Feature

posted 5 Oct 2004 in Volume 7 Issue 5

Imitation to innovation: Lessons from the consumer world

Professional-services firms are a world unto themselves, or at least that is what we are led to believe when it comes to lessons in best-practice management. Julie Lake, marketing director at Clarke Willmott, questions this assumption to argue that law firms could learn a lot from the consumer world, particularly in respect to innovation.

He wasn’t singling out the sector. He didn’t mean people in professional services when he said it. He didn’t even mean professional-service firms. When a FTSE CEO, with an ample legal budget, said that we all look the same, he meant law firms.

He also wondered why law firms don’t call themselves something different, like Syzygy or Naked, or how about Naked Ambition? Naked Ambition, he thought, is a great name for a law firm. And he has a point. However, law firms have good reasons for not calling themselves by any of these names and one is the indisputably commercial reason that other businesses already do so.

When it comes to inventive nomenclature, it seems that marketing services got there first. Indeed, occasionally, it can seem that in many aspects of legal services, apart from the legal bit, other sectors got there first.

It is hard to fathom why. This is a relatively unregulated sector compared to, say, pharmaceuticals (despite policing by the Law Society). New products are not subject to years of testing. There are few contemporary sensitivities: legal services are not marketed to children or tested on animals (that we know of). On the other hand, like the technology sector, it has a lot of preternaturally bright people. In theory, it should be one of the most pioneering fields this side of Jodrell bank.

But while the tech world doesn’t have the monopoly on IQ, it does have another quality in spades: an almost wilful proclivity to innovate, adapt and reinvent. And it isn’t just technology. The fashion sector reinvents itself each season because it is tuned almost telepathically into its markets and, crucially, its competition. Amazon also developed new retail channels for an age-old product – books.

Right now, organisations large and small whose target is that great impalpable collective, the consumer, are busy, read obsessively and put their products, markets, channels and people through reviews so brutal they practically draw blood. So what about professional services? What lessons can we learn from the reinvention ethic of the consumer world? And do we even want to?

Big-band theory

In his latest novel, Douglas Coupland says that big companies are like marching bands: “Even if half the band is playing random notes, it still sounds kind of like music. The concealment of failure is built right into them¹.”

If this theory is right, it doesn’t sound like a blueprint for delivering a business plan. And if the concealment of failure is the default setting in a business, it begs the question, who’s picking the tunes?

Happily, there is no shortage of received wisdom about how to run a professional-services (PS) business. The collective know-how available contains any number of management tenets, including the following ten:

You have a vision and a business plan to match (if your firm has neither, leave now);
Everybody understands what the plan is and genuinely buys into it;
Everybody knows how ‘what they do’ contributes to the firm’s top and bottom line. They also know how their success will be rewarded, as does the firm;
Billing is built into client care. Costs are continually revised – downwards;
People are organised around clients and markets – even if the grouping is virtual and not reflected in the floor plan;
They share information and ideas – between and across services and with support teams;
Your culture is implacably one firm, and not a medieval market of sole traders;
Marketing/business development is small, beautifully formed and focused on research, analysis and communications – not on marcoms and menus. Their objectives are tightly tied into those of the firm;
You have at least five taxonomies of knowledge: technical, market, geographical, managerial and organisational know-how;
Technology is geared to ‘locking in’ clients and to improved efficiencies.

It might look easy, there on the page, but this is not a job for the commitment phobic. It takes qualities such as stamina, enthusiasm, influence and the communications reach of, say, the Hubble Telescope. It is tough, without question. And, at the end of the day, the question remains, is it enough?

When people buy into a firm’s strategy, values, market orientation and style, there is clarity and purpose. But it is also possible that objectives and values that are too narrowly defined could become an obstacle to change. For example, the expression ‘the way we do things around here’ could take on the sinister subtext of not wanting or planning to change.

While this might be perceived by all but the most militant innovators as a deterrent to so much as thinking of doing things differently, it won’t trouble the change averse, most of whom will welcome the refuge of uniformity or convention. In their view, ‘the way we’ve always done things’ is a fantasy comfort zone, where past, present and future are largely interchangeable. But it might estrange another group: those who might, given the remit and the resources, identify the firm’s future – which includes, of course, its future profits.

Stepford lives

Brands and businesses need to stretch – and not just by market segmentation. A people business is by its very composition a more mutable entity than, say, a FMCG, but the principle holds. All brands, whatever their industry sector, must have room to:

Move;
Respond to external change;
Evolve.

A market-leading, forward-thinking business or brand will abide by these rules by focusing on the following familiar factors:

Vision and strategy: where you are going and how you plan to get there;
Identity: who you are, how you sound and what you look like;
Communication: who you talk to and what you say.

