Today’s managers are actually ruining their firms by focusing on digital innovation
Many lawyers have ‘grown up’ with Richard Susskind’s theory and therefore focus on digital innovation for the management of their processes. But according to management scientist Sebastiaan Kodden, employees and clients suffer from this. ‘Managers are actually ruining their firms this way (Kodden, 2015)’.
Vicious circle of turbulence and bad results
He has told his story at law firms many times. A story that managers didn’t like to hear, but nevertheless recognized. Sebastiaan Kodden has spoken and worked with many great Dutch athletes, coaches, and entrepreneurs and has developed his own vision of leadership. His vision: you must stop hiding behind digital instruments and opt for personal contact. Within the vicious circle of turbulence and bad results many leaders accelerate the destruction of their organizations by focusing on digital innovation.
Sebastiaan Kodden is very familiar with the legal profession. In 2011, he received his PhD for research on dedication and involvement in law firms. As a program director Law, Leadership & Management at Nyenrode Business University, he is not afraid to go against the grain. For instance, where Richard Susskind is concerned, the British hero of a lot of law firms who keeps pointing out the importance of digital innovations. If firms don’t, this will inevitably lead to The end of lawyers, which is also the title of Susskind’s book from 2010.
Kodden opts for a much more basic approach, based on a management book. ‘The model that every enterprise - including law firms - should be familiar with is that of Treacy & Wiersema from 1993. This model posits that a company has three value strategies: operational excellence, customer intimacy, and product leadership, meaning a focus on processes, client relationships, and products. All three aspects must be mastered, but you must excel at one in particular. This means that a firm has to choose. If you don’t, you will be caught up by firms that do.’
The crucial question is: what should law firms choose? Definitely not Susskind’s operational excellence. ‘The digital innovation of Susskind is not that important for law firms at all. At most, you are trying to compete with low-cost providers, such as legal aid insurers. But if this is your ambition, you’ve already slipped. Furthermore, you will lose the race. You can only be better than others if you consciously choose other products or focus on the relationship with your clients and employees – or, in other words, the choice for another return on investment: return on intimacy.’
According to Kodden, the firm’s management must realize the importance of personal branding. ‘The reputation of individual lawyers will become increasingly important these next years. Clients with major interests only want to work with that one top lawyer and are prepared to pay for this. If you’re a Messi fan and travel to Barcelona specially to watch the greatest soccer player in the world play, this is worth something to you. The same is true of music: U2 doesn’t drop by every Friday. For a regular soccer match or a local band, you won’t have to go far. If it’s really important, you go for the top and you want to be represented by a lawyer who you believe will win the case for you.’
Whether this lawyer works at De Brauw, Nauta or at Stibbe is less important. Firms, and soccer clubs, are carried by their people and not vice versa, Kodden reasons. Leaders will therefore have to focus heavily on group and team interests in order to attract, train and retain the best people, he says. In short: the only innovation that matters is social innovation. ‘If leaders do not respond to this, the best employees will leave the firm to establish a niche firm, for instance. But if they don’t want to be a low-cost firm or offer other products, they too will have to focus on intimacy and relationships: the game does not really change. (Kodden, 2015)’
Leadership expert Manfred Kets de Vries once called leaders ‘silverbacks’. These Bokitos ‘pound their chest and believe that the employees will follow’. I’m doing you a favor by letting you work for me, is the general attitude. But is that really the case? Kodden rhetorically asks. ‘The new generation of lawyers is not easily impressed. They ask: what can you do for me? Terms such as autonomy, coaching, feedback, and social support – support when they’re stuck or make mistakes – become of crucial importance for the future of law firms. Young lawyers aren’t looking for a commanding boss. Opt for intimacy and personal attention: it will be rewarded.’ The CEO as Chief Energy Officer – and that can simply be learned (Kodden, 2014)’
Management by excel
At present, Kodden mainly sees law firms with a patchwork of management plans to achieve certain goals. ‘What I’m missing is a personal view on leadership and behavior. The leadership style I often uncover during meetings can best be described as management by excel. All actions must be accounted for in diagrams and figures. This is directly opposed to the attitude I advocate: to give direction, offer space, and ask for results.’
Only then can you truly work on smarter performance, as Kodden believes, and he refers to the flow theory. ‘You have to make sure that your employees get into a flow, a state in which they work in a highly focused manner and with optimal joy. In addition to the flow, you have the burn-out, which you get when you have to do too much work that you can’t actually handle, and the bore-out, which you get when you can do much more than you’re allowed. The latter is especially a common occurrence for young employees at law firms. ‘Aided’ by technology, they do too much standardized work, writing emails to clients they never see, and receive too little appreciation and acknowledgment for their work.’ It’s the trick to convert the bore-out into a flow. This requires good leaders.’
This is needed now more than ever. The legal profession is characterized by a lot of turbulence, which leads to uncertainty and fear. Kodden: ‘In such a situation, leaders will exercise more control, apply more management by excel. For professionals, this in turn leads to less drive and enthusiasm, which is exactly one of the most important conditions for adequate performance. This management style therefore decreases performance, from employees and from the entire firm, which in turn results in even more turbulence, more checks, etc. Like athletes, good leaders know how to curb their fears and convert these into ‘letting go’ and an ultimate performance. They find a way out of that vicious cycle and develop an environment of positive energy. A good coach is often at the basis of this. Only organizations that invest in people can display durable growth (Kodden, 2015).
Kodden, S.F.GP. (2014). Be a HERO. Bernard Daniel Press.
Kodden, S.F.G.P. (2015). Advocatenkantoren moeten vooral inzetten op intimiteit en persoonlijke aandacht. Interview M. Knapen. Advocatenblad.
Susskind, R. (2010). The End of Lawyers. Rethinking the nature of legal services.
Treacy, M. & Wiersema, F. (1993). Customer Intimicay and Other Value Disciplines. Harvard Business Review.