Growth is Dead: Part 6-Failure

Sunday, October 14, 2012

At the end of the last segment in series, I opined that our industry needed to respond in creative and imaginative ways to the new market landscape, and that it would take "unswerving resolve" to do so effectively and successfuly. 

But I also warned that I don’t have confidence in our ability to do that and promised to address why that’s so in this, the final installment.

Also in the last installment I spent some time discussing A. O. Lafley’s tenure as CEO of Procter & Gamble, and that was no coincidence. To be sure, I applauded Lafley’s embrace of innovation in an industry assumed to be mature and technologically placid—consumer packaged goods—but the fundamental reason I dwelt on P&G was that they compete in bruising consumer products categories where it’s almost impossible to eke out growth above that of the population.  (This is also true of Colgate-Palmolive, Kraft, General Foods and General Mills, Anheuser-Busch, etc., etc.)

All these firms—which are as sophisticated and resourceful as they come in marketing—are in a ceaseless battle for market share. If you talk to people in the trenches at these firms and their marketing and advertising agencies (I have), you know that they track market share with the intensity of a day trader watching the price of an options position.  If that’s a slight exaggeration, it is no exaggeration to say that market share matters as much as revenue or profits.  And the reason is simple: To generate growth well above population trend, all these firms need to take market share away from their competitors.  If Pampers (P&G) are to win, Huggies (Kimberly-Clark) must lose; it’s a zero-sum game.

Sound like heavy weather? Well, we had best get used to it.

More importantly, these firms have had decades to hone and fine-tune their strategy, and they have been immersed in market-share wrestling matches for decades and decades—the entire lives of most brand managers and product development specialists.  They’re as good at this as it gets.

We don’t even think this way; we don’t want to think this way; and we have little clue where to begin if think this way we must.

Our problem is we don’t have decades to figure it out.

But that’s not our only problem, or even our biggest problem.

Not to channel Shakespeare, but our biggest fault lies within ourselves.  In order to succeed in this new environment:

  • We must fundamentally change the way we do things: we must, in other words, innovate;
  • Innovation requires delving into the unknown;
  • Exploring the unknown requires experimentation;
  • Experimentation involves failure;
  • And we cannot tolerate failure.

The last point—that we, being lawyers, cannot tolerate failure—is critical.  All else is prelude.

Attend to exactly what I mean. I don’t mean we would prefer not to fail; or that all else being equal success beats failure; or that too long a string of failures marks a loser.

No, I mean something far stronger: We are built to critique, to second-guess, to demand accountability and assign culpability.  If the gas can or the tires on the Concorde or the securities offering blows up, someone is responsible and someone is going to pay.  They should have known better (because we certainly do).  It’s their fault and they will be made to pay; justice will be done.

There’s a further dimension.

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  1. […] Smith, Esq.’s “Growth is Dead:  Part 6“:  The latest in Bruce MacEwen’s highly followed series.  I previously summarized the […]

  2. […] the end of our last piece, I asked aloud whether we as lawyers are intellectually and emotionally capable of adapting to the […]

  3. […] Accountability, yes; learn from failures, yes; blame and assign culpability, no. Bruce MacEwen recently diagnosed lawyers’ predispositions to  blaming as the fatal strategic flaw of 21st Century law […]

  4. […] Growth is Dead:  Part 6, which I reviewed in “Week in Review (October 15-19, 2012)“. […]


  1. Giuliano Chicco, 3 years ago Reply

    Zero-sum gain does not apply to law. Remember the old adage ” A single lawyer will starve in a small town that will easily support two.” Granted innovation is long overdue, and will be welcome should it ever come.

  2. Cat, 3 years ago Reply

    Glad to see another installment as I was looking for ideas on how to get rid of the “old boy, knows it all’ mentality. Please consider including concrete or at least jello-like ideas on how to out-maneuver those cemented in tradition, YHX!

  3. Mark J Logsdon, 3 years ago Reply

    In every important way, **** was the best lawyer with whom I ever worked. He had been a Special Forces non-com, came back to the World to finish school, and then went to work for the CIA. While at the Agency he completed his J.D. He returned West in 1975 to a distinguished career in civil litigation. I was privileged to work as an expert on three or so of his actions, and he provided fine and very successful service to his clients in those matters. Very late in his career, ill but still acute and active, **** focused on special support projects for the management team at his firm and on pro bono work. His last case was a pro bono effort against his erstwhile colleagues at CIA over claims for service by two spies who resettled here but were ultimately financially terminated by the Agency. Taking an extremely original line, based on liberty interest and contracts, *** prevailed through CA review. At SCOTUS the government changed their basis from Totten (a Civil War espionage case) to state-secrets doctrine, which mooted all the rest of the law. Doe, which is to say ****, lost 9-0. We lost him not long afterward.

    A failure? Well, on the scoreboard, certainly yes. I suppose it was for the Does, too, as they had no visible means of support absent their contract’s terms. And a fair old chunk of Firm resources went into it over the years of this case. In what was always going to be the longest of long shots. What, if anything, does it mean for the hypothesis of extreme risk aversion that a law firm would accept long odds of failure on a pro bono matter? I take it as significant in this respect that *** was effectively an emeritus partner at this stage, and that the partnership presumably had already discounted annual IRR for costs of pro bono work. Perhaps this is the exception – because it is not “real” litigation – that proves the rule? Perhaps law firms can do the risk analysis and can undertake sound decision-making under uncertainty, but a sort of institutional sclerosis controls how that process applies to the “core” business.


  4. Bob Jessup, 3 years ago Reply

    Glad to hear we’ll get another installment! Never thought about it this way before reading this installment – the traits necessary to be successful in operating a law business are increasingly diverging from those old-line “good lawyer” traits that are still important in working on projects for clients

  5. The Last Honest Lawyer, 3 years ago Reply

    Bruce, I have really enjoyed this series and thought is has been spot on. For the first time, however, I just don’t agree with you that lawyers are hard-wired to fear failure and that is the reason BigLaw may not be able to adapt to the changes ahead of them. I would posit that BigLaw has gotten too fat and slow because of the unprecedented growth it has previously experienced (essentially protected as a monopoly). While there are certainly lawyers worth the $1.4 million PPP AmLaw 100 average, most are not. And given the partnership model of law, it is exceedingly difficult to weed out the equity partners not carrying their weight. In the past, the answer was to simply hire more overbilling foot soldiers and charge more for them. As you have pointed out, those days are over. And with the emergence of social media making the world a whole lot smaller and very efficient, it is not a good time to be a dinosaur. It’s not fear of failure holding BigLaw back, it’s too many overpaid equity partners who have no chance to make that kind of coin anywhere else. Facing those prospects, I’d keep my eyes closed and pray for the best too.

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