LegalBusinessWorld Posts

How As A Firm Leader You Can Harness Innovation

December 16, 2019

Pick up the firm brochure or visit the web site of most any professional services firm and you will see somewhere in the content, “We are acknowledged for our ability to find new, creative and innovative solutions to solving our client’s problems.”  And in most firms that statement is neither puffery, nor a crass exaggeration.  

 

Your leadership challenge becomes one of redirecting some of that innovation that your colleagues just naturally display in solving client problems, to innovation in running the business side of the practice.  And why might that be important?  In our hyper-competitive marketplace successful strategies are quickly copied by other firms.  One need only to look at the evolution of privacy and cybersecurity services with all kinds of firms jumping into the pool, to evidence a prime example.  Without some attention directed toward stimulating ongoing innovations, success can be fleeting.

 

What that all means is that “innovation” is now being added to the long list of competencies that you as a firm leader are expected to be conversant with and to eventually master implementing within your firm.  You have likely noticed that some firms are creating their own innovation departments and it would even seem that nothing says a law firm is focused on being modern, more then bringing on a C-level professional to aid your efforts – even though such an investment does not absolve the firm leader from their role in owning and championing the initiative.

 

When compared to the precise management science of something like finance, innovation leadership is an extremely messy affair.  One need only observe how it has become fashionable everywhere to host Innovation Jams, Hack-a-thons and Shark Tank competitions; to send folks to design thinking retreats; or to use software to stimulate firm-wide crowdsourcing of ideas.  Meanwhile, the explosion of catchphrases is blistering: Lean Start ups; Agile Innovation; Boxes and Whitespaces.  These approaches aren’t without merit.  The rub is that for many highly-disciplined law firm partners, they just don’t appeal.

 

Rather than enhance predictability, innovation as a process embraces uncertainty; and rather then relying on data and knowledge, it requires empathy and insight.  To succeed, as the firm’s leader you must keep your feet in two places at the same time – executing today’s business priorities while also discovering tomorrows.  Absent in the small print are instructions on how.

 

So here are some things that you as a firm leader, interested in developing your firm’s capacity for being more innovative, need to know to take some of the mystery, and misery, out of innovation within your firm. 

 

HELPING MAKE INNOVATION HAPPEN

 

Law firms can innovate successfully, have a track-record for inspiring innovation, and be rewarded handsomely in the marketplace.  Not just that one breakthrough idea, but a continuous stream of innovations; and yet many firms painfully struggle.  You need a culture where innovation occurs because of the culture, not in spite of that culture.  So what might help your firm become more innovative?  Here are 10 decisive actions, which from my experience, are worthy of your serious consideration: 

 

1 - Define Your Innovation Efforts As Your Approach To Solving Problems

To start, “innovation” or whatever label you prefer to use, is one more tool in your Leader’s Toolkit for addressing certain types of problem – and typically, a problem for which no solution is currently available or for which an entirely new approach is warranted.  When you define innovation as your approach to problem solving it directs you and your people to begin with asking yourselves a critically important question: “What is the problem we are trying so solve for which we believe Innovation may provide the solution?”  

 

From there you can be thoughtful about whether you are addressing a problem that actually matters for your firm; where you are directing your efforts; and whether innovation is actually the best approach to use.

 

  • Reset The Barometer For What Your People Think Is Achievable 

Innovation has been something of a side-show in many firms – nice to have and nice to talk about, but not doing much to contribute to really growing the firm’s revenues.  So, how about this for a problem statement: “In our firm, we need to have 1/3 of our total revenues, in three years (2022), come from services we do not now provide.”  That is precisely the challenges that both Deloitte & McKinsey have set out to tackle, and from what I understand from friends in both of those firms, they are progressing very well in addressing that challenge!

 

They know that when you have aspirations that are outlandish, it forces everyone to begin to think differently.  When you subscribe to a stretch goal it provokes the energy to start searching for breakthrough ideas.  No one and no firm ever outperforms its aspirations.  Whatever your partners think is possible . . . is all they think possible.  Our beliefs set the upper limits for what we believe we can achieve.  So how might you challenge your firm’s future performance?  

 

2 - Invest A Portion Of Your Leadership Time Living In The Future. 

All too often, I find that far too many firm leaders are driving toward the future with eyes fixed firmly on their rear-view mirrors. 

 

Consider: the typical firm leader usually does not view his or her role as the locust of new business creation.  They most often see their role as the guardian of running the firm’s existing practices to meet the firm’s budget targets and ensure that all partners are billing to their maximum potential. 

