Technology can be a blessing and a curse and, while my feet are firmly planted in the former camp, that’s not why I’m writing what, I hope, you are about to read. Because it is about technology. I’m writing it for two reasons: I hope it provides an overview of what some of the smartest thinkers on technology that we have going these days are saying and, love it or hate it, technology is something we all spend a lot of money on. So that gets my attention in and of itself.
Our basic text for today is McKinsey’s Ten tech-enabled business trends to watch, which is addressed, as per McKinsey’s standard operating procedure, to “senior executives [who] need to think strategically about how to prepare their organizations for the challenging new environment.” I hope that audience would be you.
Here are a few headline statistics:
- Facebook has 500-million users, five times more than two years ago.
- More than 4 billion people worldwide have a cell phone, and more than 10% of those are fully web-enabled.
I could cite more, but you get the drift. McKinsey lists the ten trends as follows.
Not all, by any means, apply to law-firm land, but all are worth reflecting on and those that do apply squarely to us deserve some comment:
- Trend 1: Distributed cocreation moves into the mainstream
- Trend 2: Making the network the organization
- Trend 3: Collaboration at scale
- Trend 4: The growing ‘Internet of Things’
- Trend 5: Experimentation an big data
- Trend 6: Wiring for a sustainable world
- Trend 7: Imagining anything as a service
- Trend 8: The age of the multisided business mode
- Trend 9: Innovating from the bottom of the pyramid
- Trend 10: Producing public good on the grid
We realize, and apologize for, the fact that this is cast in the unfortunate, hostile to English, and un-euphonious argot of consultant-speak, but we place a higher value on quoting sources accurately, so there you have it. (It could and does get worse, by the way, but we’ll try to spare you. For example, a little further along in the piece you encounter this positively remarkable demolition derby of words: “Because some of the most powerful applications of these trends will cut across traditional organizational boundaries, senior leaders should catalyze regular collisions among teams in different corners of the company that are wrestling with similar issues.”)
What to make of this?
Their trends ##1, distributed cocreation, 4, the Internet of Things, 6, wiring for a sustainable world, 9, innovating from the bottom, and 10, producing public good from the grid, we can pretty much write off for present purposes.
But #2, making the network the organization, speaks quite directly to the challenge of outsourcing. McKinsey puts it this way:
We believe that the more porous, networked organizations of the future will need to organize work around critical tasks rather than molding it to constraints imposed by corporate structures.
What they mean by that is that we need to define where work can optimally be done, and get it done there, not necessarily within our four walls. This need not be frightening, as I’ve written before: For example, drawing on external expertise could involve tapping into your firm’s alumni network and even its retiree network–imagine the energy that a recent retiree would deliver to answering an inquiry in his/her area of expertise.
#3, collaboration at scale.
This means things as simple as investing in high-capacity, high-resolution videoconferencing and shared online workspaces. At one (unidentified) “high-tech enterprise,” the “savings on travel were four times the company’s technology investment [while] contacts per salesperson rose 45% [and] 80% of the staff reported higher productivity and a better lifestyle.”
Where you can trip yourself up, however, is in assuming that technological tools per se will enhance collaboration: They won’t, necessarily. What will enhance collaboration is if technology enables human interactions that people were already engaging in, or wanted to engage in.
#5, experimentation and big data.
No, we will never be as web-metrics, analytically savvy as Amazon or eBay, not to mention Google, who determine empirically everything from where to place buttons on web pages to the sequence of content the visitor sees, but we could at least be a little smarter about analyzing our clients’ spending patterns with us. Such as:
- What is your firm’s “share of wallet” of a client’s total outside counsel legal spend? Growing, or declining? In what practice areas?
- What factors are correlated with client attrition and with client retention?
- Do “acorn” clients grow into oaks? (Anecdotally, I’d be shocked if they do, but you might want to find out based on actual data and not simply partners’ lobbying for their acorns.)
