Business Guides

Running An Advisory Firm Is Like Writing A Novel

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Running a strategically disciplined advisory business – or any business for that matter – is like writing a strong story with a tight plotline.

A book I just read reinforced that lesson. I’m neither an avid reader nor a discerning one. But I do enjoy good fiction now and then.

financial advisor
Meditations / Pixabay

Last winter, I gave in to a hype and read a novel by an author (who will remain nameless) who is celebrated around the globe with a huge following. Every year, his fans lobby for him to win the Nobel Prize in literature – though thus far, they have been disappointed. There is always next year, as Cubs fans might say.

Naturally, I was drawn to read one of his better-known novels. It was engaging and entertaining, a real page-turner. Ultimately, however, I was disappointed. The plotline was forced and sloppy, and didn’t flow very well. Its characters and events didn’t develop or connect smoothly.

In short, it didn’t have a tight plotline.

In an advisory practice, every activity by every team member (including you) must sync up tightly with your “plotline” – your strategic direction, which includes your (clearly-defined) ideal client. There should be no random characters or events. That is, your service delivery model, investment philosophy and strategy, marketing strategy, client appreciation events, social media, website, quarterly newsletter – every movement and decision – must be in tight alignment with your strategic direction.

Michael E. Porter’s Harvard Business Review article, What is Strategy?, summarized the essence of strategy as:

  • Choosing to perform activities differently than rivals do.
  • Choosing what not to do.
  • Combining those activities.

Citing Southwest Airline’s example, Porter elaborated on how its activities are different from competitors. “Southwest tailors all its activities to deliver low-cost, convenient service on its particular type of route. Through fast turnarounds at the gate of only 15 minutes, Southwest is able to keep planes flying longer hours than rivals and provide frequent departures with fewer aircraft.” Absence of meals, assigned seats and travel-agent commissions, as well as a decision to use a standardized fleet of 737 aircraft tightly fit together to create efficiency and “deliver a unique mix of value” to its customers.

Moreover, by being intentional about what not to do, Southwest was uniquely positioned to serve its customers better than any other airlines. In contrast, seeing how fabulously successful Southwest was, Continental decided to say, “yes” to being both a full-service airline and low-cost airline, dubbed Continental Lite. After all, “it would seem that nearly any competitor could imitate any other airline’s activities. Any airline can buy the same planes, lease the gates, and match the menus and ticketing and baggage handling services offered by other airlines.”

By Hoon Kang, read the full article here.