Law firms, memory and history

Today is 1 May, the first day of a new year for most UK-based law firms (financially, at least). All our clocks have rolled back to zero and there should be a clear way forward into the unknown of the coming year. With that in mind, I have been thinking about history.

20130501-072454.jpg

A couple of years ago, I spent some time talking about the use of history within organisations with Julie Reynolds. We first connected following a conference session at KMUK in 2010, in which a colleague of hers described a knowledge transfer project involving Hunterian Museum at the Royal College of Surgeons. I referred to this in a previous blog post, but the links I provided there are dead or dying (Posterous is about to be closed, for one thing).

The work with the Hunterian Museum (along with other museums)  focused on the ways in which objects in the museum’s collection (some quite unusual) could be used to support different kinds of conversations within businesses. This is how I summarised it in 2010:

What [they] have done as part of the Knowledge Transfer Project is to develop a set of modules aimed at developing business skills, using exhibits from the museum. Some of these are quite intriguing (to say the least). They showed us images of two exhibits they use on the ‘building confidence’ module: a set of dentures made for Winston Churchill (designed to maintain his slight speech impediment so that no-one would notice the change) and “a painted silver prosthetic nose, mounted on a spectacle frame, from the mid-1800s. The nose was worn by a woman who had lost her own as a result of syphilis.” (Quoted from a Hunterian volunteers’ newsletter, in which there is also a picture of the nose.) She later presented it to her physician stating that she had remarried and that her new husband preferred her without it. It is easy to see how these items could spark a valuable learning conversation about confidence in a business or personal context.

Following her involvement in this project, Julie started a course in Manchester and we met a few times to discuss how her experience in curation might be used in a commercial context. She had previously worked for other businesses to help them connect with their own histories through archives and collections of artefacts. During these conversations, I quickly realised that law firms rarely refer publicly to their histories. Very few provide an ‘origin story’ on their websites and I suspect even fewer use archivists or similar professionals to preserve key documents for future use. (If you know better, please let me know in the comments or by email.) Julie had some great ideas of ways in which we might use the firm’s back-story to support some types of business development activity, but we weren’t ready for them. (The picture at the top of this post shows the imaginative container in which Julie presented her proposed ideas.)  I was disappointed that we couldn’t make it work, but I still wonder why firms have a problem with history.

After reflection, I think there are a number of different issues. The immediate one is that referring to the past doesn’t appear to help in winning work for the future (beyond highlighting juicy recent deals that might resonate with clients). When seeking legal advice, clients might be interested in the depth of experience within the team who will do the work. That probably doesn’t translate into an interest in the longevity of the firm or its antecedents. History, on this analysis, is a distraction. Another factor is that law firms are very fluid businesses. They have practically no existence separate from the people constituting them at any given moment. That means that history might be considered irrelevant, if not misleading. Finally (and back to the starting point of this post), the annual financial cycle is so strong that firms might actually sense 1 May as the beginning of current history, and so anything before that date is pre-history. (I think this last factor is actually diminishing for a number of reasons.)

But what is the impact of the anti-historical attitude amongst firms? The most significant for me is that without organisational memory, the firm has to fall back on personal recollection by distracted individuals. The result is probably even worse than anything produced by Jane Austen’s “partial, prejudiced, & ignorant Historian.” This is sometimes manifest in the way that change is resisted. The classic lines, “That’s not how we do things here” or “We did that before and it didn’t work” can be heard in all sorts of organisations. But without a documented history there is no way to deal with them. A historical account can be used to disprove such statements, or to show why things that were true in the past no longer apply. If there is no historical account such a rebuttal is not possible, and so resistance succeeds. At a practical level, that is why documented after-action reviews can be so powerful.

In the end, it’s a paradox. Law firms need to look to the future and update themselves to meet new economic, regulatory, client or technological challenges, but many of them will fail to do so because they prefer to pretend that they have no past.

What do clients need? Relationships and story-listening

It is difficult to imagine that anyone in law firm management is not yet aware of Bruce MacEwen’s masterful review of the current state of the legal market, entitled “Growth is Dead.” The series is now up to its tenth instalment and the focus has turned to clients. Whilst the whole series is required reading, this part resonated particularly for me for a number of reasons. It contains some truths that KM folk should reflect on, and one of the comments raises a common issue where a traditional approach often fails.

As all good discussion of clients should, Bruce starts with Peter Drucker. Drucker’s observation that all firms must have clients leads to a brief analysis of the evolution of client service in the law. Bruce identifies three phases:

Phase I: Sell what you make

Firms in Phase I find a comfort zone of things they (as proud and unbending autonomous individuals) enjoy doing, and they assume without, I imagine, really giving it much conscious thought, that since they enjoy it clients will appreciate it, or because they find it interesting clients will too.

Phase II: Make what sells

Phase II is a bit more mature and purposeful. In this phase, lawyers and firms try to analyze what services clients are seeking and purchasing, and then attempt to mold their offerings to client demand.

Phase III: Solve the client’s problem

This phase has several characteristics to commend it:

  • It goes straight to the heart of what the client needs professional counsel for;
  • It’s agnostic as to exactly which practice area or practitioner, if any, is best suited to the matter at hand;
  • And most important by far, it postures the entire offering and engagement around what the client needs, not what you can do.

Bruce is not convinced that many firms have made it to Phase III. (Indeed, he goes as far as to say that he believes “very few firms indeed” understand it, or even the fundamental shift in the market.)

I think the same phases apply to KM (certainly in law firms, and probably elsewhere as well).

The equivalent to “sell what you make” in Phase I is the repository-building approach to knowledge. It depends on a conception of knowledge as stuff that can be gathered, traded and measured. The knowledge or information professional is a gatekeeper for material that is held “just in case” it might prove useful in future.

