Adventure of Strategy

Thanks to those that attended my session this morning on law firm strategy, held at the Cafe Royale in Picadilly, London. The slides, as promised, may be downloaded here.

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Ever since I first became aware of strategy as a discipline, I have been a Tom Peters fan. (Disciple may be a better word.) I firmly believe that those who do the most good are not those who develop the most intellectually impressive theories and algorithms to solve the most complex business problems, but those who get the most important messages across in ways that the common [business]man can understand. Peter Drucker was one. So too Jim Collins. Love him or hate him, Tom is also right up there at the top.

This is taken off his blog today from a post by Richard King titled A Personal Top Ten Tom Quotes from London, translated ever so slightly into "professional-serve-firm-speak" :

1. Excellence comes from human beings doing things of value that clients find memorable.

2. Remember. You are the only human being in the world who can help this particular client at this particular moment in time.

3. The thing that keeps a firm ahead of the competition is excellence in execution.

4. Brand inside is more important than brand outside for sustained success.

5. Leaders' careers will usually be determined by their handling of one or two critical events that no one could possibly anticipate or plan for.

6. Make sure that you spend your time on the things you say are your priorities.

7. Tuck the shower curtain in and give away two-cent candy!

8. It's remarkable how quickly an excellent culture can be torn apart by poor management.

9. Irrelevance comes from always doing the things you know how to do in the way you've always done them.

10. If you love your firm and love what you do, you will serve your clients better—period!

Enjoy!

One of my favourite economist blogs, The Big Picture, has a post titled Creating Fake Alpha, that highlights once again a malady that western business just doesn't seem to be able to rid itself of. Namely, the inability to balance the need for short term rewards required to attract and retain talent, with managing the risks that rewarding short term profits at the expense of long term performance entails. A quote (of a quote, as it happens, but rather click through The Big Picture to get to it) :

"Then there is the central and controversial issue of how to pay people who work for financial firms. In blowup after blowup, compensation schemes based on short-term performance have encouraged traders, division heads, and C.E.O.’s to act recklessly.

In the typical case, a trader or executive places a bet that pays off immediately—or soon enough to increase the individual’s bonus or stock-options value—but exposes the firm to long-term dangers.

Examples include Merrill’s decision to step up its production of mortgage securities just as the outlook for the real estate market darkened and Bear’s refusal to keep an adequate reserve of cash on hand. Earlier this year, Raghuram Rajan, a former chief economist at the International Monetary Fund, referred to such behavior as “creating fake alpha—appearing to create excess returns but in fact taking on hidden risks.”

Anything new here? Of course not. If you'd like to see how many times this particular bit of history has repeated itself, read Alex Berenson and Mark Cuban's 2004 book The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America, which was about Enron and WorldCom (and before.) The tune changes but the song remains the same. If people are paid for short term results rather than long term performance, then human nature being what it is, at least some of them will "create fake alpha" to pad their pockets, at the expense of the firm's risk profile.

I wonder what the next cataclysmic corporate disaster to bring this issue to the fore again will be .....

Anybody with the slightest training or even interest in business strategy is probably familiar with Michael's Porter's famous 5 Forces Model. It would be no exaggeration to say that this model fundamentally re-defined the field when it was first published back in 1979. Here's a link to a short interview with him (12:57 minutes) on the relevance of the 5 Forces in today's world. Well worth watching. The page also has a link to an article by Michael Porter in the January 2008 Harvard Business Review, updating his model.

Click here for the video

As promised, attached are the slides from the London meeting of the Managing Partners' Forum, held yesterday at the offices of Grant Thornton in Finsbury Square. They are basically the same slides as from the meeting at White & Case LLP in Manhattan on the 18th of October, except that the UK rather than the North American data is at the forefront. The count for the number of downloads of the New York slides now stands at 733. I'd be fascinated to hear from some of you, about what you think the questions to the questions posed might be, and what your overall views are. For me, the survey results yield more far questions than answers.

