Harnessing the Phoenix
Surely the most dramatic mythological example of rebirth and renewal, is the Phoenix (or "Firebird.") It is found in ancient Egyptian mythology, various myths derived from it and, most recently, in Professor Albus Dumbledore's study in Harry Potter.
Said to live for 500, 1461 or for 12594 years (depending on the source), the phoenix is a bird with beautiful gold and red plumage. At the end of its life-cycle the phoenix builds itself a nest of cinnamon twigs that it then ignites; both nest and bird burn fiercely and are reduced to ashes, from which a new, young phoenix arises. The bird was also said to regenerate when hurt or wounded by a foe, thus being almost immortal and invincible.
Imagine, for a moment, that you were able to regenerate your firm in this way. Miraculously, you were able to instantly transform it into an organization of the highest performance with, what's more, that performance being sustained.
What would your new, rejuvenated firm be like? What would be different? What would be the same? If you let your imagination roam (difficult - life is designed to beat this ability out of most of us as children) then this admittedly off-the-wall visualization process becomes be a valuable tool in exploring those areas that may really need attention, whether your firm is nudging the top of the rankings, or slipping in your market.
I think that a truly high performance firm has the following five characteristics:
-It has superior profitability
-It dominates the market in its chosen areas
-It is deeply respected and valued by clients
-It's people find it to be a rich and satisfying work experience
-It has the ability to innovate and constantly renew itself
Seems easy just written down on a screen or piece of paper, doesn't it? Let's take it down a level of abstraction, and explore what it would take to achieve these characteristics. Again, I'll 'kick off' with ten main issues that I think drive them.
1.Loyal and Contented Professionals and Staff that Value Being Part of the Firm
Firstly, this involves having the "right" people in the firm. In a high end M&A law boutique this may mean top 5% of the class from the best law schools, with good commercial instincts. In a process driven firm, this may mean employees that work best in a structured, highly leveraged, procedure driven environment and who don't expect to earn a fortune. Secondly, it means having the structures and systems in place to make sure that all the components in David Maister's Practice What You Preach (essential reading for any professional service firm leader) are in place and working well. It also probably involves having work practices in place that the emerging Gen Y/Millenial workforce in particular, finds appealing.
2.Excellent Balance and Internal Alignment Between Different Structures and Systems
It is almost certainly impossible to achieve complete alignment and, as Peter Drucker once said, having the firm's people working at a high level of performance is far more important than having a neat, orderly business structure. In complex adaptive systems like professional service firms, "messy" is often not only better, but necessary. Having said that, if systems and structures are in conflict with each other, then performance is harmed. If the performance measurement and compensation systems are out of alignment, for instance, expect particularly hot sparks to fly!
3.A Properly Designed and Implemented Competitive Intelligence Capability
Competitive Intelligence (CI) involves collecting, collating and analyzing data on the market (clients, competitors, macro-trends etc) and then communicating these to the leaders of the firm, in a format that is useful to them, so that they can make the most informed strategic and management decisions possible. Just as a general would be foolish to develop a battle plan without the input of detailed, accurate intelligence, so a strategist that formulates a strategy without this critical information is doing no better than gambling that his or her intuition is correct. Which it usually isn't.
4.Good (and Constantly Improving) "Bench-Strength"
This implies top class professional skills and the depth of capacity that ensures that the services can be effectively delivered to clients and applies to all service areas that the firm offers. In other words, if you are weak in some areas, then the requirements for superior performance (which is the template that we are using here, remember) would dictate that you either get that service offering up to a level of market dominance or you exit that service area. The only exception is where that area is a critical supportive component of another area of the firm where market dominance exists. (This is the case more frequently than one would intuitively suspect.) Pro-active learning is a critical component of sustaining and growing bench strength.
