Can law firms manage to innovate? by Peter Hiscocks, Cambridge Judge Business School
This article was also featured as a column in the February 2016 issue of Briefing. To read the issue in full, download Briefing.
Speak of innovation, and most people imagine scientists in white coats shaking test tubes, or Steve Jobs at Apple inventing a new electronic device. But innovation can be found in almost every corner of business life – even law.
Law firms don't have central R&D facilities or labs, but there’s no denying that all practices need new products, processes and systems from time to time.
However, on being asked about innovation and the ways to encourage or manage it, many senior partners will say things like:
- We don’t need innovation in our firm!
- Well, it’s all just a question of luck.
- We can’t afford to spend money on things like that!
- Just get a junior member of staff to deal with it
- It mustn’t cost any money or carry any risk!
- And so on.
There’s now a lot of evidence pointing to the importance of innovation to firms. It helps growth, and can improve fee rates. But we need a strategy for innovation activities, and to manage them effectively. Otherwise, the activities will be out of control and you’ll waste money. Analysis and costing of projects at a large regional law firm recently showed it was spending five times what it thought, while the partners didn’t even have a clear understanding of the benefits they expected from the investment. You don’t want this - and I can promise you the situation isn’t unique.
So, what do you need to do?
- First, accept that you will have to manage this thing. You need to spend (a little) time developing an innovation strategy. You (and all your partners) must know what they want from innovation or new technology, and then plan how to get there.
- Stay engaged with the process – not every day, but regularly, or you’ll find costs get out of control.
- Encourage ideas from everyone. Listen carefully, and select those with real potential. But get back to people whose ideas you’ve dropped, because you want them to have more (very important!).
- Focus on a small number of important projects and just stop the rest. We call this ‘drowning the puppies’ − as every idea is someone’s puppy dog. They’ll fight to preserve it.
- Measure the benefits of the ideas you spare as they start producing so you can show the upside.
- Finally, you need to recognise that sometimes a project will fail. That doesn’t mean the project team has failed − so don’t punish them.
This may seem a lot of effort − you think you don’t have the time. In fact, you don’t have the time not to do it. Managing these steps effectively will save you and the firm a great deal of money. But if you stop new ideas and innovation in your business completely, it’s true you won’t need to worry − you’ll have gone bust.