Adventure of Strategy

I'm in beautiful Seattle at present for the US Association of Legal Administrator's 37th Annual Educational Conference and Exposition. Yesterday, I took a small group of experienced law firm managers (including one from Nigeria and another from Brazil) through a very intensive workshop on how law firm managers might best cope with the challenges of this "globalized world" that we find ourselves in today. We looked at global trends and then focused in specifically on international cultural differences, how those relate to profitability drivers in law firms, and finally how firms might manage cultural differences so as to allow and even encourage cultural diversity, while keeping a core of profitability-driving cultural attributes in place. We ended the workshop with a case study featuring a hypothetical US law firm looking to establish business operations in China.

This morning and again tomorrow morning, I was also asked to present my now quite widely known session: "The World and the Legal Profession in the 21st Century."

As promised, PDF handouts of the slides are attached below. Please feel free to download them.

Download 1: A Brief History of Humanity - The Last 5000 Years

Download 2: The World and the US Legal Profession in the 21st Century

If you would like larger slides, please email me. The larger files are too big to upload to my blog but I'd be happy to email you a version with 2 slides to a page instead.

In addition, the slides of the Managing Partners Forum research project on strategy in law vs CPA firms and UK vs US firms may be found by clicking here.

Hope you find them useful!

Fellow "Top 3" law firm consultancy Hildebrandt together with CitiBank has just released a Client Advisory with similarly sombre views on the prospects for law firm growth this year, especially in the USA. Download it by clicking here.

There's been (un)surprisingly little coverage of the World Economic Forum's current summit in Davos, in a US media apparently besotted with a 0.75% drop in interest rates and a $600 per person tax rebate. Not so elsewhere in the world. Here is a link to a well respected South African financial commentator, Alex Hogg, CEO of Moneyweb, for whom this is the fifth summit that he has attended. An extract:

"Last night, US President George W Bush's right hand, Condoleezza Rice, tried hard to lift the gloom. Her official opening address of Davos 2008 was friendly and upbeat. Exactly the opposite of what we've been hearing from the Republicans here for the past few years. But such is the half empty perspective of delegates that due praise was subsumed by the complaint that the US Secretary of State should have been making these noises eight years ago when her boss took office, not now when he's about to depart from it.

The too-late and "asleep at the switch" refrain about the Federal Reserve kept reverberating in official sessions and private conversations. The few optimists hope this week's rate cut which arrested sliding stock markets will be more than a placebo. Most of those I've been exposed to worry that it's yet another symptom-addressing quick fix which only serves to make the eventually cold turkey even more severe.

That equity markets have become uppermost in minds is reflected in bookings for the various sessions. Rarely have economists been more popular in Davos. Any discussion dealing with the dismal science has a house full sign posted within minutes of bookings opening on the electronic system. Just about anything else on the programme is an easy walk-in."

I'd add to this a comment in the economics blog The Bayesian Heresy, about "what Greenspan would say." It quotes Alan Greenspan in 2001:

Am I trying to be a deliberately pessimistic doomsayer? No, not in the least! I am simply deeply, deeply aware of something that I read in a book on survival in the jungle many years ago. That is: in  a "survival situation," the people that are most likely to survive are those that have the ability to "hope for the best but, at the same time, prepare for the worst."

If you haven't sat down and considered, seriously, what a significant drop in headline earnings this year would mean for your firm, then do so now. And then put an action plan together, to mitigate the risks (and seize the opportunities.) And then execute it.

A significant part of the Edge International Managing Partners Strategy Summit in Washington DC last week was devoted to Dan DiPietro of Citi Private Bank's Law Firm Group's sombre view of the economic outlook for the US economy in general and US law firms in particular in 2008/9, and what firms might do to "recession-proof" their strategies.

Since then, in just the past few days, the Dow Jones has broken below the 11,000 mark and global stock markets have plunged on fears about the impact of weaknesses in the US Economy. See a CNN commentary Market panic as world stocks slump. See also Bloodbath in Indian Stock Market, where Monday saw the greatest crash in Indian history.

When the United States catches a cold, many other parts of the world catch pneumonia.  By only the 14th trading day of 2008, shares in Europe's main markets are now down between 12 to 15 percent on the year, reacting to the rout in Asia and other emerging markets.

