The New Facebook
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Facebook is in the process of launching an entirely new layout and design, which aims to revolutionize the way that people use the platform to collaborate and share information. (The picture above shows my own profile page with the "new look" .... the SCUBA diver is my 11 year old daughter and diving buddy Shannon a couple of weeks ago.) Given the importance of Facebook to so many professionals in so many firms, stand by for some perhaps quite significant impacts on the way that people use Facebook in their practice, too.
Continue ReadingSeptember 2008 Newsletter - Killing a Strategy
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Herewith our Edge International September 2008 Law Firm Strategy Newsletter
We have two items for you this month. Firstly, some tips on how to execute (as in kill-off, annihilate and utterly destroy) a firm’s strategy. Secondly, news about and an invitation to participate in an exciting new research project on globalization and its likely impact on the US legal profession.
We hope that you find them both diverting and useful. Feedback, as always, is most welcome.
Our best regards,
Rob Millard & Gerry Riskin
Steam, Electricity and Law Firm Management
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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.The Luxury Touch
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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:
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Jerks in the Workplace
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The latest McKinsey Quarterly (a journal of strategy and management published by McKinsey & Company) has an excerpt titled Building the Civilized Workplace, from a book by Stanford Professor Robert Sutton.
Jerks and bullies in the workplace are a widespread problem. All too often, those exhibiting the behavior do so because they feel secure in their seniority or fee-earning credentials. (Which is not to say that high-performers are always jerks. Usually, quite the opposite is the case. Not tolerating poor performance, for instance, is not the same as being a jerk.) Research shows that jerks and bullies not only hinder recruiting and retention but also raise levels of client churn and damage reputations.
Firms that harbor jerks may also suffer from reduced levels of creativity and innovation, as well as impaired or dysfunctional cooperation, within and outside the organization. That is no small matter in an increasingly networked world. Continue Reading
Trust and Betrayal in the Process of Strategy
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Religious conviction; the national Treasury; a firm handshake: all symbols of trust that evoke expectations. Most importantly: the expectation that one will not be betrayed. If there is one place where trust is paramount, it is in firms that practice professions such as law, accounting and consulting, where the service being delivered is so intangible that trust is the only assurance that the client has, that its work will be done properly. Small wonder that trust-based relationships both with clients and internally are the very cornerstone of the cultures of such firms; certainly those at the 'top of the curve.'
The March/April edition of the Harvard Magazine contains an article on the differences between risk aversion generally and aversion to being betrayed. It makes fascinating reading and, I think, introduces a seldom-considered facet to the process of strategy.
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