When strategy fails.

According to PWC research business strategy fails in many companies.

Their survey of 2,800 executives from companies of various sizes, geographies, and industries found:

  • Most executives don’t feel their company’s strategy will lead to success.
  • Two out of three admit their company’s capabilities don’t fully support their strategy.
  • Only one in five respondents is fully confident in the company’s right to win.
  • The majority say their company has too many conflicting priorities.
While I haven’t surveyed that many design agency owners I can confidently say these findings apply to many of Australia’s design businesses.

Strategy and capabilities

I have seen many strategies prepared by studio owners and the biggest issue is the strategies overreach the staff capabilities. It’s not a matter of design skills; it’s the ability to implement and consistently apply the tactics.
This is not a criticism of our studio owners because as the PWC research shows the problem extends to many large corporations.
In design studios the problem arises from overly ambitious targets. These often start with the need to reach certain revenue targets. The next mistake is to fail to do a reality check on the revenue targets. The first step here is to check that you can generate enough billable hours from the staff. Then check which clients can give you those billable hours. After that, check that you have staff capabilities (skills) to do this type of work. When I do this exercise it often leads to expectations being scaled back while staff capabilities are built up.

Strategy to sustain or grow

The conflict between sustainability and growth is another issue. Here I often see studios fail because they take on too wide a range of growth. For example I’ve seen studios wanting to break into new fields or technology as well as sustaining their existing business. Sustainability means you have to grow just to keep up with inflation and wages growth. When you add another level of growth expectation you’re setting a huge task.
This type of strategy takes a lot of management to get the balance right. For instance a studio attempting to bring digital work in-house and sustain their existing work and clients has to develop organisational strategies to rethink the internal operations as well as competitive strategies to get new digital work.

Maintaining strategy

The vast majority of Australian design studios can’t afford to employ a business development manager; the owner(s) take on that role. This means that when the work starts rolling in they have to be hands-on in the studio. They also have extra work managing existing clients and projects. There’s no time left to continue the new business development strategy.
This is where organisational strategy kicks in. In our Design Studio Management program we’ve developed an organisational strategy that identifies studio talents and works out how they can be used in new business development.
This may mean they have to do Instagram posts or prepare infographics that explain a process or issue related to clients.

Take away point

Strategy for a design studio relies on choosing a few inter connected organisational and competitive strategies within the studios capabilities. It’s then a matter of doing them well and consistently.

Greg Branson

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