We'll be continuing the research project in the next few weeks. The further surveys will be shorter and focused on particular issues that the initial survey indicates to need further investigation. If you are a leader in a professional service firm, please watch for the invitation to participate. Hopefully we will start getting significant participation from firms outside the USA and UK in future surveys, too.

Download file

The number of downloads from this blog of the slides that I presented at the Managing Partners' Forum meeting in New York on 18 October has just topped 700. (750 now - 16 Nov 2007.) They have obviously struck a chord!

Tomorrow morning, Tuesday 13 November, I will join colleagues Andrew Hedley and Bruce MacEwen in doing basically the same presentation at a Managing Partners' Forum meeting in London. It will be fascinating to compare the reactions from a group of senior firm leaders in London, with the reactions in New York a few weeks ago. If you are in London, are a senior leader in a professional service firm, and would like to be invited to attend, please do not delay in contacting Paul Lemon at the Managing Partners' Forum, by email (click his name) or telephone (probably better given the limited time) at 020 7786 9786. The meeting will be over breakfast at the offices of Grant Thornton in Euston.

A few weeks back I had a fascinating discussion with an officer in the US Marine Corps about the current doctrines of military strategy and how they translate to business. He told me that a major current area of focus is finding ways to reduce the time that it takes to plan operations while, at the same time, disrupting the enemy's ability to plan. He also said that "everybody knows" that a strategic plan is out of date immediately after it is drafted.

In today's rapidly changing world, this makes perfect sense in business too. (The first part, at any rate!) Yet it is clear from the results of our August 2007 Managing Partners' Forum strategy survey that the "average" law firm, both in the United Kingdom and North America, uses neither the full range of information sources that they need for the firm's leaders to make good decisions, nor the tools available to get strategy crafted and executed as quickly and effectively as possible.

My fellow strategy researchers Bruce MacEwen and Andrew Hedley and I are still ploughing through the quite fascinating data and we will be releasing the full results within the next few weeks. In the meantime, herewith a few preliminary remarks about strategy velocity, data sources and tools.

This week, I am in Madrid and busy with a week long PhD residency that is being held at the Universidad Europea de Madrid. A fascinating experience, so far, given the diverse group of people participating both amongst the faculty and the doctoral students.

I am amongst the latter. A PhD, I have been asked by several people over the past few months? Don't I have enough, between a busy professional practice, a lovely wife and two kids, and life in general, to keep me amused? Yes, I do. But ...

Lake Wobegon is a fictional US town where "the women are strong, the men are good looking, and all the children are above average." It has been used to describe a real and pervasive human tendency to overestimate one’s achievements and capabilities in relation to others. According to a post titled This Just In: General Counsel Less Than Thrilled With Their Outside Counsel on Patrick Lamb's In Search of Perfect Client Service, the Lake Wobegon effect is alive and well in modern US law firms!

Global strategy and management consultants Booz Allen Hamilton publish a journal called strategy+business that often contains very good material for the professional service firm strategist.

The latest edition contains an article titled The Luxury Touch, outlining the results of a current survey on what separates the truly great luxury goods and services companies from the simply good ones. Unsurprisingly, it is their superb level of customer service. The good companies really value and practice customer service of a high standard. The point is: the great companies go further, "beyond the call of duty" and attend to customers in a manner is is noticeably better than even the good companies. This places them in a different category, in the minds of their clients. In strategy terms: they are differentiated.

To do so requires more than commitment. The customer focus needs to be proactively embedded in the company's structure, systems and culture. The strategy+business article identifies four things that the truly great companies like Nordstrom and Ritz Carlton and Lexus actually do, to breathe life into their customer focus:

OK, I’m just going to come right out and say it. Let’s cut to the chase and face up to a few unpalatable truths:

1.   THE FUTURE IS UNKNOWABLE

Any attempt at predicting it is never any better than a half educated guess, with a better than half chance of being wrong.

Anybody disagree? No?

OK, then ….

