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.
A former GM director, prudently anonymous, called it “the biggest fiasco in automotive history since Ford brought out the Edsel.”
Lafley & Martin’s verdict:
The folks running Saturn aspired to participate in the US small-car segment with younger buyers. By contrast, Toyota, Honda, and Nissan all aspired to win in that segment. Guess what happened? Toyota, Honda, and Nissan all aimed for the top, making the hard strategic choices and substantial investments required to win. GM, through Saturn, aimed to play and invested to that much lower standard. Initially Saturn did OK [but] GM couldn’t and wouldn’t keep up. Saturn died, not because it made bad cars, but because its aspirations were simply too modest to keep it alive.
I’m sure you can add other examples of businesses you’ve seen in action, or, not to put too much of a point on it, colleagues who want to win vs. those who want to participate. Years ago I read a profile of David Boies, when his star was riding high, which told the unforgettable if possibly embroidered tale of a fellow lawyer who was flagging in a trial prep war room around 2:00 am. Boies’ pithy challenge? “Do you want to sleep, or do you want to win?”
Factual or not, truth.
So your firm, as Saturn and as Boies’ partner, has a choice to make. To play, or to win?
A speculation on why playing not to lose might be so apparently widespread in Law Land.
A simplistic but sometimes accurate-enough approximation of a law firm’s strategy is to calculate it as an aggregation of its partners’ individual career strategies. This actually serves quite well as a description where the partners elevate their own self-interest above that of the firm. In that type of culture, partners’ individual preferences for the trajectory of their own lifestyles and careers prevail. Certainly it constitutes an outright rejection of the “one-firm firm” aspiration.
So what do those preferences tend to look like?
Highly risk-averse. Playing to win requires, demands, taking risks. By definition, doing what every other firm is doing will not make you a winner; it will make you mediocre. Winners do things differently. But not every iconoclastic move works.
So the cost/benefit in the partners’ minds might look something like this. (Understand this takes place at a subconscious level for all but the most self-aware; either way, it’s powerful.)
- If we play not to lose, life is good. Life is safe. I’m happy with my lifestyle. I feel I fit in here or I would have left a long time ago. I can run my client accounts as I wish and people aren’t going to bother me. I may not get rich but that’s why I’m a law firm partner and not an investment banker.
- If we play to win and actually win, I might see a small single-digit percentage gain in my compensation annually–and that could be much more volatile. Plus, my world will be one of higher pressure, more competitive colleagues, greater demands, and the unknown. (I might not even be able to cut it!–[really really subconscious].)
- If we play to win and lose, then what? I’m probably out on the sidewalk and looking somewhat tarnished. NFW!
Speculative, as I said. But the phenomenon of firms playing-not-to-lose strikes us as widespread. Maybe that’s why we’ve never seen greater segmentation in the industry, in every market segment, at every size tranche, in every geographic market, and in every niche and sub-niche. Firms with genuinely ambitious aspirations, who courageously stick to it in the face of partners whose own career planning preferences may differ–in other words, firms who are playing to win and not just to be on the field–are rare.