The usual counterpart to “just in case” is “just in time” — this is the KM equivalent of Bruce’s Phase II “make what sells:”

The distilled pitch is something like this:

“Just tell us what legal services you need, and we’ll get right on it.”

While this takes the lawyer out of the very center of the picture, and gives the client a bit of breathing room alongside, it’s still passive and reactive. To begin with, what if the client doesn’t know or can’t articulate what they need? Worse, what if your firm really isn’t ideal for what the client wants? In that case “making it” for them might not be doing them any favors.

Bruce is talking here about lawyers dealing with clients, but it applies just as well to knowledge professionals working within businesses. This passive, reactive, transactional approach to KM will get you a bit further than the repository-building approach, but there is still no guarantee that your work will really make a difference. And making a difference is essential, otherwise the business can do without it.

Phase III gets to the heart of things:

It’s not about what the lawyers prefer to do or are in the mood to work on; nor how brilliant, experienced, and highly credentialed they are (though I’m confident they are exceptionally so); nor about how much other clients adore them and sing their praises; nor, finally, is it about the law firm at all. It’s entirely about making the clients life easier, less worrisome, and letting them focus on their business and not this potential legal landmine.

A very wise managing partner, who had studied at the feet of one of the builders of a great New York law firm, once told me that his primary job was making the client look good: “The wins are theirs; the losses are mine.”

Good KMers should also focus on making people look good. What does the firm need? That is what should be done.

This is where we get to the question in the comments to Bruce’s post: Bob Jessup asks how to get meaningful feedback from clients. This is also a problem for knowledge professionals. Just as clients may ask for something when really they need a completely different approach, so our colleagues may have preconceived ideas about their knowledge needs (they might want a repository, but never use it when it is provided, for example). How to get round this problem.

I think there are two very different approaches available. The first is to emulate Apple or the early BBC — don’t ask people what they want, but just give them something that you know to be high quality in the knowledge that they will come to love it. That might work if (a) you are absolutely clear about your purpose and never divert from it (something that only people of Steve Jobs’s or Lord Reith’s calibre can guarantee), and (b) your market is still in its infancy.

The second approach is to concentrate on relationships and on natural, authentic communication. In his comment, Bob Jessup says:

Clients, like anyone, don’t like to give bad news, and often find it hard to “put their finger” on what might be wrong. Those in-house counsel giving C’s to the outsiders probably aren’t giving those C’s when presented with an inquiry or a written evaluation form.

That isn’t a surprise — anyone familiar with the work of Dan Ariely and other behavioural economists will know that people often say very different things from what they do. But how do we find out what clients really feel, or what they really need. There is a clue elsewhere in Bruce’s post.

After describing how law firms approach client service, Bruce turns to the client perspective. Drawing on an Inside Counsel survey, he lists the law firm offerings that clients like but law firms don’t deliver. Here are the top three:

  • Secondments
  • Seminars at the client’s office
  • Regular service review meetings

Coincidentally, these are all the best ways to build genuine relationships with clients and learn about their business needs. (As a slight diversion, it is essential to understand that the real needs are business needs, not legal ones: Tom Kilroy has recently provided some useful insight into what in-house legal should be thinking about in terms of their internal relationships.) Having a lawyer embedded in a client’s business or legal team will always ensure that they have a much better understanding of the issues the client faces — no amount of direct questioning (whether by a lawyer or a third-party) will generate that level of knowledge. (Of course, the same is also true for knowledge programmes — as Dave Snowden famously says, “We always know more than we can say, and we will always say more than we can write down.”)

Like secondments, holding seminars on the client’s premises will often uncover issues that might not come to light through a questionnaire. The comfort of being on home ground will encourage people to say things that they would not express in more public situations. This might also be an opportunity to involve people other than the direct in-house client: do you know what your client’s contract managers, procurement teams or sales staff think of the contracts you draft? Again, this has resonances for knowledge people. Whilst we might think we can identify what is needed by talking to our colleagues, and building relationships with them, it is also valuable to find out what clients think of the work that our colleagues do. Armed with that insight, we can ensure that they have what they need to look good in front of the client next time.

When we get to service review meetings, I think we are close to the heart of Bob Jessup’s question. If those meetings feel like mechanical exercises (maybe using a set script or a written evaluation form), then they won’t build relationships and clients will persist in hiding what they feel. What is needed is genuine conversation. The insight we need is tacit knowledge (for want of a better term), and “tacit knowledge needs to be shared through conversation.”

Conversations need time to develop, but they generate narrative — anecdotes or stories — that are essential to make sense of things. Another way of generative narrative, which might be useful when there is no single client view, might be to use anecdote circles. Shawn Callahan and his colleagues at Anecdote have created the “Ultimate Guide to Anecdote Circles” — an excellent introduction to and explanation of the method.

In the end, then, the challenge that law firms face in really getting to the heart of what clients need from them has an exact counterpart for knowledge professionals. More than that, the tools for achieving this insight are actually knowledge tools, but only if we situate ourselves squarely in the Phase III approach to understanding and helping people.

Key KM attributes

At today’s KM Legal conference, Ruth Ward started us off with a good overview of the challenges facing KMers in law firms following the end of the legal boom (or the great reset  as Bruce MacEwen puts it). Better than that though, she also provided a list of key features that KM needs to demonstrate in the future.

  • Client centred
  • Focused
  • Relevant
  • Open
  • Interested/curious
  • Flexible
  • Resilient
  • Progressive
  • Communicative
  • Collaborative
  • Culturally attentive

These are all great, and I would argue we should have been demonstrating them in the past as well. Ruth was pressed to pick one attribute that was the most important. She chose relevance because it underpinned or enhanced all of the others. Absolutely the right choice, I agree.

Be irrational about irrationality

Given my focus here on challenging traditional assumptions about knowledge and the law, it would be negligent of me not to draw attention to a concise Scientific American blog from last month that points up a key flaw in much popular writing about the psychology of decision-making.

