By Chiara Lamacchia.
When it comes to law and business innovation, both corporate managers and legal professionals look at the all-things-legal in a quite standard way. In some cases, law is regarded as a limit, a constraint, a roadblock to innovation. In others, law is something that innovation should comply with (or somehow take into account) to prevent risks. In limited cases, then, law is used to support innovation and to allow some sort of value creation. Surely, legal activity is used as a tool to protect and secure innovation.
Yet, what if we dare a bit more? Would you call a lawyer to initiate the creative process? Would you see law as an innovation trigger? Would you imagine law as a source of innovation?
There is virtually no organisation using legal knowledge as a pure innovation tool. This specific interrelationship of law and innovation seems not yet acknowledged ― there is tremendous value to gather from it.
Law is a living thing, as something in the making. Therefore, the future becomes essential for businesses and their innovation. Law and legal forecasting would then offer us new ways of using law for business purposes. In the following paragraphs, I will outline different patterns governing the dynamics between law and business innovation. Then, I will present a new pattern and introduce lawrketing with a specific focus on innovation and legal forecasting. Finally, we will discover what steps to take to make it happen.
Business innovation describes the process of an organisation for translating new or existing knowledge into new marketable solutions, such as services, products, workflows, etc. There are many tools and approaches out there to lead innovation at every step of the process, from ideation to business modelling, such as future thinking, design thinking, lean start-up, prototyping, agile development ― these all make sure that the innovation process flourishes in the right direction.
Likewise, Legal is present at almost every step to support and protect the entire process and what comes out of it. Although the innovation process is, in reality, dynamic, non-linear and characterised by many iterations, I delineate a simplified generic process to exemplify the usual relevant legal goings-on for each step:
Step 1 | Insights – problem research and insight discovery
Legal: (rarely present)
Step 2 | Concept – alternative ideas for innovation, idea selection, prototype and test
Legal: mainly reviewing IP, structure, shareholders, funding alternatives
Step 3 | Validation – implementation of the solution (with just enough features to be usable by early customers) and business model validation
Legal: trading agreements (manufacture, distribution, licensing, etc.), compliance (industry regulation, data protection, consumer protection, etc.), funding agreements, negotiating/resolving disputes, IP, contracts (shareholders, funding, employees, consultants, etc.) and corporate formalities, software development agreements, insurance policies, all things online (policies, T&C, etc.)
Step 4 | Launch – user/market traction and solution adjustments
Legal: trading agreements (manufacture, distribution, licensing, etc.), compliance (industry regulation, data protection, consumer protection, etc.), funding agreements, negotiating/resolving disputes, international development (franchising, licensing, etc.)
Step 5 | Scale – solution adoption and business growth
Legal: international development (franchising, licensing, etc.), negotiating/resolving disputes, trading agreements (manufacture, distribution, licensing, etc.), compliance (industry regulation, data protection, consumer protection, etc.), funding agreements
As far as we can see, the legal team is very active at every step. However, legal knowledge is used to sustain innovation, not to source it.
Corporate executives usually have a standard way of conceiving the role of Legal within the innovation process. Businesses deploy their legal resources within the innovation process for several reasons: reacting to a situation, reducing compliance costs, anticipating and prevent both legal and non-legal risks, taking advantage or create value. As a general principle, the more the legal team deep-dive into the innovation process, the more the organisation and its innovation thrive.
I looked at the dynamics between law and innovation within an organisation, identifying four main patterns, namely: react, conform, act, gain. Please note that the following patterns should not be considered as an alternative to one another – on the contrary, all patterns should ideally be compresent, serving different situations.
The “React” pattern – Legal protects a given innovation from problems once these arise
Function: enabling the organisation to be very responsive in connection to unforeseen problems related to any given innovation
Focus: negotiating and resolving disputes
Legal knowledge: needed to solve a more or less unexpected problem
The “Conform” pattern – Legal controls compliance of laws, policies and regulations directly impacting a given innovation
Function: minimising costs and shielding the organisation and its innovation from any possible issue deriving from unconformity with legal obligations
Focus: compliance to any policy, rule or controls to which the organisation must conform in relation to a given innovation (e.g., industry standards, data protection, consumer protection, etc.)
Legal knowledge: needed to identify all relevant laws and regulations to which the given innovation must comply, set up processes and controls, and monitor
The “Act” pattern – Legal collaborates with the business team to minimise the risk connected to a given innovation
Function: proactively preparing the organisation to face and minimise risk
Focus: IP, structure setup, agreements (shareholders, software development, trading agreements, etc.)
Legal knowledge: needed at a strategic level to identify risks, minimise them and prevent problems before these arise
The “Gain” pattern – Legal takes part in broader decision making to evaluate opportunities derived from a given innovation
Function: maximising the benefits and opportunities
Focus: Reviewing (IP, structure, fundings, agreements, etc.)
Legal knowledge: starts to be blended with
other knowledge fields as lawyers and business people become savvy in mutual leverage
These patterns might be more or less presents within the innovation process, depending on the integration level of Legal and on the general perception of laws, policies and regulations.
