In our third and final installment of the Maroons/Grays segmentation analysis, we presented this:

Here’s a simplistic way of thinking about the two types of firms and the consequences for each of strong or of weak management.

  Maroons Grays
Superbly run Steady as she goes; don’t screw it up. We call this quadrant that of the “Splendid Grays.” A fascinating and powerful business model and quite sparsely populated territory at the moment.  This could provide tremendous value to clients and staff alike. Maybe our favorite quadrant in this table.
Poorly run How long do you plan on being a Maroon, again? You better have very forgiving, or very loyal, clients. Absent those (wasting) assets, a slow slide to irrelevance.

Now we’d like to talk about that top right quadrant, the land of the “Splendid Grays.”  What does it take to get there and stay there and why might you want to?

A few brief prefatory remarks on why this column will focus on the top right quadrant as opposed to any of the other three.

First off, the strategic and leadership questions facing firms in two of these four quadrants (the “poorly run” bottom row) are of potentially tremendous intrinsic interest.  Poorly run Maroons (SW quadrant) are living off seed corn and stored reputational capital.  Marketplace perceptions notoriously lag reality, both on the way up and the way down, so they have a brief and sure-to-expire window of opportunity to reinstate their gold-plated performance and rescue their reputations, but, because Internet, it’s not as long as it used to be.

Making matters worse more urgent is that clients who’ve had a bad experience remember it far more vividly, and tell many more of their friends, than clients who’ve had the (anticipated, normal, and unremarkable) good experience.  The SW quadrant is, in short, a crisis in the making.

The demand on leadership is simple to state but as perilous as defusing a bomb: It demands prompt and decisive action to jettison under performers while keeping everyone else not just present and accounted for but more enthusiastic and hard-charging than ever.  You have to take the firm apart and rebuild it without blowing it up–all over the strenuous objections of those getting the short straws.

As for the poorly run Grays (SE quadrant), the good news is they have much more breathing room.  The bad news is it’s without doubt the weakest and least rewarding of the four market positions.

There’s little to add to the prediction of slow demise at the hands of wasting assets.  Escaping this quadrant alive (or, more accurately, staying relevant in the marketplace) will probably require more energy, capital, and plain old management courage than many of these firms have available or are used to deploying.  If you’re in the business of indefinitely re-setting expectations lower, you have found your home.

Then of course we have the well-run Maroons (NW quadrant).  They are apex predators and should by rights be able to remain so no matter how many pretenders try to mount a challenge from below.  Yes, they strongly challenge and compete with each other; but they can remain serenely indifferent to the Grays and simply will not face head to head tussles with NewLaw (although they better be hyper-efficient and reliable in their daily operations, including all matters related to digesting massive datasets of documents).  And even within the competitive set of great Maroons, you know who everybody else is, and it’s quite a short list.  You will see them coming, as it were.

Indeed, the only real threat, but it’s potentially existential, would come from within themselves: Complacency, and its more insidious evil twin, arrogance. The price of remaining a superb Maroon is, as someone said in another context, eternal vigilance.  But it can most definitely be worth it.

This brings us back to the “Splendid Grays” in the NE quadrant and our favorite sector, because perhaps the most complex to manage and the most sparsely populated on today’s market landscape, of all four.

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