Adventure of Strategy

Holland & Hart has joined the small but growing ranks of law firms with a dedicated practice group focused on legal issues surrounding climate change / global warming. This according to an article in the Denver Business Journal. I haven't time to search anything like a comprehensive list of other law firms that have established climate change practice groups, but to date they include Pillsbury Winthrop Shaw Pittman, Morrison & Foerster, Davis Wright Tremaine. If your firm also has a climate change practice group, or you know of any others, please post the details in comments below so that readers of this blog can take note.

The Department of Geosciences at the University of Arizona has a truly excellent interactive set of maps, one of the whole world and one of North America, that illustrate the levels of inundation that will occur with different degrees of sea level increase. It is truly terrifying! Even with just a three foot (one meter) increase, for instance, much of Florida disappears. (See below.) Countries like Bangladesh and the Maldives would cease to exist.

I've just read a great story in Mavericks at Work - Why the Most Original Minds in Business Win about open source innovation. Goldcorp, a Canadian gold mining company, buys a risky but promising mine (Red Lake) and spends $10 million on exploration. Comes up with positive but ambivalent results. Posts all their geological data on the internet and holds a contest with a $500,000 prize to be divided amongst 25 semifinalists and 3 finalists chosen by judges, for best solution to question: "Where should we mine?"

More than 1400 experts across the world download their raw data, model it in whatever way they choose, and tell them what they think. (Such exploration data is usually HIGHLY secret so his colleagues think CEO Rob McEwen is crazy.) The result: they get a wealth of data that indicates several possibilities that they hadn't even thought of. Net result: A $100,000 investment in 1993 in Microsoft was worth $895,000 in late 2005. A similar investment in Goldcorp was worth more than $2,9 million!

Learning: How often do we scramble around reinventing the wheel with solutions that have already been discovered elsewhere in the world by others, where we could access those solutions if we were to share knowledge ("secrets") more freely?

One of the arguments that has been held against law firms listing on stock exchanges, as will shortly be possible in the United Kingdom under the new system allowing for external, non-lawyer ownership of organizations dispensing legal services, is that it has been possible for law firms in Australia to do this for some time but none have.

Therefore, it followed, it must be a bad idea.

Well, three Australian law firms are taking the plunge with the launch of the Integrated Legal Holdings (ILH) A$14m (£5.5m / US$10.5m) initial public offering. Real the Legal Week article here.

Can you imagine having a large 'war chest' for funding strategy-driving investments like stealing practice groups or top laterals from competitors, funding aggressive business expansion or investing far more heavily in IT than otherwise possible?

BUT .... can you simultaneously imagine law firm partners having to answer to external shareholders and the organization having to generate superior enough returns to provide competitive salaries for the senior lawyers (at least what they would earn as partners in 'conventional' firms) PLUS enough surplus cash to provide a decent return on investment for external shareholders too?

It's a big, but not impossible "ask."

No doubt there are many British (and other) law firm managing partners that will be 'watching this space' with a great deal of interest. I certainly will!

One of the worst things that can be said of any professional practicing in a professional service firm is "he/she doesn't fit in here." Career-wise, it's often a death blow. This is particularly true in the precision-based professions such as law and accounting (as opposed to creative/design professions, where deviancy is more tolerated and sometimes even encouraged.)

Herein lies a clue as to why these firms often experience such difficulty innovating or even changing. Probably without even realizing the impact of what they are doing, they positively stamp on anything or anyone that goes against the norm.

On 6 April this year, I blogged about a survey on innovation in law firms that was being launched by the Financial Times. Well, the report is out. You can find it here.

IBM's recent study on the world's top corporate CEOs is, they say, the most comprehensive survey of its kind ever conducted. It polled 750 top CEOs worldwide. The study discovered that the majority of these global CEOs plan fundamental change in their organizations over the next two years, and expect new forms of innovation to drive growth.

Frankly, though, some of the results are worrying .....

I was told a while back that it is pointless trying to sell consulting services aimed at helping law firms become more innovative. They are so conservative and precedent-driven, I was told, that they simply don't "do" innovation.

Well, things may be changing. Today's Financial Times (London) contains an article titled In Pursuit of Modern Practice, announcing an innovation ranking that they have just launched, to find out who the most innovative lawyers and law firms in the UK are. The article identifies several market pressures that are forcing UK law firms to become more innovative, whether they are comfortable with it or not:

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.

The weblog Innovation Tools had a posting yesterday (10 March) on a strategic innovation tool called TRIZ (pronounced "treez".) The post describes the 5-Step process that TRIZ defines for a strategic innovation roadmap and references InSourcing Innovation, a new book on the topic.

TRIZ is a Russian acronym: "Teoriya Resheniya Izobretatelskikh Zadatch" (-¢-µ-æ--Ä-?--è --Ä-µ--à-µ-?-?--è -?-?-æ-±--Ä-µ--Ç-?--Ç-µ-ª--å--Å-?-?--Ö -?-?-¥-?--á.) An approximate English translation would be "Theory of Inventive Problem Solving (TIPS.)" The concept was developed by a Soviet patent specialist, Genrich Altshuller, while working with the erstwhile Soviet navy in the 1970s and 1980s. It has been considerably expanded and refined by subsequent work in the west.

How the tool can be applied in professional service firms is a topic for another posting. What I would like to blog about is an important insight about innovation itself, that emerged from Altshuller's work.

It's a little known fact that back in 2002, the US Military went through a major war game exercise to model what a war between the United States and Iraq might look like. The exercise, Millenium Challenge, took two years to plan and cost $250 million, involving some 130 000 troops and very sophisticated computer modeling. And the USA lost!

Lieutenant General Paul Van Riper, formerly the Commanding General, Marine Corps Combat Development Command, Quantico, VA, played the role of the enemy commander; "a crazed but cunning megalomaniac ruling a militarily powerful Middle Eastern nation." In the opening stages of the exercise, using the element of surprise and highly unorthodox tactics, Van Riper's forces sank most of the US fleet in the Persian Gulf and brought the entire offensive to a halt. It was indeed fortunate that when the real war started, Saddam Hussein did not have a Van Riper commanding his forces.

"Innovation" is one of the most used and abused buzzwords in 21st Century management vocabularies. For some, it conjures up visions of enthusiastic groups clustered around flipcharts, eagerly brainstorming ideas. For others, inventors poring over workbenches, thinking up brilliant new inventions. The truth is more complex. Innovation is more a process than a product of brilliant insight. It is a skill that can be learnt and taught. In many highly profitable firms, it is woven deeply into the culture of the business. It is a fundamental building block of business strategy.

Business valuations have always been regarded as a bit of a black art. Nowhere is this more true than in a professional service firm, where the primary assets reside between the ears of the people working in the firm. Law firms have additional complications such as strict Law Society rules and issues of client trust and confidentiality. Nevertheless, there are occasions on which it is necessary to value a legal practice.