Look at the issues that are currently consuming your time.  I often ask of managing partners a couple of questions that painfully illuminates where they spend their time. First: “What proportion of your management time is spent solving problems versus what proportion is spent on exploring new opportunities?”  After a rather awkward reflection period, the answer I will usually elicit is about 80% on solving problems and 20% on exploring opportunities. 

 

I suspect that it is really more like 95% on problems and 5% on opportunities, but let’s analyze what this division of time infers.  This means that as the firm leader, you are spending 80% of your time and energy looking backwards and fixing things, while only 20% looking forward and creating things.  Forgive me being the bearer of some bad news: Firms operating in this mode will never lead in their marketplaces. 

 

So why does this happen?  Well, it should be obvious that most professionals are veteran problem solvers.  We are trained to resolve the issues, put out the fires, correct the underperformance, and generally “fix” the problem.  There is a powerful gravitational pull that unconsciously moves us toward fixing things instead of innovating, toward restoring instead of increasing, and toward reacting rather than being proactive.  We need to understand that fixing things, while however noble, simply restores the prior performance or condition, which is comfortable, but limits value.  However, if your focus is on improving the condition, on inspiring entrepreneurial endeavors, on being innovative; then your intent is not on restoring the status quo, but on developing a level of performance that exceeds any previous standards. 

 

There is a follow-up question I will then pose: “Of the time you spend on exploring opportunities, (remember it was reported to be 20% of the total) how much of that time is directed toward pursuing billable production, winning the next big transaction or responding to a competitor, (the present) versus pursuing the development of entirely new skills, new services, new technologies or new revenue streams (the future)”?  

 

Again, if I were generous in reporting what I have learned, the average firm leader spends about 60% of their time exploring present opportunities and 40% on future opportunities.  That drives a point worth scrutiny: What kind of a future is likely to be created by a firm leader spending about 8% of his or her total management time and energy focused on that future?  And this is in firms that have a firm leader who spends ALL of their available time on leadership and management matters.  Those who spend less than full-time usually have next to no time for the future, except of course, during that one-day, off-site annual planning retreat. (Is it any wonder why so many of these retreat-generated “strategic plans” are dead on arrival!) 

 

As the firm’s leader, attention is your most powerful management tool.  So if you want your professionals to focus on innovation, nothing speaks louder about what is of bedrock importance than where and how you choose to spend your time.  Where any firm leader spends their time is not a matter of chance.  Choices are made daily about what to do and with whom. 

 

Every firm holds numerous meetings, and every meeting has an agenda, whether written or unwritten.  The cumulative content of those agendas clearly signal executive priorities and concerns.  The conscious management of your agenda, and your input into meeting agendas, is a powerful signaling device.  Most meetings are mere status reports on the present.  If you are serious about promoting innovation make sure that each meeting devotes 20% of the time to listening to ideas for improving systems, generating new revenues or developing new services.  Also, the things that get your swift and detailed follow-up will always be perceived by your people to be of the highest importance. 

 

Don’t burn up your precious time and waste resources looking backward.  This is a time for action, not introspection. 

 

3 - Help Your People Get Comfortable With Innovation. 

One of the very natural responses that you may hear from your partners if you should suggest that your firm should focus a bit more time on innovating, a bit more attention to experimenting and being a bit more entrepreneurial, is some variation on: “We’re not comfortable with something we don’t truly understand” 

 

Many of the systems that support innovation may provoke discomfort.  The unfamiliar often provokes a negative reaction at first.  Research shows that, independent of other factors, the more often people are exposed to something, the more positive they feel about it.  So I have often instructed firm leaders that they must first seek to educate, before they seek to change.  Here are a couple of things that you can begin to do almost immediately. 

 

  • Bring in a regular menu of outside speakers (predominantly from other professions, academics, thought leaders and business entrepreneurs) to attend a monthly partners luncheon (you can easily involve your various offices by way of video conferencing).  Focus your efforts on individuals who are actually taking action to re-shape their own organizations through innovative means.  Have them speak to your partners about what specifically they are doing; and equally important, why they are bothering to invest the time in initiating new directions; and what successes they are experiencing. 

 

  • Begin your efforts without great fanfare (the worst thing that you can do is announce some new program) and make it totally voluntary for partners to attend.  “I happened to be talking recently with this individual and was particularly struck by what she is doing in her firm.  So I asked her to join us for lunch.  I think you will find it interesting and perhaps of some value to you in your dealing with your own clients.”  What you should see after only a couple of luncheons, is some growing interest in why these companies are pursuing innovation, a greater comfort with the concept and the methodologies, and a degree of enthusiasm coming from some of your partners for perhaps trying out some new ideas in your own firm. 