But they also have these:

Insight: a genuine understanding of clients – their markets, people, issues and challenges – and how they feel about you;
The ability to reinvent, transform and refresh all of the above by virtue of that insight.

It’s been said before, but still holds, that good lawyers differ from good baked beans in that they (the lawyers) are all brilliant in their different, sometimes very different ways. They do not want to operate to a given formula, however distinctive. They are not Stepford Wives. And the good news is that, unlike Stepford husbands, clients don’t want them to be.

Clients should expect and receive the unexpected from their advisers. But they must also know that they will receive the same incomparable level of service wherever they encounter the firm. This puts people, their expertise, know-how, skills, commercial sense and instincts at the heart of the business.

What it doesn’t mean, non-conformists take note, is that people thus empowered are also free to trample on your values, hog work or indulge in any of the lone-wolf behaviours that undermine your culture and, by stealth, your business plan.

A people brand, contrary to the naysayers’ view, can be about consistency, providing the paradox is understood. Unlike product brands, in whose constancy we trust, it will not mean doing or being the same thing every single time. For us, doing something consistently (more to the point, consistently well) must also involve looking for and delivering new and improved solutions, whenever they’re called for and occasionally when they are not.

Innovation, innovation, inno…

The DTI, on its innovation.gov.uk website, defines innovation as: “The successful exploitation of new ideas – incorporating new technologies, design and best practice is the key business process that enables UK businesses to compete effectively in the global environment.” The challenge for companies, it says, is to bring to the market a stream of new and improved added-value products and services that enable it to achieve higher margins, and thus profits, to re-invest in the business.

Before this prompts anyone to launch an innovation project to attempt just that, there are other considerations. Keith Wells of brand specialists Dragon Brands says that innovation on its own rarely achieves much. “It needs to be a natural part of the way firms operate,” he says. “Many companies play catch-up, wanting to say something about themselves, simply because their competitors are, but the real value is in finding something true and unique about the firm. If innovation is to be a key attribute in any business, it has to be rooted in the culture and ambitions of the business – not seen as a ‘better have this too’ bolt-on.”

Hold the light-bulb logo for a minute though; this is not the Bright Ideas Scheme where firms attempt to extract from their people operational efficiencies with the lure of small gifts. That may be a well-intentioned idea, but in terms of effecting genuine transformation, it has little pull.

Neither is it about having something more upscale and shiny in the shape of an innovation team. As Wells says: “One of the worst mistakes we’ve seen in firms is to establish a so-called innovation team. Basically, this lets everyone else off the hook and makes it difficult for innovation to be integrated into the everyday workings of the organisation – it becomes someone else’s job, and often stays outside the normal planning, development and measurement processes.”

If it’s everybody’s job, then the process needs to touch and engage every point of the firm. As an ethos, this should run through any business like a double helix.

Five steps to a new you

1. Source

Think about how to capture new ideas and insight from the market, your clients and your people. Identify how (and where) they are generated.

2. Selection

New ideas are not always good or right for your business. Some should be left; others might be worth the investment. The key is to determine which is which.

3. Fusion

Consider how you can bring together knowledge from different sources – clients, industry sectors and geographical markets – with your own collective, and never to be undervalued, experience.

4. Insight

Market intelligence and, critically, the client perspective then needs to be fed back into the mix.

5. Reinvention

And all of the above needs to stimulate the generation of (and ultimate investment in) new markets, products, channels to market and people.

The limitations of imitation

Lawyers practically invented the relationship model: the science of it is ‘who we are that counts’. But, if tech firms are opting to brand along this experiential model (rather than just what they make), might we likewise steal a trick from them and focus more on product?

The FTSE CEO might well relate to Management Centre Europe’s assertion that companies must now strive to make competition irrelevant, rather than outperforming it, and that we need to move from imitation to innovation of value2. This means absorbing factors that the industry sector in question has taken for granted, including:

Reducing specific factors that are well below the industry standard;
Creating factors that the industry has never offered;
Raising some factors well above the industry standard.

If it sounds complex, and more like something worth exploring in a year or ten, it’s worth remembering that these factors are currently seriously engaging our clients. Innovation is something that other sectors have high on their agenda.

Wells says that introducing innovation might sound daunting, but it can just mean finding new ways of doing things. “Sometimes we see people really struggling with the concept,” he says, “because it always sounds ‘big’ and ‘complicated’ – something only really clever people can do. We’re working with an insurance company that has elevated innovation to one of the top strategic thrusts across the business, and a key part of that is in helping everyone see that it can often mean just finding smarter ways of doing things – not only a brilliant invention or insight.”