The shortcomings of our rationality have been thoroughly exposed to the lay audience. But there’s a peculiar inconsistency about this trend. People seem to absorb these books uncritically, ironically falling prey to some of the very biases they should be on the lookout for: incomplete information and seductive stories. That is, when people learn about how we irrationally jump to conclusions they form new opinions about how the brain works from the little information they recently acquired. They jump to conclusions about how the brain jumps to conclusions and fit their newfound knowledge into a larger story that romantically and naively describes personal enlightenment.

This is not a new problem, but it is enhanced by the proliferation of this kind of literature, and the way that the message of these books is amplified by blogs and tweets. I confess to being part of this chorus, so this is a conscious effort to help myself avoid being sucked into unwavering belief.

Ultimately, we need to remember what philosophers get right. Listen and read carefully; logically analyze arguments; try to avoid jumping to conclusions; don’t rely on stories too much. The Greek playwright Euripides was right: Question everything, learn something, answer nothing.

Snippets on the future for law firms

I am intrigued by what the future historian will make of the economic and commercial change we are currently experiencing. Will this be another ‘world turned upside down’ moment, or just a blip in the continuum? Over the past couple of days, I have read a few commentaries suggesting that law firms at least are facing real upheaval. They also start to indicate what the way out might look like.

First, a couple of last month’s posts from Bruce MacEwen. It is trite to point out that the supply side of law firm economics is notoriously fickle: Bruce links the problem to change on the demand side.

Imagine for a moment you are in charge of designing the balance sheet of one of these firms (or any sophisticated law firm regardless of location and absolute size).  As you examine what role debt should play, perhaps the first question that should come to mind is “what assets do we have on the other side of the ledger, against those hypothetical liabilities?”  And the answer is:  Elevator assets.  That’s it, folks.  Your firm’s primary and only meaningful asset is its talent:  Its human capital, a/k/a its people.

And on the other side of the ledger?

What about accounts receivable, a pledgeable asset since the Peruzzi and Medici families in medieval Tuscany, if not before?  Normally, a law firm’s accounts receivable are a highly reliable credit—one with something approaching the creditworthiness of the firm’s clients themselves.  But consider:

  • Discounts and writeoffs are more widespread than at any time since I entered the practice;
  • Realization is systemically lower than at any time in memory (by “systemically” I mean industry-wide, not firm-specific);
  • And, most importantly, if a firm’s partners and/or clients begin to lose confidence in the firm, receivables decline in value abruptly and often irretrievably.

In sum:

Fundamentally, building long-term debt on to the balance sheet of an enterprise whose only material assets are readily marketable and freely mobile human beings is to repeat the classic mistake of the institutions at the core of virtually every post-World War II financial crisis in the United States: It’s to create a timing mismatch.

That is to say, firms doing this are securing long duration liabilities with short duration assets. Should anything imperil the value of the short-term assets, the roof can cave in before you can evacuate the building.

How can law firms protect themselves against this problem? In a later post, Bruce hints at the traditional way they have done this — by trying not to scare the troops.

Imagine a firm that allocates its talent, investment, and management focus consistently every year, making incremental changes but following the same “steady as she goes” broad pattern year after year.  Imagine another firm that consistently evaluates the performance of practice areas and offices over time and adjusts the allocation of lawyers and other resources based on relative market opportunities (be they expanding or shrinking).

Which would you guess is going to perform better over some suitably extended timeframe?

And which model do you think most law firms actually resemble?

The answer is that most law firms favour the ‘steady as you go’ approach, which is also the one in which performance is more muted. This reflects research done by McKinsey into successful strategy in corporate America.

McKinsey sums up the results this way:

  • Companies that reallocated more resources—the top third of our sample, shifting an average of 56 percent of capital across business units over the entire 15-year period—earned, on average, 30 percent higher total returns to shareholders (TRS) annually than companies in the bottom third of the sample. This result was surprisingly consistent across all sectors of the economy. It seems that when companies disproportionately invest in value-creating businesses, they generate a mutually reinforcing cycle of growth and further investment options.
  • Consistent and incremental reallocation levels diminished the variance of returns over the long term.
  • A company in the top third of reallocators was, on average, 13 percent more likely to avoid acquisition or bankruptcy than low reallocators.
  • Over an average six-year tenure, chief executives who reallocated less than their peers did in the first three years on the job were significantly more likely than their more active peers to be removed in years four through six.

In other words, not only did “high capital reallocators” generate superior growth and returns, they did so (a) with lower volatility and risk, including lower risk of bankruptcy or acquisition; and (b) with less managerial turnover.

Bruce suggests that this process of constant review of profitable and unprofitable activities is something that law firms need to start to emulate. Unfortunately, that process will affect the firm’s position in the market for lawyers. It therefore needs to be matched with real attractiveness in the firm itself. Businesses like Google or Apple routinely drop products or service lines if they aren’t working out. Inevitably this will induce a sense of volatility (and nervousness) in their people: will I still have a job tomorrow? But Apple and Google are still places where people really want to work. The law firm that can create the same sense of positive nervous energy must surely have a winning ticket.

So what might that winning ticket look like? Two unrelated posts elsewhere provide some clues.

First, Robyn Bolton of Innosight, writing in an HBR blog post:

Here’s a quick quiz for you. Is it easier to get

A: 1% of a huge, established market?
or
B: 100% of a completely new one?

If you work for Apple, you might have picked B. But too often when companies embark on innovation projects, they pick A: that is, they start by believing that nothing could be easier than to capture a small chunk of a very big, existing market.

But to unleash the power of innovation to capture big markets, what matters is not how big any existing market is but how many people are wrestling with some problem that no current offering really solves, what we here at Innosight call the “important and unsatisfied jobs” of consumers — and non-consumers. When sizing an innovation opportunity, what you should be looking for are jobs what are widely held and currently poorly served, not lots of people who haven’t bought your own products yet.