 

  • After some initial success with the monthly partner’s luncheons you might then consider turning your partner’s eyes to new horizons with a “strategic forum” event designed to formally evoke some discussions of the future issues facing your profession. Here is your agenda: “What are the forces already at work in our profession that have the potential to profoundly transform the way we may be practicing in the next five years?”  Now could you sustain a four-hour discussion some Thursday evening (4:00 to 8:00 p.m. over beer and pizzas) debating the various trends, how they might affect your firm, and what ideas your people might have  - not to react to the trend, but to get out in front of the trend so as to capitalize on opportunities? 

 

4 - Have Your Leadership Team Stay Alert To Global Trends 

Wherever you look across the profession you will see two kinds of firms: stragglers who have fallen behind the change curve and challengers who are more in front of the change curve.  The stragglers fail to see the future coming.  There is no proprietary data about the future; but there are different levels of understanding of trends and factors that open up possibility.  So ask yourself: “What are the fundamental make-or-break challenges that will determine whether our firm thrives or dives in the years ahead?”

 

Innovative leaders work with the members of their executive committees and their elected boards to have those members pay specific attention to the little things, the under-appreciated external trends, that are already happening.  By way of example, the 10 member elected Board of one AmLaw 100 firm meets for one-day monthly, spending half of the day focused on immediate business issues and the remainder of the day on their near term future.  

 

In my experience there are a few important questions that are worth posing to stimulate your colleagues to zero in on potentially important trends and developments: 

 

  • what are the things that you have read, seen or experienced in the past month that have been surprising, perplexing and/or disconcerting?

  • which of these trends or developments are not yet topics of conversation within our profession or legal media?

  • when you observe the pattern that these trends may be taking, which do you see expanding in scope or accelerating?

  • now if you were to project forward, how do you think these accelerating trends are likely to play out?

  • how might we exploit any of these trends in ways that would work to our advantage?

 

It is not unusual to see your highly intelligent partners miss spotting disruptive trends as an outcome of three handicaps: because they can not think outside of their current context; because of cognitive biases; or because of personal anxiety – in particular, a fear of any disruption that could possible devalue their skills.  Nevertheless, as the leader of your firm, you have to be tracking trends, (hopefully those your competitors have not yet noticed) and then figuring out ways to capitalize on them. 

 

5 - Visit The Places Where Change Happens
Consider as the firm leader: “How often in the past year have you invested some leadership time in putting yourself into the position where you had the opportunity to see innovation close up?”  Rather than reading about some new development in a business magazine; hearing about a developing technology from some consultant, or getting a warmed-over report from one of your colleagues, why not take the time to experience some innovative initiatives first hand?

 

Have you shown enough of an interest to visit one of your corporate client’s formal innovation labs?  How about doing a tour of a tech start-up business accelerator?  Have you considered spending an afternoon hanging out at the University talking to some of the professors about their leading edge work in artificial intelligence and deep learning?  Have you ever had a ‘what-do-you-care-about’ conversation with one of the senior researchers in your State’s Economic Development Department?

 

It’s easy to discount secondhand data but far harder to ignore what you have learned and experienced for yourself.  As the rate of change continually increases, so must the personal energy that you as a firm leader devote to understanding those changes.

 

Why not set up an appointment to talk to prospective clients who are not using your firm’s services, especially those who seem to be the more progressive, demanding type.  Go out for drinks with a small group of firm leaders from other professions.  Establish an internal committee whose members are, on average, 20 years younger than your real executive committee and give this group the chance to review some of the firm’s various activities, decisions, and then present their views directly to your Board.

 

  • Observe First-Hand What Some Of Your Corporate Clients Are Doing

Instilling innovation at one Fortune 500 company I’m familiar with has required a broad-based effort over several years.  Here are a few of the changes they initiated that seemed to make a significant difference and could be emulated in some form within your own firm:

  • the appointment of vice-presidents of innovation at both the global and regional levels;

  • the creation of cross-functional “innovation teams” in each region engaged in the search for breakthrough ideas;

  • the creation of innovation boards in each major business unit made up of senior people who met monthly to review ideas and projects; set goals, allocate resources and oversee the continuing innovation process;

  • a dedicated IT platform that expedites the spread of new ideas across the company, featuring on online idea bank designed to make it easy for ANY employee to share their ideas;

  • the creation of a group of “innovation champions”  in every part of the company who are there to guide, mentor, and assist in the execution of ideas and projects;

  • the organization of communication events called “Innovation Days” where teams can showcase their ideas to others in the company;

  • an annual event devoted to recognizing and celebrating the work of innovators and the various projects that are underway;

  • the creation of a comprehensive set of metrics to continually measure the company’s innovation performance; and

  • a dashboard that showed how many ideas

  • were being produced, which parts of the company they were coming from, how fast they were progressing through the pipeline, when they were likely going to be commercialized, and what the future value of each project was expected to be.

