Convergence
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Attached is an article that I wrote as the cover article of the current edition of FD Legal in London. I have received gratifyingly positive feedback to it from managing partners and executive directors on both sides of the Atlantic and beyond, to whom I sent advance copies, so am posting it for all readers that do not see FD Legal (which is a journal aimed particularly at law firm financial directors in Europe.)
The article concerns changes that might emerge over the coming 5 - 10 years in the way that legal services are delivered to clients across the globe. Feedback, comment and constructive criticism, as always, is most welcome.
Surviving the Slide
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It's not often that no fewer than three of my friends are simultaneously featured in the leading article of a journal, but that is the case with Gerry Riskin, Karen MacKay and Merrilyn Astin Tarlton in the current edition of LawPro, which is a Canadian journal that features "information and updates on the Lawyers' Professional Indemnity Company malpractice liability insurance program and policy; the risk management and claims prevention resources from practicePRO; and TitlePLUS and title insurance."
Gerry, Karen and Merrilyn together with Ed Flitton collaborated in a round table that resulted in an article titled:
Surviving the Slide: What firms should and shouldn't do to ride out the economic storm.
Hat tip to Dan Pinnington at Slaw for the heads-up.
Post Mortems
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Post mortems are never pleasant to read but if they specify the maladies that caused death in sufficient detail then sometimes they can be useful for others wishing to avoid the same fate.
Here's a good one from law.com titled "Why Heller Died." Unsurprisingly, it suggests that although the final cause of death was "mass partner defections," the root causes were more complex. To wit:
Putting "avoiding hurting peoples' feelings" ahead of good strategy. (In 2004, when they decided not to change the terms of their partnership agreement to allow managing partners to serve a third term and so removed an excellent leader [Barry Levin] from the head of the firm.)
Botching its downsizing. (What should ALWAYS be a quick, objective and clinical exercise dragged on for months as partners jockeyed to try to prevent "favorites" from being fired. The result was severe trauma as people waited to see who would get the axe and in the end, the cut was compromised and not deep enough to restore profitability.)
Failing to communicate when it changed direction. (In 2006, the firm developed an aggressive new strategy to grow its way to profitability, aiming to expand to 1500 lawyers worldwide. Offices were opened in Shanghai and London, the US operations took on laterals. But how the expansion strategy was actually going to work was never articulated by the firm's leadership. So partners starting voting with their feet.)
Fundamental basics!
Putting collegiality ahead of business sense, botching a downsizing exercise and failing to communicate a compelling vision of how a radical strategic change is going to work. I could name several more firms that I know that have fallen or could easily fall prey to the same foibles. Is yours one of them? If so, then what are you going to DO about it? Now .... before it's too late.
Information Cascades and Law Firm Strategy
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Much law firm strategy, especially in smaller to medium sized firms where the partners all know each other, is crafted in strategy meetings or at strategy retreats. Typically, such meetings consist of some preparatory information being presented and then, quite quickly, the meeting moves on to consideration of a number of alternatives. It is here where the phenomenon of an “information cascade” can rear its ugly head.
In 2005, behavioral economist Robert Shiller and Karl Case conducted a survey among San Francisco home buyers, measuring their perception regarding likely house price movement in their market. The median expected price increase, over the next decade, was nine percent per year!
Obviously, history has proved them to have been badly wrong. According to Shiller & Case, their baseless optimism was based on two factors: salient price increases in the recent past and the apparent, and contagious, optimism of other people. In effect, an information cascade.
Management Consulting 2.0
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An inch deeper on some of my observations on the impact of Web 2.0 on law and other professional service firms in yesterday's post on the new Facebook. Herewith a Powerpoint presentation courtesy of Slideshare, on how Web 2.0 is changing management consulting.
The punchlines:
1. Management consultants are used to defining themselves as the kings of strategy
2. The internet has opened up research that was once the domain of the consulting firms
3. The modern consulting model no longer relies on copious research and thick reports but on consulting services where solutions are delivered in real time by:
- Leveraging existing management knowledge
- Developing an interactive engagement
- Valuing discovery in the consulting process, and
- Operating collaboratively with the client, rather than delivering ivory tower, dictatorial advice
In other words: Faster, more hands-on, greater action orientation and by deduction far better likelihood of execution. Probably less expensive too.
How does this relate to the services that you deliver to clients?
September 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
Scenario Planning - The Case of Saudi Arabia
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The World Economic Forum has just published a series of scenarios titled The Kingdom of Saudi Arabia and the World: Scenarios to 2025. The link gives an overview of the study, a link to the executive summary and a link to a video interview with Nicholas Davis, one of the scenario planning experts involved in the study. (Hat tip to The Bayesian Heresy.)
Scenarios are a vastly underrated tool in the strategist's toolbox. Clifford Chance went through a widely publicized scenario planning exercise in 2005 but beyond that, they are not very widely used in professional service firm strategic planning processes. This is a pity, especially in today's highly dynamic and rapidly evolving markets, and firm's would do well to consider their use more closely.
Scenarios are very useful tools for looking at what may happen. Firms almost always tend to base their strategies on a fixed view, or at least a narrow forecast of what may occur in the future. Their strategic planning processes are also not generally good at considering cause-and-effect more than superficially, or just into the immediate future. As we all know, this raises the danger of unanticipated consequences or a strategy that does not fit with alternative futures that may emerge.
On the other hand, scenario planning really casts the net wide; to explore many different possible futures. Firms can use then use scenarios to test their strategies against this range of alternative futures, some of which they may not even have considered when crafting their strategy.
Scenarios can also make it easier to have uncomfortable discussions about difficult topics. This is because they aim to explore possibilities around those difficult topics, rather than being prescriptive about their solutions. They are really more about exploring the future; not about telling anyone what should or will happen.
Careful: SWOT Analysis can be harmful to your [firm's] health!
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Further to my blog posting earlier this week ago calling for a more sophisticated approach to the tools that firms employ to craft strategy, herewith an article to be published in December this year in the Annals of The New York Academy of Sciences. Titled Neurocognitive Inefficacy of the Strategy Process , it holds back no punches when attacking either Michael Porter's 'Five Forces' for that ubiquitous old faithful, the SWOT analysis. Thanks to Stephanie West-Allen for the pointer! Click the title above for a PDF of the unedited manuscript, or click below for a brief summary courtesy of yours truly.
Here's a 'sound byte' :
"The application of purportedly “rational” tools or techniques or protocols or models or frameworks to the problem of new strategy formation appears overwhelmingly ineffectual. Few, if any, organizations actually obtain new or revised strategy from such efforts. When the genesis of a dramatic change in an organization’s objectives and strategies finally is tracked down, it invariably is the result of an “informal” process, more often than not unrelated to the formal planning effort itself."
Fighting talk, indeed!!! I'm pleased to find yet another person pointing out that the strategic planning emperor has no clothes, though! There is just too much at stake for the firms that we serve for the smoke and mirrors that so often masquerades for a strategy process.
The authors of the paper are Harold E. Klein of the Department of General & Strategic Management at the Fox School of Business and Management at Temple University and Mark D'Esposito who is Professor of Neuroscience and Psychology at the University of California, Berkeley. Continue Reading
Why Committing to Success Leads to Failure
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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.)
Continue Reading
The 5 "P's" of Strategy
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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:
Continue ReadingThe BCG Growth / Market Share Portfolio Matrix
24 Comments - Posted By Rob Millard In Strategy 101 , Tools for Strategists , , - Permalink -
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.
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