Innovation: the driving force of the future

Innovation has become a vital factor in shaping business success in a fast-moving, results-driven, fiercely competitive global economy. For the visionary corporate player, the focus has shifted away from simply optimising products, processes and services for efficiency and quality. Now, without losing control of quality, businesses are innovating to achieve leadership in their targeted markets and pursue their own innovation-driven futures.

Expert perspective

For many, this will inspire thoughts of Apple, Google or Facebook, not something for a provincial law firm to worry about, for while the word ‘innovation’ has its roots in Latin, it has not regularly featured in the lawyer’s lexicon.

But for success in an uncertain and competitive future, innovation is an imperative. This was the key take-away point from the speakers at our recent annual conference, who each talked from
a different expert perspective on the topic of innovation, and how to embed it in the culture
of a law firm.

The speakers were Paul Sloane, a prominent innovation guru who focuses on creative and lateral thinking; accountant George Bull, head of Baker Tilly’s professional services division; management and leadership expert Andrew Hedley; and Yasmin Lambert of RSG Consulting, who leads the Financial Times Innovative Lawyers research project.

Why did we focus on innovation? Certainly it’s not a topic that would have been considered a crowd-puller in the pre-Clementi era, but it hit the mark for us.

The changes heralded by the Legal Services
Act 2007 are now ‘business as usual’. The SRA has approved nearly 350 applications for alternate business structure (ABS) licences so far, with the most high-profile established to handle high-volume, low-value work.

SRA statistics from 2014 show ABSs already account for a third of the turnover in the personal injury market. You may not feel directly affected at this stage, but, as Microsoft leader Bill Gates said, it’s too easy to be lulled into a false sense of security: “We always overestimate the change that will occur
in the next two years and underestimate the change that will occur in the next ten. Don’t let
yourself be lulled into inaction.”

While the speed of change has probably felt rather slower than the doom-mongers predicted, the world is changing and will continue to do so. As George Bull highlighted, while the ABSs have created less disruption than expected so far, their different approaches and models will undoubtedly change the market in future.

Already, customers are looking for
a move away from hourly rate charging and demanding separation of process from value. This sentiment was echoed by Lambert, who emphasised that clients want solutions for their risks and are seeking added value beyond what they have paid for – this demands differentiation.

Today’s customer wants new and alternative channels of delivery, such as accessible, searchable library-style and online help for non-contentious matters. They want to unbundle the service, and rethink ‘pay as you go’ and the scope of the retainer.

The consensus of our sector specialists was that the current law firm model is not always conducive to innovation, with collegiality and incumbent partners sometimes putting obstacles in the way. But we need to recognise the incentives for change and how this should encourage firms to welcome an innovative culture in their business.

A number of factors will shape both the structures of firms and the people working within
them, according to Bull’s predictions for the sector. He highlighted issues such as the complexity of law firm structures, which he believes will challenge the regulatory framework. It’s inevitable that any review of reserved activities will also reshape the market.

We can expect that both heritage law firms and ABSs will adopt marketing strategies much more reminiscent of retail operations. In addition, consolidation in the market could be driven by demand from the big brands for white-labelled legal offerings.

Great expectations

We have seen more change in the legal profession in past five years than in the previous 200. With new competition and new challenges driven by changing customer expectations, the way ahead must be different. There is safety in numbers, so membership organisations have an increasingly important role to play in helping to shape the strategy of individual member firms: nimble, entrepreneurial, commercially-focused firms will be well equipped to meet the challenge.

Emotional connection

Staff are looking for a better work-life balance and we need innovative solutions to recruit, train and retain the best people for the next decade. Firms need to measure and track staff engagement and understand what emotional connection exists between the business and its talent. If the people working within the firm are engaged, then clients will spend more.

That means we need to tackle the difficult people in the business: not just the obvious objectors, but also the ‘non-compliant nodding dogs’, who will resist passively in the belief that the proposed changes will ‘go away, just like they always have in the past’. Changing hearts and minds takes time and tends to follow the 80/20 rule, so don’t expect, or try, to change everyone first time.

As well as listening and communicating
well with staff, it’s vital to listen to clients, to understand their problems and to be able to articulate solutions and respond. That involves understanding the touch points between
the firm and the client.

If you haven’t already, stand back and evaluate your resources and capabilities, and put together a competitor-advantage assessment. Then you can design things that will appeal to the real target client, not just any client, and develop a strategy based on ingredients, as do Ryanair and The Body Shop.

But, whether you are dealing with difficult team members or bringing in a new idea, as every speaker kept reminding us, innovation
can be incremental and we should not hold back because something will make only a small change today.

Another very important point to come out of the conference was Lambert’s emphasis on the need to focus on process management. Getting everyone thinking about how to do everything better is very client-focused. Lawyers tend to take an arts-based approach and think, ‘No, this cannot be subjected to a process map – it’s too complicated’, while an engineer will take a science-based approach and think, ‘This is really complex, so it must be process-mapped’.

As Hedley said during his session, if we started over, we wouldn’t build law firms on the heritage model. But that’s what we are working with and it doesn’t have to hold us back if we’re prepared to shake off the shackles of our past attitudes and engage with a new way of thinking and leading in the future. SJ

 

How to become more innovative   Check and challenge your assumptions. Ask questions no one else is asking and look at problems from a different point of view. Regularly brainstorm and ask others for their opinion – including clients and suppliers.  Borrow ideas with pride, and always  be prepared to look outside the legal  services sector.  Generate lots of ideas and then work on the best ones.

 

 

Chris Marston is chief executive of member network LawNet