This is the second part of this blog post. Click here for part one.
# Third step: Understand what could and should be digitalized
Once the motivation for transformation has been clarified and underpinned with a solid vision, the next step is to understand „what“ exactly should be digitalized. This entails breaking down the vision into manageable projects and tasks. A vision itself is not executable. A „digitalization project“ is therefore the concretized subset of the overall vision.
Digitalization projects may take many forms. According to Global Center for Digital Business Transformation at least seven categories can be distinguished which could be transformed digitally. The following list comprises of the most important elements of an organizational value chain as it relates to digital transformation and establishes a clear framework for digitalization project within a law firm:
- the business model (how a company makes money)
- the structure (how a company is organized)
- the people (who works for a company)
- the processes (how a company does things)
- the IT capability (how information is managed)
- the offerings (what products and services a company offers)
- the engagement model (how a company engages with its customers and other stakeholders)
Lasting change can be accomplished by transforming multiple categories and multiple technologies simultaneously.
In my view, law firms and lawyers should particularly look into the categories business model, processes and offerings, with an emphasis on processes. Legal services mostly comprises of certain processes which are bundled into a certain product. For instance, due diligence includes, simply put, several processes from gathering data to structuring and then analyzing it. Each process can be assessed in order to improve it – with or without technology (legal project management will become an increasingly important part in every law firm). If a law firm wants to truly transform into a digital law firm this should start with a proper assessment of the processes and its potential for digitalization. This process will be most likely burdensome as it requires to think and work in new ways and to leave well-trodden paths. This all requires a clear vision and leadership to stick to the game plan.
Through the assessment of the various (legal) processes that could be optimized through digital means it becomes clear that digital business transformation cannot be achieved by making a „big bang“ change or by employing single technology that will address all efficiencies and deficiencies. Digitalization requires a holistic approach considering the digital transformation categories above without loosing focus on the concrete project (the low hanging fruit) to transform a vision into practice.
# Forth step: Create a innovative culture
The forth step to reshape a law firm is to establish an „innovation culture“. It need to be actively lived, supported by management and encouraged to permeate every level if the soil for digital transformation is to be prepared. As Louis V. Gerstner Jr. puts it in „Who Says Elephants Can’t Dance?“: “I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game. In the end, an organization is nothing more than the collective capacity of its people to create value.”
Innovation culture is not about putting in a foosball table or sprinkling some „startup flavor“ over a law firm. Innovation culture is about setting the right beliefs, expectations, and sense of purpose. Make no mistake. It is not easy to create an innovation culture in the day-to-day business. And there’s no singular method to creating a culture of innovation. When you are cultivating innovation, you are cultivating a unique system, which means you have to be thoughtful about your approach. Whatever you do, it should align with the values of the law firm and with the firm’s goals.
Establishing a culture of innovation and making it stick also depends on understanding the „climate“ within a law firm: How will the firm react during periods of experimentation? Which structures, behaviors, goals, and people must be in place to unlock innovation and which structures, behaviors, goals, and people, if positioned improperly, would create discord?
Some tools, tactics and „building blocks“ have been identified to develop a n innovation culture:
- Stay open: Ideas do not always come from „experts“ or the higher management. Sometimes the greatest innovations come from novices and backroom thinkers. Stay open to listen to them.
- Celebrate Ideas: Innovation requires that risk-taking and creativity are not punished but rewarded. You need to establish an environment that rewards innovation. Rewards may come in many forms, and often the monetary ones are the least important. Innovative thinking should (besides handing out bonus checks) be celebrated with praise (both public and private), career opportunities, and other perks.
- Embrace failure: In most companies, people are afraid of making mistakes. As a result, employees simply follow the rules and keep their heads down. This is the nail in the coffin for innovation. In fact, nearly every breakthrough innovation in history came after countless setbacks, mistakes, and so-called „failures.“ For instance, James Dyson, the inventor of the Dyson Vacuum cleaner, „failed“ at more than 5,100 prototypes before getting it just right. Embracing failure means taking risks and increasing the rate of experimentation. Some bets will pay off, some will fail.
- Carve out time: Innovation needs time to develop. People tend to be so consumed with putting out fires and chasing short-term targets that most cannot even think about innovative products or business model. This can especially be true in a law firm. 3M and Google give their employees about 10% „free time“ to experiment with new ideas. The software company Atlassian encourages employees to take „FedEx Days“—paid days off to work on any problem they want. But there’s a catch: Just like FedEx, they must deliver something of value 24 hours later.
- Empower „innovation champions“: Employees often get an early “no” from their direct supervisors and end up putting innovation out of their minds again. Therefore, it can be a very fruitful tool to install „innovation champions“ in a law firm which provide friendly spaces to test new ideas, while also providing a level of protection against managers/partners who are charged with focusing on the common business.
- Give employees the tools to make their case: Even the best ideas are not going to get any traction if the value they bring to the organization is not made clear. This requires to give employees the tools, time and frameworks to show why those ideas are worthwhile. This could, for instance, mean to provide to employees training and resources, which they need to create business pitches that highlight the value of their ideas and which allows them to test them.
# Fifth step: Take action
All this won’t help if you do not act. Actually, you want to move quickly when innovating. Moving too slowly can be the death knell of new ideas. However, it is not pure speed that matters. It is the speed that comes from being decisive and having vision, a framework and innovation culture in place. Everything is linked. But it all starts with action.