During the market gyrations of 2007, sharp falls were often followed by sharp rises. There is no evidence of that yet in 2008. Will a 0.75% drop in interest rates in the USA and $145 billion in tax cuts be enough to reverse the trend? One hopes that this will not be seen by the markets, after the inevitable short term positive adjustment, as being tantamount to jabbing a sick horse with a cattle prod. As I pen this post, world leaders are gathering in Davos in Switzerland for the 37th annual meeting of the World Economic Forum. High on the agenda must be: how to insulate the rest of the world from the US's economic woes.

How does this translate into action for professional service firm strategists?

Ships do not install lifeboats because they expect to hit rocks; they install them in case they do. Even if you are optimistic that the worst is past, if you have not taken a close look at your firm's strategy and your business plan for 2008/9 in order to work through the "what if..." scenarios that could play out during a major economic recession, then you should waste no more time before doing so.

A key part of this is entering into a proactive, meaningful discussion with your most important clients about how a recession would impact them and how their needs will evolve. Clients become more mobile in recessions, so you want to do this before your competitors do. This possibility has moved from being a mere contingency, to now being a real and present danger.

Edge International's January 2008 edition of our Strategy Newsletter will go out in a day or two and is firmly focused on this issue. I'll post it on this blog as soon as it is released, too.

Further to Field Fisher Waterhouse (and probably others) launching a branch of their law firm on Second Life, we now have a fully fledged online dispute resolution ("ODR") service on Second Life too. Oddly enough, inserting "second life" into the search engine of FFW's website yields no results. I wonder why? Too rich for the blood of their conventional clients?

See this post on ICT4Peace and in particular the nine minute video on the e-justice centre. The centre itself was created by  the Portuguese Ministry of Justice in cooperation with the University of Aveiro and the Faculty of Law of the Lisbon New University. Cool architecture too and, indeed, why should 21st Century courts be grandly imposing, intimidating places?

The e-justice centre provides mediation and arbitration services for avatars resident in Second Life, focusing on conflicts deriving from consumer relations and contracts signed between parties. For those unfamiliar with Second Life, avatars may be virtual but they are nonetheless very real, representing very real people. This leads to emerging but very real legal issues.

All this is an indicator, perhaps, for how conflict resolution might evolve. This, as computers in real life reach the threshold of parity with the computing power of the human brain, followed (Moore's Law dictates about 18 - 24 months later) with computers 2x the computing power of the human brain; then 4 x, and so on, then finally laptops and maybe even PDAs [much] "cleverer" than we are. Combine this with the computer's already vastly superior capability for storing and retrieving vast quantities of data accurately, and one wonders where this path will lead over the next 3, 5, 10 years.

As somebody once said: "The future ain't what it used to be!"

Hat-tip to mediator blah...blah...blah. See also: mediation classes on second life.

Richard Susskind is definitely a man worth listening to. He has been a thoughtful observer of the impact of technology (in particular) on the legal profession for a quarter of a century. I blogged about him more than 18 months ago, in a post titled IT - The Next Ten Years. Author of a landmark 1996 book on law firm management, The Future of Law: Facing the Challenges of Information Technology, he has now taken the debate to a new level with a book to be published by the Oxford University Press next year, titled The End of Lawyers.

I've been deep in the Appalachian Mountains with my family this past week, so just got his email announcing the book and an online discussion being hosted by  The Times (of London) this morning. This is an extremely important discussion. It goes right to the hub of how firms should be thinking about their medium to long term strategy.

Distilling all down to the most basic fundamentals, I'd make the following three observations:

Imagine a tool that allows "everyone to see and understand the diversity of legal systems and laws that exist around the world - and to be able to do so at the click of a mouse."

That is the dream behind the Global Legal Information Network ("GLIN") that the Law Library of the US Library of Congress started in 1993, and which is now well into a major five year upgrade commenced in 2004. Furthermore, the the Library of Congress has awarded just awarded ATS Corporation a $14 Million contract to enhance the Global Legal Information Network yet further. A comment on a posting about GLIN on slaw.ca reports that GLIN has experienced a 70% increase in traffic and anticipates a tenfold increase in storage capacity in the first [ATS] contract year.

