As competition in professional services markets increases, so does the need for an effective business strategy within any ambitious firm. The essence of a strategy is that it clarifies what needs to be done to build and sustain a firm's competitiveness. Hence, it provides direction and guidance to people as to where they should expend time and energy, and where they should not.

There is frequently a failure to address certain key issues, which results in the strategy concerned being increasingly ineffective as competition continues to bite. Such issues include the lack of a clear understanding of market trends, of the firm's current positioning, and of where people would like it to be positioned in the future. Many firms' long-term strategic goals appear to be 'stay much as we are today'. Yet in a changing market this is not sustainable; 'staying the same' demands considerable internal change when everything else is changing externally.

Another critical issue for many firms is their lack of focus on their client base and practice areas or business units. Their strategy appears to be 'doing as many things for as many people as we can'. Given that different clients have differing needs – and therefore define competitiveness in their own way – no firm can really sustain a highly competitive position over time and across a wide range of clients and practice areas. Firms that have not yet clarified their strategic focus have an urgent task ahead.

Critical competitiveness

Firms who have not clearly defined how a particular business unit is to compete for the needs of core clients have a task of similar importance. The key requirement is to analyse how the professionals in the unit develop and deliver their work, then re-design it so that it adds more value than competitors offer. Too many firms gloss over this issue in their strategic development and focus on issues like marketing, which whilst important, will be largely wasted in the longer term if the issue of competitiveness is not addressed. This is one of the areas consistently requiring attention in the strategies of professional firms.

A simple test is to ask people in a group how it competes and see what answers result: in many cases the answers are bland and not about competitiveness at all (e.g. 'we are good at our work'). People often find it difficult to answer in any way at all (e.g. 'we get on well with our clients') or simply resort to a statement about price (frequently not a good idea!). This issue is of fundamental importance to any firm seeking to be successful in the longer term. Logically, if people do not know how they compete, they will be unable to give priority to any actions that improve competitiveness.

This raises another issue in the strategies of many firms: the role of the organisation itself. The action steps in a significant number of strategies focus on improving what the organisation does (e.g. improving recruitment processes, providing better marketing support and so on) as distinct from what fee earners are doing in their work. Yet for a strategy to be effective, key action steps should be about clients and practice group work processes. In most cases, improvements in the organisational structure, systems and processes will be directed at improving the competitiveness of the business units. If the latter has not been defined clearly then the attention to organisational issues might make for a better organisation – yet without any real improvement in the overall competitiveness of the firm.

Developing a strategy

The way in which many firms develop their strategy also needs attention. Crucially, a strategy is not so much a written plan as a way of thinking that must be embedded deeply in a partnership and beyond. It is a continual process of evolution. While there might be times when a greater effort in data collection and analysis is made, successful firms monitor markets and competitive trends on a continual basis and make regular adjustments and adaptations to their strategy as a result. Hence, they treat strategy as a process rather than an event, with senior management devoting considerable time to looking outwards, talking to clients and others, and bringing this information back for discussion. Analyses of markets, competitor performance, own performance and client needs are a continuous activity, not something that may happen every three years or so. Strategically effective firms understand that there is no such thing as 'a strategic plan' as such; nor a 'strategic planning' project. The so-called 'plan' is actually a memorandum of both the strategic thinking in the firm and the actions, goals and targets currently in existence. As the strategy evolves in response to changes in the market, so the memorandum evolves in turn.

This requires two more strategic anchors that are not strong in many firms. Everyone, but especially the partners, need to be very clear about the evolving strategy, the goals, objectives, targets and key actions. There also needs to be a long term vision about the firm, the type of firm people want it to be (and not be) both internally and in market positioning. Alongside this will be a long-term objective about the culture of the firm and a set of values consistent with it. Adopting the 'strategy as a process' approach is likely to help with the first of these issues. Naturally, you cannot have ten partners sitting around trying to develop a strategy for a firm, let alone a hundred or more. But all partners need to have an understanding of market trends, market positioning, client views, competitor performance and so on in order to understand their own firm's strategy: and they need to have wholeheartedly agreed a long term vision for their firm in order to articulate their firm's strategy to others. Without this partner involvement in the strategic process, they will be unclear about the strategy (both why and what) and not be able to provide leadership and direction to others.

Effectiveness for the long term

The absence of a long term vision with a supporting culture and related values makes it very difficult to articulate why a strategy over the next three years is the most appropriate. Articulating a long term vision about the type of firm people want, and where it is likely to be positioned, provides a context for the shorter term strategic objectives, goals and targets.

You will know when your business strategy is effective and it has little to do with profitability. A discussion with anyone in the firm will result in a very consistent message about the longer term vision, the market position being sought over the next few years, and the key elements and priorities in the present strategy.

Two men were breaking stones with hammers in a quarry. On being asked what he was doing one looked at the interviewer strangely and said "I'm breaking stones, what do you think?". The second, in answer to the same question said "I'm helping to build a cathedral".

An effective strategic process produces the latter response.