Key KM attributes

Published 15 May 2012 KM , Law Firms , PSLs Leave a Comment

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

Published 11 May 2012 Irrationality , Knowledge , Learning , Rationality Leave a Comment

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

Published 9 May 2012 Change , Clients , Innovation , Law Firms Leave a Comment

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

Published 13 March 2012 KM , Language 1 Comment

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)

Published 27 February 2012 Information , KM , Knowledge , Rationality 3 Comments

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

Published 15 February 2012 Collaboration , Conversation , Knowledge , Learning , Sharing , Work 2 Comments

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?

Published 19 August 2011 Culture , Technology , Work 1 Comment

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

Published 3 May 2011 Culture , Law Firms , Networks , Technology 5 Comments

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.

Reflecting on the PSL role

Published 16 March 2011 Change , KM , Law Firms , PSLs Leave a Comment

A passing comment in Ron Friedmann’s latest blog post has prompted me to recycle some material here that I originally put together for our own Professional Support Lawyers. In the context of a commentary on an interesting report by OMC Partners (commissioned by PLC), Ron notes:

Few large US firms, at least in their US offices, have PSL ratios even approaching those commonly found in the UK. (Some large US firms are now increasing the number of PSLs though in my view, it is premature to call this a trend.)

I think Ron is right to play down the trend. What would interest me more is to know what the US PSL community is being tasked with. That is because I think the role of PSLs in many UK law firms has changed significantly over the past three years or so, and that pace of change is not likely to slacken.

First, some history.

Harriet Creamer was Freshfields’ first PSL (and therefore one of the first in the City) in the late 1980s. She then became a partner with responsibility for knowledge management, and is now a consultant.  Over the past couple of years she has presented at a number of conferences and workshops on the changing role of the PSL. (Reports of those presentations can easily be found on the web, if you are interested.) In November 2009, Harriet summarised her thinking in an article in The Lawyer, entitled “Knowledge management needs serious consideration.” In it, she provides a potted history of the PSL and KM function in law firms, and finishes with a rallying call for change:

At many firms, the basic organisational tasks took longer than expected, and ­eventually became so time-consuming that many KM lawyers remained almost wholly focused on them. In some cases management of the KM function was poor and priorities were commonly set by client partners who misunderstood the ultimate goal or who had particular axes to grind. The vision of the KM function as the ­efficiency engine of the firm, constantly streamlining working practices and driving forward proprietary knowhow, became blurred. Now is the time to clarify it.

To do this it is critical that KM lawyers engage proactively with the business. Their central focus should be on ­profitability. They will need a clear ­understanding, at both the financial and technical levels, of the work undertaken and the systems adopted in the different practice areas.

The comments on Harriet’s piece are intriguing. They don’t display much insight or awareness, and some of them are unnecessarily vituperative. If they are typical of lawyers’ attitudes to KM and PSLs, we have a very steep hill to climb.

One of the firms whose PSLs have taken a lead in the strategic reaction to market change is Berwin Leighton Paisner. Lucy Dillon, Director of KM at BLP (and formerly a litigation PSL at Linklaters), wrote a short note for Law Business Review (“PSLs – Gatekeepers of Excellence”) summarising the ways in which she has seen the PSL role change over the last 20 years.

PSLs, with their experience of practice, are in an excellent position to help review internal processes to identify areas of inefficiency and offer solutions for improving service delivery. Standard forms, document automation, checklists, work flow systems, and FAQs are all areas where a PSL’s experience can be invaluable. They can apply their practical experience and their holistic approach to transactional work to “unbundle” the traditional deal model and identify smarter ways of delivering on clients’ objectives. Such solutions are a pre-requisite to faster turn-around times, while operating in a risk managed environment.

Some of the initiatives that Lucy describes are unique to BLP, and different firms will have different needs. The general theme — that PSLs can take part in driving change is, however, a universal one. I wonder how many firms can say that their PSLs are empowered to do this.

Regular readers of this blog will know that I am fond of drawing parallels with other areas of work to try and illuminate the challenges facing law firms (especially in their knowledge-related activities). I think a good comparison here is to consider the ways in which traditional media are dealing with changes in technology and reader behaviours.

In some (limited) respects, the role of a journalist parallels that of PSLs. Journalists are skilled at taking undifferentiated chunks of data and information and packaging them into useful chunks of knowledge. Historically this distillation and delivery has defined their role. Over the past decade, this traditional approach has become inadequate in the face of (a) rolling 24-hour TV news, (b) contribution to news channels by non-journalists (so-called ‘user-generated content’) and (c) commentary away from the news channels (on Wikipedia, blogs, Twitter, etc.). One result has been a huge decline in advertising revenues (exacerbated by the recession) and closures of many long-established newspapers. 

If you are interested in some reactions to the challenge facing journalism, I have a number of relevant bookmarks stored online. However, I think a couple are worth singling out.

Jason Fry is a freelance writer, editor, and consultant in New York. Writing about the challenge facing sports journalism in November 2009 (“This Is Broken: From Game Stories to, Well, Everything”), he poses a key question.

The question to ask about game stories is the same question to ask about everything we do in journalism: If we were starting today, would we do this? That’s the question. Not whether we’ve spent a lot of money on the infrastructure of producing something a certain way, or whether a journalistic form is a cherished tradition, or whether it still works for a niche audience, or whether it can still be done very well by the best practitioners of the craft. All of those questions are distractions from the real business at hand.

If we were starting today, would we do this?

So: If I were starting a sports site (or a sports section on a general-news Web site), would I pay a reporter or some third-party source for a summary of yesterday’s game, knowing that today my audience is much more likely to have watched the game, can get a recap on SportsCenter once an hour during the morning, can see the highlights on demand from a team or league site, and can watch a condensed game on the iPhone?