I suspect that many firms concentrate too much on one or both of (a) their own internal issues or (b) resolving the problems that clients bring to them. Robyn shows how this can go wrong by examining what happened when Kellogg first tried to enter the Indian market.

Kellogg invested $65 million in establishing an operational and marketing presence to launch Corn Flakes, Wheat Flakes, and its “innovation” — Basmati Rice Flakes — throughout the country. “Our only rivals,” declared the managing director of Kellogg India, “are traditional Indian foods like idlis and vadas.”

Things didn’t turn out quite as planned.

How is it possible that Kellogg could envision building a $3 billion business in India, invest $65 million in the first year alone, and end up, 16 years later, with only $70 million in annual revenues? And how can other business leaders avoid making similar mistakes?

Kellogg’s mistake (admittedly easier to see in hindsight) was that it had taken a far too simplistic approach to identifying its “huge” market, merely looking for people who might want its products.

Essentially, the cereal company failed to understand that Indians culture favoured warm breakfasts, so a cereal served with cold milk was unlikely to be more than a niche product. They also struggled with pricing: starting from a base that was 33% higher than the domestic competitors. Better insight into the needs of Indian consumers might have led Kellogg to create versions of traditional foods that could be stored and prepared more easily.

Law firms could therefore improve their product by really getting to the heart of what their clients need to achieve — not the explicit needs, such as getting this deal done or settling this litigation, but the more important unspoken ones. What is the client’s market like? What pressures are there on profitability, costs, income, competition, regulation? What would help the business to meet those pressures?

Alongside this focus on the product (what the firm does), there is also a need to look at delivery (how it does what it does). This is something that Ron Friedmann examines in his most recent post.

Only a few firms will continue to win business on the strength of their name. The rest must provide clients with better service delivery to keep and win business. That means understanding client expectations and changing how how lawyers practice and the firm operates, for example, with alternative fee arrangements, process improvement, project management, KM, technology, new approaches to resource allocation, a better approach to staff support, value-add services (e.g., private content), and tailored business intelligence.

Ron’s post summarises three items from elsewhere, all of which point in the same direction: “firms must change how they deliver services.”

Let’s go back to where we started: the problem of elevator assets. Bruce MacEwen lists 26 law firms that are located within a 7 minutes walk of each other in New York. The point he makes is that this proximity could make movement between the firms a trivial matter. But that is only true (putting aside constants like the hiring process) if each of those 26 firms is practically indistinguishable — whether to its lawyers or to its clients. As soon as one firm stands out (as Google or Apple do in their markets), joining or leaving that firm is a much more significant step. The fear that constant change and improvement may bring could actually make the firm more attractive to join and more difficult to leave voluntarily.

…when we talk about knowledge

I can’t now find an online reference to it, so my memory will have to suffice. I recall reading many years ago about a study which suggested that waiting staff in restaurants tended to break more crockery when they were reminded to take care than when there was no such reminder. As I once washed dishes and made coffee in a wine bar, this made sense to me. There is a lack of trust implicit in a reminder, which might make one doubt one’s abilities and therefore lead to more breakages. An alternative explanation might be that the reminder causes people to concentrate on the wrong thing — a broken plate, rather than a plate conveyed safely to its destination.

I was reminded of this insight when reading Peter Bregman’s latest contribution to the HBR blog. His topic is diversity training.

Diversity training doesn’t extinguish prejudice. It promotes it.

At first glance, the first training — the one that outlined what people could and couldn’t say — didn’t seem to hurt. But on further inspection, it turns out it did.

The scenarios quickly became the butt of participant jokes. And, while the information was sound, it gave people a false sense of confidence since it couldn’t possibly cover every single situation.

The second training — the one that categorized people — was worse. Just like the first training, it was ridiculed, ironically in ways that clearly violated the recommendations from the first training. And rather than changing attitudes of prejudice and bias, it solidified them.

This organization’s experience is not an exception. It’s the norm.

A study of 829 companies over 31 years showed that diversity training had “no positive effects in the average workplace.” Millions of dollars a year were spent on the training resulting in, well, nothing. Attitudes — and the diversity of the organizations — remained the same.

Reflecting on this, and the psychology of broken crockery, I wonder if we have a similar problem in knowledge management.

At the heart of what we do is a desire to make sure people can work to the best of their abilities, making the most of what is around them — their colleagues, documented know-how, internal and external resources. We want people to be able to find answers to the questions that arise in the course of their work as easily as possible so that they can concentrate on the important stuff — making a difference for clients, customers, communities.

But that is what they want as well.

When we talk about knowledge sharing, are we hinting that we don’t trust people to do their jobs properly? Even if that is unintended, might it depress performance anyway? (“If they don’t trust me to do the work properly, i’ll just do the bare minimum…”)

When we turn the focus on knowledge activities, do we run the risk of distracting people from their primary task — getting the job done. By concentrating people’s attention on not breaking plates, are more likely to get broken?

Or will our efforts just be ignored? Last week, David Griffiths drew our attention to an audit report on Nasa’s lessons learned system (LLIS). Despite investing $750,000 every year in adding material to that system, the audit found that it did not appear to be making a difference.

We found that NASA project managers do not routinely use LLIS to search for lessons identified by other programs and projects or contribute information to LLIS. Project managers we surveyed said the system is not user friendly and that the information it contains is outdated and generally unhelpful. We also found that Agency policy requirements regarding when and how to input information into LLIS have been relaxed over time, policy direction has been inconsistent, LLIS-related funding was disparate across the Centers, and monitoring of the essential Center-level LLIS process was lacking.

Essentially, NASA was getting on with its work without reference to the system. Underlying the audit, though, there appears to be an unspoken concern that nothing equivalent is being done. That is where knowledge management (or diversity training) is different from advice not to break plates. Everyone knows not to break plates. Not everyone understands how to find and use the knowledge around them or the organisational implications of failing to treat people with respect.

