Archive for April, 2009

Golden oldies

Published 30 April 2009 Management , Rationality 1 Comment

Every now and then, it is useful to be reminded that there is little new in the world. The most recent example for me was a pointer to a 1993 article by Peter Drucker in The Independent.

 

Drucker’s article presents, in the pithiest form possible, a clear denunciation of many commonly-held truths about managing businesses. These are the five sins.

  1. The worship of high profit margins and of ‘premium pricing’
  2. Mispricing a new product by charging ‘what the market will bear’
  3. Cost-driven pricing
  4. Slaughtering tomorrow’s opportunity on the allure of yesterday
  5. Feeding problems and starving opportunities

A couple of these really stood out for me. Cost-driven pricing is at the heart of many business models. Many law firms hear it from their suppliers, and they pass it on to their clients. Neither of these is sustainable. As Drucker puts it:

Most American and practically all European companies arrive at their prices by adding up costs and putting a profit margin on top. And then, as soon as they have introduced the product, they have to cut the price, redesign it at enormous expense, take losses and often drop a perfectly good product because it is priced incorrectly. Their argument? ‘We have to recover our costs and make a profit.’

This is true, but irrelevant. Customers do not see it as their job to ensure a profit for manufacturers. The only sound way to price is to start out with what the market is willing to pay – and thus, it must be assumed, what the competition will charge – and design to that price specification.

Cost-driven pricing is the reason there is no American consumer electronics industry any more. If Toyota and Nissan succeed in pushing the German luxury car makers out of the US market it will be a result of their using price-led costing.

Starting out with price and then whittling down costs is more work initially. But in the end it is much less work than to start out wrong and then spend loss-making years bringing costs into line.

Another sin is one that some KM activities mistakenly support and promote: “feeding problems and starving opportunities.” KM is often seen as a toolkit to improve problem-solving, but for Drucker, “All one can get by ‘problem-solving’ is damage containment. Only opportunities produce results and growth.”

What do we do in our knowledge work to feed opportunities, rather than dwell on problems?

A glimpse into the abyss

Published 30 April 2009 KM , Lawyering , Management , Tradition 2 Comments

John Flood has published on his blog an article he co-wrote for The Lawyer. It is essentially a challenge to the traditional UK law-firm business model.

The context for the challenge is clearly the current economic crisis, coupled with the opportunities offered for different organisational structures by the Legal Services Act. In essence the suggestion is that law firms should stop ‘owning’ their stock (lawyers) and instead lease it as and when client demands dictate.

Although legal work has become more commoditised and an increasing proportion of it shipped offshore, it is perhaps lawyers themselves, both associates and partners, who are the commodities, traded and marketed by recruiters and head-hunters. New service models such as Axiom Legal, Rimon Law and Lawyers Direct are flourishing. One recruiter is now even advertising ‘pay as you go lawyers’. At the same time, the equity partnership prize is becoming ever harder to win, and even less sought after by today’s younger lawyers who are more mobile and happier than ever to migrate to newer opportunities.

Since a sufficiently large pool of high-quality and experienced lawyers is emerging from the crisis, why not rent lawyers for a specific period or task and then let them go again? The advantage of temporary resources is that they can be deployed as and when needed and released when not.

What would be the purpose of the firm in this model?

A smaller, tighter front-line team would oversee client relationships, supervise the work and manage the firm. Rather than constantly seeking merger partners, law firms could structure their growth in a more organic fashion which would build collegiality as well as returns.

I am not sure what this would look like. I think there are two (potentially competing) reasons why law firms are organised as they are. The first is that the current model has served private practice lawyers well so far. That is not to say that this will remain true. John Flood and his co-author, Peter Rouse, chief executive of 7 Bedford Row Chambers, have started to make a compelling case for change from this perspective. However, the current model has also grown up in response to client needs. It is at least arguable that clients play some part in designing law firms. There is compelling evidence (see Ron Friedmann and others, passim) that client pressure will define the law firm model to a much greater extent in years to come. The Flood/Rouse model may serve clients well, but it is not clear from the article how or why clients would prefer this approach to one of the many others on offer.

As they are currently organised, law firms can and should offer clients the security that individual lawyers are well-trained and -briefed so that they can apply more than basic legal knowledge. That is one of the functions of firms’ KM activities. How would that be replicated in a firm using the Flood/Rouse model? There is a real risk that clients would get little benefit from this approach. Yes, firms might find that their costs are lower and that this might translate into lower hourly rates (assuming that the billable hour still holds sway), but a poorly-briefed contract lawyer could take much longer to perform the tasks required to the standard required by the client. As a result, the client would see no financial benefit, and might even discern a distinct difference in the quality of the work done.

