Smart Strategy

Recent news and awards indicate law firms are increasing their investments in innovation. Stories of recently launched innovation committees, R&D teams and idea labs routinely grace the pages of industry publications. Yet despite these investments, the trajectory of the industry as a whole seems to have remained largely unchanged. Why are innovation efforts by larger law firms failing to make a meaningful impact?

The emphasis of the majority of innovation efforts in today's law firms is on idea generation— bringing together smart people to catalog all of the ways in which the firm can respond to changes. While idea generation is vital, it lacks the impact of taking action. Corporate entities as noteworthy as Disney, Ogilvy, Microsoft and Coca Cola have shuttered their innovation labs in recent years. Why? They simply don't work. In fact, according to a CapGemini report from 2015, an expert predicted 90 percent of innovation labs fail.

The think tank approach often focuses on major shifts—artificial intelligence, Millennials, lawyer robots—at the expense of a very real alternative—small change, or as Adi Gaskell refers to it in his Forbes article, “humdrum innovation.” While Gaskell's examples focus primarily on process improvement concepts, the underlying message is clear. “Go big or go home,” is not a mantra for leading change. Small improvements in what law firms engage in every day—from the delivery of legal services to the way they communicate with clients to how they attract talent— can add up to meaningful impact.

To encourage any type of innovation, including the “humdrum” kind, law firms must simultaneously empower their professionals to make decisions, incorporate voices from outside the firm and acknowledge and reward incremental improvements. Three fundamental elements must be in place to accomplish these objectives:

• A culture that supports experimentation (or exploration) and endows its people—not just its partners—with the authority and encouragement to execute ideas;
• A set of clear, concise key performance indicators (KPIs) that reflect what the firm most values (Hint: if the firm still emphasizes number of billable hours over profitability, realization or client satisfaction expect little in the way of increased efficiency or stronger long-term performance); and
• Inclusion of external influencers, whether clients, industry experts or third-party partners

Few firms are approaching innovation through the establishment of these essential ingredients —culture KPIs and the voice of the client—thereby, (often unwittingly) undermining their efforts. Innovation demands law firms create not just an environment conducive to the development of ideas, but also one able to embrace and act upon those ideas. CLOC, in its inception and dialogue with law firms, has the potential to create a collaborative platform on which greater innovation is possible. Yet for many law firms, the struggle will be internal. According to MIT Professor Luis Perez-Breva, author of ”Innovating: A Doer's Manifesto,” who works routinely with entrepreneurs and is an advocate of a less formulaic approach to innovation there is tremendous value in being “productively wrong.”

Somehow, when you grow into being an adult, you've learned so much and you've been taught so much that it feels like being wrong is an anathema. But it turns out that if you're really innovative—if you're really doing something new—you want to be wrong as many times as possible.

For law firms, this means letting go of the gold standard of perfection and replacing it with one of exploration, and cultivating a willingness to allow team members to be wrong—in the right ways. Re-focusing law firm innovation on small changes, rather than wholesale rehabilitation of long-standing traditions, can help to release the fear and uncertainty that often accompanies new ways of doing things. Small change also constrains the impact of “being wrong,” to allow for greater experimentation and more, not fewer, attempts to make an impact.

At the same time, allowing space and time for what Perez-Breva describes as exploration—the iterative process of entertaining various options and possibilities without constraints or preconceived notions—is equally vital to the act of innovating. Rather than focusing on a single idea or solution, Perez-Breva encourages continuous development and improvement through the incorporation of feedback and inputs.

In other words, innovation is a process, a way of being and approaching problems, rather than a step-by-step recipe. For law firms to truly “innovate,” they must change their mindset. Rather than a program or initiative designed to ignite new ideas, a systematic and holistic shift in thinking is needed. Embrace “humdrum innovation.” Encourage professionals across the firm to be “productively wrong.” Measure and celebrate incremental improvements in what matters most. And explore, most of all, explore.

Marcie Borgal Shunk is president and founder of The Tilt Institute, a firm dedicated to unveiling new perspectives on law firm growth through intelligence, innovation and intuition. She specializes in helping law firm leaders make better, data-driven business decisions.