Wells also says that businesses that thrive are not always the most ‘innovative’ in the sense of changing lives, but they are likely to be able to move more quickly, be more responsive and have an obvious understanding of and feel for what their audiences ask of them.

Neither is it just about investing in a long-term scheme. For instance, the drive to lower costs might, if approached with a future perspective in mind, result in new operating models that create a genuine competitive edge, as well as in improved efficiency. This is not just good for profit; it’s good for clients’ profits too.

Compare this to an objective that is all about costs. In the short term, this might enrich the bottom line, but it might also starve the firm of muscle – as well as stripping it of fat. It cannot become more competitive because it no longer has the energy to move.

We were wrong – but that’s all right

Market-leading consumer brands do not just compete when obliged to by external forces. The good ones don’t play catch up, largely because they have an almost intrinsic need to invent or reinvent. It’s in their DNA. How does the PS sector compare?

Wells says a partnership structure can make it difficult to get decisions taken clearly or quickly – and innovation usually needs both. “It also needs people to be prepared to be wrong, to take a risk,” he says. “That goes against the grain in professional services, where risk is inherently bad, and, in a people business, it is likely that some people will be sensitive to the suggestion that there might be a better way for them to be doing something.”

In the search for better ways, Consumer World – with its conspicuous ability to invent and deliver what we never knew we wanted but now can’t live without – has plenty to teach. It also understands the need for insight. When it comes to attempting to engage with its markets, it is the daddy. But when it comes to the psychology of why we buy what we buy, it’s still in short pants.

We, by contrast, have two distinct and indisputable paths to insight at our disposal, that is, the ability to talk directly to:

Clients – in a genuine client/adviser exchange that gets far closer to the genuine drivers of business relationships than market research, however sophisticated;
Clients’ people, markets and peers, which enables us to round out the picture.

And yet, despite having a tool that consumer brands would sell their secret herbs and spices for, firms continue to outsource the opportunity to talk to their clients about how they perform. At best, this is an abdication of care; at worst, it’s corporate negligence.

This is not to say that commissioned research has no place in our lives, but it should be used with specific benefits in mind, for example, creating more value.

But when it comes to generating insight, talking to clients – particularly clients whose departure would leave a crater-sized hole in your business – is not a task to be outsourced to consultants or the business-development team. Rather, it’s a not-to-be-undervalued opportunity to learn more about our performance – and, critically, about theirs too. Insight, as Consumer World knows, is not all about you.

Can’t change, won’t change

Facing the choice of finding smarter ways of working or concealing failure is actually no choice at all.

But there is another way. It is a more strategic approach to innovation, which liberates it from the bright-ideas group and places it at the heart and head of the firm, where it belongs. With it, you will regularly review:

Market opportunities – the new frontiers and identifying those clients who will define your future;
Products/services – checking that the old ones are up to scratch and that they will get you to where you want to go. Alternatively, seeing whether there are other ways of doing things;
Brand models – the possible emergence of (more) umbrella or diffusion brands to support a range of more diverse products. Also assessing products that might reach parts of the market that a firm can’t currently reach;
Market channels – new routes to market and how your reach can be extended;
New cost structures – clients want them;
New joint ventures – not just technology driven, but involving people and other businesses as well;
The possibility of the big one: the first-to-market offering that no-one else has thought of.

Anything’s possible. All are within reach of any firm – providing its focus is as much on the future status quo as it is on the present.

Such a strategy will require changes. For instance, lawyers and business-development teams will have to work even more closely together. This will not be a linear arrangement, where ideas are passed on baton-style, or where teams and functions live in intellectual segregation, but in a more organic partnership that sees the firm augment its understanding of markets, read the runes of emerging trends and build and deliver new products and services that clients actually want or, even better, that they didn’t even know they wanted. Admittedly, and controversially for some, this will also mean changes in its marketing approach, for example, cutting the hospitality budget in favour of research and development.

Are we all the same?

It might look that way to those for whom insight and reinvention are for life and not just for (this) Christmas. We might not have differentiated in the style of, say, Naked Ambition, but this is a diverse market sector, and it is undoubtedly becoming more so.

Plaudits aside, there remain better ways of doing things, which need to be found. But we know this: clients have been telling us so for years. In this newer world order of escalating competition, inflexibility, inability or unwillingness to accept that the world might be making different demands are no longer options. Change is now not just part of the landscape: it’s non negotiable. It might take Herculean will to drive it though, get buy in and maintain the momentum, but as a business that wants to stay competitive and grow, it’s worth it.

References:

Page 105 of Eleanor Rigby by Doug Coupland, published by Fourth Estate, September 2004
See www.mce.be

Julie Lake is director of marketing and communications at Clarke Willmott. She can be contacted at jlake@clarkewillmott.com