Adventure of Strategy

The Resource-based View of corporate strategy dictates that a firm's basis for competitive advantage lies in the way that it applies the unique bundle of valuable resources available to it. In this case, one person's strategy for getting from "A" to "B" appears to have included a somewhat unusual resource ..... a garden hose. (Photo taken in a parking lot in South Africa.)

Who says British lawyers are a dour lot? Not true! In this video, now out on YouTube, an all-star cast from law firm Macfarlanes show that they can do far more than strut their top tier tax and finance stuff, as they bring down the house at Koko night club in London at at their annual charity cabaret night. Good for Charles Martin and his team! It looks like The Lawbreakers at Wilsons may have some competition as to who "rocks" more :-)

Hat-tip to RollOnFriday.

Courtesy of Add Letters; hat-tip to Verasage.

The crux of the billable hour debate really seems to lie primarily in one very basic conundrum. That is: how else to accurately and sensibly value the output for a wide diversity of legal services, other than "by the hour," with anything like the same ease of applicability. It seems almost sacrilegious to ask the question .... but this by no means the first time that the dilemma has arisen about sensible metrics to measure performance in the production of diverse products or services.

 

In the erstwhile Soviet Union, where factories were state controlled and performance was measured in terms of output rather than profitability, similar problems emerged. When the product was simple and homogeneous (tons of iron refined; kilowatt-hours of electricity produced, for instance,) the issue was relatively straightforward.  When a wide range of products or services were involved, though, output either had to be defined in very specific terms for each and every item individually, or it had to be defined in general terms. In professional services, where the nature and range of the service being delivered cannot really be accurately defined until it is actually delivered, the availability of the former option often falls away. Defining output in general terms in the case of professional services, on the other hand, is well known. This is precisely what "billing by the hour" constitutes. The problem is: it was precisely where a general and often somewhat arbitrary measure of value was used that problems emerged for the Soviets, much as they do in law firms today.

 

“Whenever orders are given in units of weight, managers find it easiest to fulfill their output plan by making goods unnecessarily heavy. Thus, writing paper or roofing materials become too thick, screws and bolts are manufactured predominantly in larger sizes. The Soviet humor magazine Krokodil once carried a cartoon, showing a nail factory which had fulfilled its output plan by producing one single nail, the size of the plant, suspended from the ceiling. To give the orders in square meters of writing paper or in millions of nails would have the opposite, equally undesirable, effect, as paper would then be too thin or nails available in smaller sizes only."

Shaffer, Harry G. 1963. "A New Incentive for Soviet Managers." Russian Review, Vol. 22, No. 4 (October): pp. 412. (Thanks to Dr Michael Perelman at California State University for pointing me to this reference.)

 

I wonder if the current wave of enthusiasm for alternative fee arrangements and value pricing (which I enthusiastically endorse and with which I join) is going to achieve what the Soviets could not, and come out with usable measures of value for all of the wide range of diverse services that law firms deliver to their clients, in ways that make economic sense for both buyer and seller and are easy to apply. Hopefully it will ....

What was Cinderella’s slipper made of?

As just about every person who grew up on European fairy tales would know, the answer would be “glass.” But .... as Pascal Costantini, managing director in Deutsche Bank’s Global Market Research, points out in my current bedside reading Cash Return on Capital Invested: Ten Years of Investment Analysis with the CROCI Economic Profit Model (Butterworth-Heineman, 2006, and yes, my wife thinks I’m weird too :-) …. they would be wrong.

 

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Incontrovertible evidence that:

1.  No matter how hard you try, things might still go disastrously wrong .... or alternatively ....

2.  Sometimes lunch just falls into your lap when you're lying around doing nothing.   :-)

I snapped this picture of a Daily Telegraph advertisement on a train station in England during my last trip over there and just posted it on Facebook. A couple of people have commented on it so I am posting a high resolution image of it here and a PDF here in case it is of use to any of you good readers of my blog.

Who says firms cannot change? In the 1930s, IBM made business equipment like weighing scales; in the 1950s Lamborghini made tractors and in 1979 Nokia made wellington boots. So, it is that hard to reinvent oneself? The answer of course is "yes it is .... and that is so why so few succeed," but for those that are determined to do so, hopefully this will help with a little inspiration!

My old friend John Henry Looney just sent me a set of slides for a webinar that he is presenting later today on the topic of sustainability, with the request that I critique them. One of the slides shows the above graphic (click here to see a larger version) that illustrates the countries of the world sized relative to their respective ecological footprints. Looking at it reminded me of Wall Street, circa +/- January 2007. (In other words, at the height of the pent up pressure prior to the collapse.) I would not be at all surprised if the imbalances portrayed in the graphic provide a pointer to a future global economic crisis .... especially when considered together with climate change and the increasing ease with which information flows across the world.

Perhaps even the "next" crisis?

Happy Earth Day :)

I couldn't bear to leave such a depressing post as the last one as my most recent entry on my blog, so here's a more cheerful one ..... To all my Chinese readers: "Happy Tomb-sweeping Day!" Actually a bit late .... it was yesterday, April 6. So "Happy Araw ng Kagitingan" (Day of Valor) to readers in the Philippines for today, 7 April, as well. It's apparently World Health Day today, too.