I am presenting a two day multi-session workshop next week at the ALA Regions 2 & 3 Educational Conference in Nashville Tennessee, on trends and best practices in law firm management. The ALA emailed me a couple of days ago to advise that 130 people (wow!) had already signed up for my opening session which is a presentation titled "The World and the Legal Profession in the 21st Century." This will be followed by a panel discussion about the macro-trends, bringing the topic right down home into law firms and what to do about these issues. Hopefully much audience interaction will be provoked, too. Panel members include Tom Grella, managing partner of McGuire Woods & Bissette in Asheville, immediate past president of the ABA Law Practice Management Section and author of The Lawyer's Guide to Strategic Planning; Dick Nigon of Robins Kaplan Miller & Ciresi LLP and Immediate Past President of the ALA; and Jessica Thomas, regional administrator in Florida for Roetzel & Andress. Should be fascinating!

For those that would like to start thinking about this before next Friday, hopefully so that they can participate more robustly in the debate, I have saved the presentation slides as a Quicktime movie (to preserve the animations.) Click here to download the movie (8.3 MB.) If you don't have Quicktime on your computer, the movie can also be played using RealPlayer.

If you're unclear about how the new Web 2.0 internet based IT tools that are emerging are different from the conventional software solutions that we have become used to, then this 5 minute video by Rod Boothby at Innovation Creators will give a pretty good overview. Also some solid insights into how this is going to affect knowledge work as the new tools increase dominance over the old. I think that it is IMPERATIVE that firms track this trend. If the topic interests you in greater depth, there is a white paper (still in draft) available too.  Click the image above to access the video.

   Click image to enlarge

Stephanie West-Allen has an important post on her blog, on the topic of accommodating older members of the legal profession that want / need to remain in practice. Titled:  Who are you calling old? With 104 being the new 80, graying doesn't lead to grazing in some pasture, her comments would of course be relevant to any professional service firm and beyond the professions too. Why is it important enough for me to highlight especially? Well, "ageing talent" is one of the top ten critical strategic issues facing professional service firms today, according to the Managing Partners' Forum strategy survey that we fielded in July/August this year.

The world's first publicly listed law firm, Slater & Gordon in Australia, has just acquired personal injury litigation boutique McClellands for an undisclosed cash amount and A$2 million (US$1.7 million / £837,000) in Slater shares.

The legal world should be watching the evolution of this model of public ownership of law firms very closely. It is interesting that both Slater & Gordon and the acquired firm are litigation boutiques. This flies in the face of those that say that non-lawyer ownership may  be all well and good for commercial law firms, which are specialized business advisory service providers anyway, but that it is inappropriate for firms that litigate because attorney-client privilege and professional altruism is threatened.

If you want to get a brief glimpse of the enormity of the advances that globalization and technology is expected to make over the coming couple of decades, and how this will likely impact on us, take a couple of minutes (well, six minutes and five seconds, actually) to watch this ...

Oh, if you like Celtic music, turn up the volume too!

If you have an interest in how the internet is likely to evolve over the next decade or so (up to 2020) and how this will impact the world, society and strategy too, then you'll find this site, Imagining the Internet, quite fascinating. It contains "over 6,000 pages that examine the future while also peeking into the past." Published by the Pew Internet & American Life Project, the site has a varied collection of videos, podcasts and other media too. So far, I am finding it a veritable goldmine of information for those who, like me, are wrestling with how strategy models are evolving at the most basic levels, to accommodate an increasingly dynamic, complex and unpredictable world.

Right now, I am studying a 115 page report on the results of a 2006 survey: The Future of the Internet II. From the report itself, here is a summary of the conclusions.

I have just returned from an engagement back home in South Africa, facilitating merger discussions between two law firms. Successfully, as you might discern from the bottle of champagne about to be "popped" by the two chairmen in the picture above. (Graeme Polson left and Themba Langa right.)

For one of the firms, Rooth & Wessels, this is the first merger and the first change of name in its 117 year history. This proud, somewhat conservative old stalwart counts the South African Reserve Bank, the Financial Services Board and even the Law Society of South Africa itself amongst its clients. They are feared litigators. The other firm, Langa Attorneys, was founded post-apartheid and, demographically, is wholly black. Its chairman, Themba Langa, is well known in Johannesburg commercial law circles.

I was responsible for facilitating the negotiations, and helping the merger committee craft both a combined strategy for the new firm and a detailed action plan to take them through to the formal launch on 1 October. The new firm, Rooth Wessels Langa, will focus on financial services, aviation, project finance, litigation, corporate and commercial law, property law and will also be launching a multidisciplinary tax advisory service with a focus on customs and excise.