Once again, the legal activity focuses on protecting and sustaining innovation, but not really on igniting the process.
The hidden pattern
Practically no organisation is using law as a source of innovative ideas. There is a new field of action that wants to break this ― lawrketing, an untapped strategic ground at the intersection of legal, business and innovation. Lawrketing aims at acting on legal trends through cross-competencies, where the law is no longer a dark field, limiting business activity, but a set of possibilities for business innovation.
When looking at innovation from a lawrketing standpoint, the law becomes a source of innovation.
Nowadays, laws and regulations are seen as very slow compared to the speed of innovation. We usually say regulators can't keep up ― and this is true.
What we never say out loud is that many topics are already investigated at a legislative level, with many valuable conversations capable of shrinking the business world and foster innovation.
While law can cause all manner of limitations for business activity, it is also an important driver of innovation. Limitations must be considered functional ― organisations should be moved to innovate because they need to improve and compete. It is now time for organisations to explore these unexploited dimensions of law, and to use corporate legal professionals proactively to innovate. There is an additional pattern I would like to present ― the one where the lawyer is placed at the very first step of the process and law becomes a source of innovation.
The “Innovate” pattern – Lawyers initiate and facilitate the innovation process
Function: granting an additional source of innovation and a differentiating competitive gear
Focus: legal trend forecasting and new idea generation
Legal knowledge: is hybrid, as legal professionals become savvy in future forecasting and business innovation
Corporate leaders need to rely on new, emergent approaches to gather insights and boost innovation. In this sense, lawrketing proposes to use legal strategic foresight as a complement to traditional innovation processes.
By using future thinking with a focus on legal, we get the opportunity to find new dimensions to innovate, enabling organisations to deal with changes coming from the world and create changes to influence the world. Future thinking offers tools to explore and navigate the unknown possibilities and opportunities that lie ahead.
What we could call legal future thinking serves to: inspect legal trends, disrupt the limitations of current practices and beliefs, reveal assumptions, highlight potential risks, unveiling a new playground to innovate ― all by using law as a tool for innovation.
As said before, legal professionals and legislators are already discussing topics that will inevitably have consequences for businesses.
Law does not happen overnight. Pandemics, elderly increase, immigration and integration, healthcare costs, youth unemployment, privacy, poverty, low-cost housing demand, traffic increase, CO2 emissions, catastrophic events, water and fertile soil scarcity, pollution, bio-diversity reduction, energy conservation costs ― problems are growing in number and complexity and are already being discussed extensively at a legislative level. By exploring legal trends, organisations ride the wave of potential changes and may even take an active role in shaping those changes.
How to get there
There are few transformations needed to allow the inclusion of the legal dimension as a source of innovation.
C-level involvement – Getting the top management onboard is a must-have (specific tools, such as business cases or smart requests, facilitate it). It means to be sure that the C-level is:
shifting mindset when it comes to law, policies and regulations, above all when connected to innovation
regarding the legal function also as a source of innovation influencing the future
going systematic by building a consistent capacity of legal foresight, undertaken regularly and routined into the innovation process.
Hybrid knowledge – Legal teams should grow to favour new hybrid competencies related to business innovation. It includes:
gathering the right level of competencies in business innovation processes and tools to be able to transform legal savvy into innovative opportunities and propose the right inputs and strategies
learning how to ignite the innovation process and unveil hidden opportunities for businesses starting from the law
resorting to specialist consultancies for training (e.g., lawrketing for lawyers, lawrketing for managers, etc.) & tools (e.g., reverse limitations, two-sided line, negative to positive, etc.) on legal future thinking
Innovation teams – Organisations should empower their innovation teams by:
equipping them with hybrid legal profiles, fully involved in the innovation conversation right from the start
ensuring that non-legal professionals get a general understanding of legal concepts in connection with the innovation process
At the very end, once the law is appreciated for its potential as a source of innovation organisations diversify their channels to source innovation by identifying opportunities starting from the law.
On the other side, legal professionals innovate their competencies. More times than not, legal innovation refers too much to tech & digital – but in reality, there are many other dimensions to innovate our professional complexity. In this sense, lawrketing also serves to enrich legal firms’ innovative service range for their clients.
At this point, I feel like asking you the same questions I posed at the beginning of this article:
What if we dare a bit more? Would you call a lawyer to initiate the creative process? Would you see the law as an innovation trigger? Would you imagine law as a source of innovation?
About the Author Chiara Lamacchia is a consultant in legal, marketing & legal forecasting, working in corporate strategy for global organisations across different sectors, after an LL.M. from Bocconi University (Milan, Italy) and an MSc in Marketing from Edinburgh Napier University (UK). Chiara is the Founder of lawrketing.com and withoutconsulting.com, promoting the adoption of ground-breaking ways of using the law for innovation and competitive advantage.
Besides, among other things, she authored and published the book "Lawrketing – What Business Never Realised About Law", introducing a new concept, lawrketing, combining law, business, marketing and innovation.
Connect with Chiara on linkedin.com/in/chiaralamacchia.