Hat tip to Sara Naumann for Qingming!

Finally, a definition of globalization to which I can relate .....

Question : What is globalization?

Answer : Princess Diana's death.

Question : Why?

Answer :  An English princess, with an Egyptian boyfriend, crashes in a French tunnel, in a German car with a Dutch engine, driven by a Belgian, who was drunk on Scottish whisky (spelled whiskey in America,) followed closely by Italian paparazzi, on Japanese motorcycles. She was treated by an American doctor, using Brazilian medicines. This was originally written by an Australian, and is now being posted on a blog by a South African, living in The Bahamas, using American technology (my Mac computer) onto a blog being hosted on Lexblog's server, also in America. You're reading it in any one of the 195 countries in the world, probably on your computer that uses Taiwanese chips, and a Korean monitor, and software packaged in Ireland that is supported by a help desk in India. That computer was probably assembled by Bangladeshi workers in a  Singapore plant, transported by Indian truck-drivers, hijacked by Indonesians, shipped on a Panamanian registered ship with a Greek captain unloaded by Maltese wharfies, and (if you're in the USA) trucked to you by Mexican freeloaders.

Tongue firmly in cheek but that, my friends, is Globalization!

There's apparently more hype than substance to the new Indian "$10 laptop" which is apparently not a laptop at all but more a glorified hard drive, according to this article in Fast Company.

Is the age of portable computers about to take another quantum leap? Somewhat upstaging the XO-1 / $100 laptop project sponsored by the One Laptop per Child project, developers in India have now announced a new laptop called Sakshat that they are determined will cost no more than 500 rupees or ..... US$10 / £7 each!!!

Aimed at providing e-learning to those that fall outside the formal education systems in India and also Africa (see here,) the computers have 2GB of RAM and wireless capabilities.

Imagine a world where computers, and knowledge, and the means to transmit that knowledge across the world safely and in large quantities, is "nearly free ...." It seems that world is no longer decades away but, just perhaps, almost upon us.

How will this influence your clients; your practice; your firm?

Imagine a world where children in the far-most flung corners of Africa and Asia are able to grow up computer literate and at least reasonably-well educated.

How will that influence supply and demand for knowledge workers across the world?

We live in truly fascinating times!!!

According to another communique received from the Brenthurst Foundation this morning, the inflation rate in Zimbabwe is now "6.5 quindecillion novemdecillion per cent." In plain English, that means that the long-since functionally worthless currency now halves in value every day. The economy of this country (once one of the most prosperous on the continent) deteriorated first slowly, over a decade or more, and then precipitously in the last year or two as "mad Bob" Robert Mugabe's lunatic policies reached full effect. A warning to all of us that are tempted to ignore systemic problems in the hope that they will self-correct.

Zimbabwean inflation rates over the past decade leading up to the tongue-twister figure above were:

1999 - 59%	2004 - 350%
2000 - 56%	2005 - 238%
2001 - 72%	2006 - 1,017%
2002 - 133%	2007 - 6,724%
2003 - 365%	2008 (July) - 231,150,889%

 

All this gobbledygook about a billion of this; a trillion of that. Talk about mental overload and intellectual stasis! How much, exactly, is a trillion dollars? Well .... I did a quick Google search on banknote thicknesses. They apparently vary mostly between 0.07mm and 0.15mm, so let's settle on 0.1mm each which yields (close enough) about 250 per inch in a vertical pile.

Imagine, then, a vertical pile of $100 (US, of course) bills:

$1,000,000,000,000 ($1 trillion) = 10,000,000,000 x $100 bills = 40 million inches = 631 miles (or just over 1,000 kilometres.)

So, next somebody makes a "trrr" sound before an "illion" sound when referring to an amount of money .... you have some idea how staggeringly large that amount really is.

Ever wondered what $50 billion actually looks? Well .... it's the brown note above.

Apparently it will buy you two loaves of bread but with inflation at an estimated 231,000,000%, by the time you're finished reading this it will probably only buy you one. (I should insert a 'smiley' symbol here, I suppose, but I can't bring myself to.) The $50 million and $250 million dollar notes in the picture will obviously buy far less. $1 million notes are now cheaper to use as toilet paper than the real thing, which shops in Zimbabwe stopped stocking a long time ago anyway.

Except for his excellency the country's tin-pot president, Robert Mugabe, who is currently on holiday in Malaysia having lifted $92,000 from his private piggy bank, the Reserve Bank of Zimbabwe, for the purpose. That's $92,000 in U.S. currency of course. Even at the official rate of exchange, which bears no resemblance whatsoever to reality, that would be  $836,754,587,636 in "Zimdollars" today, according to the OANDA website. On the black market, the Z$1 trillion to USD1 exchange rate was surpassed way back in August.

Back then, the breakfast at the famed Meikles Hotel would set you back a cool $10 trillion. (Hat tip to Christopher Reichert at 'Life is Never Dull.')

All of which might be the source of some amusement were it not for the sheer depth of human tragedy that it reflects in the life of the average Zimbabwean.

