Accept less client loyalty, greater client turnover, and unprecedented scrutiny of the underlying profitability of the firm.

Therefore, the case is made in the sections that follow that the successful delivery of services and development of your client base is a continuous process-a never-ending cycle of embracing change that is an innate characteristic of a strategically managed culture.

Improvement Is Not Possible without Change

Strategic management systems are about process improvement that drives change within the business environment. Creating a strategically managed environment depends on it. Success today does not guarantee success tomorrow. In extraordinary businesses-those that succeed and sustain their success for years-new beginning points instantly replace end points and the process starts anew.

To understand this concept, ask this question, What is the firms value objective as a professional services practice? Is it net income? Earnings per partner? Market share? Number of constituents served? This isnt a restatement of the mission of the organization. Its a definition of what drives success (for the firm, and for the clients) and how it is to be measured. Once defined, the value objective can be measured over time. Exhibit 12.1 demonstrates this concept.

Components of the current state include:

Management style/culture Professional resources Range of services Market share

Strategic planning/budgeting Compensation structure

Quality of client relationships

Information systems

Exhibit 12.1 demonstrates that today this organization has delivered $150,000 of net earnings per partner, in a firm where net earnings per partner is the professional practices value objective.

Once the value objective has been defined and measured in todays terms, the critical question is not, Where are we? Rather, it is, Where do we want to be? In value objective terms, What is the targeted, desired future state?

S 250

*, 150-

Current - state -

Today Time

* Value objective = Net earnings per partner

Exhibit 12.1 Value Objectives in a Professional Services Environment

Exhibit 12.2 shows that this practice has a future value objective ($250,000 of net earnings per partner) that exceeds its current condition. The difference between where the firm is and where it wants to be is the direction and goal of change.

Most professionals are inherently reluctant to change their approach to managing their practices. But progressive and successful professionals realize that they must embrace the argument for change because it:

Creates a strategic management environment Solidifies the organizations commitment and focus Delivers incremental future value

The following section looks at the firms internal strategic management. Without a strategically managed environment, the strategic delivery of professional services, and the strategic building of a firms client base cannot be successfully accomplished.

Strategic Internal Management

Strategic management systems work when they become the way business is conducted, the way decisions are made, and the way new services are

*, 150-

Future. state

Current - state

Today Time

* Value objective = Net earnings per partner

Exhibit 12.2 Value Objectives in Transition

developed and delivered to the market. In this manner, future value objectives can be realized.

Engaging the Management Team in the Strategic Process

Everyone on the management team in a professional services firm must learn how to use the strategic process firsthand. There is great power in understanding how a strategically managed business functions. As so well put by Eliyahu M. Goldratt, author of The Goal:

So, what are we asking for? For the ability to answer three simple questions: What to change? What to change to? How do we cause the change? Basically what we are asking for is the most fundamental abilities one would ask from a manager. Think about it. If a manager doesnt know how to answer these questions, is he or she entitled to be called Manager? 2

Equally important to strategic internal management is dedication to the process. It has to be backed by the leadership of the organization. This takes building a consensus among the leadership. Says Edi Osborne, principal of MentorPlus in Monterey, California: