Why A Good Strategy Can Fail

Here's an interesting fact that many consultancy founders forget about: You can have a good strategy and still fail. It's not a guarantee of success.

There are three reasons for this:

1. All strategies need to be fully implemented to generate results. If you have a good plan but don't put it into practice (or only execute the fastest, easier, or cheaper parts of it), you can't expect the results you had in mind in the first place.
2. All strategies are speculative. It's a plan of action based on available information, big-picture thinking, and your best guesses to understand your clients and market. Even the best of them might not work as you imagined when applied to the real world.
3. All strategies must come from the leadership team. It's the responsibility of founders and senior partners to do strategy. Delegating it to employees or a department is a recipe for failure.

The first two of these are fairly obvious for most founders. But I want to quickly expand on the third point, as it is often a hidden danger for boutique consultancy owners.

An Exception

If you've been a member of the Boutique Consulting Club for a while, you know I've written about the importance of delegating and outsourcing a number of times.

The control trap many founders fall into ends up limiting their growth and work flexibility. To avoid it you must adopt the mindset of a human router. Constantly look for ways to hire yourself out of every job.

But there are a handful of jobs you can never delegate. And strategy is one of them.

But why? What exactly makes strategy so special?

I believe it's a matter of authority. It's easy to better understand it by listing the main capabilities of a consulting business (I'll probably write more about this in the future...).

The Capabilities Of A Consulting Business

Business capabilities are the different skills, systems, and routines that allow your consultancy to do what it does. They are the things that improve the performance of your consultancy in the long term.

Let me give you three examples of capabilities that can be partially delegated:

• Knowledge capabilities: It's your ability to capture, store and share IP. You or another partner must establish priorities here. But you can easily ask an employee to perform research and document your processes, best ideas, or lessons learned.
• Service capabilities: It's your ability to delight clients through the delivery of your services and products. Again, the partners' involvement will depend on what you sell. But almost every consultancy can bring other people in to help with project delivery and offload partners.
• Business development capabilities: It's your ability to improve the client base and increase margins. It includes a mix of activities such as marketing, sales, and new offering design. Partners carry the responsibility to sell, but you can have a team supporting you with a large part of the tasks.

Now imagine you are the founder of a mid-sized consultancy firm, with 300 employees at your disposal. What are the responsibilities that you cannot delegate in any way?

Who Owns It?

You can have a dedicated team to do research, explore new developments in your industry, and create and document new IP. You have teams who are capable of leading and delivering different kinds of client engagements. Finally, when you get to a larger size you even have junior partners who do all the selling for you!

What's left to you are two things: Leadership and strategy.

Leadership is about understanding what your team needs to achieve the company’s strategy. Motivating, reassuring, and persuading people. I won't get into details since it's outside my circle of competence, but it needs to come from the top.

Strategy is about providing direction and focus. Do it well, and the whole business will grow faster, make competition irrelevant, and sustain high margins.

Now let's come back to our question: Why can't strategy be delegated?

The reason is that, as opposed to the other examples, strategy can't be owned by a department or group of people within the business. Marketing people can own marketing initiatives. Finance people can own money issues. But who owns strategy?

Leadership and strategy are capabilities that directly impact the entire business. And since in most consultancies people are organized based on function or specialty, they all work parallel to each other. They can make decisions that impact their work, but don't have the authority to command other departments.

Side-Effects

If you're a solo or micro consultancy founder, you might be wondering why you started reading this post in the first place. "I wish I had multiple departments to worry about authority!" Well, let me tell you how you can fall for the same trap.

Small consultancies often outsource activities. And those external professionals can cause similar problems regarding strategy.

Marketing is the first department or discipline that strategy gets delegated to. It makes sense since marketing is all about understanding your external world (clients and competition) to find a way to earn visibility, interest, and trust from others. But problems are inevitable.

Last week I chatted with a consultancy founder who hired a marketing agency to help him with strategy. Here's what he told me:

"They really did a great job, I have nothing to complain. The problems came after a couple of months. We saw that the go-to-market plan required changes to the rest of the business we could never predict."

Well, he's wrong and I told him so. His mistake, and that of the agency, was in thinking that a marketing or brand strategy = business strategy. They are related, but not the same.

It doesn't matter if you've hired a marketing director or a marketing agency. They probably won't fully understand how the rest of the business is affected by their strategy - and even if they do, they won't have the authority to make other people accept and follow that plan.

Ultimately, you as the founder or managing partner have two options:

1. Do the strategy yourself; or
2. Do it with the support of an external, objective, and fiduciary advisor (hello!).

If you need help, it's better that it comes from someone who's completely removed from the business and does not benefit financially from recommending you any specific products or services.