 

Meanwhile in our profession, signs of strategy decay become painfully obvious as we witness firm leaders all reading from the same industry publications, going to the same legal conferences, and hearing from the same consultants.

 

6 - Reach Out For New Voices 

Perhaps the tallest hurdle your leadership must clear in pursuing innovation is to abandon the tightly controlled cliques that dominate most strategic thinking that purportedly takes place on behalf of the firm.  

All too often, strategy discussions in large firms have the same 10 partners talking to the same 10 partners for the fifth year in a row.  Any hint of innovative strategy died when you know that they can finish each other’s sentences.  Where in large firms are you going to find the least “cognitive diversity”- usually with people who have most of their emotional equity invested in the past.  In many firms, the innovation bottleneck is all too often at the top of the bottle.  Without new voices – different ages, different industry experiences, entirely different professions, newcomers, those from the far-flung edges of your firm, you won’t hear new ideas. 

 

Consider the approach taken by Deloitte Consulting who believes that you should create an internal competition for ideas and involve the collective brain of the entire firm. 

 

Deloittes sponsors contests among all of their professionals for the wildest innovations. They propose: why not offer a cash incentive and allow our people to eagerly compete for a chance to have their personal vision impact the firm’s future?  One of their more recent events was reported to have stimulated over 176 ideas competing for a $10,000 cash prize. 

 

  • Call Upon Your Younger Voices 

There are a number of areas in any firm where you can hear from new voices.  There is the younger practitioner who has grown up in a different time with different skills and seemingly different values.  We need to recognize that organizational aging encumbers innovation.  Your firm’s response to embracing innovation changes both as the firm ages and as your senior power partners age.  As any firm matures and achieves some measure of success, it unfortunately loses much of its appetite for being entrepreneurial; able to quickly respond to market opportunities, pioneer new service offerings, or initiate change. 

 

Jeff Popova-Clark from PwC posed these questions: How old was Einstein when he revolutionised physics with his special theory of relativity?  How old was Isaac Newton when he developed calculus?  Darwin, when he conceived of evolution?  Picasso, when he added a whole new dimension to the visual arts through cubism?  What about Shakespeare when he penned Romeo and Juliet?  Karl Marx, when he released his Communist Manifesto?  Mozart, when he composed Don Giovanni?  Maxwell, when he deduced the relationship between electricity and magnetism?  Slightly more timely, how old was Henry Ford by the time he built and sold his first car, Bill Gates when he co-founded Microsoft, Anita Roddick when she set up The Body Shop, or Jeff Bezos by the time he launched amazon.com?  No one on these lists were older than 33! 

 

Jeff’s proposition (which deserves some serious attention and is painful for even me to contemplate) is how surprisingly hard it is to find any disruptive ideas and creations originating from people older than 35, and how some of the most original, icon-smashing, and valuable ideas have and are being developed by individuals still in their twenties and early thirties.  So, how many professionals between the ages of 25 to 35 have you purposely asked to formally participate in the creation of your firm’s strategy?  And, how likely is it that your firm possess at least one Picasso, Roderick, or Gates? 

 

In one particular client firm working on their strategic plan, the leadership initiated what they came to call their “2022-25/40 Initiative.”  In an effort to encourage foresight they called upon all of the lawyers in the firm between the ages of 25 and 40 years of age to volunteer for a project.  They then asked the assembled volunteers if they would divide into separate task forces with each tackling the same project.  The project was “to formulate a written scenario of what the legal profession might look like in the year 2022”.  They would then collectively examine the various scenarios and what implications they might present for the kinds of proactive actions that the firm would need to initiate to get out ahead of the future.  I had the honor of participating in the meeting where the three task forces came in to each present their scenarios to the firm’s leadership committee.  It is no exaggeration to report that these senior partners were blown away!

 

We need to acknowledge great ideas, no matter where they come from – for example, last summer a young associate, practicing employment and labor law, inspired the leadership at the McNees Wallace firm to announce the launch of their esports practice group.  For the uninformed, esports law is an amalgamation of multiple disciplines – labor and employment, contracts, endorsements, sponsorships, gaming, intellectual property and all the things that come with those arrangements.  Potential clients are likely to include individual gamers, but also the game publishers, organizations building potential leagues, sports competition venues, media, entertainment, and advertising companies, and let’s not forget potential investors and private equities.

