Bending the BigLaw Business Model
Some time ago, when I was still a consultant working with Seyfarth as my client, I was at a kick-off meeting for three high-stakes projects. One of these projects went on to yield the now reengineered SeyfarthLean Consulting. One was to evaluate the market opportunity for a technology platform that was developed inside the firm. The other is still ongoing (and therefore classified).
Each of these projects was unique in that each tackled defined problems in the marketplace. The meeting began with introductions and overviews of the various projects. Tending not to speak too often in meetings, I spent my time as I usually do listening and observing reactions.
Being the lead for two of these projects, ultimately it came time for me to speak and lend my thoughts to our action plan. Taking stock of the others in the room — a mix of business professionals, project managers, the Chairman, the Managing Partner, and my consulting partner — I avoided hyperbole about disruption and innovation while also ignoring the project mechanics.
Instead, I simply stated that what we were all about to do was to ask the law firm to do something it was not designed to do — design and launch new businesses. To be successful we would need to bend the business model of the firm enough to achieve success but avoid breaking it. Many in the room may not have understood completely what I meant by that. Nine or so months later, these folks fully appreciate this notion.
Let’s take a step back.
Why Business Model and Not Business Plan?
A business plan is typically a vanity project and writing exercise. It may be a helpful exercise: to get thoughts out of your head about your business idea, how you will operate and perhaps make some educated guesses about future performance. No matter how complex the projection models or how pretty the graphs of revenue and profit lines screaming upward, most business plans amount to nothing more than very structured and organized wishing.
Business plans seldom survive the first minute of contact with reality.
In most cases, the document is often stuffed into a drawer, never to see the light of day, or stored on your computer, fated for nothing more than to attract virtual dust. My experience is that plans feel good to have, as you can point to something you did, but they have not much to do with executing. As Mike Tyson once said, everyone has a plan until they get punched in the face.
In contrast, a business model is a flexible framework that consists of the essential components that equip a business to convert a customer problem into business value. In essence, it encapsulates the most critical choices that define the value proposition of a market offering and it captures the contextual analysis that inform those decisions. It is actionable and practical as opposed to theoretical and aspirational. Most importantly, it is a resilient. A business model serves a continuing purpose to support exploration, iterative decision making and subsequent execution by the enterprise.
Several years ago the business theorist and consultant, Alex Osterwalder, developed the Business Model Canvas (BMC) a visual and activity based tool that aids in the understanding, plotting and execution of business models. This tool has been adopted and adapted throughout the world and has been combined with Lean methods to test, build and sustain emerging business. Notable Silicon Valley serial-entrepreneur and Stanford professor, Steve Blank (steve blank), swears by the value of business modeling for developing new sustainable businesses.
Bending the Business Model: the Intrapreneur’s Mission
I have the great privilege to be working in an organization that embraces innovation. That being said, “innovation” is not a word that I find particularly meaningful.
For me and for Seyfarth, innovation means creating and delivering value to our customers in a new way. Doing this from inside a mature, incumbent organization is a unique challenge.
Certain considerations must be made for the existing business model that is currently generating value for our clients and our shareholders. It is not easy to have two models running in parallel. It is possible, but takes serious effort and focus to ensure that there is no cannibalization, resource drain, or complete confusion.
Often the incumbent model can offer resources, wisdom, and risk mitigation to emerging business models — if the ecosystem and environment is designed appropriately. Is there risk? Of course, but done correctly, you can flex the incumbent model just enough to make room for a new model all while maintaining, and in some cases enhancing, the performance of the incumbent. Accomplishing this is the true challenge of intrapreneurship.
While the basic BMC is helpful, it is not, in my experience, complete when used to design new business models inside incumbents or within the legal markets, particularly inside a law firm. Through my consulting and teaching over the last several years, I tested the weaknesses and strengths of the BMC. I learned how to translate the language it uses into more accessible language for the legal markets. I adapted the BMC to better address the needs of intrapreneurship inside the legal markets. The result is the Intrapreneur’s Canvas, shown below.
Accounting for Reality
While I’ve made several changes to the original BMC,those most pertinent to this discussion appear in the rightmost column — Environmental and Legacy/Culture.
Environmental components take into account the specific, particular reality with which the new business model will come into contact upon launch. Businesses do not exist in vacuums, and so a business model must contemplate the habitability or hostility of its eventual “home.” This is why organization often develop “skunk works” and other “off grid” development teams.
Most incumbent models will seek to kill off any competing model — competing in terms of resources and attention. Understanding the environment will help shape the strategy for how to and where to design new models. As I have experienced, it is possible to do it inside an incumbent but certain conditions must exist.
Legacy/Culture components map the existing or historical events still resonating inside the incumbent that the new model must consider. For instance, it would be an extreme challenge to launch a new model that sought to engage the existing customer base of the incumbent in a manner fundamentally different from, and thus wholly inconsistent with, current practice. If a new business model depends on compensating an incumbent stakeholder group in a less generous manner, you can bet that it will inspire a strong reaction from that group and that those sentiments will reverberate through all activities undertaken by the new business. These types of things must be addressed early on to avoid rejection and failure.
The Intrapreneur’s canvas, like the original BMC, is not a planning tool, but a tool for design, testing, iteration, and validation. This tool has power to unlock unseen or overlooked value, risk, investment and focus. It is not a silver bullet or an “easy button” for business design, but it does provide a shot of adrenalin to organizations trying to create new models that will not just survive but thrive inside incumbents.
As many of my colleagues know, I am unabashedly fanatical about the business of law. (To use the word “fanatical” is not hyperbole. I had the phrase “Legal is business” trademarked. I had “legal means business” put on a t-shirt that I wore on-stage in front of hundreds.)
While law firms are formed on the basis of a profession, that profession rests on and is delivered by a business model. The knowledge, skill, and tradecraft involved in the practice of law remain crucial: they are the precious raw materials that can be translated into enormous value for clients.
Working on legal business models is what i call "doing the business of law."
That is what I do as a BigLaw CSO. It is what we are doing at our firm. Stay tuned. Or better yet, come join us.