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.

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.

The two (complex and sparsely populated) are of course joined at the hip.  Complex organizations are hard to mimic and challenging to maintain at a high operational level and, let’s face it, lawyers can reach quite senior levels in their firms blissfully free of exposure to management or, really, Business 101.

That brings us to the first characteristic of Splendid Grays, which can be a show-stopper right out of the blocks: The senior people running the place must be drawn primarily from across a well-balanced blend of business professionals:

• COO,
• CFO,
• CMO,
• CIO,
• pricing and project management specialists,
• data analysts,
• client relationship managers,
• process optimization experts,
• interface and design developers;
• and much much more.

Yes, they will “run the place” in intimate partnership with the lawyers, but the lawyers’ role will be constrained and not imperial.  They–and the business professionals alike–need to do what they do best and can have no right to second-guess others in their specific areas of expertise.

This will be hard, bordering on impossible, for many lawyers to swallow.  Lawyers are so used to being in charge at law firms, lock, stock, and barrel, that they may almost be unaware of it, and if brought to their attention, any other state of affairs will be ruled out as unthinkable.

Lest you think I jest, my partner Janet Stanton was presenting at a large law firm retreat about a year ago, when she made the seemingly anodyne observation that referring to “non-lawyers” within the firm was demeaning: “Are there ‘non-doctors’ in hospitals?,” she asked rhetorically.  The rather plaintive objection was immediate: “But, then, what are we supposed to call them?”

And have you noticed how many senior people at law firms running (for example) marketing or technology or “innovation” initiatives have JD’s?  Yes, to some extent it’s a statistical artifact resulting from people with JD’s tending to spend their formative years inside law firms, but the voiced preference of many law firm leaders that those positions be filled by JD’s is clear and present (and highly irrational).

May I point out a certain asymmetry here?  It would never cross the mind of a business professional to second-guess a lawyer’s litigation strategy or transactional negotiating technique, but it seems irresistible for lawyers to presume they “know better” than almost any businessperson, and to get in their way, second-guess them and veto their decisions if they can get away with it, and of course demoralize and demean the businesspeople in the process.

This reminds me of the school of thought among foreign relations experts that the concept of “national sovereignty” stands for respecting each nation’s right of self-determination and autonomous governance, unless you happen to be China, in which case it means China’s sovereignty over other nations as convenience and self-interest might dictate.

As is often the case, then, one of the foremost challenges to adopting a strategic positioning–in this case that of being a Splendid Gray, with all the high-powered business and operational expertise that entails–is that the native culture of the firm onto which the strategy is being grafted will reject the implant, its life-saving or therapeutic benefit be damned.

I have no snappy riposte to this dilemma and no “seven habits…” to help you get over it, but if you aspire to being a Splendid Gray, get over it you must.

The market will not be kind unless you do, because remember, the competitive set of Grays is not just other Grays, but in-house departments (we can do this non-brain surgery ourselves) and NewLaw.  Being a Splendid Gray means far more than being better than other middle of the pack Grays (outrunning your friend in the woods, as the old joke has it), it means outperforming the bought-and-paid-for expertise of inhouse counsel and beating NewLaw at its own game of predictability, reliability, repeatability, and relentless cost minimization.

None of this will be possible if you can’t bring yourself, and your partners, to (a) seek out and hire the most highly qualified business professionals you can persuade to sign up; (b) pay them their full market worth, and maybe a risk premium on top of that because they’ve seen what can come from signing up for a tour of duty at a law firm; and (c) get out of their way.

Few firms will be capable of doing that, or of sticking with it long enough to see it bear fruit.  That’s why the Splendid Gray quadrant is sparsely populated.  And why squarely planting your flag there could be richly rewarding.