 

From Gaius Cornelius Tacitus (ca. 56 – ca. 117,) a senator and historian of the Roman Empire. More evidence that there truly is nothing new under the sun. Hat tip to Mark Chandler, GC of Cisco, who used this quote in his luncheon speech to the Northwestern School of Law’s 34th Annual Securities Regulation Institute in January 2007, which I re-read this morning. As the WSJ law blog described it in a post titled The Last Vestige of the Medieval Guild System, [still] "a speech worth reading" and no less important today than when it was first delivered. The WSJ blog post links to the speech.

 

 A real eye-opener, if you are one of the majority of people of Planet Earth who mistakenly believe that "money" consists of the banknotes printed and the coins minted by Governments. Also a very good primer on how the credit crisis spiralled out of control.

Description from Google Video:  "Paul Grignon's 47-minute animated presentation of "Money as Debt" tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its "Duncan Initiative" received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States."

Hat tip to The Obvious? and Anecdote.

Video link below.

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Here's a great little tale courtesy of Shawn Callahan "down under" at Anecdote, in Australia, about some R E A L L Y long range planning:

New College, Oxford, is of rather late foundation, hence the name. It was founded around the late 14th century. It has, like other colleges, a great dining hall with big oak beams across the top. These might be two feet square and forty-five feet long.

A century ago, so I am told, some busy entomologist went up into the roof of the dining hall with a penknife and poked at the beams and found that they were full of beetles. This was reported to the College Council, who met in some dismay, because they had no idea where they would get beams of that calibre nowadays.

One of the Junior Fellows stuck his neck out and suggested that there might be some oak on College lands. These colleges are endowed with pieces of land scattered across the country. So they called in the College Forester, who of course had not been near the college itself for some years, and asked about oaks. And he pulled his forelock and said, "Well sirs, we was wonderin' when you'd be askin'."

Upon further inquiry it was discovered that when the College was founded, a grove of oaks has been planted to replace the beams in the dining hall when they became beetly, because oak beams always become beetly in the end. This plan had been passed down from one Forester to the next for five hundred years. "You don't cut them oaks. Them's for the College Hall."

In this age of quarterly earnings, annually distributed profits and deliberately engineered redundancy, reading about foresight such as that is truly a breath of fresh air!

At 3 PM on September 4 1882, Lower Manhattan was transformed as Thomas Edison’s spectacular, cutting edge electric illuminating system went into operation. The American public was astounded at this revolutionary new energy supply. Clearly, it was only a matter of time before it would take over as the primary energy source in industry too.

So it did, of course, but four decades later, only half of America’s factories were fully electrified. Why did it take so long for a clearly superior technology to establish itself?

The reason is simple:  The very best, state-of-the-art factories at the time (the product of a century of refinement and innovation through the course of the industrial revolution,) were designed in such a way that electricity provided little advantage. Unlike today’s factories, where every piece of machinery has it own electric motor, factories at the end of the 19th Century were designed around central energy sources. Machines were powered by elaborate systems of pulleys and shafts called “group drives” that transferred energy from the central source (typically a water turbine or steam engine) throughout the factory. The most efficient way of doing this was to minimize the length of the drives. Factories, as a result, were multi-storey buildings with one or more shafts per floor, each driving a group of machines. The entire factory, in effect, was designed around the limitations of the power supply.

So what use was this newfangled electrical energy? Initially, it was used to provide lighting and steam/water turbines were replaced with central electrical motors. Electricity only came into its own when a new generation of factory buildings started being built, where machinery could be arranged and rearranged to optimize production line efficiency. These were typically sprawling, single storey plants. Small, efficient electrical motors powered each machine independently. Electrical wires replaced the cumbersome group drives. There were no more awkward steps and elevators to navigate between floors.

Replacing the factory buildings was a slow and expensive process, however. One does not simply through out such capital investment and the know-how built up over a century or more.

This little case study provides a valuable lesson in how innovation progresses in law firms too. Many of the great ideas out there today provide little advantage to law firms as they are currently constituted.

The Chairman of a very prominent national US law firm mentioned in a conversation that we were having recently that except for the computers, there is little difference in a law office today, to what existed 50 years ago. The arrangement of offices, structural hierarchies and suchlike are still “just as they always have been.” Other practices like hourly billing and aversion to alternative work arrangements would fall into the same category. This is  more than just generational differences in perception between Baby Boomers / Gen Xs / Gen Ys. The changes that people talk about today are challenging the very foundation of the way in which legal services are being provided to clients.

The good news is that just as electricity was around for 40+ years before it was fully adopted, so many of the solutions to the problems facing law firms today are also out there, in plain sight, in the market. The challenge is not so much in finding the solution, as in overcoming the corporate inertia of the firm’s business model, to get those solutions implemented.

Billing by the hour a problem? Fine … replace it with value pricing or risk sharing models. But how does one actually do that with the same ease as filling in time sheets? (My view on the billable hour is that it is an excellent example of something that will eventually go the way of the dodo, but first the "factories need to be reinvented.")

“Generation Y’s” want flexible work arrangements and a work/lifestyle balance? Fine … let them work from home and other remote locations. But how does one actually do that while maintaining teamwork and service quality?

You want to be able to harness the combined intellect of your firm whenever necessary, to craft strategy, to develop virtual client teams, to share knowledge? Fine … create an online collaborative system using one of the emerging Web 2.0 internet based tools (see here and here.) But how does one actually do that in an environment where there is deep suspicion about such tools?