What is truly fascinating is that the two firms represent sectors of South Africa society that less than two decades ago were effectively at war with one another. It is wonderful to watch differences being overcome as people craft strategy together, to achieve objectives that would be out of reach for them individually as separate firms. I am firmly of the belief that it is not so much cultural differences that kill mergers, as the failure to create a clear, detailed and highly compelling view of the future firm, focusing particularly on those aspects that can only be achieved together. That way, the momentum to overcome differences that do exist or that arise later is generated almost spontaneously.

Rooth Wessels Langa will have black economic empowerment ("BEE") credentials (essential in South Africa today) that are unsurpassed amongst the mainstream commercial law firms in South Africa, together with deep and sophisticated levels of legal expertise and a track record spanning more than a century. In short, a sound foundation on which to build a very substantial 21st Century African law firm.

The price war for newly qualified attorneys (solicitors) in London seems to have heated up to the same intensity as New York. See 2007 Pay Round: a Legal Week Wiki Special with a table of who is paying what and a long string of comments from individual contributors. Who is paying newly qualified associates the equivalent of $182,000? According to a comment posted on 6 June, that's what Cleary Gottlieb's London based newly qualifieds get. £92,000. Plus bonus.

The comments string provides interesting insights into how firms are balancing the demand/supply driven need to pay top rates for top entry level talent with the need to make "money in exceed money out" and also to retain that talent for long enough to turn a profit. Herewith some  unedited snippets:

A crucial debate with fundamental implications for the independence of the Judiciary in the United Kingdom is under way in the British Parliament today (4 June 2007.) That is, the second reading of the controversial Legal Services Bill. In an unprecedented move, the senior partners of all five 'Magic Circle' firms in London, namely Slaughter and May, Linklaters, Freshfields Bruckhaus Deringer, Allen & Overy (A&O) and Clifford Chance (CC), as well as Bar Council chairman Geoffrey Vos QC, have written a joint letter to the Economic Secretary to the Treasury, arguing that the Legal Services Bill could deter foreign companies and lawyers from investing in the UK and leave a £2bn (+/- $4bn)  hole in annual legal services exports.

Watch this space. This has long term implications for jurisdictions far more widely spread than just England and Wales. See also the article in this week's Legalweek.com titled Magic circle wades into LSB independence debate.

What with all the bad news we constantly read and watch in the media, it is easy to lose sight of the positive overall picture. I have just finished going through the 2006 report of the United Nation’s Millennium Project. In general, the global trends are quite encouraging. If one removes Africa from the equation (although one obviously cannot do that,) many of the trends are very encouraging.

It appears that foreign law firms will soon be able to hang their shingles in India, according to a posting titled UK Law Firms In Seduction Dance For Entry Into India on the blog Offshore Outsourcing World. This is, of course, very big news indeed.

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.

Imagine: All the glittering technology that surrounds us in these opening years of the 21st Century will, in a decade or two, be as old-fashioned to our kids as black and white television, typewriters and 1970s style Chevvys are to us.

Predictions are usually wrong. Their fatal flaw is that they are created in the present, which is a paradigm that is by definition, too primitive and ill-informed to fully comprehend the possibilities. (Think of a scientist in 1900 trying to comprehend commercial air travel, mass produced automobiles and the implications of that fellow Alexander Graham Bell’s newfangled invention, the telephone!)

Developments at extreme edges of science can be extrapolated, though, to give at least indications of what the next decade or two might hold. Here are a few things that could emerge in the next ten years, that would fundamentally impact the way that lawyers and many other professionals operate, if they did:

Ambassador John Negroponte, the US Director of National Intelligence, was the guest speaker at the Oxford Analytica dinner at Blenheim Palace on 22 September. His address is very well worth the attention of anyone with an interest in the future of globalization, the changing geopolitical landscape, global macro-strategic trends and terrorism.

Watch it here courtesy of Reuters (just under 19 minutes) or read it here.

According to an article in Legal Week just published in London, Clifford Chance is set to move about 300 support jobs from the UK to India over the next four years, in a cost cutting move that is expected to save about £30 million (about US$57 million at today's exchange rate.)

While the firm is largely looking at accounting and IT functions, the move could affect any support staff, with a spokesperson for the firm commenting: "The criteria is: does this job need to be done in this office?"