How do strategists that develop plans based on assumed, fixed futures (and look very carefully at this one; many that say they don’t, really do) sleep at night!

Guy Kawasaki has a very thoughtful post on his blog How to Change the World, about a new book by Michael Raynor titled The Strategy Paradox : Why Committing to Success Leads to Failure (and what to do about it.) If you are in any way involved with strategy or strategic planning, then you need to read it. (But then you probably know that because you probably subscribe to Guy's blog, anyway.)

I'm busy reading Solving Tough Problems, an excellent little book by Adam Kahane. Kahane was the architect of the Mont Fleur Scenarios that were developed in South Africa in 1992, just before the formal end of apartheid, to develop a range of possible views on South Africa's post-apartheid future. The proponents of the exercise were the then still black liberation movements, the African National Congress (ANC) and the Pan Africanist Congress (PAC.) The books covers far more than just scenario planning, though. (Important though scenario may be as a tool in the strategist's toolkit.)

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.

Some while ago, I sat in on a presentation on another management consulting firm’s strategic plan. Perfectly legal – no Watergate tapes here. I was simply present in the room. Basically, the plan was as follows:

“We’ll create a series of presentations to show prospective clients how hopelessly they are managed and how pathetic their performance is relative to the top performers in their market, and then show these to them. Obviously, this will make them fall over themselves to hire us so that we can make them into Olympic athletes too!

Then, in a few years, we can persuade somebody to buy us for a truly stupendous figure, and we can all retire.”

The strange thing is just how common the strategy reflected by the second paragraph is. I bet you can think of several firms you know that, explicitly or not, follow it. (Hopefully, your own firm is not one of them!) The thinking even has a name: Chinese Math.

The September 2006 Harvard Business Review has a short article by Cass R. Sunstein titled When Crowds Aren't Wise. The article raises an extremely important point concerning how strategic and other decisions are reached, whether by consensus or majority decision, in profession service firms.

Conventional wisdom holds that crowds are "wise" and that all things being equal, the more inclusive a decision making process and the larger the number of people in a group making a decision, the more likely the "correct" decision will emerge.

I had hardly finished my post Too Sexy For Wasabi when I came across this short post by Dan Hull, titled "Give Me Your Tired, Your Rich Abused Fortune 500 Clients," on the blog What About Clients?

A provocative sound-byte, aimed primarily at smaller firms that are actively using the "Masa Takayama approach to strategy" (in other words, differentiating themselves by delivering ASTOUNDING client service and charging premium fees) :

"Boutique firms with top legal talent in America, Europe and Asia are still bottom feeding. Unless your firm is doing a quality-of-life experiment, or trying to make law practice easy and not stimulating, you should be actively pitching to and stealing BigLaw clients. Get off your knees, get a grip. It's okay, we live in a free markets world. Just keep your rates high and your services superb."

Carpe deum? A strategy such as this is not the easy road. It's difficult. Very difficult. But then, how appealing is the alternative?

Why is it that a bottle of water at a theme park or sports event costs $5, when you can get basically the same stuff out of a faucet for free?

Why is that the reportedly "most expensive meal in New York" (at Masa Restaurant on the 16th Floor of the new Time Warner Centre) is basically the same kind of food as one can get from sushi bars across the country, at a fraction of the price?

The answer, of course, lies in the quality of the client experience. There are very few areas in which a professional service firm can differentiate itself (i.e. make itself different to its competitors in ways that clients value) as effectively as by driving the standard of the experience that clients enjoy when working with the firm. So we can learn from Masa Takayama and, with current research showing that upwards of 70% of Fortune 1000 clients are dissatisfied with the service that they receive from their law firms, the conclusions of that learning just have to be a no-brainer, too!

