As lawyers discussed the 21st Century law firm at a College of Law Practice Management Conference a few years ago, one delegate summed up the problem of whether law firms are innovative very succinctly when he said:
When it comes to actual legal work, lawyers can innovate like crazy. Corporate lawyers have designed some of the most innovative (and profitable) financial instruments around; litigators are always finding new angles from which to argue cases, and so on. Where we have trouble innovating is in our two main professional mechanisms: practice management and client relations.
This likely explains why most companies think of themselves as innovative while their clients disagree. Responding to changing conditions and client needs is especially challenging in professional services where those in a position to innovate spend 90%+ of their time meeting existing demands with little left over for innovating toward the future or addressing client concerns unless they generate billable activities.
Innovation and innovative firms
To the right you’ll see the scheme I typically use. On the x-axis, you see product change, and on the y-axis, process change.
Genome sequencing began as basic research, but, when it reaches practice, it will change the drugs we use (major product change) and the way physicians practice medicine (major process change), placing it in the upper right of this graph.
On the other end of the spectrum are minor improvements; changes one individual can make without approval or adoption by others. For example, playing more soothing music in the waiting room doesn’t require others to conform.
In between basic research and minor improvements lies the crux of the innovative process. In most organizations this is were 70%+ of innovation activities take place. However, in professional services, these are, typically, the most difficult innovations to pull off, as they require a team and (unpaid) professionals’ time to implement these ideas in practice.
As the quote above demonstrates, innovating novel ways of solving client problems is what you trained for and is a natural part of delivering high-quality service. Such innovation is what clients pay you for and what provides competitive advantage over others in your field. But, can you afford to stop at innovations at such short-term innovations while ignoring long-term process improvements providing sustainable competitive advantage in the future?
Innovating the future
You can’t afford to stop at providing services to existing clients and patients. You need to rise to the challenges you will face in the future, and build the processes and capabilities needed to tackle this large middle ground of low risk, high reward innovation opportunities.
Clients aren’t willing to pay for you to figure out how to incorporate Web 2.0 or the Internet of Things to streamline processes or deliver services at a lower cost. They’re paying you to deliver top-notch services. They expect you to figure out and operationalize innovative processes on your own.
Innovation isn’t easy. You must balance meeting today’s operational needs with building innovative solutions for tomorrow’s. I estimate most professional service firms spend between 90% and 99% of their effort on serving today’s client needs. Where do you find the time – and money – to also work on tomorrow’s issues?
Yet, if you want to continue delivering high-value services you must combine your clients’ work that is urgent today, with the important challenges that will bother them tomorrow. Clients are willing to pay for such high-value services, the challenge is whether your organization is innovative enough to address them.
Innovation is pro-active
Perhaps an example will help clarify. One of my clients (let’s call them Widget Law Firm) was challenged by their client about addressing a particular type of legal issues. The client was convinced that there had to be a better way to address their long-term challenges. This client made it very clear that the issue was important to him, however, as often happens, urgent issues required the immediate attention of lawyers at Widget and the project to find an alternative process was postponed.
This was a missed opportunity. If Widget’s client wondered about the effectiveness and efficiency with which their legal issues were being addressed, likely other clients had similar thoughts. And indeed, clients had already left quietly for other law firms that offered more innovative processes than Widget.
Waiting for clients to ask (and pay) before acting reduced Widget’s opportunities. Because no one was putting time and effort into crafting an innovative process, Widget becomes increasingly vulnerable to challengers who are willing to invest in innovative processes.
Hence, while professional services firms might be very innovative when it comes to providing the best state-of-the-art services to clients, they must recognize their shortcomings when it comes to developing innovative processes that position them for the future. And, they must be willing to devote the time and energy necessary to create the innovations of the future when no one is (yet) paying for it.
Want to strengthen your innovation abilities?
We have developed a benchmark that will enable you to test whether you have the process, organizational capabilities, and infrastructure to innovate. We advise you to take this benchmark, to understand where you stand, and what you can do to improve the innovativeness of your organization, while making sure you and your clients are on the same page when it comes to the innovativeness and value of your services.
If you complete the scan, which takes about 15 minutes, you will receive your own scores benchmarked against those of other professional service organizations the next business day.
The benchmark can be found HERE.
Organizing4Innovation is proud to offer the first innovation management approach that is dedicated exclusively to the professional services. For more information see www.organizing4innovation.com