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IFRS AND ISA
+ IFRS and Canadian GAAP
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By Stephen Rosenhek
Illustration: Baiba Black
A strategic plan is a never-ending process, but implementing it will be both a demanding and rewarding endeavour
Once a professional services firm has developed its strategic plan, formed its leadership team and organized delivery streams for all projects, it must then march collectively to accomplish its objectives.
As the planning phase lays the foundation for successful strategy implementation, it must not be rushed, but once approved, a firm must move decisively toward its execution. Competitors will generally be as insightful in analyzing their strengths and weaknesses as they are adept at formulating market-driven initiatives, whether these involve exploiting new opportunities, cutting costs or changing their image. They may even have a better plan. However, results are what counts and the success of any strategic-planning exercise is primarily measured in its execution.
Get them involved
Although some partnerships may opt for more of a benevolent dictator style, a consensus building approach among partners and a participative strategic planning process produces the best and most sustainable long-term results and is more compatible with the entrepreneurial spirit of a professional practice. However, these greater rewards are not without cost, as obtaining a firmwide buy-in is an onerous task. When asked to give their two cents’ worth, many participants will dish out more than $20. Furthermore, delivering a single message to a large group of professionals is akin to herding cats. Being conservative by nature, accountants are not generally receptive to radical changes. Efforts deployed to reach consensus or obtain a buy-in are not necessarily an adequate excuse for those observing the strategic planning process and expecting quick results. But the leadership team must effectively seek to co-opt all the firm’s professionals, even those whose feet are stuck to the ground and those who have gone into hiding.
As progress is accompanied by occasional setbacks, when something does go wrong, some will see this as proof that the strategic plan will fail. An inclusive approach helps address opposition, as well as dissension from participants who may want the process shelved because of its demands on management’s time, especially in the early phases of implementation when a first wave of major changes must be set in motion.
Walk the talk
The objectives stemming from a strategic plan must be compelling if employees are to rally around them. The leadership team must communicate how these goals will benefit everyone, then convince employees to take a leap of faith. Turning a ship that is moving downstream full steam ahead is no easy task. Employees must be weaned off old behaviours and encouraged to adopt new ones. But when the rocks are avoided and the change of direction becomes visible, all crew members will pull the sail in together and help chart the firm’s new course.
Luc Villeneuve, FCA, vice-chairman of Deloitte & Touche LLP, considers mergers and acquisitions an integral part of the strategic-planning process. He has experienced a few mergers, notably that of Samson Bélair with Deloitte, and he views these events as catalysts for positive change, much like any other strategic initiative. “When two cultures merge, their common ground will be their entrepreneurial spirit. Many talented young professionals will step up and assume the leadership of strategic projects.”
The leadership team’s other responsibility is to lead by example, doing much of the heavy lifting for the group. The team must tackle all initiatives it controls, as both a facilitator — removing all obstacles that may slow a firm down and ensuring that all projects have the required resources — and a doer — producing tangible results in all early projects that are low-hanging fruit. These early-stage successes help employees imagine that their projects will also produce the desired results. At RSM Richter’s Montreal office, our focused efforts during the initial implementation phase improved lines of communication, upgraded support functions and enhanced the firm’s image in the marketplace. Often called foundation and enablement elements (see table on page 46), these successful initiatives fended off resisters to change and provided a solid foundation for future achievements.
The last phase of the implementation is broader and introduces more radical changes. It should ideally commence at the appropriate time in a firm’s business cycle, when overall activity slows down. For an accounting firm, this would generally be in the summer, as the peak season is January to June and hiring is a priority in the fall. Deadlines for particular projects should be intentionally staggered across each of the various stages of execution, from planning to final implementation.
Work teams must be formed for each identified project in every delivery stream, which could be employees and internal culture, image in the marketplace, clients and infrastructure. Because people are working better and have fewer frustrations in their daily activities, thanks to the foundation and initiatives that have been implemented, they are ready to take on changes. The leadership team should look for innovative ideas from employees and seize opportunities to make productive improvements.
Building tactics and implementing them quickly is critical in business strategy. Hesitation and lack of follow-through lead to missed opportunities and can cause a firm to forgo all the advantages of being first to market. Nine to 12 months into implementation, the firm should be able to communicate some concrete realizations to its employees.
Having overcome initial resistance to the strategic plan and achieved a conceptual buy-in from employees, the leadership team will likely face a second wave of resistance during the innovation phase. To date, the foundation and enablement phases have clearly made things better without rocking the boat in terms of professional practice management. However, the innovation phase is where it hits home with partners and professionals because it touches on which business areas will be developed, which types of clients are to be nurtured, how service is to be delivered and by whom. And this could be the biggest hurdle to overcome. Even though they have agreed intellectually with the strategy, many professionals will be hesitant when presented with the actual game plan.
Some will highlight the numerous elements that could go wrong and put up road blocks to successful change. Others, when handed the nuts and bolts of implementation, which refer to specific names, actions and changes, will contend they were not aware that the strategic plan would translate into such initiatives or that they did not think the plan applied to their team or their clients.
To achieve a more practical buy-in, the leadership team should seek to rally the firm’s professionals around the plan’s overall objectives and explain to the partnership group that a balance must be struck between a gradual implementation approach and decisions that must be surgical, due to their tactical nature. For a professional services firm the biggest failure would be not making timely decisions. Facing opportunities or threats, a firm should allow itself time to react and make educated decisions then move quickly toward their implementation, recognizing that some will be wrong and adjustments will be required along the way.
Change a losing game
This sports principle applies equally to business, which is also innately competitive. It involves identifying your losing games and finding ways to change them. Accordingly, strategic planning cannot be a process that involves a one-time implementation and occasional followups. Rather, it goes hand in hand with continuous improvement, which seeks to improve all functions of a business in an ongoing manner.
A strategic plan must therefore address the next three to five years, but it cannot be set in stone. It will require frequent tinkering and refiguring, since circumstances may change, the competitive environment will certainly evolve and some events can simply not be foreseen.
The changes that a strategic plan will aim to implement must not jeopardize a firm’s bread and butter and successful recipes. They must be based on strong foundations and any tearing down of existing structures should not be done hastily but only after a thorough analysis of viable options.
The partnership group must be regularly informed of the results and progress of the strategic plan. This may take the form of monthly or quarterly updates. Firmwide communications, which can take on an assembly format, must be initiated when the plan is ready to be set in motion, and regular updates must subsequently be provided. Sharing the success stories of the firm, its employees and clients provides motivation and helps sustain the momentum to implement improvements and new tactics.
Clients and referral sources must also be informed in a timely manner of a firm’s strategic initiatives, and they can provide useful feedback on competitive positioning, market perceptions and potential threats and opportunities.
Preparing and successfully implementing a strategic plan will undoubtedly be the most demanding and rewarding endeavour a professional services firm undertakes. It is a process that has no end, as the planning cycle will be reinitiated every three to five years. Once it becomes an integral part of the modus operandi, it should become easier to implement strategic initiatives as a firm gradually adopts a culture of continuous improvement.
Stephen Rosenhek, CA, is the comanaging partner of RSM Richter’s Montreal office. He is also the technical editor for Practice management