Performance levels differ widely amongst individual lawyers and sometimes, truth be told, some (ever more expensive) junior associates do better work and are more valuable to the firm than some of their senior colleagues. Fine … develop a system that easily measures performance and links it to reward in a way that is seen to be transparent and fair. But, how does one actually do that where the hierarchy of partners and associates/assistants developed over a century is heavily entrenched, true performance is difficult to measure and compensation discussions are often a source of considerable stress?

Some firms are quicker than others in developing ways to implement solutions. Market changing revolutions that effectively deconstruct the environmental parameters of a profession, like those that will follow final enactment of the Legal Services Bill in England and Wales will catalyse a whole slew of innovations and firms elsewhere would do well to watch those in England carefully. Likewise developments in Australia. Sometimes, there may be some “first mover advantage” for firms that adopt new practices quicker. More often that not, though, it is the “second mover” that gains the real advantage. Innovations are typically adopted sequentially. First: by small, fringe firms with entrepreneurial leaders and less corporate inertia. Second: by market leader firms that can afford to “try” something new without the change (or possible failure) being threatening. Last: by the mainstream in the middle, who are driven (rightly, in most cases) by precedents.

If you are a leader in a mainstream firm, the key is therefore to constantly be a thoughtful observer of what your competitors are doing and what your people are saying. Then, to have the courage to shamelessly “steal” the best ideas that others come up with and build them into your firm.

Hat tip to Alan Greenspan, who wrote of Edison and the adoption of electricity in industrial America in his book The Age of Turbulence: Adventures in a New World, on page 474-475.

OK, as co-inventor of the term brainswarming (and proud of it!) I am probably the last person that should be pointing out new jargon, but here's some that has even my tongue in a knot.

Frenemy? Froe? Ouch!

Note, though, that the terms also originates from EAST of the Atlantic, not the oft-maligned (for jargon invention) US of A ... and from one of the top minds in the strategy business. That is: Sir Martin Sorrell, founder + CEO of global marketing and communications giant, WPP.

A very sound idea underneath, too. Read Bill Taylor's Harvard Business article The New Language of Competition to see why. Bill is former CEO of Fast Company. His book Mavericks at Work: Why the Most Original Minds in Business Win is one of the best business books that I read in the past year. Here's a 'sound-byte' from his article:

"... the most striking insight came from Sir Martin’s discussion of the competitive dynamic between his firm—a global marketing powerhouse—and digital powerhouses such as Google. One participant wondered: Are the new Internet giants allies of or rivals to marketing giants such as WPP?

Certainly, Google is a business partner of WPP, Sir Martin replied. (In fact, WPP is Google’s biggest customer.) At the same time, he explained, Google aspires to play a bigger and bigger role in how advertising works, from print to radio to the Web. In other words, the Internet giants are both friends and foes—or “froes,” to use Sir Martin’s phrase. They are both friends and enemies—or “frenemies,” to use his other phrase.

Froes. Frenemies. Those clever little terms capture a huge transformation in competition."

Think about it:

Do you have competitors whose absence would harm your business? Perhaps because of some relationship that your firm has with them; equally possibly just because they are there, influencing the market in their own way? So much corporate strategy is premised on blunt "win-lose" assumptions. In the race to "win," synergies and cooperative dynamics (that adversarial competition often kill) are overlooked. In today's complex and ever changing world, that's myopic. Today's competitor, all so often, is tomorrow's ally.

On second thoughts, maybe the terms aren't quite so bizarre after all ...

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.

Ants achieve great feats together, that are far beyond the abilities of individual ants with miniscule brains. How do such simple individuals achieve so much complex and intricate behaviour as a group? The answer lies in a concept called swarm theory. A key aspect is … nobody is in charge. The “queen” plays no function except to lay eggs. Instead of management, an ant colony relies on countless interactions between individual ants, each of which is following simple rules of thumb.

Mark Thoma at the blog Economist’s View has a post today titled Swarm Theory with an excerpt from an article by Peter Miler of National Geographic on that topic, with a link to the full article.

Miler points out that some companies such as Air Liquide have used swarm theory (“ant-strategies”) to solve complex business problems such as … routing trucks ... or channelling telephone calls across a network.

Which does raise the somewhat “off-the-wall” question: Are there aspects of law firm management that would be far more efficient if they were deliberately self-organized, with a few “rules of thumb,” rather than centrally controlled? (Especially if such central control is unpopular or, worse still, actively resisted.) I suspect the answer to this is not only a “yes,” but one would not be hard pressed to come up with quite a long list of aspects where this is already the case, deliberately or not. The next question would be: what can we learn from swarm theory, at least metaphorically, to improve these aspects?

I have been working with David Terrar, an Enterprise 2.0 specialist based in London, on a concept that we are calling "Brainswarming," that uses swarm theory to solicit firm-wide input into a firm's strategic planning process using a dedicated enterprise blogging platform as a tool. Click here to download a short article by David on this topic. The tool, which is based on the Blogtronix platform is also being used by the brand-new Reuters Interactive, amongst others. It is about to be rolled out commercially. Brainswarming is particularly well suited to diverse and complex organizations that are geographically dispersed across multiple offices. Watch this space!