Absolutely not.

The problem as he sees it is that the medium for which traditional journalism is designed (the daily newspaper of record) has been overtaken by other sources. People get more value from those other sources, but journalists have failed to see that:

Why didn’t we change? Journalists are masters at filtering, synthesizing and presenting information, yet we’ve spent more than a decade repurposing a 19th-century form of specialized storytelling instead of starting fresh with the possibilities of a new medium. Newspapers could have been Wikipedia, instead of being left to try and learn from it. And what are we learning? The news article is in some fundamental ways just as broken as the game story — if it weren’t, Jimmy Wales wouldn’t see a surge of traffic to Wikipedia in the wake of any big news event. We need to rethink the basics: If we were starting today, would we do this? But when will we unshackle ourselves from print and really ask the question? And at what point will the answer come too late to matter?

That question “If we were starting today, would we do this?” is one that I think all firms need to ask themselves about a whole range of issues. In this context, I am curious to know whether US firms that have adopted the PSL role have started to define that role from scratch or whether they have adopted the historic UK model without significantly adapting it for changed circumstances.

(If you are interested in reading further into the journalism debate, I would also recommend Jonathan Stray’s article, “Does Journalism Work?”, which examines the ‘why’ of journalism, rather than the ‘how’ that is Jason Fry’s focus. Stray’s piece still has parallels with knowledge support in law firms, but they are much more strained. However, his hypothesis is an interesting one, and I may return to consider the ‘why’ of law firm KM at some point.)

Knowledge ‘what’? And why?

Published 26 January 2011 KM , Knowledge , Work 8 Comments

One of the great things about using wordpress.com to host this blog is that Akismet, the tool they use to block spam comments, is really effective. A result of this is that I have never shut off comments on my older posts. If I had, I would never have seen a thought-provoking comment on a post of mine from 2008 by Madhukar Kalsapura:

I simply use this ; “Knowledge management is about what to DO when you don’t Know”.

Over the past few weeks, I have been contemplating this comment. I think it has much to commend it, but it also raises a slight terminological problem.

What do we do when our knowledge runs out? I don’t think we do ‘knowledge management’ as individuals. We certainly aim to develop, deepen, extend, broaden or redirect our knowledge — this is learning. Also, we don’t necessarily go to the same places for that learning every time. Organisations might aim to do things to facilitate that learning process, and we might call this ‘knowledge management’, but I am less and less certain that this is a sensible phrase.

Separately, I was reading Knoco’s recent newsletter (pdf), and found an article which builds on Yasmin Fodil’s experiences observing knowledge and learning at NASA’s Goddard Space Flight Center, which she reported on her blog (and cross-posted). In the blog post there are some useful diagrams summarising the people-centric approach used at Goddard; the whole piece is well-worth reading (and following the links to the Goddard material itself). Knoco took one of those diagrams and embellished it. I have embedded that one below (click to see the original).

This table made me reflect on my own knowledge and learning behaviours, as well as those I see around me. In the column headed “How can I learn it?” there are certainly some tools and techniques that benefit from external (call it ‘KM’) input, but the starting point (learning from one’s own experiences) depends on individual commitment.

I found it a bit more useful to show these tiers of learning as concentric circles:

I think this makes two things clearer.

Firstly, what I myself know contributes to the knowledge of my network, which in turn is part of the wider firm’s knowledge (although people’s personal networks usually include participants from outside their own organisation, or their immediate working group, I am ignoring that for simplicity here). When individuals have good personal knowledge practices (even if it is just making good notes that can be easily accessed and used in one-to-one conversations), their wider contribution is almost inevitably higher quality — to the benefit of those around them.

The second thing is that the further sources of knowledge and learning are from the individual, the more help they will need to make the most of them. I think that’s what we mean when we talk about knowledge management. But it isn’t so much ‘management’ as facilitation of knowledge. (And I am not crazy about ‘facilitation’ either. Alternative suggestions welcome.)

As a result of this cogitation, I have amended the description of KM in the comment I quoted above.

  • For everyone, knowledge development is about what to do when you don’t know.
    • When you don’t know, you need to ask: from whom can I learn? When you see people around you who appear not to know, you need to ask: how can we learn together? or what can they learn from me?
  • For the firm, facilitating knowledge development is about creating the best environment to encourage effective learning and knowledge sharing.
    • This virtuous circle of knowledge exchange and learning helps to create a more agile organisation primed to respond creatively and innovatively to client demand, legal change, and market shifts.

That last justification of our knowledge activities is one that often crops up. Better use of knowledge promotes innovation goes without saying, doesn’t it? But if that was the only reason organisations did ‘KM’ then why do all that traditional stuff around ‘best practices’, standard documents, house style and taxonomies and so on?

The commonly-stated problem with all that boring stuff (and I have been as guilty as anyone else of such comments) is that it just crystallises past practices, that if we do what we have always done, we will just get the results we always got. But sometimes that consistency and predictability is really what we (and our clients) actually want.

We (and of course, I really mean ‘I’) need to be careful not to jettison the baby with the dirty bathwater. Organisational knowledge activities (building on good individual behaviours) do contribute to innovation and creativity, but they also ensure consistency, improved quality and risk-avoidance in the boring old stuff as well. The challenge is to steer a sensible course between the two — to do the things that will achieve both aims, even when they appear to conflict.

Next Page »

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

Join 1,047 other followers

Recent micro-blog posts

Categories

Interesting stuff...

Locations of visitors to this page
Bookmark and Share

When…

May 2012
M T W T F S S
« Mar    
 123456
78910111213
14151617181920
21222324252627
28293031  
Follow

Get every new post delivered to your Inbox.

Join 1,047 other followers