Remember: “God is in the details.”
Markets, be they geographic or sectoral, are not intrinsically attractive or unattractive based on conspicuous and highly “legible” indices such as stock market performance. Remember that markets can remain disconnected from underlying economic reality for quite awhile. (Most memorably, and thank you, John Maynard Keynes, “markets can remain irrational for longer than you can remain solvent”).
“The details?”
Yes, the details. I have bad news for you: Deciding whether to expand or contract in a locale or a practice area requires painstaking analysis.
Jumping on bandwagons has a crummy track record (Exhibit A: Piling into Silicon Valley ca. 2000).
Being opportunistic rather than purposeful and thoughtful almost assures you’ll buy at the top and sell at the bottom.
Doing research, a/k/a looking before you leap, is hard work: Don’t fool yourself that all signals are go if your loyal clients say (when you ask) that they think it would be a splendid idea if you opened up in XYZ. What do you expect them to say? How about asking them which firm(s) they’re using there today that they’d ditch in your favor?
Finally, one size never fits all.
If the first question your partners ask, when you’re contemplating a contraction or expansion, is “who else is doing it?,” I despair. Few things in life and work are certain, but this is: A “strategy” of followership guarantees mediocrity.
“Who else is doing it” does not define “best practice;” all it defines is “common practice.” Which is usually, truth be told, “least common denominator” practice.
I was recently talking about the increasing dispersion of performance results across the AmLaw 200 and the Global 100 and I noted that I thought the phenomenon—the best doing a lot better and the worst falling behind the pace more seriously—reflected the new reality that “strategy matters more than ever,” and I was asked: “What strategy?”
Not comprehending the question, and after a bit of awkward back and forth, I finally realized my interlocutor wanted to know what The Strategy (the one and only, that is) was to assure out-performance. This took the impulse behind wanting to know “who else is doing it” to Olympic levels.
Equity markets—and hunch and instinct—are very blunt instruments of analysis indeed. One size does not fit all.
God is in the details.
A.S.,esq: >> If the first question your partners ask, when you’re contemplating a contraction or expansion, is “who else is doing it?,” I despair. Few things in life and work are certain, but this is: A “strategy” of followership guarantees mediocrity.<<
Assume that the presentation of the new plan has been proposed in a full and coherent manner, predicated on the underlying values of the firm and with compelling evidence that risks and opportunities have been analyzed openly and fairly. If the question has been asked as if it were the determinative factor, regardless of the business case presented, then I certainly would agree. However, could there not be a legitimate context: Are there risks here that have caused others to avoid the action, or even, is the market not already saturated? A well wrought proposal will have covered these questions off in a manner that supports the value proposition.