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The Financial Times collates and commends a variety law firm ‘innovations’ in its latest annual report on “Innovative Lawyers”.  But ‘innovation’ is now being used so loosely and frequently that it seems any old initiative is tagged as ‘innovative’.  So what is ‘innovation’ and how do firms generate it?

Peter Drucker succinctly described ‘innovation’ as “change that creates a new dimension of performance”.  Such change can occur on a spectrum of incremental -> radical innovation.  The former tends to be less costly, risky and dramatic, and the latter shifts us to a whole new paradigm in the way things are done or the products/services that are offered.  In each case, “innovation” drives businesses forward into producing new products and services, new markets, new ways of doing things, and, in particular, new ways of making money.

But the ‘change to something new’ isn’t just about coming up with good ideas, or technology pushing innovation.  John Soat records Ram Charan’s thoughts on innovation, which are right on point here:

“1. [It is a myth that a]nybody who comes up with a good idea — [is innovative]
2. [T]echnology for technology’s sake doesn’t work.  It must intersect with the consumer to fulfill a need or demand.

Charan’s other tips for transforming business (reported by Mitch Wagner) include:

  • Participating in true innovative growth projects for business, which means a change to the cost-cutting mentality to a mindset that goes after revenue growth
  • Enhancing the brand
  • Increasing customer consumption of the company’s product not just market share.

Those points echo the position expressed by DeMarco & Lister (1987) in Peopleware 20 years ago:

“Organisations that build products [or services] with the most value to their customers win.  Those that build products [or services] that make the world yawn lose, even though they build them very, very efficiently.  Even those who stumble while building products [or services] of high value win over the efficient yawners.”

Those views pitch ‘innovation’ as a social activity, which requires the development of appropriate competencies and resources for creativity, to encourage learning, growth and delivery of high value products/services.

The FT report, however, commends numerous out-sourcing, off-shoring and cost-cutting initiatives in the sections about ‘Thought Leadership’ (!), ‘Client Service’ and ‘In-house Lawyer’.  Apart from the obvious drivers in the current economic climate to tighten budget-belts, those initiatives focus only on the efficient performance (or production) of commoditised processes (or products/services).  Whilst demystifying, simplifying, or simply outsourcing, legal processes can help in reducing the cost of delivering legal products/services, those activities don’t assist in building/renewing capabilities overtime via an environment of learning and creativity.

Consequently, the types of knowledge-creating and diffusion activities leading to innovation capabilities I was looking for in the FT report involved experimenting, importing knowledge, problem solving and implementing and integrating (Leonard-Barton Model of Technology Capability (1992)).  Which is why I chose the following examples from the report (of Client Services, Marketing and Technology/Knowhow) to illustrate elements of the foregoing activities, as well as the approaches to innovation advocated by Charan and DeMarco/Lister.

In particular, the examples emphasise the importance of relationships/social networking, autonomy, knowledge sharing and information personalisation. They provide some insight into how firms are trying to get closer to their clients so as to provide them with the highest value products and services, as well as development of robust knowledge-bases.  And whilst the initiatives may be common or obvious to companies in other sectors, they are creating new dimensions of performance within the legal sector.  As such, there seems to be tremendous potential for firms who are capable (and willing) to experiment and import knowledge from a variety of sources and industry sectors.

Client Services (“Pleasing Results”)
Clifford Chance introduced what is essentially a social networking programme connecting its more junior lawyers with their peers in Citigroup.  A structured programme of events has been designed “to give its more junior lawyers a broader understanding of Citi’s core product areas, strategic objectives and, most importantly, the client’s concerns”.  The hope is that the scheme will develop long-lasting connections with Citi by cementing peer-level contacts and “even [form] a basis for succession planning in managing the Citi relationship”.  The approach was welcomed as “a common-sense move and a first-of-its-kind among [Citi’s] law firms”.

Comment:  There are signs here of organisational learning about ‘control’ and power of networks (i.e. client relationship building no longer ring-fenced to partners).  Given that this initiative involves junior lawyers and their peers (i.e. Gen Y), I wonder if it is also, or will be, supported by online social networking, which enables people to ‘friend’ and ‘follow’ others, create communities of interest, post photos, events and status updates, and generally connect in ways they have become accustomed to on the internet?

Marketing (“Sweetening the Deal”)
Malcolm Cannon, chief executive of Hunter Boot, the boot maker, indicated in the report that he is bombarded with information from other firms. “KnowlEDGE is extremely simple to use and lets you tailor it.  …  Maclay Murray & Spens is so different from other law firms in simplifying things and giving a much more human touch. The branding is strong and consistent and the marketing is reassuring, so you feel you are buying into something that is special to them and so is special to you.”

Comment: This is a great example of the enormous strategic value of technology, which coincides well with Charan’s point about technology intersecting with the consumer to fulfill a consumer need or demand”.  It also illustrates innovation in the form of law firm ‘brand enhancement’.

Technology/Knowhow (“Use IT or lose it”)
Cleary Gottlieb features for “knowledge engineering techniques to capture the expertise of senior staff, embed it in a computer system and pass it on to junior lawyers online.”  The report goes on to state that “this collective experience is distributed on the firm’s intranet as knowledge maps – graphic presentations of how to perform key transactional processes, with each stage backed up by extensive documentation … [described] as intelligent online textbooks”.

