Firms Of The Future & Innovation

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leftFollowing on from my October post, as you know I am all for firms being creative and innovative. After all you market for growth but innovate for profit.

But lets face it many organizations, especially professional firms, struggle with innovation despite just about every firms website mentioning just how innovative they are.

When I ask some firm leaders to give me examples of what their firm does that is truly innovative either the silence is deafening or the examples provided relate to efficiency gains, are pretty underwhelming and moreover are usually things practiced (often better) by their competitors. This is not to say such examples are bad or a firm should not have them- merely that they are not innovative per se.

Most professional firms like to benchmark themselves against their so called competitors to either feel good about themselves or to establish just how far they still have go to copy those they perceive as leaders, but this is hardly being creative or innovative. The real leading firms, those that are truly innovative, do not waste their energies benchmarking themselves against the more average firms. Most firms also tend to benchmark themselves against others in their profession - despite the fact that competition is increasingly coming from outside. Such benchmarking at best creates a race towards mediocrity.

True leading firms often find their creativity and innovation in one of two ways.

  • They look outside their own industry and see what disruptors have done and then consider how something similar might apply to their industry.
  • Alternatively they find their innovative ideas from within-because they have fostered and nurtured a culture that encourages and rewards creativity and innovation.

Regrettably the professions are not known for always encouraging such a culture and in fact the traditional firm business model and the internal rules and conventions built to support it can actively discourage and even penalize creativity and innovation. (The best example of this would be firms that continue to price their services solely by time-what incentive is there in those firms for anyone to come up with an innovative way to get a clients problem solved more quickly? None...  The firm loses revenue and most firms KPI their individuals on revenue- as such creative solutions may not be a good career move.)

For the most part and for understandable reasons, our professions like our people to be obedient and diligent –to conform to the file opening procedure, send out a Costs Agreement, make notes of every conversation, enter time on your timesheets, etc. And to be fair much of the work undertaken for clients requires a fair slice of diligence and discipline, operating within rules and timelines and conforming to convention.

Our professions of course measure all this ad nauseum and reward those that do these things well- whilst penalizing those that behave otherwise.

For all our fixation and eons of experience on measurements, I do not come across many firms that either measure or reward creativity and innovation. Creativity does not come from invoking a rule or an order or a formula from management. You might be able to make people stay late at the office and bill upwards of 5.5 chargeable hours per day, but you cannot force anyone to be creative. One of the world’s foremost business thought leaders Gary Hamel in his excellent book The Future Of Management sums this up nicely- “…while the tools of management can compel people to be obedient and diligent, they can’t make them creative and committed”.

Yet if most of the pundits are correct in that firms that do not innovate simply will not survive in the medium to long term (and some have not and will not even in the short term) or will be left languishing at the bottom competing for their commoditized services mainly on price, are we not measuring and rewarding the wrong things? At the very least can we not find room to also reward the right things?

Why is it then that some firms foster a culture of continuous improvement and encourage creativity and innovation (not just talk about it or use it as marketing hype) yet others fail miserably- even if their intentions are well meaning? Some reasons include:

  • In any organization the culture is of course set by the top so firm leaders have to genuinely believe in their heart of hearts that creativity and innovation is good for their firm and for their clients.
  • Many professionals however are inherently conservative and risk averse (that is why many became lawyers or accountants in the first place) and thinking creatively does not come naturally nor is it part of our training or conditioning. As such we are often scared of anything seen as new or untried, untested or worse still if no one can give a guarantee of success. Lawyers in particular work in a precedent based environment in their daily lives so if something has not been done before (successfully) by someone else (they respect) they will rarely give it a go.
  • The traditional partnership model itself is far from conducive to innovation. If consensus is necessary at partner level to push a new idea through on a firm wide basis it is often hard to bring everyone along for the innovation ride and a good idea is often killed or is so watered down once the LCD (lowest common denominator) factor takes hold the status quo is effectively maintained.
  • The professions also still primarily work on the old “command and control” model and whilst- at least in the short term- this maybe good for the discipline/obedience side of things again this is hardly conducive to establishing a creative culture. You have to empower people before they can ever hope to unleash any creativity but many leaders just cannot bring themselves to let their brood off their leash.
  • Innovation is not short term and for many firms that have their measurements and rewards built around short term goals (e.g. 5.5 billable hours per day) they just cannot see the point in investing in something at the expense of their short term goals. Particularly when the results of which, even if it is successful, they may never see (and never be rewarded for).

Being innovative does mean being different or unique and whilst many firms talk about differentiating themselves in the market this is often far from the reality as there is understandable comfort and safety in the warmth of a herd.

Despite all these inherent obstacles, there are firms that seem to consistently come up with really innovative ideas and practices.

You don’t need a firms website to tell you whether they are innovative or not. In some you only have to walk in and you can feel and smell the air of innovation-much like when you walk into an Apple store. But the real test  is when the stories and experiences are told and shared by the firms team members and their clients.

They know what it feels like to be part of a Firm of the Future- not part of a Firm of the Past.

As William Gibson said “The future is already here…it's just not evenly distributed”