Pace of change an issue for incumbent professional service providers

Previous posts have looked at various aspects of the radical change sweeping through the professions.

Generally, the four main areas where disruptors, innovators and incubators tend to focus their attention are:

1. unchallenged orthodoxies - the parts of a business model that have remained unchanged and are assumed by industry players to be non-negotiable


2. unappreciated trends - things that are happening in other unrelated industries that have not been embraced more widely


3. unleveraged competencies - a focus on what the business knows as opposed to what it does can create new value propositions


4. unarticulated needs – a focus on the '5 Whys' and 'What job is to be done?'.

As Jack Welch has explained, firms are at significant and potentially irretrievable risk when the rate of internal change is slower than the pace of external change.

True incubators understand that plans for the future must simply be plans for learning. In other words, plan to be wrong - and then learn how to be right as fast as possible.

A new solution must always be simple, reliable and convenient. It will always be delivered at lower margins - the profits will follow as market share is secured.

As the solution is generally only valued by the least profitable customers, a firm that chooses simply to listen to its best customers to identify new products essentially ignores all forms of disruptive innovation and, in turn, essentially ensures that it will fail the innovator's dilemma test.

This means there is a very strong first mover advantage as the incumbents effectively ignore the disruptive model until it is too late.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago.

For many, the journey has started more recently and we believe it important to share our learnings.

In this regard, we are excited to be presenting at the 2016 ALPMA Summit, A Blue Print for Change, 7-9 September in Melbourne – see -http://www.alpma.com.au/Summit

Before then, our upcoming Roadshow will also be a full day example of our contribution in this space.

Download the brochure.

Watch the promo video below.

Image courtesy of Shutterstock

Outliers and the Professions

Last week’s post looked at Malcolm Gladwell's latest book.

Interestingly, Gladwell has previously also provided guidance on what types of factors may be of interest to the professions as the foundations of the time billing business model continue to be subject to intense scrutiny.

In particular, in Gladwell's book Outliers (see - http://www.amazon.com/Outliers-Story-Success-Malcolm-Gladwell/dp/0316017930), he analysed the 'perfect storm' that allowed the legendary New York legal firms to seemingly come from nowhere and become arguably the western world's most famous and successful law firms.

The analogies given the current changes facing the time billing professions should be clearly identifiable, given the wave of innovative business models enjoying exponential rates of growth across a myriad of industries.

The key factors identified by Gladwell as the criteria for the successful New York lawyers were as follows:

1. be born in 1930 (40 years of age in 1970 when the revolution first began and a 15 year period of experience in takeover work while others were ignoring it); 
2. be an outsider; 
3. have parents who did meaningful work; and 
4. have a strong dose of ingenuity and drive.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago. In this regard, it is exciting to have been selected to present at the 2016 ALPMA Summit, A Blue Print for Change, 7-9 September in Melbourne – see - http://www.alpma.com.au/Summit

For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming July roadshow will be a full day example of this.

For your limited opportunity that lasts less than 2 weeks to access special early bird pricing for our Roadshow, download the brochure here.

Insights on the Journey to Value Pricing

For those who do not otherwise have access to it, the contribution I made to a recent eBook published by LegalTrek is extract below. The complete eBook that features among others Ron Baker, David Wells, John Chisholm and Ed Kless is available at the following link – https://legaltrek.com/afa-ebook/ Our legal services business has operated entirely on a fixed price basis since 2004.

This said, timesheets were not completely eliminated until 1 July 2013 (see photo attached!), shortly before founding our firm View.

There have been challenges, mostly unpredictable, however unsurprisingly no one in the team is likely to volunteer to fill a timesheet in ever again.

A key influence has been VeraSage, the international think-tank dedicated to eliminating hourly billing from the professions (see - http://www.verasage.com/). Consultant John Chisholm is the leading Australian based Fellow of VeraSage and is a fantastic mentor, as are the trail blazing firms associated with the group – see - http://www.verasage.com/thelist/

The key lessons we have learned in running a truly ‘timeless’ firm include:

1. Parkinson's Law is a serious challenge even without timesheets – perhaps counterintuitively our key performance metric is still time related; that being – what is the duration between agreeing on a scope of work and delivering that scope to the customer.
2. Communication both internally and with customers is vital. Many law firms only exist because of Murphy's Law (i.e. everything that can go wrong will go wrong). Successful fixed pricing almost entirely depends on carefully planning and agreeing a defined scope. If there is a legitimate change to scope that could not have been identified at the start of a project, there must be real time communication within the team and immediate engagement with the customer.
3. Centralisation of all team learnings in a logical and easily accessible manner is critical. This includes (using VeraSage founder Ron Baker's language) ‘AARs’, being after action reviews (see – https://www.linkedin.com/today/post/article/20130303194245-38251380-replacing-the-performance-appraisal). This 'non-billable' concept is rarely, if ever, done in a time billing firm. In a fixed price firm it is a discipline that must become automatic.
4. The Goldilocks Principle helps explain why we always provide the customer with alternatives in the level of service that is provided. The time billing professions remain essentially the only industry in the western world that do not empower their customers to choose service levels, and this one change to our approach has been vital.
5. The Donkey Principle explains that the best performing lawyers in a time billing model are generally of least benefit in a fixed price model - the impact of this culturally cannot be underestimated.

There are numerous other impacts that we have seen, sometimes on an hourly basis (no pun intended).

Ultimately, the most important lesson is the depth of cultural change because what timesheets do (even when you are fixed pricing) is create a focus solely on what is billable.

Without timesheets, the focus is solely on what is valuable.

This one concept has an impact on every part of a professional services business. Increasingly we are finding customers get this, and are allocating their legal spend accordingly.

As I suspect is the case for everyone in the VeraSage community, we happily share our experiences with others contemplating changing their business model.

As mentioned previously, we began the journey to address many of the challenges of redefining the professional services firm business model over 10 years ago.

For many, the journey has started more recently and we believe it important to share our learnings. Our upcoming July roadshow will be a full day example of this.

Before then, our free webinar on 28 April will also share a number of insights (see - https://viewlegal.com.au/product/free-webinar-foundations-for-the-future-28-april-2016/)

Image credit: Brian Turner cc