Latham & Watkins was also highly commended for its creation of “structured” wikis or “twikis”, which enable the firm’s lawyers to create their own applications without involving the firm’s software developers.

Comment: The knowledge capture and codification idea in the Cleary Gottlieb imports technology/knowhow form the military arena.  However, it does leave me wondering about how:

  • information flows through the knowledge maps (and documentation) to keep them current,
  • they are linked to expertise, networks and new projects, and
  • people interact with them – tagging what’s relevant, leaving comments or asking questions about ambiguities?

Unfortunately, there was no further detail on the types of mash-ups at Latham & Watkins.  I’m speculating here, but the innovation could provide the firm’s lawyers with personalised dashboard (Netvibes style), promotes the usability and efficiency of the wiki.  Mash-ups are a key tool in user adoption of the technology, allowing each user to easily select and organise his/her information flows, social networks, activity streams, and tools depending on individual preferences and work needs.  They can also push to the fore important content, specific to the person, based on that person’s activity and preferences.

In light of the examples of innovation (and technology cross-over) outline above, I’d like to finish with a thought from Bruce MacEwen (Adam Smith Esq. – 13 June 2008) about the role of technology in innovation, empowering people and binding a firm together.  After relaying almost-forgotten aspects of the personal computer revolution in the 1980s, and the enormous strategic value of the shift, he suggests that:

“[T]oday the goal is … to embrace the range of Web 2.0 technologies–social networking software in general, which enables people to collaborate at a distance.  Because, after all, what do lawyers do?  They collaborate.  And in today’s economy, they are almost surely collaborating “at a distance”–in space or in time or both.”

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The 13th annual technology survey of AM Law 200 firms makes for a disappointing read from a social software/organisational change perspective.  The report suggests that firms are grappling with issues like “what emerging technologies are worth investing in – and which aren’t ready for prime time”.  However, in respect of ‘collaborative’ technologies respondees were asked only whether their firms use web conference software, blogs or wikis.  What!  No mention of RSS, feed readers or aggregators, let alone micro-blogging, friendfeeds, personalised pages, social tagging or content filtering.

The report blandly states that:

“While some firms have dipped their toes in the water — 43 percent run one or more blogs; 24 percent use intranet wikis (Web pages that let users contribute or modify content) — it’s been fairly ho-hum stuff by Internet standards. Blogs with lawyer posts on happenings in a practice area and wikis to collaborate on interoffice documents are the norm. It’s still unclear what sort of future these technologies have in a law office. But seemingly everyone is thinking about it.”

Of course firms are thinking about it!  Else they will find themselves sitting on the wrong end of the technology commoditisation process which turns yesterday’s shiny innovation (*email*) into today’s ubiquitous baseline or even legacy tool.  Not only do such tools offer no competitive advantage, they also trigger negative consequences, like information overload and silos of out-of-date content.

And the examples in the report of how blogs, wikis and social networking tools are being used in firms certainly are ‘ho-hum’.  From adoption and knowledge sharing perspectives, the Allen & Overy use of group blogs (integrated into wiki spaces) for knowledge networking is far more instructive.  As for wikis, they can be used to capture ideas, questions and comments in respect of groups or projects, and then to aggregate all interactions with content, so as to highlight recent activities, popular and/or salient items (from an individual or group perspective).  All these collaboration activities are quite distinctive, yet supplementary to, document management activities supported by other systems, as these articles illustrate:

Those are just a few examples of how firms are endeavouring to adapt and apply new techologies to help people work in smarter more social ways.  And there are even greater opportunities for the ‘re-engineering’ of knowledge intensive processes in business through technology.  As Simon Wardley has emphasised, unlike previous generations of technology, which essentially offered the opportunity of ‘substitution innovation’ (doing what had always been done a little better), new technologies like RSS, micro-blogging, social tagging and networking tools, offer possibilities for radical change in the way in which things are done.

These are some changes we are seeing or expect to see very shortly through the use of integrated platforms incorporating a range of social tools:

  • Reducing information retrieval costs by encouraging users to employ monitoring and delivery modes of information retrieval rather than searching for information or navigating to static destinations (like external sites).  The former modes rely on RSS feeds delivered to feed readers, blackberries or mail accounts.
  • Helping people to get out of their inboxes by offering alternatives to email.
  • Using micro-blogging to spark quick reaction to breaking news, increase awareness of on-going work and to strengthen social ties across the firm
  • Eradicating the static expertise directory and instead pulling information from the user’s activities, including blog posts, comments, tags, feeds and favourites into a dynamic ‘public’ profile which provides a rich picture of the user’s status, work, professional network, expertise and interests.
  • Providing personal dashboards to allow people to design and control his/her interactions and information flows to best suit their changing needs.  That means allowing people to easily add, organise and view activities, discussions, news, feeds, communities, colleagues, etc,
  • Delivering more targeted relevant information by recommending and filtering information based on the individual’s tags, subscriptions, or activity with content, communities, projects or individuals.

All examples of how firms need to continuously adapt just to stand still.

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