RAINMAKERS
SHARPENING SECTOR
FOCUS TO SUCCEED
IN TOUGH TIMES
By Dr. Clifford Ferguson
T
oday’s tough times have leading
deal-makers rethinking the
basics about how they do
business. Are they concentrating
on the most promising asset classes
and regions? Do they have the right
capabilities to achieve and sustain a
competitive edge? Are their operating
processes as productive as they could
be?
‘‘The benefits from
building deep industry
expertise are powerful.
In relationship
building, it makes
a professional firm
as a serious player,
putting it in regular
contact with key
people in the industry
and increasing the
volume and quality of
contact.’’
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Among these fundamentals,
professional firms increasingly find
themselves grappling with a question
that’s been on the agenda of many of
them for years: Does it make sense
to focus on industry sectors and
organize around them?
some over-specialize by targeting
sectors that do not require the level
of expertise that firms try to build
around them.
The benefits from building deep
industry expertise are powerful. In
relationship building, it makes a
professional firm as a serious player,
putting it in regular contact with key
people in the industry and increasing
the volume and quality of contact.
Sector focus works best in
areas like health care, media,
telecommunications, and energy that
are characterized by outsized risks,
regulatory minefields and complex
business models. Others define the
sectors they pursue too narrowly (and
commit scarce resources to them),
which limits the number and quality
of deals they see.
It speeds up a firm’s ability to identify
good ideas and screen out bad ones,
and brings to bear insights and
credibility with the client directors
and managers that can provide a real
edge. It helps the firm quickly set the
right strategic direction to improve
performance and build value, recruit
seasoned professionals, and challenge
management to hit operational
targets.
The second major shortcoming:
Many firms end up paying only lip
service to the idea. It is one thing
to rearrange organizational boxes,
assigning professionals to become
sector specialists, but it is quite
another to make the commitment
stick. Too often, when a new deal
materializes, teams are pulled out of
their sector work to jump on the new
opportunity for weeks, if not months.
Yet, while many professional firms
already claim to be sector focused,
few do it well. Their attempts suffer
from two common pitfalls. First,
Define the Right Sector Approach
From our work with leading
professional firms, we’ve found that