 

When developing innovation, ensure that you include a healthy representation of younger, newer, and less-experienced professionals in the process.  Then you need to create the environment in which these people will feel comfortable expressing and developing their ideas.  Placing a token younger professional in a room full of senior partners will not, by itself, ensure that a fresh perspective has been injected into discussions. 

 

  • Hear The Voices Of New Hires

Some of the very best ideas can come from your newest professionals (partner or associate; new hire or lateral).  One firm has a specific program called “Fresh Eyes” to tap into that insight.  With this program the new hire or lateral gets to give the firm a formal performance review following the first 30 days of his or her tenure.  While impressions remain fresh, the professional is called into a meeting with the managing partner to provide a candid review of their initial experiences and ask the hard questions like “why in the world do you do certain things the way you do; why haven’t you done it this way?” 

 

  • Include The Voices Of Business Experts From Outside Your Firm 

When considering how an individual can add value, do not be concerned with how many years of experience they have within your particular firm.  Instead, determine if they bring experience from a wide variety of backgrounds, industries, and perspectives.  You are not necessarily going to benefit from having a carbon copy of your current management team.  Experience can result in less flexibility, greater investment in and protection of established ways of doing things, and less reflection on and questioning of why things are done in certain ways. 

 

In 2017, accounting and consultancy firm PriceWaterhouseCoopers ("PwC") announced the appointment of two 'outsiders' to its Board.  According to PwC Governance Insights Center Leader and partner Paula Loop, “diversity and addressing the risk of 'group think' were prominent in the PwC decision.”  Meanwhile, Grant Thornton LLP, another leading accounting and advisory firm, reports that for the past 5 years, it has included two independent (external) directors on their partnership board.  Grant Thornton’s external directors serve up to two, three-year terms.  So are the practices evident by these leading accounting firms with respect to good governance and innovative thinking not also applicable to law firms?

 

When thinking of new voices there is also the partner residing in a remote or smaller office, or practicing in a fringe specialty area who sees the entire profession somewhat differently from your typical partner; and there is the occasionally disruptive partner who just sees the world from a different mind-set.  All are capable of making a valuable contribution to your firm’s quest for innovation – if you care to reach out to them. 

 

7 - Take Your Cue From Your Clients. 

Firms truly devoted to innovation must reach far outside the inner sanctum of their management committees — and sometimes the firm — to even call upon clients, for their fresh insights.  Profound client insights come from a cocktail of unexpected problems, novel experiences, random communications and newly discovered facts.  

 

Go into the field, interview clients and where possible, videotape those client’s responses – and then find the appropriate time and venue (perhaps a retreat or town hall meeting) to show the interview to all of your attorneys.  As the firm leader you can present your views, you can even call in some brain-dead consultant to address your partners . . . but when they hear directly from clients, they actually start to listen.

 

In one Pennsylvania-based advisory firm the impetus for the development of it’s fastest growing national practice didn’t originate from the thinking of any of its professionals.  It was actually inspired by the firm’s Advisory Board composed of outside business people charged with providing a fresh perspective to helping the firm develop and target its service offerings more effectively.  The firm maintains a 12-member advisory board that meets every two months.  It includes four clients, four referral sources, and four non- clients.  According to their managing director, “We want to put our resources into developing one or two new products each year that clients really want and the advisory panel has proved incredibly valuable to us, both as an idea-generator and focus group.” 

 

How many law firms actually have Advisory Boards or some formal mechanism for directly involving clients in helping them conceptualize and develop new services that the client might value?  All too often, we forgo ever bothering to actually involve clients, or to even pay attention to what their evolving needs might be.  It is not efficiency that produces new wealth but insight – insight into opportunities; insight into pockets of emerging demand.  A firm that gets an early start in accumulating knowledge and experience serving some micro-niche of client need, and then continues to learn faster than rivals, can build an almost insurmountable lead – irrespective of size. 

 

  • Completely Redefine How You Serve Client’s Needs 

Too many firms define themselves by what the lawyers do rather than by what the client needs.  Imagine if the problem statement you were to put forward as a challenge to your colleagues stated: “How do we redefine the services we provide our clients from simply ‘solving legal problems’ to offering more of a ‘total turnkey solution’ for their business needs?”

 

One firm I know advanced just such an innovative challenge – which then stimulated some entirely different strategies and structures.  While everyone is busy chasing lateral attorneys as their speculative ticket to growth, this particular West Coast law firm has been flying under the radar for some seven years, with little media attention, growing their “subsidiary” practice group to 160 professionals with $110 million in revenues. Notice that I used the label “professionals” because their practice group is actually a multi-disciplinary collection of 90 lawyers and 70 consultants, all treated equally including the compensation system they use internally to reward performance.

