By Susan Letterman White
Faced with the discomforting threat of disruption to their business, many lawyers react with fear. They struggle to innovate and instead end up seeking to sustain profitability by working harder instead of smarter. Their anxiety reduces their cognitive ability and that leads to a reliance on the skill sets and mindsets that are comfortable instead of those that are useful.
One example is the number of law schools that are responding to a shrinking applicant pool by cutting costs instead of tackling the problem that what they are selling isn’t delivering as expected. Too many students are not getting a chance at the career path they had expected. Another example is the array of law firms that seek out mergers (read acquisitions of partners and practice groups with very large books of business) instead of addressing a shrinking demand for services at the organization level.
Most of my clients are leaders. They are leading themselves or others in efforts to innovate. They are solo practitioners or leaders at mid-size and smaller firms. In contrast to firms that can maintain their profitability by optimizing performance through project management, cost-cutting, restructuring their talent management system or any other process aimed to make incremental improvements (like being acquired), my clients need to innovate. They are seeking to attract new clients with new brands and value propositions. They are successful when they evaluate and improve the robustness of their business strategy functional disciplines instead of merely their business strategy.
There are four functional disciplines in a business strategy: (1) Inquiry; (2) Design; (3) Execution; and (4) Adjustment. I’ve named it the IDEA Strategy Model. Each has its own set of skill sets and mindsets that make it possible to carry out the function effectively. Inquiry and Design are closely aligned with innovation, while Execution and Adjustment are closely aligned with sustaining and increasing profitability. If an organization is experiencing an ongoing drop in demand for whatever it is supplying, sustaining profitability isn’t an option in the long-term. Demand is the cyclical driver of revenue and profitability across a sales cycle and while it is dropping, no measure of cost-cutting and increased efficiencies will offset a dwindling demand.
When marketplace disruptions threaten an industry, industry practitioners experience rising anxiety levels and react by falling back on the skills they already know. These tend to be those in the functional disciplines of Execution and Adjustment. This leads to the legal innovation myth, which goes something like this:
If I work harder and longer, cut costs, and use existing technology to improve efficiency, my profitability will increase.
However, the reality is more like this:
If I work harder and longer, cut costs, and use existing technology to improve efficiencies, my profitability will initially increase even though I’m not innovating and growing my business. In reality, nothing will really change…except that I’ll be unhappy and exhausted.
Execution and Adjustment will not help you adjust to disruptive change with a new, competitive position in the marketplace. Inquiry and Design do that. A deep dive into these disciplines is the path forward.
The IDEA Strategy Model
The IDEA strategy model distinguishes the functional disciplines related to innovation and a core focus on marketplace relevancy from those related to incremental adjustment and a core focus on sustaining and increasing profitability. The model has a red-dotted line to separate the two vastly different skill sets, mindsets, and functions. Many lawyers are more comfortable with the skill sets and mindsets on the right side of the red-dotted line.
IDEA is an acronym for the four functional disciplines:
Inquiry
Design
Execution
Adjustment
Each functional discipline has its own core questions a/k/a function, skillset, evaluation criteria, mindset, and role in marketing and business development. The skill sets and mindsets of most lawyers are better suited for sustaining and increasing profitability of an ongoing business endeavor rather than responding to the discomfort of a diminishing market for services with a new idea. The good news is that those left-side skills can be learned and developed through practice.
Inquiry
The functional discipline of Inquiry is the creative, unconventional process of exploring and theorizing. The core question of this function is:
What new and as yet unknown “thing” (X) could we create or do that an existing or new target market would want or need?
Unpacking this question reveals the challenge inherent in this discipline.
What are “we” capable of creating or doing now or with practice in the future?
How are the boundaries of and criteria of our target market and its sub-segments defined?
What does our target market want, need, expect, or prefer today?
What might our target market want, need, expect, or prefer in the future?
What might be the right “thing” to attract a new target market?
The skillset for this functional discipline is heavily steeped in curiosity, wandering-with-intent-to-notice, and leadership of self and others. These skills are often associated with resilience, mindfulness, strategic thinking and communication, changing when change is hard, personal development, and branding. They are frequently dismissed as less important by lawyers as they prioritize their use of time. That said, when the tipping point is reached - when the level of fear and frustration leads a lawyer to try something completely new and different – most of my clients rise to the occasion. Formal training, followed by coaching is usually an integral part of the path forward. Evaluation of performance under this functional discipline is measured by the target market’s willingness, if not eagerness, to expend the time and money to buy the idea, product, or service that is being offered for sale.
For lawyers, the most challenging element of this functional discipline is the archetypal mindset of the creative, unconventional, explorer and theorist. It risks being overshadowed by the skeptical mindset that lawyers are trained to master. While there is a clear benefit for any start-up team to retain a lawyer in a supporting role; one, who will encourage a comprehensive risk-analysis by questioning assumptions and probing for more information and analysis before making any decision, there is a grave problem when the lawyer also owns the analysis and decision-making functions. The mindset overshadows the theorizing function that is central to Inquiry. It’s what moves the process forward. It’s not that lawyers can’t think and behave congruently with the Inquiry functional discipline; it’s that when under stress, it’s much harder for anyone to integrate less preferred ways of thinking and behaving into any strategy work. Therefore, it falls on the leader to include a plan and process to address this reality.
