partner income of the bottom 25 percent. That seems to be a good enough reason to start.

Three important rules for successful planning include:

• The planning plan must be to change the plan. Strategies are temporary targets based on inaccurate assumptions and estimated capabilities.
• The planning document should consist of words and phrases to facilitate frequent updating.
• The structure is a critical part of the process.

The structure for the strategic portion of the planning process that I have successfully used includes nine main areas to be addressed by the planning team in the order listed. The nine subject areas are:

1. Nature of the law firm (or activity, e.g., practice area or department)

2. Environment in which firm operates

3. Opportunities/Capabilities (SWOT)

4. Assumptions about the future

5. Objectives–Mission/Strategic Thrust

6. Policies/Procedures (changes or new ones needed)

7. Strategies–How we are gong to achieve objectives

8. Priorities and schedules for programs, new resources required, measurements

9. Organization and delegation

For more step-by-step suggestions, reread the earlier post The Structure to Structured Planning. I also suggest a reread of Consensus Building for a discussion of the role of the structured planning process in building a consensus, i.e., preparing the mind to deal with an uncertain future in pursuit of a common vision.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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I’ll take the future! That is what my wife said the other morning. I wish I had said that.

She had been listening as talking heads on TV bemoaned the changes man is causing to our environment and the need to preserve the species, etc, etc, etc. Like Peter Pan, they want to never change. I was half listening to the TV and at the same time reading McKinsey’s 10 Trends to Watch highlighting changes already afoot that will present you with either opportunities or problems.

Except for change, we would not even be here. We are living on a piece of explosion debris warmed by the tip of a burning match. According to the evolutionists, we are simply the current iteration of primordial slime. You don’t have to look far into the past to realize that the future is a worthy goal.

The point is you can’t stop change. Change is constant. It is one of the two certainties in life and business—change is constant and we are always judged by others. That pretty much sums up the laws of economics as well. You can be temporarily successful accidentally. However, Long term success depends on how well you can change, and how well you do it is determined through the eyes of those who judge you. In the case of a law firm, that includes the consumers of legal services and the talent pool you compete for.

Success depends in part on making intelligent assumptions about the future and changing to take advantage of those trends. Assumptions are, by nature, inaccurate. Assumptions are mere temporary targets that you must adjust and refine constantly, narrowing your focus as the future gets closer and closer.

Assumptions are the starting point for strategic planning. Without assumptions as the starting point, it is not possible for effective strategic planning. Your plans should include assumptions about all of the following and anything else your business depends on:

Economics

Labor force and Talent Pool

Technology

Governmental impacts

Professional Rules and Regulations

Nature of market and trends

Pricing constraints

Buying methods of prospects

The internet is a great hunting ground for tapping the insight of futurists and business experts like McKinsey & Co., that spend a lot of time and resources researching trends and thinking about the future. McKinsey offers a free registration for their McKinseyQuarterly online Journal. Your membership includes access to an extensive library of McKinsey articles and white papers.
 

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• 84% of surveyed firms do not have a written strategic plan
• 13% of managing partners focused on long-term strategic objectives
• 46% of managing partners focus on initiating change or day-to-day administrative matters as their #1 priority
• 64% of firms have a very or somewhat democratic governance structure
• 67% of firms indicated that they have a formal budget

 

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• Planning
• Management
• Outsourcing

 

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The most important set of measurements to develop are the firm’s KPI’s. These are the top line metrics that must be achieved for the firm to meet its strategic objectives.  KPI’s can be both financial and qualitative, but should be highly correlated with the top priorities of the firm and the firm’s business model as developed during strategic planning. Furthermore, if you have more than 10 KPI’s you probably have too many.  For example, Colgate-Palmolive Company manages its entire worldwide operation with 10 Key Performance Indicators.  The first thing every business unit general manager would review when presenting to the CEO would be their results against those 10 KPI’s.  The rest of the meeting was explaining why or why they did not meet their goals. It’s hard to believe a huge Fortune 500 company can manage a global operation using 10 measurements of success but it’s true and it was VERY effective. Colgate is one of the most reliable businesses when it comes to consistency and predictability of revenue and earnings growth and their KPI system is a key element of success in this regard.

Obvious choices for law practice KPI’s might include leverage, rate, productivity, realization, etc.  Other obvious choices include fee revenue, cash generation and the balances of WIP and accounts receivable, or related ratios such as day’s fees outstanding.  If you have designed a target business model as part of strategic planning, you will know what these values must be if you are to achieve your strategic objectives.  If realization is coming up short, you can probably bet that the firm will not achieve targeted levels of partner income.  So a key element of selecting the most critical measures for the firm to manage is that a target or goal outcome must exist. In addition, the measurement must be clear and objective.  Other less obvious choices for KPI’s might include market share related measures, client profitability or measures of staff diversity if those issues are top priorities of the firm.  To develop KPI’s, we suggest that you begin with the list of priorities identified in strategic planning and that during the development of the strategic plan, a means of measuring success for each is identified. The partners can then come back together to review and approve the KPI model as developed by the managing partner or whomever has been delegated the task.

An important pitfall to avoid in designing a measurement and accountability model is reporting for the sake of reporting.  As a CPA, I can attest to the fact that accountants often measure success by the quantity and complexity of reports we could develop and distribute.  Having stacks and stacks of thick reports with full detail are basically useless for managing a business. Detailed reports are for analysis to find the reasons why a given key performance measurement is failing to meet expectations or perhaps to analyze pricing or customer profitability for the purpose of making decisions on rate increases.  So, don’t design your measurement system around reports.  Select the top-line measurements you need to track to ensure success, set a goal level and a minimum level of performance and simply report on those few measures. If results don’t meet the target, THEN and only then, dig into detailed reports to find the root cause.  This approach implies that the managing partner only needs to see a very few measures at any given time.  Such measures can be distilled into dashboards that simply show a graphic indicator.   We’ve called this “happy face/sad face” management reporting. If you only track realization, daily cash flow and billed hours against a goal level as your KPI’s, then you might design an e-mail that is sent every day that looks like this: 

 

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