Most would agree that one of the most difficult things to get
lawyers to do is to change, and that changing a law firm itself
is an order of magnitude more difficult. Many managing partners
I know, some of whom arrived on the scene of "a burning platform,"
have recounted that the only time change meets relatively little
resistance is when it’s self-evident to all that drastic action
has to be taken. Even then, tragic examples such as Brobeck
and Coudert instruct us that there are no guarantees.
But unless your firm is organized and performing optimally
in all regards—in which case please call or email me because
I want to nominate you for some kind of heroic award—change
is often in order. What can we say about how to make
it happen? What, in other words, is entailed in "leading
change?"
An excellent example comes from McKinsey’s analysis of
the first five years of Alan G. Lafley’s tenure as CEO of Procter & Gamble,
the world’s leading consumer products company. Recall
if you will that when he took the helm from Dirk Jager in 2000,
P&G had issued three profit warnings in four months and its stock
had just slid 30% on a single day. Worse (from his perspective
anyway), as a company insider with 25 years under his belt, Lafley
wasn’t viewed by Wall Street as the white knight riding in to save
things, and the stock slide a few more points the day his selection
was announced.
But fast-forward to five years later and Lafley’s results speak
for themselves: Revenues up 30% and profits up 70% (to $51-billion
and $9.8-billion, respectively).
How did he do it? Perhaps surprisingly, he, famously in
league with Lou Gerstner at IBM, refused to announce "a vision." His
focus was strictly on execution. Well, great, but what does
that mean? For Lafley, the key ingredients were:
- Forcing managers to challenge their assumptions as a means
of uprooting complacency and forcing them to make strategic decisions. This
also entailed setting some aspirational goals. Too many
of P&G’s product lines and brand managers had fallen into a pattern
of looking for another 1% incremental growth year over year,
and had lost sight of the possibility of transforming markets. "You
can get used to being a player without being a winner. There’s
a big difference between the two." Does this sound
like any practice groups you know? - Again, forcing managers to make strategic choices: In
other words, you can’t have, or do, everything. As Lafley
puts it: "Most human beings and most companies don’t like
to make choices. And they particularly don’t like to make
a few choices that they really have to live with. They
argue, ‘It’s much better to have lots of options, right?’" - This in turn leads to creating "Not-Do" lists, as in "this
is something we’re not going to do." And if somebody
runs off the rails and starts doing it, they receive zero funding,
which tends to make them reconsider. - But tough love must be tempered with mercy, and during any
transformation a genuine risk is that people will become either
so overwhelmed by the task at hand or so frightened of making
mistakes that they’ll freeze, and all will grind to a halt. To
counter this a leader needs to draw attention to the positive,
reward small gains, and reinforce morale. So, by contrast
to his predecessor, Lafley never criticized the P&G "culture." Rather,
he stood by the firm’s core values and reaffirmed them: "To
improve the everyday lives of people around the world [with] products that deliver better performance, quality, and value. That’s
not going to change." What is your firm’s comparable
mission statement in a dozen words?
The focus on execution has another implication, one Lafley quite
self-consciously realizes: Contrary to Wall Street’s initial
skepticism, his 25 years in operations at P&G meant he had an intimate
knowledge of the company, with this tremendous benefit: "The
more deeply you understand something, the more willing you are
to take risks and the more intelligent those risks are…. I
knew how and when we could take risks and stretch ourselves to
go for peak performance—without
breaking down."
P&G has 100,000 people in over 100 countries, and English is a
second language for many employees. Now tell me it’s too
hard for you to change an Anglo-American law firm where—face
it—there is tremendous commonality of background, experience,
and purpose among your people?
