Recent conversation with a veteran friend in the industry. He had correctly deduced from a recent column in these pages that I’m (re-)reading the all-time strategy classic Playing to Win by A.G. Lafley and Roger Martin (Harvard Business Review Press: 2013) and he called with “an epiphany.”
I realized my firm isn’t playing to win; it’s playing not to lose. I think most law firms are doing the same.
Now, a bit of background for those of you who haven’t read Playing to Win or who have read it and so damned many other strategy books that you’re struggling to recall the particulars of its message: The title constitutes truth in advertising. But why do Lafley and Martin think “winning” is so important? After all, most firms in any given industry play a good game but only the lucky few win; isn’t it safer (more prudent, less risky, at the very least more realistic) not to expect to truly “win?”
To the contrary; winning is the acid test of a successful strategy. For one thing, across industry after industry, large and often disproportionate value-creation accrues to the industry leaders. This seems to be the case with BigLaw as well. Using the AmLaw 100 dataset:
- 10% of the entire revenue of the 100 firms is accounted for by the top three;
- the revenue of those three firms was greater than that of firms ##81–100 combined;
- and the top nine firms garnered as much revenue as the entire bottom half of the 100 firms.
Let me be the first to highlight that this is revenue, which is essentially market share (within the AmLaw 100), but that might not constitute “winning” in your eyes–it does, however, constitute our best measure of “value creation” in the sense of where clients spend their legal budgets.
Setting aside “value creation,” a rather MBA-esque concept, why do Lafley and Martin believe so strongly in the power of the aspiration to win?
[Because] winning is hard. It takes hard choices, dedicated effort, and substantial investment. Lots of companies try to win and still can’t do it. So imagine, then, the likelihood of winning without explicitly setting out to do so., When a company sets out to participate,rather than win, it will inevitably fail to make the tough choices and the significant investments that would make winning even a remote possibility. A too-modest aspiration is far more dangerous than a too-lofty one. Too may companies eventually die a death of modest aspirations. (id. at p. 36)
As a cautionary tale, they recite the story of Saturn, GM’s late attempt to compete in the small-car market with Toyota, Honda, and Nissan. Remember Saturn? In 1990, with its legacy brands (Chevy, Oldsmobile, Buick) in decline and with their buyer demographic aging, GM launched Saturn, its first new brand since the 1920’s, intended to be “a different kind of car company, a different kind of car.” But the fatal flaw in the strategy was that it was fundamentally defensive. Fast-forward two decades to 2010 and Saturn was shuttered, all its dealerships closed and GM $20-billion in the hole.