Click on image to enlarge

Heres a factoid from the Oxford Analytica conference that caught me a little by surprise:

The USA is sitting on oil reserves more than 3 x the total of Saudi Arabia, in the form of oil shales in the Rockies. Much of these can be profitably exploited at $45 a barrel. Major reasons why they have not been more fully exploited in recent times included fear amongst oil companies that supply and demand could go weird again like it did in the 1980s and the oil price could plummet again; and also that importing from the Middle East was easier and cheaper. Until now. A recent USA Today article, Oil Shale Enthusiasm Resurfaces in the West gives a pretty good overview.

I've just spent a most diverting week at Christ Church at the University of Oxford in England, participating in Oxford Analytica's 2007 Global Outlook Conference. Quite fascinating. Over the next few days, I'm going to be blogging on those 'lessons learnt' that are of particular relevance to strategy in law and other professional service firms.

One of the topics that the Science and Society work group discussed was the likelihood and potential impact of a major outbreak of a deadly strain of Avian Flu. According to the experts, it is absolutely not a question of "if," but rather of "when!" Since at least the 1500s, mankind has been subjected to a major pandemic between every 10 and 40 years. In other words, about two or three per century. It is now 39 years since the outbreak of the last global pandemic (HIV/AIDS) and a fact often lost on folk living in North America and Europe is that about 25% of human mortality worldwide is still today the result of infectious disease.

In the 1918 influenza pandemic, 8% of the world's population perished within a period of months. A similar mortality figure today would yield approximately 500 million deaths, although some current estimates conclude that total mortality would probably not exceed about 150 million. The reality is that it is completely impossible to predict.

Science fiction? Beyond the realms of imagination? Or something that firms can or should be seriously factoring into their risk management strategies? Oxford Analytica regard the threat as severe enough to include on their Global Stress Point Matrix which summarizes the most important risks worldwide. You be the judge, as you read on....

Debates about professional service firm demographics have tended to focus, over the past decade or so, on generational issues between the older "Baby-Boomers" and younger "Generation Xs" and more recently the "Generation Ys". One of the outcomes of these debates has been the institution of mandatory retirement ages and a focus on making firms 'youngster-friendly.' All completely understandable and justifiable, especially when coupled with getting 'up to speed' with technology. But things seem set to change.

Jim Thompson, aged 70, has just stood down as chairman of Chicago headquartered, 800 lawyer Winston & Strawn, after holding the post for 13 years. Read more in this Chicago Sun-Times article. He will, however, continue to practice law full time and also hold down several directorships of publicly listed companies. The firm twice changed its rules about mandatory retirement at age 65, to enable him to stay on.

Across the "pond" in England, mandatory retirement on the basis of age is being declared an unfair labour practice.

Are these indeed early indicators of changes in the age-related drivers in professional service firms generally? Current western demographic trends also support the idea that such changes might be on the way.

The trend down the S-Curve towards wholesale commoditization of the legal services that external lawyers provide to banks just accelerated dramatically. That is: if the tough new strategy that has been instituted by ANZ (Australia and New Zealand Banking Group Limited) to select its external lawyers takes hold in the market.

According to an article titled Banks Force Firms to Fight for Work and Fees in the Australian Lawyers Weekly, the new system has a few marked similarities to the user rating system used by the on-line actioneers eBay:

Asia Business Law has a posting today titled The Future of Law is International. A 'sound-byte' :

"The day is fast approaching when an American law student will not be able to find a job working as an attorney unless he or she has a basic working knowledge of international law and a basic fluency in a foreign language."

Starling David Hunter III, who blogs at The Business of America is Business has a post on Measuring Globalization which would be of interest to strategists in multi-national / global professional service firms.

The Offshore Outsourcing World Blog has a posting today titled Invented in US, Drafted in India, on trends in outsourcing patent applications to India.

What are the strategic implications of your firm and its competitors being able to transmit large amounts amounts of data across the globe, nearly instantaneously and at nearly zero cost?

A few weeks ago, scientists at the Fraunhofer Institute for Telecommunications at the Heinrich-Hertz-Institut HHI in Berlin set a new world record by pumping data down a 160km fiberoptic cable at a rate of 2.56 terabits per second. Click here for an article on this from PhysOrg.com.

That's 2,560,000,000,000 (two trillion, five hundred and sixty billion) bits per second!

