Total world cross-border trade as a percentage of global
GDP

1990: 18%
2015 (estimated): 30%

Computational capability of an Intel processor, as measured
in instructions per second

1971: 60,000
2005: 10,800,000,000
Multiple by which e-mail traffic has grown from 1997
to 2005
: 215
Number of US tax returns prepared in India
2003: 25,000
2005: 400,000

Do I have your attention?

My point is a simple, if oft-neglected, one:  "No firm
is an island," and enormous macroeconomic, social,
and business trends will affect how you do business,
and what business you do.  Warren Buffett is fond of saying
that "bad industries trump good management:"  If
so, how do you know you will still be in a "good industry"
10 or 15 years hence?

This is where global strategic scenario planning comes in.

As previously
noted
, Clifford Chance engaged in just such
an exercise late
last year.  With the help of Oxford
Analytica
, CC’s worldwide managing partner Peter Cornell and his management team were
able to re-conceive the firm’s strategic direction
by focusing on the three scenarios Oxford Analytica
built:

  • China being removed as an economic opportunity thanks to
    their invasion of Taiwan, prompting economic isolation;
  • The US becoming fed up with its foreign adventures
    and withdrawing into isolationism; and
  • Instead of globalisation, the world regresses “back
    to the future” — countries and continents
    become separate and protectionist. For instance,
    America and Europe construct trade barriers
    to block cheap imports from China and India.

As both The
Lawyer
and the Sunday Times noted,
none of these scenarios is supposed to be "right,"
in the sense of being an accurate prediction of what
will actually come true.  What, then, is the point?  The
point, which could scarcely be larger, is to have
the firm’s leaders think deeply about whether its
strategy is aligned with where the world might be
going.  If "change is the only constant," you
cannot foretell the future by linearly extrapolating
3—7%
compound annual growth (let’s say) in revenue, headcount,
and profits:  More
fundamental shifts are surely in store.  

Or, as
Cornell put
it, the world is dynamic:

"Cornell told The Lawyer: “So
many strategic reviews are done in a static environment, but
we have to get used to doing them in a dynamic environment.”

"The review also underlines Clifford Chance’s shift
away from practice area groups to a more geographical
focus."

Chiming in, from the Times:

"Already the law firm plans to implement
a change in its corporate strategy. From now on, strategy
will be be less practice-based and more geographically
focused. In other words, instead of seeing its divisions
as, say, banking, energy or commodity practices, it will
think in terms of China, North America or Latin America
in future."

But wait a minute, whence this focus on geography?
Aren’t we supposed to be focused on clients, which means
industries, which means practice specialties?

Clifford Chance may be right after all, at least if you believe
McKinsey’s "Ten
Trends to Watch
."  Trend #1, extrapolating ten
years hence, is:

"Centers of economic activity will shift profoundly,
not just globally, but also regionally. As a consequence
of economic liberalization, technological advances, capital
market developments, and demographic shifts, the world has
embarked on a massive realignment of economic activity."

Sounds like geography matters.

What else does McKinsey think we need to factor into our strategic
planning?   Most germane to law firms:

  • "In many industries, a barbell-like
    structure is appearing, with a
    few giants on top, a narrow middle,
    and then a flourish of smaller,
    fast-moving players on the bottom."   Hmmm,
    sound like any industry we’re familiar with?
  • As firms become bigger and more far-flung, "Long
    gone is the day of the "gut instinct" management
    style. Today’s business leaders are adopting algorithmic
    decision-making techniques and using highly sophisticated
    software to run their organizations. Scientific
    management is moving from a skill that creates competitive
    advantage to an ante that gives companies the right
    to play the game."  This means you need
    to pay serious attention to "business intelligence"
    software, for starters.  Its effective deployment
    across your firm will indeed become table stakes—I
    assume only that your partners care about profit levels.

Thinking long and hard about these potential (and, I would
argue, highly likely) developments, as McKinsey puts
it drily, "will be time well spent."  Clifford
Chance is there:  When will your firm be?

Related Articles

Email Delivery

Get Our Latest Articles Delivered to your inbox +
X

Sign-up for the Insider’s Email

Be the first to learn of Adam Smith, Esq. invitation-only events, surveys, and reports.





Get Our Latest Articles Delivered to Your Inbox

Like having coffee with Adam Smith, Esq. in the morning (coffee not included).

Oops, we need this information
Oops, we need this information
Oops, we need this information

Thanks and a hearty virtual handshake from the team at Adam Smith, Esq.; we’re glad you opted to hear from us.

What you can expect from us:

  • an email whenever we publish a new article;
  • respect and affection for our loyal readers. This means we’ll exercise the strictest discretion with your contact info; we will never release it outside our firm under any circumstances, not for love and not for money. And we ourselves will email you about a new article and only about a new article.

Welcome onboard! If you like what you read, tell your friends, and if you don’t, tell us.

PS: You know where to find us so we invite you to make this a two-way conversation; if you have an idea or suggestion for something you’d like us to discuss, drop it in our inbox. No promises that we’ll write about it, but we will faithfully promise to read your thoughts carefully.