When things get more complicated than not breaking plates, we still need to help people find the right way to work. Peter Bregman’s suggested alternative to diversity training is an interesting one.

We decided to put all managers through communication training. It still fulfilled the requirement of the lawsuit. But it did something more. People learned to listen and speak with each other — no matter the difference — which is the key to creating a vibrant and inclusive environment.

As it turns out, it’s also the key to preventing lawsuits. The communication trainings I led for Bedia were ten years ago and they haven’t been sued since.

A similar approach would improve knowledge work — find something that people need to do, and which they know they find difficult because it is different in the work context than elsewhere in life — defining and scoping work projects, for example. Work on improving that, and see what difference it makes to knowledge development and use.

(Apologies to the late Raymond Carver for bastardising his work in creating the title for this post. As a penance I will re-read “Cathedral”, which is one of the greatest things ever written.)

 

Knowledge and information are different (no doubt about that)

In one of those internet coincidences, I have encountered (or re-encountered in some instances) a number of assertions today that we need to distinguish knowledge management and information management. Largely for my own benefit I have synthesised these in the following post.

David Gurteen’s regular newsletter contained the first pointer, to a blog post by Stephen Bounds.

I don’t agree that Information Management should be primarily backwards looking. The use of BI tools like Cognos et al are squarely IM but they are just as useful for forecasting as analysis. More generally, effective IM should always be done with a view to enabling KM process improvements.

I define the difference in this way: Knowledge Management is practised through activities that support better decision-making. IM is practised by improving the systems that store, capture, transmit etc information.

In this sense, a librarian neatly captures both sides of the coin. The act of building and making a library catalogue available is covered by IM. But the transaction by which a person can approach a librarian and leave with a relevant set of data to make a better decision is covered by KM.

Stephen’s post builds on a comment he made to a blog post of Nick Milton’s, in which Nick gives vent to a self-confessed rant:

If, as many people claim, Knowledge Management is “getting the right information to the right people at the right time” then what on earth do they think Information Management is?

Management of X is not concerned with delivery of Y.

Interestingly, although I have had similar experiences to Nick’s of people muddling knowledge and information, many of the links from the linked Google search use the quoted phrase to highlight the same error. One of the clearest of those rejections is that provided by Joe Firestone in one of a series of posts exploring US Governmental Knowledge Management.

If to do KM, we must understand problem seeking, recognition, and formulation, and knowledge production (problem solving), in order to know what is “knowledge,” and what is “just information,” then why not simply recognize that a First generation KM program based on “Getting the right knowledge . . . “ is not a clean alternative that allows one to forget about problems, problem solving, and innovation, but that since it also requires knowledge of these things, we may as well pursue a version of Second Generation KM that seeks to enhance not only “Getting the right knowledge . . . “, but also how we make that “right knowledge,” in the first place.

And as long as we’re at it, let’s also make that distinction between “doing” and “managing” that is at the very basis of the field of Management, and say KM is not primarily about Knowledge Managers “making knowledge” or “Getting the right knowledge to the right person at the right time,” but rather is primarily about enhancing the ways in which knowledge workers do these things. If we do that, we in KM won’t be stepping all over the turf of other managers, who, from a point of view distinguishing managing “knowledge processing,” from “doing knowledge processing,” are some of the primary knowledge workers part of whose job it is to actually make and integrate knowledge into organizations.

Independently, and most freshly, John Bordeaux has revisited an aspect of his critique of KM in the US Department of Defense. Specifically, what is the difference between Information Management and Knowledge Management. His answer:

The difference between IM and KM is the difference between a recipe and a chef, a map of London and a London cabbie, a book and its author.  Information is in technology domain, and I include books (themselves a technology) in that description.  Digitizing, subjecting to semantic analysis, etc., are things we do to information.  It is folly to ever call it knowledge, because that is the domain of the brain.  And knowledge is an emergent property of a decision maker – experiential, emotional framing of our mental patterns applied to circumstance and events. It propels us through decision and action, and is utterly individual, intimate and impossible to decompose because of the nature of cognitive processing.  Of course, I speak here of individual knowledge.

John’s position is especially interesting for his assertion that knowledge is distinct from information in part because of its location. If I understand him correctly, once knowledge is captured, stored, or manipulated outside the brain, it ceases to be knowledge — it is information.

This makes sense to me, but it is at odds (I think) with Joe Firestone’s position, as expressed in a paper elsewhere: “My Road to Knowledge Management through Data Warehousing” (pdf).

[T]he desire to get beyond “arid IT-based” concerns and to take the human-side of decision support into account, is about a view of KM that sees knowledge as subjective and personal in character, largely “tacit” or “implicit”, and as distinct from codified expressions, which are really not knowledge, but only information. Knowledge is frequently viewed as “justified true belief” in this approach, a definition that has been the dominant one in philosophy since Plato, but which has been under vigorous attack since at least the 1930s. People who take this road to KM, view it as primarily an applied social science discipline, whose role is to “enable” better knowledge creation and sharing by facilitating the “conversion” of tacit and implicit knowledge to codified expressions.

The problem with this road to KM is that (a) in viewing knowledge as “justified true belief” it makes it dependent on the “knower” and therefore basically subjective. And (b) in restricting knowledge to beliefs in the mind, it neglects the role of management in providing a framework of rules and technology for testing and evaluating codified expressions or knowledge claims and thereby creating a basis for producing objective knowledge. In a number of other places, I’ve specified two types of knowledge found in organizations: surviving beliefs and surviving knowledge claims. In restricting attention to facilitating expressing surviving beliefs alone, this road to KM misses one of its major objectives: to enhance Knowledge Production and, in this way, indirectly improve the quality of surviving knowledge claims used in future decisions.

