Argument (#06 June 2015)

Wind of Change: Challenges of the New Era

Evgeniy V. Bessarabov

It is not the strongest or the most intelligent who will survive but those who can best manage change. That was what Charles Robert Darwin established in his evolution theory called “On the Origin of Species”. And such a business species like lawyers and law firms are no exception. They are even more sensitive to “survival” through changes as lawyers are rather good professionals but not always good businessmen.

Kevin Roberts, a man who ran the UK’s most famous advertising firm Saatchi & Saatchi for 17 years, until his recent move upstairs to become executive chairman, one day claimed quite strange and new things: marketing is dead, strategy is dead, management is dead and big ideas are dead. Business is now all about creating a “movement” of people with shared values, he enthuses from his suite at London’s luxurious Bulgari hotel, without even a hint of a smirk.

That’s all about high speed changes we have been facing within the last 5-10 years living in a very instable business environment. This is the world of high technologies which becomes more intelligent and speedy every day. This is the new era with its new rules.

We do not just live in a VUCA world, a Volatile, Uncertain, Ambiguous and Complex world. We live in a “super VUCA world”. We live in a vibrant world where our kids are connecting to each other and to brands across the world with no money involved. To us this is a world that’s gone crazy.

Strategy is dead. Who really knows that is going to happen any more in this super VUCA world? The more time and money you spend devising strategies the more time you give your competitors to start eating your lunch.

Management is dead. To win today you need a culture and an environment where the unreasonable power of creativity thrives. Ideas are today’s currency not strategy. Martin Luther King did not say “I have a vision statement” did he? He had a dream. You have to make sure you have dreams and your brand also needs a dream.

The big idea is dead. There are no more big ideas. Creative leaders should go for getting lots and lots of small ideas out there. Stop beating yourself up searching for the one big idea. Get lots of ideas out there and then let the people you interact with feed those ideas and they will make it big.

Leaders need to become emotional thinkers. The difference between rational thinking and emotional thinking is that rational thinking leads to conclusions and meetings and more meetings. Emotional thinking leads to action.

There are three secrets to emotional thinking — mystery, sensitivity and intimacy. It is a lot about story telling. Brands need to tell stories on their websites, on their packaging and so on. Make sure your brand and company has a smell, it has a sound, it has a feel and an intimacy with people. Think about how you can build empathy. It is the small things that count and how consumers feel about our brands that count today.

Marketing is dead. The role of marketing has changed now. There is nothing new anymore. If marketers are just hearing about something going on then it is already old in today’s world. The further up in a company you go the stupider you become and the further away from new things. Speed and velocity is everything today. Marketing’s job is to create movement and inspire people to join you.

Everyone wants a conversation. They want inspiration. Inspire people. Don’t just interrupt, but interact. Asking about return on investment is the wrong question today. You should be asking about return on involvement.

Economic crises, recessions and sharp rises of purchasing power, changes in the structure of markets, liquidity crises (financial crisis), stress, early professional burnout, chronic fatigue syndrome, downshifting — all these are already embedded in our everyday business life. That is how the world looks, and it is not going to change.

And yet, the time is approaching when Generation Y comes to manage law firms. And Generation Z is coming closer too. The time comes when elderly partners should “move aside” and surrender their offices to younger partners. They cannot just leave. They need to begin giving away their business wisely and thoughtfully, thinking primarily about the firm, its future and prosperity, even outside the active business life of the founding partners. In the first place, they need to give away their partnership shares to young partners when the “older” partners are no longer able to quickly “run around” to sell services and develop customer relations with the velocity and efficiency that are essential for a stable condition of the firm and its employees. People first.

It is better to get away in a nice way and become a great legend, rather than to start a fight in one’s own house against other members of the pride and to lose the fight? Everyone chooses for oneself. Some want to die in a battle and make their own firm a battlefield. And there many such examples. But is it actually worth doing that if eventually leaving is inevitable? Yes, it is not easy to make the decision, and even more difficult to implement it. This is what many well-known foreign and international firms lived through decades ago when their founding partners retired leaving their names for history and often in the names of law firms that belonged to them sometime in the past.

