Strategy step 0: understanding where you are

One of the areas where knowledge is undervalued in law firms (and probably in other organisations as well) is the creation of strategic plans. This has always seemed odd to me, but I suspect that the pressure to respond to changing markets in the same way as other firms is a very strong one. (Especially as it sometimes appears that there is little differentiation between firms — something that I believe less and less the more firms I see at work.)

Why is knowledge important for strategy? A number of reasons. I found these particularly well explained by William Duggan in his book Strategic Intuition. He described Napoleon Bonaparte’s success (the first in his military career) in the siege of Toulon as resulting from a combination of factors: tools and resources, knowledge of previous actions, openness to different solutions; and insight.

In 1793, the port of Toulon was held by the British navy in the name of the French royalist forces. Napoleon was an artillery captain in the revolutionary army. He formulated a plan to put pressure on the British forces by attacking forts on either side of the harbour. The first attempt at executing the plan failed due to the poor leadership of the general in charge. A later, better coordinated, attempt was successful. The British withdrew their forces in fear of being cut off from the rest of the navy.

The tools and resources Napoleon used were available to all — light cannon and contour maps. What he brought was an understanding of historic battles — the sieges of Boston and Yorktown in the American Revolutionary War, and the siege of Orléans in 1429. At both Boston and Yorktown, British forces on land were threatened with being cut off from their navies at sea and gave up the fight or surrendered. At Orléans, Joan of Arc’s forces routed the English army by attacking smaller forts rather than the large well-defended town itself. Napoleon’s insight was to see that rather than attacking Toulon (the obvious target, but a recipe only for a prolonged siege of attrition), his forces could use the high ground (discovered with contour maps, and accessible to light cannon) to take two key forts protecting the harbour. This strategy combined elements of all three historic actions in a way that was unique to the situation at Toulon.

Duggan is interested in the intuitive leap that Napoleon makes — he calls it strategic intuition. Successful strategic intuition depends on drawing together previously uncombined elements. Duggan recommends a similar approach to business strategy. In reality, what I see of many strategic efforts appears to depend more heavily on mere intuition — gut feel — without a real understanding of key factors affecting the organisation.

Firms often focus very closely on their own capacity and capability — what can we do now, and what could we do in the future — without thinking deeply about territory and logistics — external forces that need to be understood or managed. Ultimately, of course, Napoleon’s failure to consider logistics properly led to his greatest strategic failure — the march on Moscow in 1812. The  most fundamental failure, though, is not getting to grips with the territory.

My earlier posts in the legal ecosystem series were aimed at helping law firms get to groups with what is happening around them — helping them ask (and work towards answering) the right questions. Richard Susskind’s work has a similar aim — especially his characterisation of legal services transitioning from bespoke to standardised to systematised to packaged to commoditised.

I recently came across a more thorough way of mapping activities to help organisations understand how the land lies before making their strategic choices. The value chain mapping model was created by Simon Wardley, whilst working in the technology sector. Most of his examples arise out of this sector, but there is no reason why the mapping technique should not work elsewhere. He explains it well in this video of a conference presentation.

There is also a site that brings together many of Wardley’s writings on maps, including guidance on how to create maps for your own organisation.

I am still getting to grips with how the mapping might best be used for law firms, but the basic concept is fairly easily understood. It comprises three main activities.

The first thing is to describe the value chain, starting with user needs (client needs in law firm terms) and then identifying every subsequent need. Wardley uses a cup of tea value chain as an easily-understood example. (The diagrams that follow are taken from and link back to Simon Wardley’s blog.)

This simple diagram shows how a person’s need for a cup of tea depends on a chain of other needs, some more readily acquired than others.

However, even a complex set of such diagrams, describing a host of business needs, is incomplete because it is fixed at a moment in time. In reality, things change. Making a cup of tea in a domestic kitchen now is a much easier task than it might have been 200 years ago because of the reliable ubiquity of electricity, piped fresh water, supermarkets selling vast arrays of different types of tea and so on. Without those things, making tea was a more labour-intensive process.

So what Wardley does is to align each of those needs against an axis marking the typical evolution of products or services (similar to Susskind’s model): from genesis to custom-built to product to commodity to ubiquity.

The different components of the value chain can then be placed at the right (current) point of their evolution. That then allows the organisation to look at how each of those components may develop and plan accordingly.

The end result may look a bit like this map which describes a major infrastructure project. The location of each of the components allows the project owner to decide how best to acquire or develop that component. The most evolved can be bought off the shelf, and those that are novel can be developed internally.

This kind of unbundling or componentisation is something that a number of law firms are doing for client work, although rarely to this level of abstraction. I am still reflecting on how well it might adapt to other aspects of a firm’s activities (I have a lingering uncertainty about the placement of risk factors and regulated activities, for example), but my current thinking is that this would be a very powerful tool to help firms with the very first step of developing any aspect of their strategies — working out the lie of the land.