When I take on a new client – small, medium-sized or large – our engagement often starts with me asking something along the lines of “What’s the point?” or “What’s the purpose of this business?”. Answers range from people giving me their Vision statement through listing out the key business objectives and financial targets for the Financial Year to explanations of the range of services that they provide to their clients. These are all answers looking in the business rather than on the business.
Unless the leadership team of any business is aligned with regard to overall objectives that the owners have for that business, the focus of the individual leaders will be in different places. Many businesses have to sort out this alignment from the outset, and regularly thereafter, as they have significant funding requirements. Given that most services businesses have a low cost of entry, however, this is not necessarily the case and I meet many firms that were established a number of years ago by a small group of Owner Directors with a desire to service clients better than their previous employer, be their own boss or simply do it for themselves rather than make someone else rich. For a while this is fine since establishing an initial set of service propositions and gaining a first few clients can be done in the absence of a shareholder strategy. Eventually, however, the firm may fall into doing things that aren’t core (e.g. because a client offers a different piece of business to its trusted advisor), investment may be put into the wrong places and the firm may stagnate.
I also spend time with groups of Partners at larger firms, many of whom were not in at the outset of course, and find an interesting mix of people headhunted in for their key client relationships, recruited to establish a new capability for the firm, promoted up through the ranks etc. Their own reasons for being there are personal to them and rarely shared with their fellow Partners. Similar problems can occur regarding direction, where to invest and what to steer away from – a number of Partners then end up spinning the wheels for a few years just to gain enough profit share to fill their bank accounts to a level sufficient to make them financially secure.
There are essentially three pure types of professional services firm – asset growth, income generation and lifestyle. Most firms contain a blend of objectives that cross all three but the proportions vary dramatically from one firm to another. There is no “right answer” but there is a right answer for a particular firm at a particular point in time.
I enjoy taking Owner Directors and Equity Partner teams in my clients through an exercise to identify what the mix of the three is currently and what they believe it should be. Many Executives find that, in order to come up with the answer to the simple question, they need to get into deep and meaningful conversations at home about life aims – something that may not have been looked at since the early days of relationships! Once we have individual desires understood and shared, we then work out an overall answer that each of the owners can subscribe to. From this point, every business decision is made in a context that is understood by the leadership team and is often easier and quicker to make than previously.
Once people get what “the point” is, their business (and often personal) life becomes clearer and more fulfilling!