The Innovation Test

Richard Susskind once said, “It’s tough to walk into a room full of millionaires and tell them they are doing it wrong.” Just look at Kodak, one of the most profitable companies in the world for a time. Or consider the biggest companies in the world sixteen years ago. Only one was a technology company. Now, every single one is a tech company. What does this mean for the most reputable firms? Not only do they need to innovate to stay on top, they need to innovate to survive. So what are the five most common ways firms fail the innovation test?

1. Productizing offerings

There have been countless articles, multiple books, and far too many meandering panel discussions over pricing, alternative pricing, success-based pricing, and the death of the billable hour. Most of these come at the problem from the wrong direction. They ask, “How can we increase our return per hour on our work?” Instead, the question firms should be asking is, how can we create a legal product bundle that will solve our clients’ problems, reduce risk, and make it more attractive for companies to purchase legal solutions? Many have argued that clients aren’t asking for alternative pricing, but Kodak’s clients weren’t asking for digital cameras and as Henry Ford famously said, “If I had asked the people what they wanted, they would have said ‘faster horses.'” Truly innovative firms understand that the product itself must evolve.

2. Project management

In the software world, there are two ways to manage large projects: the waterfall method and the scrum method. In the waterfall method, the entire project is scoped out, every task detailed in a massive Gantt-chart-style way. This is how a software product like Word Perfect is built. It’s extremely expensive and, at this point in time, considered antiquated. The second method is called scrum or agile software development. A great book on the topic, Scrum: Doing Twice the Work in Half the Time, explains how agile software development uses weekly sprints, or periods of focused work with daily stand-ups (meetings to evaluate progress), to not only save huge amounts of money but also for faster and better results. Can we agree that software companies have learned how to make money? Take notice that the waterfall method is practically extinct in software development. So why is it that every major deal and piece of litigation in law firms follows a process more similar to the waterfall method than scrum? Innovative firms will abandon neolithic forms of project management in search of a better way.

3. Knowledge management

Large law firms have actually made great strides when it comes to knowledge management. Innovation in knowledge management takes various forms now, from virtual deal rooms to cloud-based software to manage everything from litigation to cap tables. What is standing in the way of greater innovation? Fear of change and fear of sharing non-proprietary data. If firms are truly driven by greater client success, than sharing contract language, pleadings, and other legal writing between allied firms should be the norm. Unfortunately, it is all very siloed, which becomes a huge advantage for the very large firms and a liability to the small and medium-sized firms that aren’t willing to collaborate.

4. Leveraging data

Last night North Carolina beat Gonzaga the national championships men’s basketball game. Every minute of the game, I could view the statistical odds of Gonzaga losing or winning the game. In sports, we have such amazing data and it makes the game far more enjoyable. Why don’t we have similar data in law firms? When a case is brought to a firm, why can’t they tell the client or potential client the odds? I know that every case is different, but how is that different than the saying “any given Sunday?” Knowing the odds could help or hurt your chances of bringing in a new matter—but those are numbers that should be far more visible than they currently are. There has been some talk in legal about big data, but we aren’t even talking about big data here, we are talking about statistical odds on certain types of matters in certain jurisdictions. This is just one example of data that should be present in making business decisions but isn’t.

5. Marketing

Look at some of the most innovative companies in the world, like Tesla, Airbnb, and Uber. Can you separate the product from the branding? Impossible. Can you imagine AirBnB emailing out PDFs to sell their services? Can you imagine Uber drivers handing out folders filled with articles about their services? Or even Tesla having a car commercial during the Superbowl? These brands are winning because they are breaking the marketing rules. I love seeing the early days of Twitter when a law firm would put out a press release, “We now have a Twitter account!” or “We have an iPhone app!” Those are mere novelties. Is Uber so successful because they have a cool app? NO! They are successful because their product/marketing/geo-locating/customer service/communication and logistics are all wrapped into one extremely powerful piece of technology that fundamentally needs to be delivered through a mobile app. Law firms that want to be innovative in marketing need to realize that true innovation is not one Twitter account or twenty Twitter accounts, but a fundamental shift in how the firm uses technology to not only get their message and brand out there but to deliver value to their clients.

In Conclusion

I spoke to a firm in Las Vegas last week at the Legal Marketing Association and the firm’s Marketing Director said to me, “We are very interested in what you are doing because innovation is one of our firm’s goals this year.” That’s an extremely lofty goal for a twelve month period. I applaud the decision to add it to your list. The challenge is that innovation is not a task, it is a method of doing business. Truly innovative organizations are never truly done evolving. Does your firm pass the innovation test?

Adrian Dayton is the founder of ClearView Social, a software solution that turns all professionals in a firm into advocates. Adrian has spoken on Innovation to GlobalLaw groups in Davos, Switzerland and Taipei, Taiwan. Before law school, he worked for Harvard Business School Professor Clayton Christen’s (author of The Innovator’s Dilemma) consulting firm Innosight. Adrian is also the author of two books and more than one hundred articles on social media for the legal profession.

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