- Which cohorts of your clients are the slowest and fastest to pay? Which complain the most about billing and provide the lowest realization and which complain the least and provide the highest? What can you learn from this?
Etc.
The point is not that we can’t figure these things out. A decade ago, to be sure, we probably could not have. But now is not then.
Now we can at least take an educated guess at figuring these things out. And not to do so is, I submit, tantamount to managerial malpractice. (But then, you know that I’m a data junkie at heart.)
#7, imagining anything as a service.
We are, of course, one of the quintessential service industries, so this is easy: We sell knowledge, and knowledge classically lends itself to digitization and zero-marginal-cost reproduction.
That’s not the point.
The point for us is that “cloud computing” should enable us to really get serious about alternative career paths and attorneys who want to work from home (or from the totemic South Sea Islands), or only a certain number of hours or days per week, or intensely on a particular transaction or litigation and then be “on the beach” for x months.
You may be thinking that all of this (a) has been tried and failed; (b) won’t ever seriously be tried because it couldn’t possibly work; and/or (c) will be shown to fail as soon as it is seriously tried. I am not here to argue for or against any of those propositions.
Merely to point out that, pregnantly, McKinsey writes:
Business leaders should be alert to opportunities for transforming product offerings into services, because their competitors will undoubtedly be exploring these avenues. In this disruptive view of assets, physical and intellectual capital combine to create platforms for a new array of service offerings.
What’s “pregnant” about that observation is the warning that “competitors will undoubtedly” be trying to exploit the ability to deliver legal services from a distributed platform. Even if we’re not. En garde.
#8, the “multisided business model”
Apologies, first and foremost, for the opaque consultant-speak. Perhaps even McKinsey can’t help themselves.
But a “multisided business model” is nothing more than a business that has more than two counter-parties: More than the buyer and the seller or more than the law firm and the client. Wildly familiar examples are the newspaper, magazine, and television industries, where the publisher/broadcaster delivers content to the reader/viewer, sometimes for free and sometimes by subscription, while a major portion of the publisher’s revenue, and the consumer’s time, comes from advertising–the third party to the industry model.
Or Google. Their sponsored ads subsidize our free searches.
What might that look like for law-firm land?
I submit that we have not begun to capture, analyze, and re-package the vast amounts of data we have on litigation or on corporate transactions. For example, what if a firm with a significant management/employment practice began to systematically try to capture what the underlying characteristics were of cases that led to expensive and horrific claims versus the characteristics of cases that were benign and settled quickly and cheaply? Or if a corporate-centric firm analyzed what clauses in prospectuses, 10-K’s, and other disclosure documents were the most frequent subjects of litigation? Or if an IP practice could analyze, on a geographic or time-series basis, where challenges to patents were rising and where they were subsiding?
Don’t you think that non-clients would be willing to pay a fair amount of money for that information? If so, welcome to the multisided business model world.
Your view may be that some, all, or none of this is going to come to pass, or that however much of it does won’t affect us.
The point of all this is different: Think about what it might mean for your firm if any of it happens. Use these possible scenarios to broaden your conversations with your partners, your clients, and your associates and staff. If a competitor or peer firm of yours decided to embrace one or more of these potentialities, how would you respond?
The abrupt resignation of Mark Hurd as CEO of Hewlett-Packard this past week over a seemingly trivial expense account peccadillo or non-harassment sexual harassment charge may have many people scratching their heads, but the smart analysis is that, as brilliant as he evidently was at delivering operational results by cutting costs, he also demoralized and insulted employees and staff left and right, and cut R&D to the bone, which is why HP was caught flat-footed by the Apple iPad.
Consider that a cautionary tale. After all, a larger form-factor iPhone could not exactly have been a shock to anyone paying attention to Apple, or to the evolution of technology in general. Yet HP was unprepared. Evidently, they weren’t thinking about the future. You better be.
Don’t wind up as HP did in this case. And please don’t end up as Mark Hurd.
