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Common mistakes firms make in developing and executing their strategic plan

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Strategic planning is misunderstood in most small and midsized CPA firms.

There have been tons of books and articles published about the strategic planning process. Developing strategies is probably the most prevalent topic that accounting firm partner retreats focus on. Firms have used numerous processes to create and execute a strong, effective strategic plan to propel them. I’m not about to suggest a new or best process for a firm to follow, but I want to highlight the five major missteps most firms and organizations make when building their strategic plan as part of a partner retreat or any other forum.

Most partner retreats focus on strategy, and they generally approach it through various methodologies built around some form of SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Strategies are then built around the challenges the firm is facing or the opportunities that the participants envision in the belief that building strategies through this process will result in a strong, effective strategic plan.

What’s wrong with that? Basically, the above process is built from the current to the future versus the future to the present. It’s critical that as part of the planning process there is a strong and objective understanding of where the firm is today, the challenges it is facing and the opportunities that lie ahead. However, starting the planning process from the viewpoint of the firm today will almost always result in strategies that are mostly tactical, that look out a year or two versus strategies that are long-term, directional strategies that look ahead four to five years. In addition, the strategies, even if they’re tactical, will be incremental versus game changing. The five major missteps are reflected in the graphic below:

Let’s briefly dive into each step:

1. Lack of future vision supported by strong core values: The No. 1 misstep is that too many firms, whether at partner retreats or some other forum, launch into developing strategies without first having a healthy discussion about the future vision of the firm. What do the partners want the firm to aspire to? How can you develop a long-term strategic plan if you don’t know what the destination is? How can you determine if the strategies being developed move the firm toward its future vision or not? All strategic planning should begin with developing a vision statement that clearly describes what the firm aspires to be five years down the road. Vision is a statement about what a firm aspires to be, and therefore is future driven: why the firm exists. Vision is a fixed point like the North Star — a destination the firm aspires to. A strategic plan built on a basis of today versus a vision of the future will always result in a tactical plan instead of a real strategic plan. As futurist John Naisbitt stated, “Strategic planning is worthless — unless there is first a strategic vision.”

2. Building strategies based on myths versus facts. Every firm that begins its strategic planning process usually starts with some form of a SWOT analysis. It’s critical to effective strategic planning to have a good baseline of today, which is what the SWOT analysis in its various forms is supposed to provide. In most firms the SWOT is completed through various internal sources, such as surveys, informal input from partners or as part of the partner retreat. The issue is that more often than not this internally generated SWOT ends up creating a baseline that is built on myths and not facts. Myths develop in every firm over time and, as the myth is repeated over and over, it becomes the truth. For example, a myth might exist that says the firm provides good client service based on how partners view client service. After all, “we don’t get many client complaints, so it must be true.” So, the myth regarding client service takes on a life of its own and is passed from person to person, eventually becoming the “truth.” What if the myth is wrong and a good percentage of the firm’s actual clients are not that enamored with the service being provided, but no one has ever asked? In this example, building a strategic plan would not include strategies to improve client service since the myth is the truth versus the reality. To create a correct baseline of today, the SWOT should be done using an outside consultant to lead the process and who can and will challenge the myths and look for facts to support the SWOT. In the end, the strategies developed will be based on an informed baseline of the firm today.

3. Lack of ownership: The third major misstep relates to post-retreat implementation of the strategic plan. Someone must take ownership of each strategy and drive the successful implementation of each. At most firms, responsibility is assigned, which is not the same as someone taking ownership. Ownership makes it personal, whereas responsibility makes it a task on a to-do list. At too many retreats, the firm leader will say, “Steve, this is something you are familiar with and I would like you to take responsibility for this particular strategy.” Steve will in most cases accept it and do his best but will not climb every mountain and overcome every obstacle to implementation as he would if he owned the task. Ownership creates emotional buy-in to the task, whereas accepting an assignment creates a job. Think about the difference.

4. Lack of courage: The fourth and final misstep relates to leadership’s lack of courage in driving the strategic plan beyond incrementalism to create a firm with a vision of exceptionalism, pushing everyone out of their comfort zone to create a standout, high-performing team and firm. This takes courage and confidence in not only the partners to succeed but in firm leadership to drive past incremental change to inspirational change. A great strategic plan should be motivating and inspire everyone to reach and stretch, as opposed to most plans that are seen by most partners as wishful thinking or, worse yet, just another leadership venture. The firm leader’s responsibility is to create in everyone’s mind a picture of what the firm can be and create belief in the roadmap (the strategic plan) to actualize that picture. It’s the leader’s responsibility to promote courage in every member of the firm to reach beyond their past performance. It’s about the courage to succeed.

The goal of a strategic plan is to create a roadmap that can lead the firm from where it is today to its vision of what it aspires to be. It’s not about creating strategies that beat the competition or creating a firm that implements someone else’s best practices. The firm’s strategic plan should focus on creating a firm that is clearly different in the eyes of clients (current and future), a firm that is based on providing value to each client to help each client become more successful. The strategic plan is not about nibbling around the edges, but instead moves the firm from wherever it is today to a firm that clients love and talent is drawn to — an exceptional standout firm.

Every firm should take the time and put in the effort to create a long-term strategic plan, mindful of the above four missteps. Many firms don’t have a strategic plan that is truly impactful, if they have one at all. Far too many accounting firms see little value in a long-term strategy and find false comfort in rationalizing the lack of a strategic plan with reasons such as (1) things change too fast; (2) next year is all we can really control; or (3) the partners don’t need a plan, and on and on. There’s an old saying that states if you don’t have a destination, any road will get you there. If the firm does not have a future vision coupled with core values and a strategic plan to achieve that future vision, then the firm will remain stuck where it has been, achieving some incremental growth but never becoming a firm that is truly exceptional.

It takes courage to move from the comfort of the past to creating a vision and strategic plan that require you to think four or five years down the road with all of its unknowns. It takes courage for firm leadership to chart a course where there are so many variables. The point leads us to a fifth major misstep: thinking that the strategic plan once developed is a static document. It isn’t. The strategic plan should be a rolling plan where every year the plan is updated for the year that past, lessons learned, and a year added to the plan so that it’s always a living five-year roadmap.

The challenge is to have the courage to develop a strategic plan that creates the roadmap to exceptionalism and doesn’t settle for incrementalism. Finally, be mindful of the missteps so many firms make in their partner retreats when focused on developing their strategic plan. Done correctly, the strategic plan will be the roadmap to a future of exceptionalism and move your firm out of the shackles of the past.

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