Here's a very succinct statement on strategy, and in particular on performance management systems, by Robert Kaplan and David Norton, authors of The Balanced Scorecard and Strategy Maps:

"Strategy must be understood and executed by everyone. The organization must be aligned around its strategy, and performance management systems help create that alignment. Herein lies one of the major causes of poor strategic management. Most performance management systems are designed around the annual budget and operating plan. They promote short-term, incremental, tactical behaviour. While this is a necessary part of management, it is not enough. You cannot manage strategy with a system designed for tactics."

Quoted from an Ivey Business Journal report titled Building a Strategy Focused Organization.

Hat tip to MBA Depot.

Dick Richard's post Don't Shield Them From Distress reminded me of a conversation that I had with the managing partner of a prominent law firm last year, where he expressed concern that the results of some research that we had done into their corporate culture might be divisive or distressing to some of his partners. Come to think of it, I've heard this concern (that disclosure of something contentious might cause distress) expressed many times over the years.

Yet an appropriate degree of distress is a critical ingredient for overcoming resistance to change.

David Maister's post today You've Gotta Serve Someone cuts to the quick of what being a professional (of any kind) is all about. A 'sound-byte:

"Commitment is not numbers of hours you work, the sales you generate or the rates you charge. It means placing other people - the client and your colleagues - first in your professional life. Commitment means attention to details, not because you might get caught, but because you want to provide the best product or service available and you relish the opportunity to step up and take on responsibility.

"Find people who disagree with you. If you get mad at them, it's a good sign you need to think. Fight as if you're right; listen as if you're wrong."

Bob Sutton (Co-author : Hard Facts, Dangerous Half-Truths and Total Nonsense)

Expanding on this, I've just come across a paper by Aneen Karnani at the Stephen M. Ross School of Business at the University of Michigan, titled Essence of Strategy: Controversial Choices.

While not aimed at professional service firms specifically, the paper does address many of the challenges faced by professional service firm strategists in today's complex world. Especially the idea of embracing controversy and dissent and channelling it as a tool to create better strategy, rather than try to subdue and avoid conflict in favour of collegial "group-think."

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.

My friend and colleague Gerry Riskin is reproducing his Seven Immutable Laws of Change Management on his blog.

Says Gerry to managing partners: "I guarantee that if you respect these rules, you will get the cooperation you need to effect the changes that will catapult your firm forward."

Well worth a look.

I've just spent a fascinating few days comparing notes with leaders of some of London's greater law firms. One of the topics that came up was the old favourite of the market's preoccupation with "profits per partner" (PPP) as a metric. More properly (in this case) "profits per equity partner" (PEP.) Bottom line: Look at the breakdown of equity versus non-equity partners before taking PPP/PEP, in isolation, too seriously. Now, I know this is probably old news to many readers of this blog, but just in case there is anybody that has missed this trick ...

Tom Peters quotes the Wall Street Journal today in a post titled To State the Obvious ... In it, he notes that in order to return to something resembling profitability, the airlines have resorted to the last resort - doing the obvious. Namely: Stop doing dumb things. i.e. : Get rid of flights that lose money.

In the same post, he also notes that in a recent survey, the chief commonality between companies that achieved superior Profit/ROAs ('return on assets') in 240 industries was that they "aggressively weeded out customers who generate low returns."

There's a lesson here for a frightening number of professional service firms.

"Subjective judgments do not become objective simply by translating them into numbers. More importantly, when some of the options under review require ethical considerations, we can cloud the difference between right and wrong when we translate all options into a quantitative order of dollar values. If you tell me that option A contains a moral impediment and option B is pristine, that is substantially different than if you tell me that option A has a probability adjusted present value of $2 compared to $1.50 for option B. And yet we tout the virtue of net present value analysis because it does that very thing."

James Haines (CEO and President, Westar Energy, Inc)

As true in professional service firms as anywhere else .....

Excerpt from an address Corporate Governance, Business Ethics and Individual Responsibility given at the The Robert O. Anderson School and Graduate School of Management at the The University of New Mexico. Full text of address here.

Thanks to MBA Depot for the pointer.