 

There are obviously many opportunities to innovate and leapfrog competitors by simply collaborating with and being sensitive to the (often unspoken) needs of your clients. 

 

8 - Steal The Best Ideas From Other Professions 

Innovation isn’t always about invention; often it is about stealing great ideas from others.

 

You can’t buy your innovation “off-the-shelf, from the same tired old consulting companies your competitors are using.  The act of employing consultants to teach you “best practices” is no more useful than providing life-support for brain-dead lateral recruitment strategies.

 

One of the principles that I have learned about innovation is that it is often the product of someone spotting an old idea that can be used in new places, in new ways, and in new combinations.  Taking an idea that is commonplace in one business or profession and moving it into a context that isn’t common, can spark entirely new approaches – if you are paying attention! 

 

Thus as the firm leader, if you want to enhance innovation within your firm, one way is to initiate an internal committee of interested professionals to monitor all new developments and trends going on throughout . . . OTHER professions.  Or, have your administration staff monitor the industry and news media, and provide a summary of clippings that highlight the business activities, emerging issues, and new innovations being promoted by firms in related professions. 

 

For example, at Ernst &Young, they hold formal and frequent brainstorming meetings with a collection of academics, clients, and researchers to identify important issues and opportunities – with a specific objective of identifying issues three to five years before they appear on the radar screens of most everybody else. 

 

If a systematic emphasis on growth and innovation offers any meaningful payoff, why don’t more firms try it?  The overarching challenge in most firms is that no one is clearly responsible for innovation leadership.  It is unlikely that any firm can initiate and maintain an innovation strategy without dedicated, well-positioned leadership.  Some firms may actually need their firm leader to appoint an innovation czar with the authority to shoo off complainers and obstructionists who over-analyze and pick breakthrough projects to death. 

 

One further consideration: In a separate study involving extensive interviews with the Fortune 1000, it was discovered that these companies are using an average of 22.8 different professional services firms of all types (lawyers, accountants, actuarial advisors, consultants, public relations strategists, financial analysts, investment bankers, etc.)  The significance of that is that you likely think that clients are comparing you against some other firm in your profession – wrong!  Survey Says: Your firm is being measured against all kinds of other professional firms with respect to the value-added, delivery and client servicing aspects of what you provide.  Know this: Whoever you think your competitors are, they aren’t.

 

I mention this because the subject of “innovation” is appearing in more and more RFP invitations as Corporate Clients themselves are seriously embracing the practice and are looking to see what kind of a commitment and what serious steps your firm can show evidence that you are taking. 

 

9 - Champion Your Intrapreneurs
Innovations don’t always come about because of some direction, intervention, or incentive provided by you or your management committees.  They often come about as the result of what Peter Drucker, the father of modern management, first expressed as, “having a mono-maniac with a mission!” 

 

There is an incredibly valuable lesson here.  If you want to have rule-breaking, wealth creating new ideas come to the forefront in your firm, then you definitely need to identify, nurture and champion those professionals, chomping-at-the-bit to try new ways of doing things.  I am absolutely convinced that the maniacs exist, the innovative ideas exist.  What is missing is the internal champions. 

 

It is also the reason that I have long advocated to firm leaders that you must view your practice groups as your basic building blocks for constructing your firm’s innovation strategy.  It is only when you begin to explore “hidden assets” at the practice group level that these opportunities emerge. 

 

  • Consider Fostering Angel Investors 

The year was 2014 and I was working with a major Chicago-based AmLaw 100 firm.  During my engagement I came into contact with a couple of young partners who were passionate about starting a cybersecurity practice as they perceived the future unfolding.  Their only problem . . . they could not get anyone on the firm’s executive committee to sponsor their effort, as no one seemed to think that developing a practice in this particular micro-niche could be monetized.  20/20 hindsight really can provide valuable lessons! 

 

Now, imagine that each of your Office Heads and/or Practice Group Leaders could occasionally play the role of angel investor in providing seed funding for ideas aimed at producing new revenue for a particular office or practice group. What if each of those unit leaders, who managed a unit budget were allowed to invest 1% or 3% or 5% of that budget on innovative strategy experiments? Perhaps an Office Head and a particular Practice Leader could form a syndicate to take on a slightly bigger opportunity.  

 

Then to the extent that a portfolio produced a positive return in terms of new revenues or even a significant costs savings, a small bonus could go back to those who had provided the investment and served as sponsors.  Thus liberated capital could flow to the most intriguing possibilities unfetter by some Senior Partner’s protectionist proclivities. 

