EMH Insights

What does a strategic consulting firm actually do?

People often ask us, what do you do for your clients? What does it mean to do strategic consulting? While there isn’t just one way to define strategic consulting, we do help our clients think about the future in a more concrete way. And we often tell clients what not to do–instead of pursuing every possible revenue source they can, we encourage them to step back and choose only those that will lead to a more defined brand. Providing clarity to clients on what does (not) qualify as strategy is the value a strategic consulting firm brings to a company. Without this critical guidance, firms can trick themselves into thinking they are implementing a sustainable strategy, instead of a set of ineffective practices that eventually breed stagnation within the company.

Here are some myths we would like to dispel about strategy.

Myth #1: Operational effectiveness (making something better, cheaper, faster) is a business strategy.

Operational effectiveness may provide a company with a temporary advantage, but is not sustainable. Instead, strategy has to be something unique and identifiable. For the same reasons, imitation is not a good strategy. Another component of strategy is constraint- or choosing what not to do. Because the time and resources of a business are constrained, strategic decisions about what courses of action to take can lead to long-term success.

Myth #2: An effective, permanent strategy lasting indefinitely into the future can be planned.

That seems counterintuitive- a strategy consulting firm telling people that strategy planning is useless? Well, we’re not saying it is useless. But the point here is that strategy needs to be developed through a dynamic, iterative process rather than a static, backward-facing one. Strategy planning can be a useful exercise to help get everyone in the company on the same page, but ultimately strategy is about doing, not planning. The past isn’t an accurate predictor of future performance, and companies will always face unplanned, external shocks. So if a company thinks of strategy as an ongoing learning process, the organization will be much better suited to adapt to change.

Myth #3: Creative processes and open-ended outcomes in conjunction with one another breed effective strategies.

Flexibility in a company’s processes and innovative outputs may be utilized with success by a company on their own, but pairing them together could threaten a company’s productivity. Instead, effective strategy consists of one of two choices, depending on the company: controlled processes and operations with open-ended outputs, or innovative processes with constraints on the desired outcomes. An example of the former is the film industry–the methods and processes that go into making a film are relatively uniform throughout the industry, but there is quite obviously wide variance among the outputs (the films themselves). On the other hand, Southwest Airlines is a company with a clearly set service: convenient routes at affordable prices, and superior service with minimal wait times that are uncommon throughout the airline industry. With this goal in mind, Southwest gives its employees freedom in achieving this output, which is why flight attendants of the airline typically exhibit lighthearted and laid-back personalities. Providing flexibility in either the operations or the outputs of a company encourages innovative strategies to emerge, while still allowing for a structure that encourages productivity.

Making the mistake of confusing any of these myths for sustainable strategy threatens the long-term viability of a company. Throughout the next series of papers on strategy, we will continue to explain what defines successful strategies, and why any firm needs to understand it.