In my last post, I began a series on the 10 Questions Prudent Firms Ask Themselves. Question 1: Who do we want to become? asks us to order our lives because our lives are shaped by what we live for. Question 2 now asks us What are our goals? in order to declare and set our ambition’s course. Professional services goals need to be more than just “SMART” (specific, measurable, achievable, relevant, and timely); they need to be the “right” goals.
Why Professional Services Goal Clarity is So Important
Culture is at the heart of the Prudent Pedal growth model. It’s there because culture reflects the firm’s leadership style and dictates the firm’s risk tolerance, learning and development, brand positioning, intellectual capital agenda, ideal client, people strategy, employee engagement levels, and, most important, where the rubber hits the road, service delivery.
You cannot hide a culture from the world. And no matter how hard leadership desires to do so, you cannot ask marketing to “put lipstick on a pig.” Modern buyers are too smart and too well-informed to be fooled by such condescension. Think Uber, Theranos, Weinstein Co., Fox News, and Google. Goals reflect a firm’s true culture.
I have found that there is a cultural continuum and when a firm is unclear about its culture and its purpose it mismanages its brand, elevates both reputational and operational risk, and most importantly, its ability to achieve both its mission and its long-term objectives.
At the heart of the continuum is a firm’s worldview about exactly whom the firm serves and why. Does the firm serve Shareholders, a broader set of Stakeholders, or a higher Purpose or calling? You may be thinking it is all three. If so, keep reading; this post is for you because prudent firms don’t see it that way.
What Are Your Firm’s Goals
For firms with a Shareholder worldview, the long-term objective is to maximize profit and satisfy the Shareholder’s need for value creation. A Stakeholder worldview attempts to “balance” the multiple demands of employees, clients, communities, and regulators—a socially responsible corporate mindset. Finally, Purpose-driven firms focus on driving the optimal balance of profit and organizational performance in order to maximize a defined good, impact, or outcome.
The driving precept for Shareholders’ goals is maximal profit, for Stakeholders it’s protecting permission to operate, and for Purpose-driven firms, it’s maximum “impact” of the mission.
The Shareholder worldview is the purview of free marketers, Libertarians, Ayn Rand devotees, the “Street”, and University of Chicago MBAs and economists. The Stakeholder group is more eclectic and populated with Business Pragmatists, Progressives, Fundamentalists, and Social Justice Warriors. Theirs is a big tent that is growing rapidly. The Purpose-driven fold is much less crowded and home to altruists, risk-takers, and game-changers.
READ: The Purpose of a Leader
Each of these worldviews is built on a philosophy. The Shareholder worldview believes that healthy markets reflect the “survival of the fittest” (i.e. most competitive companies) and that the market’s invisible hand produces the best outcomes for all. Those following the Stakeholder worldview believe in corporate social responsibility and addressing the needs/demands of all the entities that the company touches. More often than not the emphasis is on politically powerful constituencies in order to manage threats to operations (protests, negative publicity, strike, dissent decrees, etc.). Purpose-driven companies believe that profit and positive impact are neither mutually exclusive nor the realm of hand-to-mouth nonprofits and NGOs.
Perhaps you have mentally pin-dropped your firm on the continuum because you are clear about where you fall. Perhaps you are not quite sure where you are. Prudent firms are unapologetically clear on their driving precepts. The clarity that comes from our “becoming” in Question 1, provides the impetus for goals in Question 2.
Shareholder and Purpose-driven firms have the benefit of clarity and focus. For the Shareholder group, there is a clear pecking order of constituencies and shareholders are clearly at the top. For the Purpose-driven firms, maximizing the altruistic mission is first, profit is just a means to that end. No profit, no mission. Stakeholders, on the other hand, are often conflicted and unsure which priority takes precedence. Is it making the numbers, supporting our employees, environmental consciousness, diversity, or community support? Most Stakeholder firms live in fear of alienating a stakeholder group (see KMPG, McKinsey, Adidas, Pepsi, United, NBC). It is much easier to be socially conscious or to value diversity before your biggest rainmaker or most profitable practice’s leader gets caught in a compromising video or tweets without 7 rounds of approvals.
SMART goals are great. The RIGHT goals are even better. Get clear on your goals.
As we approach the end of the year, many firms are moving deep into the planning and budgeting process for next year. So, I thought this would be a great time to reflect on year-to-date performance and look forward to the opportunities of next year. Earlier this year,...
Do you set aside time to think, to ponder, every day? If so, where do you do your best thinking? At your desk? On a quiet walk? At the gym? While you sleep? If you're an extrovert, perhaps you talk it out with a confidant or peer. For my daughter, Alejandra, it's in...