 

When Richard Branson was at school, his headmaster predicted he would wind up either a millionaire or in jail. Since then, he's done both. He talks to TED's Chris Anderson about the ups and the downs of his career, from his multibillionaire success to his multiple near-death experiences, from Virgin's line of spacecraft (including some amazing footage of what a trip in this spacecraft would be like) to the failure of the Virgin condom. He also reveals some of his (very surprising) motivations. (Recorded March 2007 in Monterey, California. Duration: 30:44.)

The late Charles Schultz, creator of Peanuts, had a philosophy on life that we can learn from. Perhaps that's why Peanuts was one of the most popular and influential comic strips in the history of the medium. Take a look through the following quiz and you'll see why. You don't have to actually answer the questions. Just read straight through and you'll get the point.

1. Name the five wealthiest people in the world.

2. Name the last five Heisman Trophy winners.

3. Name five winners of the Pulitzer Prize (or the Nobel Prize in Literature.)

4. Name the last five Academy Award winners for best actor / actress.

5. Name the last five World Series winners.

How did you do?

Not very well? That's OK. The point is: none of us remember the headliners of yesterday. The answers to the above questions represent people at the very pinnacle of their fields. But the applause dies. Awards tarnish. Achievements are forgotten. Accolades are buried with their owners.

Here's another quiz. See how you do on this one:

1. Name five teachers who aided your journey through school.

2. Name five friends who have helped you through a difficult time.

3. Name five people that taught you something really valuable.

4. Name five people who coached you well and really made you want to improve your performance.

5. Name a consultant that really served you well with solving a difficult issue in your firm.

Easier?

The lesson: The people who make a difference in your life are not the necessarily the ones with the best credentials or the most well-known brand. They are the ones that really care about what they do for you and your firm, personally. Think about that next time you engage a consultant or, if you are a consultant, next time you make a pitch to a client. The question is not just: "are they qualified and competent?"  The question is: "will they really serve us well?"  While objectivity is always necessary in solving complex business problems, the ones that serve best (including coming up with the best solutions) are usually those who actually care, too.

Hat-tip to my wife, Creena, who emailed this to me this morning!

While one cannot do much about the name that one is born with, one does have to be careful about the impression that the name of one's firm conveys in the market. A reader of Roll on Friday, the irreverent weekly commentary on the legal profession in the United Kingdom, sent them this photo of a nameplate that he spotted of a firm in Ireland.

A "fib" (plural: "fibs,") for those on the western side of the Atlantic (and many other parts of the world too,) is a uniquely British colloquialism for a childish "untruth!" As in "telling a fib."

What can one learn about leadership from an angry mother-cow? Before you dismiss the notion as too "off the wall" even for Millard, ye who be serious-minded folk, consider the author: Dee Hock  is founder and former CEO of Visa USA and Visa International, now a $1.25 trillion enterprise owned by 21,000 financial institutions. So if he told me that there were lessons to be learned from angry mother inchworms, I'd still listen.

His article is titled The Art of Chaordic Leadership and it was published in Leader to Leader seven years ago. It's a darn good read. "Chaordic" is a term that Hock invented to describe forms of organization that are neither rigidly controlled nor anarchic; a hybrid form of consensus decision-making. If you don't have the time to read the whole article, at least click below and scan through his bullet points on chaordic leadership.
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Samedi Soir, Juan Les Pins (Ted Seth Jacobs, 1981)

One of my friends here in Freeport was formerly the CEO of a very substantial North American financial services organization and a serial entrepreneur and owner of a fair number of other businesses besides. He is also a very competent artist and is currently devoting much time and effort to honing his skills as a painter, under the tutelage of the best mentors that he can find.

He and I found ourselves talking over coffee this morning, of analogies between art and strategy. Art ranges extensively from the most appalling rubbish to the most stunning masterpieces, with much in the “average” band in between. So it is with strategy. Some is positively dysfunctional. At the other end of the range is the strategy that one finds in place in firms that are truly “getting it right.” With much, again, in the “average” band in between.

We got to debating what differentiates the exceptional from the average. A little esoteric, perhaps, but here goes with some of the ideas that emerged: Continue Reading

A pretty horrifying movie clip. Nobody would disagree. What is it that makes a pilot fly a perfectly good airplane into the ground? In this case, a highly experienced, field rank pilot with three equally senior colleagues on board?

All too often, it is what the Air Force calls "task fixation." That is, the pilot is so focused on aiming at his target, or executing a turn, or whatever, that he or she fails too notice that the plane is banking too steeply, or that the ground is approaching too rapidly.

A sombre lesson for professionals who are so focused on serving their clients, that they fail to pay attention to changes in their firm or it's market. It is not often that a firm actually 'crashes and burns' (although recent law firm examples such as Coudert Brothers, Altheimer & Gray, Broebeck and Arter & Hadden clearly show that it is not unheard of.) It is far more common for a situation to be saved but only after serious damage is done because danger signals are not heeded before they translate into crisis.