Or the equivalent of the contents of 60 DVDs per second!

How often you hear somebody talking about 21st Century thinking; 21st Century technology; 21st Century whatever?

It's comforting to think that we have any sort of handle on what is likely to unfold during this century, isn't it? I mean, technology will continue to advance of course and so will our understanding of life and the universe, maybe even God, but surely life as we know it will probably not change in any really fundamental way .....

The truth is almost certainly that we really don't have a clue!

Let me illustrate:

Accenture have a great article on global trends in the May 2006 edition of their journal Outlook, called Making the Trend Your Friend. Predicting the future, according to the article, is the easy part. (Not sure if I agree with that, but anyway.....) The article lists 10 crucial global trends and the actions that organizations need to take to ride them and so create their own futures.

The 10 trends are:

Here's a link to Al Gore on global warming (and how to deal with a heckling robot.) Obviously, a megatrend not often regarded as being pivotal for professional service firms.

Why?

Well, Bill Gates's dictum that we tend to over-estimate things over a two year time horizon and under-estimate things over a ten year time-horizon does spring to mind. So firms with their offices less than six metres above sea level won't need to move their lobbies to the second floor and rename their neighbourhoods "Little Venice" at least until well after the expiry of the current managing partner's tenure.

On a more sober note, I've certainly got seeing Gore's movie, An Inconvenient Truth, on my list of things to do in the next month or two.

I've just spent a fascinating morning with Oxford Analytica here in Oxford, England. Oxford Analytica is the organization that Clifford Chance turned to, to undertake their scenario planning exercise that underpinned their strategy review last year.

I was privileged to be invited to attend their daily briefing as an observer. This meeting was a round-table "what has happened in the world in last 24 hours that we need to know about," that is modeled on the 'daily briefing' instituted by Henry Kissinger for Richard Nixon. Oxford Analytica's founder, Dr David Young, was one of Kissinger's key advisors.

According to this post on Curt Wehrley's The Bell Curve Scar, the sucking sound that one can hear in London and Europe these days (if you listen carefully) is the sound of the financial centers drawing increasing numbers of emerging companies and financial talent away from the U.S.

Good news for professional service firms east of the Atlantic; somewhat troubling for firms to the west.

Curt describes himself as a recovering statistician and his blog is about "pondering a world that no longer fits a Gaussian curve." His ten point manifesto is worth pondering too.

There's a tendency to overestimate how much things will change in two years, says Bill Gates, and underestimate how much change will occur over ten years. There are a few things, though, that can be predicted with relative certainty.

-Networks will get faster
-Computer processing will continue to increase in accordance with Moore's Law
-Data storage will continue to fall in price
-High definition screens will become cheaper, lighter and more portable
-Mobile phones will rival today's desktop PCs for power and storage
-Software will become increasingly sophisticated, streamlined and intuitive

Several of Microsoft's recent Executive Emails, including Beyond Business Intelligence : Delivering a Comprehensive Approach to Enterprise Information Management and also The New World of Work, provide valuable strategic insights into how some of the most serious problems that face us in the way that we use technology today, are to be addressed. Just a few of the concepts that strategists can look forward to over the next few years (starting next year with the release of Vista and several other new tools) are:

-Seamless and nearly gratis collaboration in teams across the globe
-If not the end then at least a massive reduction in information overload
-A new approach to data storage, away from today's 'file and folder' thinking, that will make it far easier to find the data that you really need.

Sounds appetising! No doubt new problems will arise to replace old ones as they are solved, but Microsoft is firmly focused on addressing the following four issues, at least, over the next decade. To quote Gates:

One of the likely consequences of Thomas Friedman's 'flattening world' is the professions being driven to redefine not only the boundaries between themselves, but at a far more fundamental level what constitutes a profession itself. This is being driven primary by IT, but also by the changing dynamic of the professional/client relationship. The time frame for significant and visible impacts may be more than five years in most places, but in the legal profession in England and Wales the Clementi-induced changes may prove to be a powerful accelerator. The final result could easily be the complete deconstruction and re-aggregation of what we today call the professions.

This makes it critical for the strategists that guide professional service firms to hone their skills in the gentle art of picking up and tracking these trends as early as possible, and in working through the "what-if" scenarios well before they become an issue. At which point, their firms will hopefully have solutions that they have already identified, if not implemented, while competitors are still in the starting blocks.