Strategic blindspots seems to be popular topic amongst readers of this blog. (My posting Blindspot Analysis - Uncovering Strategic Bias has featured on the list of five most read postings on this blog for two out of the past three months.) Given that so much of my own practice revolves around strategy, it is also a subject that is keeping me increasingly fascinated, too. Not so much blindspots as 'per se,' as how to identify them and what to do about them during strategic process.

Craig Henry, in his blog Lead and Gold, blogs about a new book on the topic that will certainly be in my next contribution to Amazon.com's profits. The book is called Changing Minds - The art and science of changing our own and other people's minds, by Howard Gardner.

His insights are critical not only for those who have to think themselves about strategy, but also those tasked with driving change.

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

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

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

Henry Mintzberg (pictured above,) Bruce Ahlstrand and Joseph Lampell, in their 2005 book Strategy Bites Back, present 5 "P's" as a way to define strategy. Each "P" shines a spotlight on what strategy is / means / encompasses from a different angle, to provide a comprehensive overview that is probably more useful that definitions that try to fit all into a couple of sentences.

The 5 "P's," adjusted where necessary to fit into the professional service firm universe, are as follows:

So you've had this important client (this VERY important client) for more than 30 years. You've been doing good work for them and your firm has grown steadily on the steady flow of fees. How secure is your position?

This is exactly what Bob Bernstein and Skip Rein, founders of Missouri-based ad agency Bernstein-Rein must be thinking right now. According to an article in Fast Company, Wal-Mart are putting their $578 million advertising account up for review for the first time in 30 years. Bernstein-Rein and Omnicom GSD&M have been sharing that revenue river for three decades, the former growing to 300 staff in the process.

We've all heard the old clich?©:

Rule No 1:The client is always right
Rule No 2:If the client is wrong, refer to Rule No 1.

This has always sounded a little prostitutive to me. (Yes, I know that there is no such word but I'm searching for an adjective associated with "prostitution.") What happens when the client really is wrong? Isn't it a bit trite to simply say: "Refer to Rule 1?"

Of course it is. Ross Holman (quoting Seth Godin) blogs about this today on his blog Strategize, prompting the thought. If the client is wrong, then they should not be the client any longer. Not for a moment longer than necessary, that is. How many clients do you have right now that, quite simply, are wrong? How much effort and emotional have you expended on trying to make things right, only to find out that you can't? Imagine how much time you might have saved if you had simply fired that client, and the benefits that would have accrued if all that effort had been expended on more worthwhile clients instead.

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

Law firms in the state of New Jersey have just received the 'green light' to own other law firms as subsidiaries. (In most other jurisdictions and previously in NJ, law firms could own other kinds of commercial entity, but not other law firms.) The opinion was issued jointly as Opinion 704 of the New Jersey Supreme Court Advisory Committee on Professional Ethics and Opinion 37 of the Committee on Attorney Advertising.

The prohibition on fee sharing with non-lawyers remains, but subsidiary firms can turn over profits to the parent firm. While the subsidiary can have a different name to the parent firm, it still needs to contain the name/s of lawyers working in it. The relationship between the firms also must be explicitly disclosed through inclusion of the phrase "a subsidiary of X law firm" beneath or next to the subsidiary's name.

This development presents a great opportunity for firms with diversified practices. Law firm marketing professionals have been quick to point out the marketing implications (see Larry Bodine on the topic here) but the possibilities go far further, to the very roots of strategy.

Exemplar Law Partners LLC of Boston, MA claim to be the first corporate law firm in the USA to abandon the billable hour completely and exclusively adopt a fixed price model. Their CEO, Chris Marsden, has launched a blog called Inside the Firm of the Future to track their experiences and progress. This may prove to be an interesting one to watch. Thanks to Michelle Golden at Golden Practices for the 'heads up.' Michelle notes that while some firms will be applauding Exemplar and hoping that they succeed (because it will provide evidence that their firms might do the same,) it's likely that many others will be waiting for them to fail so that they can say "I told you so" as they dutifully check their watches and fill in their timesheets. Time will tell.