The Movies are what Tom Cruise’s character Maverick (in the 1986 movie Top Gun) would call a “target-rich environment,” when it comes to metaphors for strategy. My colleague Gerry Riskin and I got to discussing this while watching the Academy Awards in a hotel room a few nights ago. He mentioned a really good one featuring Jack Nicholson in the 1970 movie, Five Easy Pieces. I was in Grade 4 in 1970, so I doubt that many others my age or younger have heard about it. So here goes … Continue Reading

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: Continue Reading

The folk at Visual-Literacy.org have developed a monumental summary of graphics used in business management and strategy, grouped by type into a Periodic Table of Visual Methods. The table is essentially the same concept as the Periodic Table of the Elements that many would remember from high school chemistry. As one moves the mouse over each block, a pop-up window emerges showing what each type of graphic looks like. Wow! I shudder to think how long this all took to put together!

Hat tip to Seth Godin and David at Boingboing.

The Attila the Hun approach to managing employee satisfaction!

Mark Thoma’s posting titled Nooks, Crannies, and Dot-Com “Get Big Fast” Bubbles on Economist's View raises an issue that translates well into professional service firm strategy in the modern era.

He takes a new look at the dot.com crash and questions the conventional view of its cause, namely:

"Too many companies rushed into the market in defiance of all known business fundamentals, and when the crash came, all but a tiny fraction of them just as quickly imploded and went away."

This view, Thoma reports, may be complete nonsense. Continue Reading

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?

We're in the client service business; we just happen to practice:

- law
- accounting
- consulting engineering
- medicine
- investment banking

etc, etc, etc

It's way beyond a cliche to say that professional service firms depend utterly upon their clients. Yet how many would really, strapped to a chair with truth serum in their veins, describe that relationship the way that Colleen Barrett does?

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A bit of soul-baring. What the heck - it's late Friday afternoon! Have a great weekend!

Came across the De Vito quote on The Recruiting Edge, while looking through stuff on talent retention, by the way. Thanks!

Seth Godin has a post titled Thinking About Snakes on a Plane that makes a very important point:

Having everybody know who you are is something very different to having everybody want to buy what you're selling.

For those that missed the hype surrounding the movie, the makers used the internet to get feedback on some scenes and invited those that provided input to a highly publicized pre-release premier. A new, innovative and interesting idea. But the result? Disappointment at the box office. Not much likelihood of an Oscar nomination either.

Maybe it will become a hit when it is released as a DVD. Crappy movies sometimes do.

The same cannot be said of professional services, of course. Crappy service seldom gets a 'second chance.' So much for spending huge effort on name recognition, either. Far better to devote that effort to identifying your key clients and treating them like royalty.

Roy Andersen is a man of many diverse talents. Besides being Chairman of the Board of South African insurance giant Sanlam and civil engineering contractors Murray & Roberts, as well as of the South African interests of Richard Branson's Virgin group, he also serves as a major general in the South African National Defence Force, where he commands the Defence Reserves for the South African Navy, Army, Air Force and Medical Services. He is a chartered accountant by profession, which all goes to show that one should never underestimate those that choose to arm themselves (primarily at least) with pen and pocket calculator! Being an artilleryman, this particular accountant's other weapon of choice would no doubt be be the G6 Self Propelled 155mm Howitzer!

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Christopher Taylor is either the most erudite ten year old that I have ever come across, virtually or otherwise, or somebody that really likes this picture of himself as a child. He has a fascinating post titled 100 Years on his blog Word Around the Web about what the USA was like 100 years ago. Which is, of course, a blink of an eye ago in the greater scheme of things.

Here are ten of the century-old statistics that he mentions :

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Gerry Riskin is a good friend and colleague in Edge International so I'm probably not dispassionate enough to make the statement absolutely objectively, but I truly believe that he is the uber-guru of all gurus when it comes to helping lawyers and law firms build client relationships. I've seen him in action in this area with accountants too, equally effectively. In short, he's astounding!

I don't mean what is usually called "marketing." In other words, the also important but different business development activities that professionals hire others to do, often while muttering the old refrain: "If I'd wanted to be a salesperson, I'd have become a salesperson." What I do mean is empowering the lawyers themselves to build strategically important, deep, valuable, bulletproof, highly profitable relationships with their key clients.

Which, of course, is something that it is CRITICAL to have firmly front-and-centre in any sensible strategy.

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"There is no better example of the need for embracing change whilst maintaining a sense of continuity than in the requirements for future command and control."
Joint High Level Operational Concept
UK Ministry of Defence

The Summer 2006 edition of RUSI Defence Systems, which I receive by virtue of my membership of RUSI (the London based Royal United Services Institute) contains an interesting article titled 'The Impact of Technology on the Art of Command.'

Written by Roger Mendham, defense advisor at LogicaCMG, the article obviously concerns the art of military command. However, it has several important insights for strategy in professional service firms.

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Here's a series of pictures that my friend and colleague Nick Jarrett-Kerr emailed around Edge International recently, with the admonition:

"For any who are in danger of being tempted to think how great we are, take a few seconds to check this out and be humble!!!"

The size of the Earth, relative to our closest neighbours in the solar system:

Click image to enlarge

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Frequent readers of this blog will know by now that I have a particular interest in differences in culture across different countries or social groups; the alignment of culture and strategy; and the proactive evolution of culture in professional service firms to support and drive strategy.

Here's a quick quiz that illustrates one of the key variables in culture, especially internationally e.g. between east and west. I'm sure that you'll find it fascinating.