 

Is there any possibility that such an unorthodox initiative would result in a return on investment for your firm? 

 

  • Rethink Some Of The Assumptions About How You Operate. 

Every partner carries around in his or her head a set of built-in assumptions, biases, and presuppositions about what clients want or don’t want, who the competition is or isn’t, and what services we should offer or not, and how he or she should conduct their individual practice.  We are all, to some degree or another, prisoners of our past experiences.  Nowhere is that more pronounced than in our professional’s individual quests to maximize billable production. 

 

In countless sessions that I have conducted with the members of various practice groups in various firms around the country, I have often had the occasion to pose to partners this question for them to brainstorm their innovative answers for: “How might we find ways of doing our kinds of work, that would incur less cost to us?” 

 

Now, notice we are separating this from how you bill your client.  That is not the issue. The issue is, that with the type of work, deals and transactions that we do, is there a bit of this that’s could in fact be done at a lower cost to us. Now the reason for posing this question should be fairly obvious in that if you can find ways to do something at a lower cost to you, you can either pass the savings on to clients and get hired more often, or you could use the money to increase partner profits. 

 

Unfortunately the very worst reaction is the one that I so often see.  After going through this discussion and even after having identified some very viable options for doing some part of the transaction at a lower cost, a number of the partners will immediately conclude that there is absolutely no incentive for any of them to take action.  

 

“Why would we want to do that?” they’ll say. “That’s just going to reduce the number of hours that I’ll be able to bill the client.”  We tend not to explore ‘more cost effective ways of getting any particular task done’ because we tend to think only of today. 

 

Look at what Wilson Sonsini has just done to portray themselves as the premier privacy firm in the country.  Wilson Sonsini made more than $100,000 in sales during its first week offering subscriptions to an app that helps companies comply with California’s new privacy law.  While the firm’s lawyers, on average, generated $1.1 million in revenue last year, Kimball Parker from the firm, said he expects the app will generate millions in revenue as companies scramble to comply with the CCPA by a January 2020 deadline. 

 

The cloud-based app, sold by a Wilson Sonsini software development subsidiary, is an example of this law firms’ nascent interest in selling subscription-style legal services via an online platform – thereby delivering documents and legal advice straight to clients without a lawyer directly involved.  So while competitors were saying, "why would we want to invest non-billable hours developing a resource that then only serves to decrease our billable hours?" And asking, "who’s going to compensate me for the lost hours that I spend developing this resource?" Wison Sonsini has disrupted these firms and is now making money while they sleep.

 

To explore innovation we need to get on the path of asking questions that challenge the way in which we have been operating - regularly - as part of the way we run our business. 

 

  • Consider Packaging Your Intellectual Knowledge 

Building on the Wilson Sonsini example, perhaps you might pose this question to your partners as your innovation challenge: “Some firms have packaged their intellectual knowledge into a viable commercial product, while others have created subsidiary operations to provide and market services ancillary to their basic legal services.  Do you have any ideas on what we could do in either of these areas?” 

 

If you were to pose this question, I’m betting that you will likely elicit a pleasant surprise.  From my experience, in most cases somewhere between 14 to 22% of your partners have a potentially viable idea in this regard that they have been pondering.  Now, is it likely that any of the ideas that these partners have in mind, are of any commercial significance, with the slightest potential for being revenue generating and of value to clients?  Absolutely. 

 

Have any of these partners been among those chosen in the past to sit on your firm’s core strategy committee?  Not usually.  Have any of these ideas been mentioned to you as the firm leader, or indeed to anyone on the management committee for serious consideration?  Not Likely. 

 

Does anyone see a problem with this picture?  One wonders . . . any opportunities possibly exist in your firm for professionals to package what they do for clients, thereby developing an entirely different and profitable redefinition of leverage? 

 

10 - De-risk The Act Of Exploring Unfamiliar Opportunities 

I’m told that an average-sized Silicon Valley Venture Capital firm receives as many as 5000 unsolicited business plans a year.  So as a firm leader, how many unsolicited business plans did your Executive Committee get this past year?  We need to find the means to let our lawyers imagine entirely new services / industries that do not yet exist; give them birth – then test and tweak their ideas at a speed that leaves competitors in the dust.  In order to accomplish that we need to begin with limited-risk experiments.  

 

In grade school they teach you that the word experiment and the word experience are derived from the same Latin verb, experiri - to try.  You try out your ideas in the hope of success, and whether they succeed or not, what happens next creates your experience. 