That is not to say that we should dismiss this approach. No organisation can assume that it will be allowed to remain in its current form forever. Likewise, those of us who work in a particular way because of the form of the organisation we support should also be mindful that change is inevitable and be constantly seeking ways of ensuring that the service we provide is still hitting the mark for our people and our clients.

If the Flood/Rouse model were pervasive, what would law firm KM and training look like?

Perspective

Published 29 April 2009 History , Personal 2 Comments

I spent the Easter holidays in Italy. However, that wasn’t the full extent of my holiday. For various practical reasons, including personal preference, I drove to our destination (the rest of the family flew). On my way back, I was able to spend some extra time sight-seeing.

One of the things I wanted to do was to see some of the First World War cemeteries. I didn’t know why — it was just something I had never done. I am glad I did, although it was much more harrowing than I expected.

Prior to the First World War, the bodies of soldiers who fell in battle tended to be buried, cremated, or left in situ. The cemeteries created by the Commonwealth War Graves Commission (founded in 1917) provide a clean break with this tradition. The Commission’s principles have been emulated by other nations and traditions, but few memorials are as moving as those on the Western Front. The simplicity of those principles is immensely respectful of the dead.

  • Each of the dead should be commemorated by name on the headstone or memorial
  • Headstones and memorials should be permanent
  • Headstones should be uniform
  • There should be no distinction made on account of military or civil rank, race or creed

Wherever you are in the UK, you are never far from a memorial to local soldiers, sailors or airmen lost in war during the last century. Even the school I attended had a plaque immortalising the old boys who had given their lives in 1914-1918 or 1939-1945. (I saw similar memorials in many Italian towns and villages as well.) Despite these constant reminders, I was not prepared for the emotional impact of the memorials in West Flanders.

Despite the generally flat landscape of Jacques Brel’s plat pays, there is a curved low ridge around Ieper (Ypres), which has been the site of conflict on a number of occasions (even before WWI). Between 1914 and 1918, a number of battles over this salient accounted for the lives of about 450,000 young men. (All the information provided in West Flanders suggested nearly 250,000 soldiers of the France and the British Empire, together with just over 200,000 German soldiers.) These numbers are almost unimaginable, but awful when you can actually see the landscape over which they fought.

The only way I could start to comprehend the scale of this sacrifice was to personalise it. In Ieper, I found five graves belonging to soldiers killed on the same date as my visit, 21 April, but in 1918.

  • 139636 Lance Cpl. E.J. Jones (Royal Engineers)
  • 18934 Lance Cpl. A.R. Ockelford (Royal Engineers)
  • 143532 2nd Corporal R. Wilson (Royal Engineers)
  • 177166 Sapper Oliver Smith (Royal Engineers)
  • 42544 Private C.G Hawkes (Essex Regiment)

May they rest in peace.

At the largest cemetery of all, Tyne Cot, the dead of Passchendaele 1917 are commemorated. Here there are nearly 12,000 men buried, and a further 35,000 whose graves are unknown remembered on a massive memorial wall. Another 55,000 casualties whose graves are unknown are commemorated on the walls of the Menin Gate in Ieper.

The emotional impact of these names, and the landscape over which the men bearing them fought and lost their lives, was heightened by the knowledge that so many of them were born in the 1890s and slain in their 20s. My own children were born in the 1990s. Little facts like this start to put the large numbers into perspective.

Don’t overdo it

Published 6 April 2009 Design , KM , Technology 2 Comments

When we think about and plan our KM activities, it can be tempting to imagine a marvellous future wherein all our firm’s know-how is carefully nurtured, categorised, exposed for all to see, tagged, analysed, or whatever it is we think would be the best outcome. However, as the Bard of Ayrshire put it: “The best laid schemes o’ mice an’ men/ Gang aft agley.” Why is this?

Gigha boatscape

One good reason is pointed out in Gall’s Law:

A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.

I am indebted to John Gruber for the pointer to this formulation. He uses it to explain how to understand Apple’s strategy with regard to the iPhone.

If there’s a formula to Apple’s success over the past 10 years, that’s it. Start with something simple and build it, grow it, improve it, steadily over time. Evolve it.