I am not sure that I understand Joe’s position completely, especially as his comprehension of the philosophical foundations far exceeds mine. However, the final sentence of the first paragraph above appears not to fit John Bordeaux’s position, although I think the first part of the paragraph does fit. I also struggle with the second paragraph. Even if one can separate knowledge from the ‘knower’, there remains the possibility that what is known depends on the context. As Nick Milton puts it in a comment on his original post:

I could give you a whole stack of information about the rocks below the North Sea – seismic sections, maps, core samples – but could you make an effective decision about where to site an oil well?

I think this comes to a practical problem. Capturing what is known in an objective sense would require a correlative capture of enough context to make it comprehensible by anyone at any point in the future. How much effort would that take, and at what point would it be more economical just to ask the relevant person (or even to start again from scratch)?

Asking better questions, getting better insight

Over the past few months I have been using a model that Nick Milton shared on his blog, to help people understand that the knowledge activities they have traditionally espoused only tell half the story.

I have reservationas about the tacit/explicit distinction, but that is irrelevant for now. The key thing for me is that there is a clear and meaningful difference between systems and tools that push knowledge to people and the activities that develop people’s ability to pull knowledge at the moment of need.

In another post, Nick describes advising an organisation which had over-emphasised the push side of the table. I think many law firms are in this position now. We have developed vast banks of precedents, practice notes, process guides, checklists and so on; and we have encouraged in our lawyers a dependency on these things. To a point, this is all good. These tools help people to dispose efficiently of the work that should not require great thought. But what about those areas where great thought is required. How do we build people’s capability to get to the insight and expertise that will help them solve the trickier problems that clients bring?

We can throw technology at the problem again — search engines will allow people to draw on the vast pool of work that has already been done. Sometimes that will disclose a really useful document that contains just the right information to help the lawyer arrive at a suitable answer. More often, though, it will produce nothing at all or many documents none of which actually help directly. Those many documents may, however, help to identify the right people to ask for help.

So it comes back to asking. Nick Milton has made this point in a couple of posts on his blog this week. The more recent post, “Asking in KM, when and how?”, identifies a number of situations in which asking might be institutionalised: communities of practice, after action reviews, and retrospects; but it doesn’t get to the heart of the question. What does good asking look like?

Fortunately, help is at hand. (The topic must be in the air at the moment for some reason.) Ron Ashkenas, in an HBR blog post, “When the Help You Get Isn’t Helpful“, explores what happens when someone shares their knowledge in a way that is actually useless.

Consider John, an account executive who is contemplating how to expand into a new market segment — one that is wrought with regulatory challenges. With a puzzled look on his face, he walks past Samantha, who asks, “Are you okay?” John responds, “Not really, I’m trying to figure out how to gain access for more of our products into Latin America.” Samantha immediately runs to her office and returns with a 100-page analytical report detailing the region. She then spends the next ten minutes going over a how-to guide on conducting market research. Out of respect to Samantha, John patiently listens. But despite her good intentions, Samantha’s input is counterproductive. John might have benefited from Samantha’s time if she had focused on solving his regulatory conundrum. Instead, John walks away feeling even more frustrated and perplexed.

What happened here? John presented Samantha with a problem, and she offered help. I suspect this kind of unfocused response is common. I know I have been guilty of it in the past, and I suspect I will be again in the future. The difficulty is that people are actually very poor at asking questions. Why that might be is a conundrum for a different time. Fortunately, Ron Ashkenas has some guidance to get better at asking.

Target your requests. Instead of asking whoever is available, intentionally target certain individuals. Create a list of people who have access to resources, information, and relevant experience about your problem. Expand your list to include friends and colleagues who tend to challenge the norm and see the world differently. Make a point of including people who are likely to have useful views but you might hesitate to approach because you think they are too busy or wouldn’t be interested.

Frame your question. Before asking for input, figure out what you really need: What kind of advice are you looking for? What information would be useful? Are there gaps in your thinking? Then consider how to frame your question so that you solicit the right advice.

Redirect the conversation. If the person offering advice jumps to conclusions, be prepared to redirect them. Most people will not be offended if you politely refocus them. For instance, had John interrupted Samantha’s lecture on market research by saying, “The issue isn’t our understanding of the market, it’s how to deal with the area’s regulatory restrictions. That’s where I could use some help,” Samantha could have spent the next ten minutes firing off some useful ideas.

This doesn’t feel like rocket science. Frequently, however, I see people asking quite open-ended questions in the hope that something useful will pop up. I suspect that what actually happens is that those with the knowledge to assist don’t answer precisely because the question is too vague. Yet again, the key to good a outcome here is the same as it is in many other contexts. Careful preparation and clarity of scope will generate the answer you need. (It is also important to be comfortable with the possibility that there is no answer. If you are precise and clear, the fact that no answer is forthcoming is much more likely to be an accurate reflection of there being no answer available at all.)

I think this is an iterative process:

  • Work out exactly what you need to know. What is the gap in your understanding that needs to be filled in order to resolve the issue raised by your client?
  • Who is the best person to answer that question? Do you know that person already, or will you need to seek advice from others? Plan how to ask the right question to identify that person.

Repeat until satisfied…

Hiding behind technology: what kind of a job is that?

I think our relationship with technology is detracting from our capacity to work effectively. In order to change this, we need to reassert what it is that we actually do when we come to work.

One of the staples of TV drama is the workplace, another is espionage. The BBC is currently showing a short series, The Hour, in which those elements are combined with a touch of social/political comment in a not-so-distant historical setting — a BBC current affairs programme (The Hour of the title) in 1956, as Hungary is invaded by the Soviet Union and Egypt precipitates the Suez crisis. It isn’t the best thing that the BBC have done — Mad Men beats it for verisimilitude, nothing can touch Tinker, Tailor, Soldier, Spy for British cold war espionage drama, and at least one person who was in TV in the 1950s is adamant that its representation of news broadcasting is a long way from the reality. That said, it is relaxing Summer viewing.