 

Your best hope of success lies in having numerous projects percolating at once.  This ups the odds of one of them boiling over.  As Linus Pauling, the Nobel winning chemist once said, “the way to have lots of good ideas is to have lots of ideas and throw away the bad ones.”  Early successes breed optimism, the enthusiasm to do more and the commitment to try again. 

 

Set up small, relatively inexpensive, minimal-risk, and short-term experiments.  Anything beyond six months takes you into the realm of pipe dreaming.  Too many things can go wrong.  If you have an action plan pushing beyond the six-month limit, break it down into smaller tasks that fit into shorter time frames.  This way your firm is continuously knocking down fresh goals and objectives, experiencing success, staying on track, moving quickly, and raising overall motivation to continue. 

 

Small wins breed success and compel us down the path.  Field tests, pilot projects, trial balloons, trying something new in a contained environment, and selecting one site or program to experiment with, are all ways to facilitate the innovation process. 

 

  • Celebrate the individual or team that leads an expedition into the unknown.

Many firms have created innovation ghettos – incubators, business development initiatives and skunk works to pursue ideas.  These efforts, often cut off from enabling resources, produce little in the way of new revenue streams and many simply wither away.  To institutionalize your innovation efforts you need to establish a set of measures – an innovation dashboard – from which your Board or executive committee can track the number of ideas moving through the pipeline; the percentage of those ideas that are truly new; and the potential financial impact of each one. 

 

You want to have a transparent process for continually generating, launching and tracking novel strategy experiments in the areas of new services, service delivery, improved efficiencies, and enhanced client service.  And then MOST IMPORTANTLY, making the time to celebrate your achievements, no matter how small they may initially seem to be. 

 

WHY NOW? 

 

The world around us has changed.  You'll need to find new ways to extract value.  New ways to build markets.  New ways to organize and execute. You have to be smarter.  More agile; more inventive.  That's what strategic innovation is all about.  You need to help your partners see their practice in ways that can reveal new opportunities.  You need to help them see and uncover the hidden costs of standing still.  You need to hone your understanding of the real risks and rewards of your current strategy.  In a climate like this one, the most important step you can take to ensure your prosperity is to reenergize your thinking. 

 

As firm leader, harnessing Innovation isn’t merely a set of tools or techniques; it’s about creating a firm- wide mindset.  As the firm’s leader, you need to become a “venture catalyst”. 

 

Understand that Innovation isn’t about putting out fires or fixing yesterday’s shortcomings; it’s about blazing new trails and preparing for a new tomorrow.  Albert Einstein once noted, “You cannot solve the problem with the same kind of thinking that created the problem.” 

 

Innovation isn’t about developing detailed and inflexible planning documents; it’s about creating a compelling challenge capable of inspiring people.  Most plans are a little bit too much like quicksand, eliciting a degree of rigidity that impedes a firm’s ability to explore an ever-changing world.  Few things capture people’s excitement more than being part of a vibrant entity and exploring new revenue producing possibilities. 

 

Innovation isn’t about improving incrementally; it’s about daring to pursue strategic breakthroughs.  

 

In a competitive marketplace where there are no time-outs and no commercial breaks, if you are content with being a follower, you will always be eating someone else’s dust.  The pace of change will suck the air right out of your lungs.  The classic saying “Lead, follow, or get out of the way” is being replaced with the reality that you either lead or get blown out of the way.  In these highly competitive times, there is little room for firms that simply follow. 

 

Ultimately, we need an approach to innovation that causes us to reach for the highest and best in ourselves, our leadership and our firms!

About the Author

 

Patrick J. McKenna is an internationally recognized author, lecturer, strategist and seasoned advisor to the leaders of premier law firms; having had the honor of working with at least one of the largest firms in over a dozen different countries.


He is the author/co-author of ten books most notably his international business best seller, First Among Equals, currently in its sixth printing and translated into nine languages. His most recent work, The Art of Leadership Succession (Legal Business World Publications, 2019), provides in-depth guidance on the leadership selection process in professional firms.

 

Patrick’s three decades of experience led to his being the subject of a Harvard Law School Case Study entitled: Innovations In Legal Consulting (2011). One example of that innovation was his launching the first instructional program designed to specifically address the issues that new firm leaders of larger firms face in their First 100 Days – which has thus far graduated over 80 new leaders many from AmLaw 100 and 200-sized law firms, as well as from notable accounting and consulting firms.

 

Patrick is the recipient of an “Honorary Fellowship” from Leaders Excellence of Harvard Square; and was voted by the readers of Legal Business World as one of only seven international Thought Leaders (2017).

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