The early trend indicators are compelling and in many ways the evolution is already well under way.

Can anybody even remotely connected to the internet not have heard about Skype's free or nearly free Voice-Over-IP (VOIP) telephone calls? Surely not. Here's a development at Skype that may be news to you, though.

Alex Osterwalder blogs today on his Business Model Design and Innovation that Skype has introduced a new real-time language translation service for Skype voice calls. The service supports 150 languages and it costs $2.99 per minute. Skype is able to offer this to the market through a partnership with Voxeo and Language Line Services.

So now firms can communicate with other firms across the world, that don't even speak the same language, for nearly free. Yet another indicator of our rapidly flattening earth! Imagine the implications of being communicate with a client who doesn't speak English seamlessly, accurately and inexpensively.

If optimism or pessimism about the economy is an important indicator of what the future really holds in store, then Grant Thornton's 2006 International Business Owners Survey (IBOS) of medium-sized businesses around the world makes interesting reading. The survey was carried out amongst 7,000 + owners of medium-sized businesses from 30 countries during late 2005.

None of the traditional western powerhouses feature in the top ten most optimistic countries. The USA's score has dropped a whopping 50% from 2005 and it ranks No 17 on the global ranking overall. The UK, which also shows a sharp drop from the 2005 survey, is at No 23. A graphic of the survey results may be seen below. The figures show the balance, being the difference between the proprtion of businesses responding positively and those responding negatively.

Strategy exists at two distinct levels:

The Macro Level, where the firm is not able to influence events but needs to be resilient to withstand them and even capitalize on them, and

The Market Level, where the firm can influence events to a lesser or greater degree and needs to do so in order to drive its competitive advantage.

Examples of the former include macro-economic trends like rises and falls of interest rates, war, Black Swans like 9/11 and natural disasters.

Examples of the latter include entry and departure of clients from the market, evolution of new services and maturation / stagnation of old, competitiveness with other firms in the market and penetration of new geographic markets.

Strategy can further be differentiated into deliberate strategy, which is planned for, versus emergent strategy where the firm reacts to something in the market that was not planned for (it may or may not have been foreseen, though) but which requires a change of direction (either an opportunity or a threat.)

One macro-strategic issue that has emerged as a possibility in the past few weeks, and that frankly scares the hell out of me, is the increased sabre rattling amongst senior people in President Bush's administration, about the possibility of attacking Iran. Perhaps even with tactical nuclear devices. The range of unforseen results that this could give rise to are truly frightening and extent to far beyond the Middle East. The global firms in particular, or others with global clients, need to be thinking about what this risk might hold for them. Let's play "what if" with the scenarios for a moment.....

Anybody who still thinks that "outsourcing to India" is and will remain the domain only of low-end services, needs to read this letter written to Steven D. Levitt and Stephen J. Dubner by a ten year old boy, posted on their blog Freakonomics. Levitt and Dubner are the authors of the bestseller of the same name, subtitled "A rogue economist explores the hidden meaning of everything." A great book! One of the best, I think, of 2005.

The letter reads:

Globalization has been a great liberator - but it also poses a threat to Western professionals. This article in Times Online of 9 March makes a great read on the topic of strategic implications for Western professional service firms, of the entry of emerging economies to the global market.

Thanks to Graeme Codrington (a fellow South African who has written a great book on intergenerational issues between Baby Boomers, Gen X and the Millennials, called Mind the Gap) for pointing to me to this. Graeme's posting on this topic on his blog is here.)

This posting is more about one of the most significant global mega-trends and the impact that it is likely to have on the global macro-economy and politics over the next decade or two, than directly about professional service firm strategy.

"The Long Emergency" is a concept coined by Jim Kunstler. Jim is a man of strong feelings. The unfortunately chosen name of his blog is not one that can be repeated in polite company. His hypothesis is no less than the collapse of American society as we know it, as a result of fuel starvation. His book by the same name is summarized in this article, and a video of an interview with Kunstler on BBC2 (just over 39 min) is available here.

PricewaterhouseCoopers (PwC) have just concluded their ninth annual global CEO survey, titled Globalization and Complexity, Inevitable Forces in a Changing Economy. 1400 CEOs from across the globe participated. Globalization, it is clear, is growing from strength to strength. But what of the professional service firms that serve these increasingly global organizations?