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Click image to enlarge

We all have our little indulgences in life. One of mine is bibliophilia, or the love of books. (My lovely and long-suffering wife is less charitable and would probably prefer to refer to it as bibliomania!) Between the thousand or so books on strategy of all kinds, management and organizational theory; to my quite reasonable collection of books on African exploration, hunting, natural history and related; and to say nothing of my collection on military history, my study needs to be the size of an average dining room.

The latest edition to my library is quite special. It is an exceedingly rare, vellum bound, original 1580 edition of a Renaissance geographical and literary work by the great Calvinist scientist and theologian Lambert Daneau. A slightly older contemporary of Galileo, Daneau was one of those of that time who, like Galileo, also held the view that the earth was not flat but round. He was also a prominent witch hunter, which was unusual for a protestant (at that time anyway,) but that is a story for another time. I did not buy the book for its age alone (426 years,) but rather because it is a very useful aid in understanding and communicating the evolution of strategy.

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Did you ever see the movie "Jaws?" If you did, it probably fair to say that you may be hesitant about getting close to a great white shark in the open sea, and the photo above is making your hair stand on end! The more adventurous amongst us (like Brad Pitt) might repress those memories of "Jaws" sinking the boat and snacking on the salty old fisherman, and get up close to a white shark from the safety of a ski boat. The bravest amongst us might even go down in a shark cage and view these magnificent apex predators under water. (This has become a major tourist magnet at the small southern Cape village of Gansbaai, near Cape Town.)

But actually get right up next to a white shark, in the water, without a cage? Surely that's complete lunacy?

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Imagine compressing the last 5000 years of human history into a 24 hour clock .......

Late last year, I was privileged to be asked by a group of leaders of the Association of European Lawyers, representing some of Europe's top commercial law firms, to conduct a one day workshop on managing international cultural differences in business. The workshop was held in Reykjavik, Iceland, home of the oldest continuously functional democratic parliament in the world, the Althing.

As an introduction to the workshop, I wanted to do something to put mankind as a whole in perspective. The way that I went about it was to create a highly graphic PowerPoint presentation that indeed compressed the last 5000 years of human history into a 24 hour clock.

5000 years ago mankind was already beginning to organize in the forerunners of urban settlements. Crops were being cultivated and livestock had been domesticated. The Judaic calendar was already at year 575. There was art, music and language. The people on the earth were the same species of man as today, Homo sapiens sapiens, and had been for at least 30 000 years. The first hominids of the genus "Homo," Homo habilis, emerged 2.5 million years ago.

My clock started at midnight, being 5000 years ago, passed noon 2500 years ago and ended in September 2005 at 12 midnight again. The presentation itself took snapshots of a range of events over the period, and made for a truly thought provoking exercise. Clearly, much of what we believe is modern is as old as the ages and deeply wired into our psyche, and much of what we regard as ancient happened just an eye-blink ago, in the greater scheme of things. I can't reproduce the actual graphics (the file is enormous) but the chronology of the clock is as follows:

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"What we sell is the ability for a 43-year-old accountant to dress in black leather, ride through small towns and have people be afraid of him."

Harley Davidson executive quoted in Results-Based Leadership and quote itself sourced from a slide in a presentation by Tom Peters. (Thanks, Tom!)

Which leads us inexorably to the question:

What does your firm sell?

And now for something completely different .......

Here's a completely original idea for your next firm retreat / workshop / conference, once again from Garr Reynolds' blog Presentation Zen. Reynolds provides us with a wealth of invaluable tips on:

- Being naked
- Why we are afraid to be naked
- How to present naked

Please don't post comments below until you've actually read Garr's posting, after which they would be most welcome (as always.)

Click pic to enlarge

Believe it or not, this is a map of California. No, it's not a futuristic map following a cataclysmic earthquake. It is actually several hundred years old (1662.) Stewart Black and Hal Gregerson used one similar to it in their book Leading Strategic Change as an illustration about times when there is too much wishful thinking and too little knowledge.

How the map came to be drawn that way has as much relevance for 21st Century professional service firm strategists as it did for 16th Century explorers.

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Knowledge is not power. Power alone is power. What knowledge does is provide the means to determine where to focus that power, for maximum effect.

Knowledge can even be dangerous. Poring over it to excess paralyzes action. Different elements may be in conflict with each other, suggesting sometimes even diametrically opposed courses of action. There are almost always gaping gaps. It is here that decisive leadership and a robust decision making process is paramount. Every time, the less impressive strategy, ferociously executed, beats the perfect strategy that is executed timidly, if at all.

In many quarters, it is not politically correct to equate business to war and I would be the first to agree that parallels need to be drawn very carefully indeed. On the other hand, the issues in military and corporate strategy are often strikingly similar. The first two paragraphs of this posting may have come as easily from a business strategy book, as a military science manual.

One of the concepts that I believe is particularly applicable in business is that of schwerpunkt. It was developed by one of the greatest military theorists, the Prussian Karl von Clausewitz (1780 - 1831,) author of the book On War.

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And now for something completely different .....

No sooner had I posted my previous piece that multitasking doesn't work, when I came across this piece of equipment, the Treadputer. It was created not by a Millennial tecchie-teen but by a 40 year old 'Gen X' venture capitalist, (Brad Feld.) A treadmill combined with a telephone combined with a multi-screened computer combined with a sound system, with voice recognition, bluetooth etc incorporated. I stand humbled!

