By Jay W. Lorsch Thomas J. Tierney
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Additional resources for Aligning the Stars
The best firms understand this, thinking and acting strategically in good times as well as bad. Doing so requires a clear definition of strategy and an understanding of its central elements. If you’ve spent any time in the business section of a bookstore, you know that strategy has tens, if not hundreds, of competing definitions. , is a perennial business bestseller) to the frameworks of contemporary economists like Michael Porter. The definition we think is most helpful— especially for PSFs—comes from Ken Andrews, one of the founding fathers of the field.
If it’s on a project fee basis, how are overruns and changes of scope accommodated? Is your fee to be paid entirely in cash, or is there a non-cash component such as equity? Is there a performance incentive built into your contract? Do you price differently by geography, by business line, or by customer segment? Do you price differently against different competitors? From a client’s perspective, moreover, these economic aspects of pricing don’t tell the entire story. Clients encounter another type of “price” as well: the time, effort, and risk associated with engaging an outside service provider at all.
Perhaps it was time to merge with a competitor, or at least forge a strategic alliance. Underlying every discussion were the issues of money and ownership: How would a new strategy affect partner compensation? How would major initiatives be funded? Should they sell all or part of the firm? Should they go public? It was inconceivable that his white paper could build consensus around these complex questions. Everyone was smart and had a strong opinion (especially the senior partners). Unfortunately, there were few objective facts available to alter all these closely held beliefs.
Aligning the Stars by Jay W. Lorsch Thomas J. Tierney