5.An Unassailable Focus on High Quality Client Relationships and Satisfaction
Obviously. The firms at the top of the performance curve are completely pathological about ensuring that their clients are ALL in the 4/5 - 5/5 category in client satisfaction surveys. Our background at school and college teaches us that generally, above 50% is a "pass" and above 75% is a "distinction." In client relationships, 4/8 (80%) means that you will probably be used again and only 5/5 (100%) is a sure-fire indicator that you will be. 3/5 (60%) means that you're probably on your way out and 2/5 (40%) means that you're already gone - you just didn't notice.
6.Worldly-Wise Leadership
Leadership that is not trapped in the cocoon of their own firm, but who can look at their market, discern emerging trends, make sense of them and draw sensible conclusions about what they might meet for their firm, and change the firm's course accordingly. It also means that mentoring of young professionals is empathetic and performance focused.
7.Clarity About the Strategy
This aspect was covered in some detail in my recent posting, Crank Up the Volume! Everybody needs to know what the overall game plan is, and what they need to do in the next couple of hours / days / weeks / months to move in that direction. I really like Gary Hamel and C.K. Prahalad's analogy that strategy is like doing a marathon run in 400 meter sprints, without knowing what Mile 26 even is going to look like. There are two overall layers to strategy: (1) developing the overall picture and (2) action planning that covers timeframes short enough to ensure that things actually get done.
8.Focused Innovation and Organizational Learning
By this I mean that when opportunities do arise for improving any of the critical aspects that drive superior performance, this information is considered and, if appropriate, translated into action. Proactive innovation needs to be focused on solutions to specific problems, not just allowed to freewheel. Firms generally do not have the resources to specifically go out and try to design fundamentally different ways of doing things. But as I pointed out in Innovation: Disruptive or Incremental, the solutions to at least 75% of innovation-related problems probably exist in the knowledge base already within the firm, anyway. So innovation becomes an issue of unlocking this resource and, if an opportunity for something really dramatic does materialize, to have the organizational foresight and courage to seize it.
9.An Action Orientated Culture
This is a critical component of a high performance firm. Such a culture means that everybody works in their own way, towards executing the strategy. Problems are fixed when they are noticed; not only once they have grown to the point that real damage is done. People are accountable. Things happen.
10.An Appropriately Focused Performance Measurement System
Okay, so you're measuring billability and revenues. What else? Not much? That's a little like flying a Boeing with just a couple of dials on the cockpit dashboard. Developing an accurate control panel that provides the data that the firm's management needs to track performance is also a critical component of achieving high performance.
These ten points are also far more easily written down than achieved. Perhaps you could even add a few more. (If you like, by all means do so - post them in as comments below!) The point is that none of these are hugely intellectually taxing. Most are plain common sense. That being so: why are some firms so much more successful than others? Many firms appear very similar. They offer the same services to the same kinds of clients and employees may be very similarly compensated. They may even co-exist in the same market. They all have strategies and all genuinely want to improve their performance. Yet year after year, some of these firms achieve dramatically higher levels of performance than others and there are very, very few right up at the top.
The answer, I believe, lies at least partly in how firms go about addressing performance improvement. They ignore the complex interconnectedness of these ten (or more) issues and treat each as though it were a separable component. If there appears to be a problem with the performance evaluation system, then only that is addressed. Perhaps a consultant is appointed; or an internal committee established. Either way, the terms of reference are almost always limited only to the aspect that is "hurting." But this aspect is almost never really separable from the rest of the "organism" that is the firm. To think that it is, is a little like the Phoenix wanting to renew only its wings today, its legs next month, and its body perhaps when there is more money in the budget next year.
If the modern thinking about professional service firms as complex adaptive systems is correct (personally I have absolutely no doubt that it is) then especially when coupled with an evolving market where change is the norm, the ONLY sensible way to look at strategy and performance is holistically.
Undertaking a comprehensive strategic overview of the firm's current status and its potential in every one of the ten issues above, paying particular attention to the interrelationships between them and how they all interact to drive the five overall characteristics of high performance, may be the most valuable strategic appraisal that your firm has ever done. It would certainly give your strategists a far sounder foundation on which to build your future.
Comments, as always, are most welcome. Please post them below.