And the same time is here. Even though it all began seemingly quite recently — 15-20 years ago, we are no already a very “young market”. New winds are breathing — the winds of change. The old and well-known firms that were founded by their respected partners, who in most cases still manage their firms, more often face difficulties, and sometimes even find themselves on the verge of a foul. And we see how “internal struggle” evolves in the minds of older senior and managing partners who established their firms. They are looking for the right answer to the question: “Is it already the time to leave and to pass the “child”, the Firm to younger people?” And the young ones could be children of the founding partners by their age. But they are not children any more. They are different people with other genes, values, attitudes to life and business. And they regard the legal business as “just a business, nothing personal”. The new Generation Y and the upcoming Generation Z are different from Generation X, and even more so if to compare to the “Soviet Komsomol generation”. These are people who think fast and act fast. They have used to live in a technological comfort since their childhood (they grew up with computers, social networks, and search engines), they associate the future with technologies and they are ready to change their business and type of activity depending on economic benefits and their proximity: “Now and all of it!” And also they ask a lot of questions in the beginning, and often those are the questions that Generation X and the preceding generations considered immodest, unethical and even prohibited. What income has the partner in your law firm? How fast and how much salary raise do I get? If I become a new partner I would have absolutely equal rights, including the share of business ownership and the distribution of gains, in particular with the founding partners? Changes in consciousness and self-awareness within one’s own firm are inevitable.

What will happen to law firms and their partners in the time of change? What would the elderly have to face? What would hired associates have to face? What would start-ups have to face — the new law firms and partnerships? How is it possible to prepare quickly and move to a new era with new people? For each category of players (old partners-old, young lawyers, future partners, partners and lawyers leaving law firms to become independent) there should be a different set of “ammunition”: knowledge, skills, abilities, assistants. And since everyone has their own game and goals, the sets will be different, though having many similarities.

What new rules enable managers of legal business to stay afloat?

One should be a businessman and think like a businessman. This is the first rule for owners and business managers in the Volatile, Uncertain, Ambiguous and Complex world. This rule applies to all players: young and old, X, Y, Z. The second rule is to make right decisions fast and to think even faster. A spectacular example of the speed of making fast and right decisions is the movie “The Margin Call”, where the main protagonist needs to make a right decision over one night with the price of the decision involving the future of the firm and the end of 30 years working for the firm’s prosperity. Without a sober and even cynical business attitude, their future would be even sadder. Because this is business. Business lives by its own laws. And nobody cares who started the firm and how many years one devoted to it. One needs to feel when the music fades and in the silence one can hear only the wind. So it’s time to find oneself at the EXIT door.

Be transparent. 5 and even 3 years ago, distribution of partners’ fees and firms’ profit were known only to a few people. Currently, the transparency of such policies for all of your lawyers is normal and a must. One shouldn’t waste one’s precious time making these rules secret and discussing the same issue with personnel seeking relevant answers from partners and HR-managers.

Be objective in evaluating the results achieved by staff. Sooner or later, there will be a need to develop and implement internal policy on Compensation & Benefits that is objective and tied to financial performance and economic efficiency. That’s why the personnel evaluation policy under the KPI metrics is in the “must have” category.

Get rid of unreasonable expenses. Time is money. Through investments in technologies and selective outsourcing of auxiliary processes, you do not need to spend precious time on technical processes and unrelated work. The time of the “home made” systems of accounting, billing, settlement and reporting is over. The time of a “zoo of systems”, when each process in the firm occurs in separate systems, which often are not even integrated with each other and require expensive support of entire teams of IT professionals and ever changing developers, is over. Over is also the time, when instead of specialized professionals exclusively partners deal with marketing & PR, economics and finance and HR. Currently, it is no longer a problem to find outsourcing or to develop specialized professionals through outsourcing to support the business processes of law firms, i.e. administration.

Partners’ time should be used for sales, development of relations with existing, cost-effective clients, increasing efficiency, and new technologies. All that does not make money now or in the foreseeable future in the short term it is not rational.

Permanent search for “blue oceans” and their rapid exploration. As the world becomes globalized borders fade away. We are well accustomed to staying in one place and engaging in “competition wars”, adding the red color of blood to market waters. But is it efficient and “environmentally friendly”? For what result is business time spent in battles using resources of the business (often obtained by hard work)? Is it to increase capital or for personal satisfaction? Perhaps, everybody can answer this question in the right way. But would everybody act in the right way? The theory of conflict states this: conflict is inevitable due to competition for limited resources, status, awards. And this is also true. But is it worth using precious resources such as time and health for lengthy involvement in conflicts? It is more efficient to take one’s time and search for new “blue oceans” and enjoy their “bloodless” waters until other fleets can be noticed on the horizon.

We are either at the helm or we go ashore and wish our ships “Good voyage!” Sooner or later, we will do that. And that’s not the question.

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