One of the things that struck me, watching the most recent episode, is that everyone is intimately engaged with the objects of their work. Cameramen wield cameras; editors cut film; reporters write words (with a pen or pencil) on paper. And they do one thing at once. During the episode, the producer of The Hour is admonished by her superior (for having an affair with the programme’s presenter). As she enters the room, he is making notes in a file. He closes it while berating her for putting the programme, and her career, at risk. When finished, he returns to his paperwork. There is no doubt at any point during this sequence as to his focus, his priorities or his wider role.

I think we have lost that clarity. As I look around me, in all sorts of workplaces, there is little or no distinction in the environments inhabited by people who actually do very varied jobs. Generally, it looks like we all work with computers. People sit with a large flat surface in front of them, which is dominated by a box filled with electronics, umbilically attached via (in my case) ten cables to a variety of other bits of electronics, to power and to a wider network. One or two of those other pieces of hardware are really intrusive. The screens we work at (I have two) are our windows into the material that we produce — documents, emails, spreadsheets — to the information we consume, and to our connections with other people. But physically, they fail miserably to benefit our human connectivity. In my case, the screens sit between me and the rest of the occupants of my working room. We all sit in a group, facing each other, but our screens act as a barrier between our working environments. When we converse, we have to crane round the barriers, and we are easily distracted from the conversation by things that happen on the screens.

But if you asked the average law firm employee (whether a lawyer or not) what they do every day, very few would respond that they work with computers. They would speak in terms of managing teams, delivering quality advice to clients, supporting the wider business with training, information or know-how. Some of our IT colleagues might agree that they do work with computers, but some would claim instead that their role is to enhance the firm’s effectiveness and that computers are just the tools by which that is achieved. That is consistent with research conducted by Andrew McAfee, for example. At an organisational level, then, technology improves performance. However, it is also well-observed that many forms of technology, inappropriately used, can distract people and reduce their personal effectiveness. That is manifest in complaints about information overload, email management, social media at work, and so on.

The problem is that, through this box and its two big screens, I have access to absolutely everything I need — the software tools, the online information, the worldwide contacts — to do my job. Unfortunately, because everything is in the same place, it is hard to create clear boundaries between all these things. Outlook is open, so I see when email arrives even though I am working on a document. When I am focusing on an email on one project, it is sitting next to one on a different topic, so it is practically impossible not to skip to that topic before I am actually ready. We can discipline ourselves, but that actually makes work harder, and so we must be less effective.

In some organisations, the technology is configured to provide access just to the tools people need. This is typically the case in call centre environments, for example. I think this only really works when people are working through clearly defined processes. As soon as a degree of creativity is required, or where the information needs of a role are emergent, bounded technology starts to fail.

Instead, I think each of us needs to understand exactly what we need from the technology, to create a clear path to that, and to take steps to exclude the less relevant stuff.

My current role requires me to take responsibility for a group of people who have not previously thought of themselves as a single team. I shouldn’t do that from a desk which is at a significant distance from many of them. The technology may fool me into thinking that I am bridging that distance by sending emails and writing documents, but I am sure that isn’t really the case. We have technology to allow me to divest myself of the big box and its screens. I am seriously considering doing just that — doing my job, rather than working with computers.

 

The nature of the firm, and why it matters

Jordan Furlong‘s justified question, “Why do law firms exist?” is something that isn’t just relevant to partners (or potential investors in firms). Those who support the core functions of the firm need to be aware of its implications. I’ll come back to Jordan’s question, but first I want to reflect on something else.

Thanks to the generosity of Headshift, I was able to attend the Dachis Group’s London Social Business Summit at the end of March. One of the most interesting sessions that day was the presentation by Dave Gray of XPLANE. Dave outlined his current thinking about the nature of the company, which can be found summarised in the initial post on his new site, The Connected Company.

Dave is concerned about the short life span of the average company:

In a recent talk, John Hagel pointed out that the average life expectancy of a company in the S&P 500 has dropped precipitously, from 75 years (in 1937) to 15 years in a more recent study. Why is the life expectancy of a company so low? And why is it dropping?

He is also worried about their productivity:

A recent analysis in the CYBEA Journal looked at profit-per-employee at 475 of the S&P 500, and the results were astounding: As you triple the number of employees, their productivity drops by half (Chart here).

This “3/2 law” of employee productivity, along with the death rate for large companies, is pretty scary stuff. Surely we can do better?

I believe we can. The secret, I think, lies in understanding the nature of large, complex systems, and letting go of some of our traditional notions of how companies function.

The largest complex system that still seems to work is the city.

Cities aren’t just complex and difficult to control. They are also more productive than their corporate counterparts. In fact, the rules governing city productivity stand in stark contrast to the ominous “3/2 rule” that applies to companies. As companies add people, productivity shrinks. But as cities add people, productivity actually grows.

A study by the Federal Reserve Bank of Philadelphia found that as the working population in a given area doubles, productivity (measured in this case by the rate of invention) goes up by 20%. This finding is borne out by study after study. If you’re interested in going deeper, take a look at this recent New York Times article: A Physicist Solves the City.

Drawing on a study of long-lived successful companies commissioned by Shell Oil, Dave spots three characteristics of those companies also shared by cities:

Ecosystems: Long-lived companies were decentralized. They tolerated “eccentric activities at the margins.” They were very active in partnerships and joint ventures. The boundaries of the company were less clearly delineated, and local groups had more autonomy over their decisions, than you would expect in the typical global corporation.

Strong identity: Although the organization was loosely controlled, long-lived companies were connected by a strong, shared culture. Everyone in the company understood the company’s values. These companies tended to promote from within in order to keep that culture strong. Cities also share this common identity: think of the difference between a New Yorker and a Los Angelino, or a Parisian, for example.