This is another posting of the Strategy 101 kind, in this case to introduce another of the basic tools that professional service firm strategists need to have in their toolboxes. This tool was first mentioned on this blog in my previous posting Love Your Dogs?

Only firms that have superior market share that can grow their business and develop the organizational learning capabilities to really capitalize on their experience. Empirical studies by the Harvard Business School in the 1970s first confirmed the basis for this assumption, leading the way to the development of the Boston Consulting Group's (BCG) Growth / Market Share Portfolio Matrix.

In the professional service firm context, the BCG matrix is a tool to determine the attractiveness of a service or practice area, based on the service life cycle and the experience curve. In other words, it provides critical information that strategists need, to help decide where the firm should be focusing resources over the next strategy cycle.

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.

For larger view, click on image

A current Strategy+Business article, Love Your Dogs, suggests that conventional wisdom may be wrong when it dictates that resources should be focused on a businesses 'stars' while leaving 'dogs' to starve or hiving them off. (The terms, of course, come from Boston Consulting Group's famous model that divides businesses into stars, question marks, cash cows and dogs.)

This issue is a particularly troublesome topic in many professional service firms, where practice areas that may have commoditized to the point of marginal profitability are not faceless business units but one's partners, colleagues and, frequently, friends. So facing up to the need to starve or divest dogs is something that many firms simply don't have the stomach for. The result is that they are tolerated and sometimes (in the name of 'fairness') even invested in as much as high growth areas of the firm.

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

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

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

It is obvious that any strategy that is not focused squarely on one's clients is nonsensical. But which clients? Should the focus of the strategy be diffused shotgun-style over the whole client list, or rifle-like on the firm's key, "crown jewel" clients. James Hassett argues strongly for the latter in a two part piece in his blog Law Firm Business Development. Part 1 is here and Part 2 is here. The articles reference my friend and colleague Gerry Riskin quite heavily, and also Edge's 'bulletproofing' methodology for protecting one's crown jewel clients from predation by competitors. (For more information on 'bulletproofing,' please email me.)

BTW: Just to be different, the crown jewels pictured above are not the English but the Scottish regalia. Also known as "The Honours of Scotland," they consist of a crown, sword and sceptre. On the Union of the Crowns in 1603, the Scottish crown jewels were left in Scotland when King James VI of Scotland inherited the English throne. They are now displayed in Edinburgh Castle, as is the Scottish royal throne, the "Stone of Destiny," which was returned to Scotland from Westminster Abbey in 1996.

Compensation systems may be "Management 101" stuff and my apologies to anybody that feels that I am pitching too low here, but I have come across several cases recently where firms are really struggling to develop a compensation system that (1) drives their strategy, (2) keeps their star fee-earners happy and (3) is easy to administer.

There are few things more contentious than how performance is measured and rewarded amongst the owners (whatever they might be called) of a professional service firm. So firms simply avoid discussions about this like the plague until things reach boiling point. The result is that many tolerate compensation systems that are at best sub-optimal, at worst actually damaging.

My friend and colleague Gerry Riskin has a posting by the above name on his blog Amazing Firms Amazing Practices, today. He cites data from BTI Consulting Group's latest client satisfaction survey of Fortune 1000 clients, regarding their perceptions of the law firms that serve them. Bottom line: Only about 30% of clients polled would recommend their PRIMARY law firm to others; half had OUSTED a primary law firm in the past 18 months and more than half said that they were planning to try a new law firm for substantive matters in 2006. And this survey included some of the finest firms in the US of A. Does anybody hear alarm bells ringing?

Ross Dawson, author of bestseller Developing Knowledge Based Client Relationships, is posting a series called 7 Megatrends of Professional Services on his blog, Trends in the Living Networks. His posting on a recently released report on 10 Trends for 2006+ is worthwhile visiting too. He also gives the option of downloading the entire "7 Megatrends" white paper as a pdf. If you'd like to do this, then click here.