The functional discipline of Inquiry is the combination of brand exploration and development, target market analysis, and developing a value proposition. Much of the leg-work is consumer research discovered through curiosity, exploration, and keeping up with current events. The aim is to uncover an unmet need, tension, discomfort or problem among a target market that you, as a lawyer or law firm, could possibly resolve – an “X.”
Design
The functional discipline of Design is the tenacious, persistent process of pioneering and experimenting. The core question of this function is:
What are possible ways we could create and/or deliver X to our target market?
This question is answered through trial and error. This means that mistakes will be made and new lessons learned as a result. Often, it is mistakenly assumed that a lawyer’s natural aversion to making mistakes is the obstacle. The real obstacle is that innovation comes from a deep dive into purpose and learning new skills. More often than not, my clients are more willing to experiment and less willing to ponder identity and purpose questions about who they are, what they do, and their purpose in the marketplace.
What is the purpose of a lawyer? Lawyers essentially contribute to creating, interpreting, and applying laws. They lobby for or against the creation, elimination, or application of laws. They interpret laws and advise clients or make decisions as a judge or arbitrator. They use existing laws to advance their clients’ interests.
With that purpose in mind and the fact that innovation is about adding something new; what new product, service or experience will you offer to resolve your target market’s X? Is there a new law that opens up a new area of practice for you? What are the different possibilities to create and deliver the X better, faster, and more tailored to the exact preferences of the sub-segments of your target market than anyone else? What new skills could you possibly need?
One skill for this functional discipline is the ability to imagine possibilities and experiment with new products, services, or experiences. Be a first class noticer. Voraciously seek out and notice the novel - new laws, new technology, and new problems for people. Never forget that your business is a community of people serving a community of people. Be curious. How has the “new” created new problems and opportunities for people in their relationships, ability to achieve their goals, feel safe, and satisfy their basic needs for food, water, and shelter?
Another skill is the ability to design and test a hypothesis. When you come up with an idea for something new, design an experiment and test the marketplace interest in a small, cost-effective way. Publish an article about a new law and measure the level of interest in your target market. Try a new way of reaching your core consumer and measure engagement. Play with technology to enhance your speed for delivery and improve your design of X. Every time you experiment, you learn something new about your target market, about your brand, and about the possible ways the two fit together in a mutually beneficial way. Measure performance under this functional discipline by what you learn. What worked? What didn’t? Why? In this endeavor, two heads are better than one. This means that working in teams with the appropriate team leader and team member skills will make a positive difference in the outcome.
The archetypal mindset is of the tenacious, persistent pioneering experimentalist. Failure is to be expected. Mistakes are to be expected. The struggle is not with resilience in the sense of fearing failure nearly as much as it is with managing frustration and persevering despite extreme conditions. It’s the climber’s mentality of loving the challenge to get to the top in the face of extreme conditions because the opportunity to learn more about the context - route, mountain, weather, physical ability, and mental ability – feels almost as good as achieving the summit and most certainly reaps highly valued beta toward that end. The drive to achieve is the hallmark of the Design mindset, while curiosity is the hallmark of the Inquiry mindset.
In this half of the model, you are discovering and testing your relevancy to the marketplace. The functional discipline of Inquiry is the combination of brand exploration and development, target market analysis, and developing a value proposition. Designing is all about testing options for the fit between your brand’s value proposition and the target market you’ve selected.
Execution
The functional discipline of Execution is the nurturing and building process of settling into a routine and refining it. It’s doing what you need to do after you have figured out what to do and how to do it. In this second half of the model, you take the X you created and often the associated production and delivery processes and make them better. What can you add to make X even better? What can you do to improve the client experience? What can you do to reduce costs and improve efficiencies? What can you do to reduce the cost of production? Improving a process that already works isn’t disruptive in the same way that changing a brand, value proposition, or target market is. What must you do to keep your clients happy and return your technical skills?
The skillset and mindset is related to project management, including providing clear direction and coordination of efforts and managing the budget. The goal is to increase and sustain profitability. The measure of success is whether you are doing that.
Adjustment
The functional discipline of Adjustment is the conventional, methodical process of surveying and measuring. It’s the analysis of outcomes and the decision of what to do next. While always looking for improvement, the art and subtlety of this functional discipline is knowing the evaluation criteria to use. If you use Execution evaluation criteria to measure the progress or success of Inquiry or Design efforts, you will always conclude the efforts were worthless and a waste of your precious resources – time, talent, and money. What’s worse, you’ll never learn that innovation is much more within your reach than you had thought it was.