The iPhone exemplifies this strategy. There’s a long list of features many experts and pundits claimed the original 1.0 iPhone needed but lacked. Ends up it didn’t need any of them. Nice to have is not the same thing as necessary. But things the iPhone did have, which other phones lacked, truly were necessary in terms of providing the sort of great leap forward in the overall experience that Apple was shooting for.

At this point, it is worth noting an essential qualifier to Gall’s Law: “A simple system may or may not work.” In the case of the iPhone it clearly did work. In other cases, Apple decided that it did not work.

What Gruber brings over and above a simple assertion of Gall’s Law is an insight about how to choose the original simple system: “It’s not enough just to start simple, you have to start simple with a framework designed for future evolution and growth.” When the iPhone was first launched, it was not particularly full-featured as a phone: it was not 3G; it did not support MMS. It even fell short on the music front, as it cost significantly more per gigabyte than any of the iPod range. However, as Gruber points out:

Apple started instead with the idea of a general-purpose pocket-sized networked computer. It no more has a single main purpose than a desktop PC has a single main purpose. Telephony is simply one feature among many, whereas on most other phones, the features are attached to the side of the telephone. They sold 30 million iPhone OS devices in the first 18 months after 29 June 2007, but 13 million of those were non-phone iPod Touches — proving that the platform is clearly appealing even when the “phone” is entirely removed. (Consider too that the iPhone’s two strongest competitors are BlackBerry and Android, neither of which started as phones.)

…

The iPhone was not conceived merely as a single device or a one-time creation. It’s a platform. A framework engineered for the long-run. The iPhone didn’t and doesn’t need MMS or a better camera or a video camera or more storage or cut/copy/paste or GPS mapping or note syncing, because the framework was in place so that Apple could add these things, and much more, later — either through software updates or through new hardware designs. The way to build a complex device with all the features you want is not to start by trying to build a device with all those features, but rather to start with the fundamentals, and then iterate and evolve.

We should learn the same lesson with our knowledge systems. Not to try and predict all the features that might be useful in the future — that way lies excessive complexity coupled with early obsolescence and failure. Instead we should imagine and create the best platform for future possibilities — as simple as possible, but as open to development as necessary.

Star-shaped workers

Published 2 April 2009 KM , Work 5 Comments

Jason Plant drew my attention today to an old HBR article: “Introducing T-Shaped Managers: Knowledge Management’s Next Generation“. The article, by Morten T. Hansen and Bolko von Oetinger, dates from 2001 and shows how much our views on KM have changed over the past eight years. It starts by asserting that centralised knowledge management efforts and those depending on technology have not been especially successful. The alternative, it is suggested, depends on people behaving differently.

We suggest another approach, one that requires managers to change their behavior and the way they spend their time. The approach is novel but, when properly implemented, quite powerful.

We call the approach T-shaped management. It relies on a new kind of executive, one who breaks out of the traditional corporate hierarchy to share knowledge freely across the organization (the horizontal part of the “T”) while remaining fiercely committed to individual business unit performance (the vertical part). The successful T-shaped manager must learn to live with, and ultimately thrive within, the tension created by this dual responsibility.

The question the authors pose next remains an interesting one, but for different reasons. “Why rely so heavily on managers to share knowledge?” The alternative they pose is a knowledge management system.

The trouble is that, while those systems are good at transferring explicit knowledge—for example, the template needed to perform a complicated but routine task—direct personal contact is typically needed to effectively transfer implicit knowledge—the kind that must be creatively applied to particular business problems or opportunities and is crucial to the success of innovation-driven companies. Furthermore, merely moving documents around can never engender the degree of collaboration that’s needed to generate new insights. For that, companies really have to bring people together to brainstorm.

But why concentrate on managers to do this brainstorming and collaboration? The article (or at least the excerpt available online) does not appear to admit the possibility that workers at a lower level might have a responsibility to share knowledge, or that they would even be able to reach outside their silos to people at a similar level in different business units.

Eight years later, it is clear that what we actually need is not T-shaped managers, but *-shaped workers. That is, people who can share knowledge effectively within their business unit (with junior and senior co-workers): | , with colleagues at the same level in different business units: — , and even others at different levels in other areas of the business: / and \ .

Adding all these pieces together: | — / \ we get a star shape or asterisk: * . I think that is a reasonable goal for people in modern businesses: to share knowledge freely, without respect for organisational boundaries or hierarchy. Any business that relies on T-shaped managers is likely to miss the benefits offered by wider knowledge sharing. Organisations with star-shaped workers will make the most of their knowledge.

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