Active listening: Long-lived companies had their eyes and ears focused on the world around them and were constantly seeking opportunities. Because of their decentralized nature and strong shared culture, it was easier for them to spot opportunities in the changing world and act, proactively and decisively, to capitalize on them.

The whole post is worth reading and reflecting on. Dave’s prescription for success, for companies to be more like cities, is to shun divisional structures, and to build on networks and connections instead. This has been refined in a more recent post into a ‘podular’ system.

A pod is a small, autonomous unit that is enabled and empowered to deliver the things that customers value.

By value, I mean anything that’s a part of a service that delivers value, even though the customer may not see it. For example, in a construction firm, the activities valued by customers are those that are directly related to building. The accounting department of a construction firm is not part of the value delivery system, it’s a support team. But in an accounting firm, any activity related to accounting is part of the customer value delivery system.

There’s a reason that pods need to focus on value-creating activities rather than support activities. Support activities might need to be organized differently.

This idea appears to be closely related to Steve Denning’s notion of Radical Management, as described in his latest book. It also reflects the way that some professional service firms organise themselves. That’s what brings us back to Jordan Furlong’s question.

Why do law firms exist? Or, more properly, why should law firms continue to exist? (One important reason why they exist is that their history brought us to this point. What might happen to them in the future is actually more interesting.)

Jordan’s post starts with Ronald Coase, but also points to a number of ways in which law firms might not meet Coase’s standards.

Companies exist, therefore, because they:

  • reduce transaction costs,
  • build valuable culture,
  • organize production,
  • assemble collective knowledge, and
  • spur innovation.

So now let’s take a look at law firms. I don’t think it would be too huge a liberty to state that as a general rule, law firms:

  • develop relatively weak and fragmented cultures,
  • manage production and process indifferently,
  • assign and perform work inefficiently,
  • share knowledge haphazardly and grudgingly, and
  • display almost no interest in innovation.

That’s an inventory of defects that would make Ronald Coase wonder exactly what it is that keeps law firms together as commercial entities.

Worse than that, Jordan points to a range of recent commentaries suggesting that things aren’t getting any better. I think he is correct. In fact, it is interesting to note that John Roberts spotted the germ of the problem in his 2004 book, The Modern Firm.

Many authors, including Ronald Coase and Herbert Simon, have identified the essential nature of the firm as the reliance on heirarchic, authority relations to replace the inherent equality among participants that markes market dealings. When you join a firm, you accept the right of the executives and their delegates to direct your behaviour, at least over a more-or-less commonly understood range of activities. …

Others … have challenged this view. They argue that any appearance of authority in the firm is illusory. For them, the relationship between employer and employee is completely parallel to that between customer and butcher. In each case, the buyer (of labor services or meat) can tell the seller what is wanted on a particular day, and the seller can acquiesce and be paid, or refuse and be fired. For these scholars, the firm is simply “a nexus of contracts” — a particularly dense collection of the sort of arrangements that characterise markets.

While there are several objections to this argument, we focus on one. It is that, when a customer “fires” a butcher, the butcher keeps the inventory, tools, shop, and other customers she had previously. When an employee leaves a firm, in contrast, she is typically denied access to the firm’s resources. The employee cannot conduct business using the firm’s name; she cannot use its machinery or patents; and she probably has limited access to the people and networks in the firm, certainly for commercial purposes and perhaps even socially. (The Modern Firm, pp.103-4)

The benefits Roberts identifies are almost always missing in a law firm. The firm’s name may be less significant than the lawyer’s and there is little machinery or patents. In the seven years since the book was published access to networks and people has become infinitely more straightforward, thanks to developments in social software and similar technologies.

Joining Roberts’s insights with those of Dave Gray and Jordan Furlong, I think it is likely that we will see much more fluid structures in law firms in coming years. Dave Gray’s podular arrangement need not be restricted to one organisation — what is to stop clients creating their own pods for specific projects, drawing together the good lawyers from a variety of firms? Could the panel arrangement now commonly in use by larger companies be a Trojan horse to allow them to pick off key lawyers whenever they need them? Technology is only going to make that easier.

So that leaves the support functions. In Dave Gray’s podular model, support is provided by a backbone, or platform.

Podular platform

For a podular system to work, cultural and technical standards are imperative. This means that a pod’s autonomy does not extend to choices in shared standards and protocols. This kind of system needs a strong platform that clearly articulates those standards and provides a mechanism for evolving them when necessary.

For small and large companies alike, the most advantageous standards are those that are most widely adopted, because those standards will allow you to plug in more easily to the big wide world – and the big wide world always offers more functionality, better and more cheaply than you can build it yourself. Platform architecture is about coordination and consistency, so the best way to organize it may not be podular. When it comes to language, protocols, culture and values, you don’t want variability, you want consistency. Shared values is one of the best ways to ensure consistent behavior when you lack a formal hierarchy. Consistency in standards is an absolute requirement if you want to enable autonomous units.

Interestingly, there is often little variation between different law firms in terms of their technical standards. In some practice areas, these are dictated by external agencies (courts, industry associations, etc.), whilst in others they converge because of intervention by common suppliers (in the UK, many firms use know-how and precedents provided by PLC) or simply the fact that in order to do their job lawyers have to share their basic knowledge (first-draft documents often effectively disclose a firm’s precedents to their competitors). It is a small step to a more generally accepted foundation for legal work.

Will clients push for this? Would they benefit from some form of crowd-sourced backbone to support lawyers working for them in a podular fashion? Time will tell, but don’t wait for the train to leave the station before you decide to board it.


Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,223 other followers

Follow me on Twitter

Categories

Interesting links

Bookmark and Share

When…

April 2014
M T W T F S S
« May    
 123456
78910111213
14151617181920
21222324252627
282930  

Follow

Get every new post delivered to your Inbox.

Join 1,223 other followers

%d bloggers like this: