Law firms often misunderstand what strategy really means

What is strategy? It is a word so widely used that it can sometimes be unclear what
it means. If managers become confused about what strategic thinking actually is, they can find themselves focusing on matters that make very little difference
or, worse, taking actions without
clear planning.

Strategy is the means by which a business moves from where it is now to where it wants and needs to be. Strategy
is a discipline or a way of thinking. It enables managers to precisely define
what steps they need to take to make
their organisation achieve a specific,
well-understood aim.

It sounds simple, and yet the business world is filled with fluffy concepts that
pass themselves off as 'strategy' when
in truth they are far from it.

So, what is not strategy? Let us consider some examples.

Common misconceptions

A mission statement, for example one that states the importance of 'integrity, independence and client service', is not
a strategy. It is a list of noble values, but it is not a proactive plan to get somewhere.

Broad objectives and unrealistic aspirations are not strategy either. For example, stating that the firm 'seeks to become the leading adviser in all of its
key practice areas' may make everyone in the firm happy but is of little practical value and is certainly not a strategic 'battle plan'.

A workable strategy can never exist in isolation to the market. Getting from A to B in the real world will usually mean winning work from peers and then dealing with those peers' counter strategies to combat your growth and success.

We can often forget that everyone else also has a market position and, if we disrupt theirs, they will seek to limit our success as best they can. This is the law that every action has an equal and opposite reaction among one's competitors.

Firm policy should also not be confused with strategy. For example, 'our international strategy is not to open foreign offices, but to refer work to other firms'
is a default policy and perhaps a very sensible one, but it's not a strategy.

Choosing not to open offices but to instead invest funds in lateral hires in a specific practice area in order to better compete with one's rivals would be a strategy. But, a referrals policy alone
does not constitute a strategic plan.

A goal that never changes nor adapts to market evolution is not a strategy either - or at least not one that will be effective in the real world. The problem with grand aims that take a very long time to achieve is that the world moves on. One's peers change. One's own firm evolves, whether by accident or design. One's clients change, as do a myriad of other
factors ranging from technology to regulatory barriers.

Grand goals, such as becoming the largest law firm in a particular region or the world, also have a tendency of becoming cul-de-sacs for strategy. The biggest firm will always be met by a bigger firm a few years later, as history has shown. Meanwhile, the more important matters - such as constructing an offering that clients really want - get overlooked.

Kneejerk responses that demand
action are also not strategy. For example, after witnessing the merger of several of one's peers, a firm may decide that it needs more scale and must also merge. Management may focus considerable time on courting other firms, talks may ensue and a deal may even be consummated.

But, was any of this activity really driven by strategy? Sometimes the answer is 'no'. Firms can feel pushed into following the behaviour of their competitors. Partners may fear getting left behind, though they do not necessarily see where they are going or what this will mean.

Merger is only a strategic step if
it is part of a deliberate plan to get to
a particular position in the market with a specific impact on the clients in mind. Scale is not a strategy; neither are higher headcounts or revenues. They look like
they might be, or perhaps should be, but they are not. They are just indicators on
the strategic dashboard.

Positive risk

Finally, strategy always contains an element of positive risk. If a firm seeks to get to point B in a competitive and ever-changing market, then there is a chance it might not get there.

The fear of not getting to a defined point can deter some firms from ever setting course for one. But, if there is no specific aim, there is no strategy. And, if there is no strategy, the firm has no direction. In a market that is now greatly in flux, the latter position is the riskiest of all.

When you do succeed at executing a well thought-through strategy and the firm's position improves, it will not be because of chance, but because you brought the firm to that point. In short, you led it. And that is the most tremendously satisfying thing about strategy.

Richard Tromans is founder of
Tromans Consulting, which advises
law firms on strategy and execution
(www.tromansconsulting.com)