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.

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At the beginning of March, Wikipedia published its millionth article in English. Or, rather, a Wikipedia reader somewhere on planet earth did. By today, it had climbed further to 1,024,000+ articles. Readers of my blog will have noticed that I use it quite frequently as a reference for things in my postings that may need explanation.

Is it accurate? How accurate can something that is compiled by the public at large be? Surprisingly so, actually. A recent study published in Nature put it in more or less the same ballpark here as Encyclopaedia Brittanica!

Bottom line: Wikipedia is an invaluable resource for strategists, managers, lawyers, accountants and people looking for a recipe to prepare huitlacoche. Thanks to Seth Godin for alerting me to the existence of this as-yet-untried delicacy (corn smut) on his blog posting today, Fungus (which has a parable in it about people trying new things, or not!)

Comments, as always, are most welcome. Please post below.

Ever stopped at a traffic light, next to a car with its windows literally rattling in time to the bass of its sound system? Any doubt that the person inside that car is hearing that music? I mean: REALLY hearing it, along with everybody else at the intersection?

Think for a moment of a song that you know by heart. Perhaps one that changed the way that you thought about life, back when you were young enough to allow music to do this. (Hopefully you still are!) How did you learn it? Through hearing it once or twice? Through finding the words intellectually logical and sensible? Probably not.

Chances are, you learnt it through multiple listenings and then only because the song resonated powerfully to create a picture in your mind, that you related to at both emotional and intellectual levels. In fact, this is often the only way that people really pay attention.

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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.

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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.

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Have you ever felt a twinge of guilt when tendering a very large invoice to a client? If so, then this post from the Wall Street Journal will make you feel a whole lot better. And what gives with those wusses claiming that 1800, 2000, 2400 billable hours per annum are unreasonable targets? See here how to bill 3410 hours per year on just one matter! (That's 9.3 hours a day, 365 days a year.) Be ashamed, mere mortals that manage less!

A couple of weeks ago I found myself in Phoenix AZ and got to strike one of the things off my "gotta do before I die" list. I arrived in Phoenix two days beforehand, hired a car (was meant to be a Harley but the folk at Blue Sky Motorcycle Rentals said that there was snow on the ground and icy conditions north of Flagstaff so I wimped out) and headed for the Grand Canyon. I had booked a place at the Indian Garden campsite on the Bright Angel Trail. The plan was to arrive mid-afternoon Saturday; hire the necessary gear; hike to the campsite (half way down) and on Sunday complete the trail to the Colorado River and stroll sedately back to the south rim.

Cut to chase: Flight delayed in Pittsburgh, arrived too late on Saturday; had to do whole hike from rim to river to rim on Sunday despite notices (View image) warning of the possibility of death.

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In the Bible, Jesus says that "it is easier for a camel to go through the eye of a needle than for a rich man to enter the Kingdom of God." (Matthew 19:24) As a child, I was somewhat dismayed to hear this, when it was provided by my Sunday School teacher as evidence that rich was "bad" and poor was "good." As it turns out, context is everything and the teaching is far deeper than simply an indictment on worldly wealth. It also provides a fundamental strategic insight.

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It is late one evening and the USS Palau (not its real name,) a US Navy amphibious helicopter transport, is approaching San Diego Harbour. Suddenly its boilers fail and have to be shut down. This cuts off power to the generators. With its primary steering out of action and almost no electrical power, the ship's inertia continues to drive it headlong towards the ships and the pier in the harbour ....

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There was a time when life was simple. The laws by which we lived were nearly always constant. "Every action," Isaac Newton taught us, "has an equal and opposite reaction." There was perceived order in the chaos around us, comforting us with the knowledge that we had only to learn from the past in order to forecast the future. Systems, we knew, tended towards equilibrium and chaos was uncomfortable, but temporary. If something broke, you fixed the defective component. Just like clockwork.

This thinking represents only a phase along the continuum of our understanding of the universe, over the course of human history. There have been previous understandings. There was a time, not too long ago in the greater scheme of things, when comets and erupting volcanoes were seen as symbols of a deity's anger. Just sacrifice a few members of the tribe, preferably virgins (to emphasize to the gods that we were REALLY sorry about whatever it was that we had done to annoy them,) and everything would be all right again.

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Fancy doing MIT's "Introduction to Solid State Chemistry" course? Starting right now, at home? For free? You can if you want to. If solid state chemistry doesn't blow your hair back, there are fifteen other courses on their beta "Open Source Courseware' programme. Just for fun, I've just downloaded the Physics 1 course. That means just over 6MB of lecture notes, problem sets with solutions, exams with solutions, links to related resources, and a complete set of 35 videotaped lectures. Wow! Not that I intend doing the course - physics interests me generally but was not my favourite course at university. What does fascinate me is what MIT is giving away to anyone that wants it, FOR FREE!!! And what the effect might be in other areas, if others did the same.

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That's the prize (US$ 1 million) that was on offer from 2000 until 2002 from a group of London publishers, for anybody that could come up with the proof of a mathematical puzzle called Goldbach's First Conjecture. A very simple puzzle, on the face of it, yet the prize went unclaimed. Despite the flurry of enthusiastic research that a million buck prize might be expected to have caused in the world of mathematicians!

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