Adventure of Strategy

In South Africa, one of the most ubiquitous items of cooking equipment (after a barbeque or "braai" grid) is a cast iron three legged pot called a "potjie." Which is Dutch for, oddly enough, "little pot." It comes in various sizes from small enough for a single egg, up to large enough to feed an entire wedding party in rural Zululand. There is nothing quite like a vension stew cooked in a potjie over a hardwood fire, deep in the African bush! But it is the three legs that make it a useful metaphor for strategy. You see: it's like a three legged stool. If one of the legs is missing, the potjie falls over, the food ends up in the fire and the wedding guests go home hungry.

There are three essential elements to strategy in a professional service firm. The first is a bold plan to achieve that strategy. The second is a solid body of clients that are delighted with the services that the firm is rendering, to fund the implementation of the plan (to say nothing of school fees, food and mortgages too.) The third is a pool of loyal talent that can execute the strategy and delight clients with their prowness and responsiveness. One needs all three. Two out of three doesn't hack it. The pot falls over.

Which brings me to one of the items in today's RollOnFriday, published in London.

Apparently, a Senior Associate in one of the 'Magic Circle' firms (they have a little survey going on the web page to see if readers can guess which one) has emailed them with a tale of woe about what an awful place to work, his firm is. To wit ....

"...awful arrogant atmosphere. Very hierarchical. Poor quality of partners in Finance and Capital Markets compared to other magic circle firms - there don't appear to be any real experts - everybody is a generalist who is blagging it.

Demoralising working atmosphere - huge emphasis on PEP, encouragement to bill, bill, bill and suggestions from firm management that one can bill more than one client for the same time in some circumstances (e.g. travelling time and working time if working on one client's file while travelling on the other client's business).

People management seems to involve telling associates that they are not good enough on a regular basis to justify lack of pay rises, bonuses and promotion prospects. People leaving in droves. Partners seem to be immune from criticism. Nothing done about sexual harassment etc.

Shocking place. I'm off."

How on earth does a situation arise where a Senior Associate (and he/she is by no means the only one of late) develops such views about one of the world's leading law firms? One has to look no further than David Maister's variation on the old Du Pont formula, which in this case yields how profits per partner are derived.

The pressure has been on for some time regarding rates and increasingly competitive panels and savvy clients make it difficult to push them up without offering greater value in return.

Margin is heavily under pressure, not least because of the salaries of the non-equity fee earners, which have reached quite unprecedented heights of late.

Leverage? Well, leverage entails using more and more of these same non-equity fee earners, but hiring more queers the margin and the top tier commercial work that the Magic Circle thrives on does not really lend itself to high leverage anyway.

Which leaves utilization. If none of the other levers can be pulled, not least to fund this year's increase for associate salaries, then there's only one thing for it: Roll in those camp beds and see you in the office on Sunday!

How far, I wonder, will this particular pot leg bend, before the pot falls over and the food ends up in the fire?

Comments, as always, are most welcome and may be posted below.