Institutional memory — a diversity problem?

The BBC has discovered that knowledge management is important, at least in the form of improving institutional memory. In a report for Radio 4’s Analysis programme, Phil Tinline writes:

Each time someone leaves their job, a chunk of the organisation’s memory leaves too. How, then, do you run complex systems, see through long-term projects, or avoid past mistakes?

Short-term contracts and outsourcing reduce the appetite for learning company or product history. And when job losses land, even more knowledge is lost.

In 2012, one institution found that, as City firms poached its bright young employees, its staff turnover was hitting 28% – faster, apparently, than McDonalds.

And for Her Majesty’s Treasury, after its experiences during the financial crisis, this was rather scary.

The report describes a number of initiatives in commerce, industry and the public sector, but I was particularly struck by the inclusion of the UK civil service as an institution suffering particularly badly from organisational amnesia. How is it that one of the world’s pre-eminent administrative cadres, studied by academics of all types, with record-keeping and archival traditions dating back hundreds of years, can forget experiences and decisions made just a few years ago?

SIgning the way

Tinline suggests that staff turnover is an important component of the problem and I suspect that, as with many other organisations, the faster pace of work probably also plays a part. But what struck me was a reference to ‘folk memory’ by the outgoing Treasury Permanent Secretary. Without trying to read too much into the Permanent Secretary’s words, I think there may be a slight, but significant, difference between ‘folk memory’ and ‘institutional memory’.

When I learnt, and then taught, constitutional law, the civil service was still regarded as a very traditional force within British government. The research of Peter Hennessy and the comedy of Yes Minister suggested that centuries of experience were distilled into power exercised gently but forcefully to sustain a variety of constitutional norms. Almost invariably, senior civil servants were men, Oxbridge-educated, and with good networks across government through which traditions could be maintained. Those traditions contribute to a particular kind of folk memory that allows people to communicate and work more efficiently, since they can rely on a shared understanding.

Even when I was a student, this traditional approach was changing. The civil service recognised the need to improve the breadth of its recruits — drawing people in from roles in the private sector, and working to improve the diversity of recruitment — more women, and more non-Oxbridge graduates. At the same time, the civil service also found itself competing with political appointees — special advisers — for the ear of ministers. Yes Minister gave way to The Thick of It. There is no easy way for folk memory to be transmitted in a more fragmented system like this. What is needed is a concerted effort to develop and sustain shared understanding — the more formal institutional memory.

In a sense, folk memory can be sustained by lazy adherence to outdated standards of recruitment and advancement that lead to a lack of diversity. As organisations (not just the civil service) become more diverse, the benefits that come from diversity are matched by a new burden of finding new ways of ensuring that there is a proper understanding of the organisation’s history. This might be a personal obligation, as shown in the obituary of the late Chris Martin, the prime minister’s principal private secretary.

Martin, who has died of cancer aged 42, had always thought deeply about the place of the civil service in the constitution. He wrote his university dissertation on its role, and was a compulsive reader of biographies and political works that helped him understand its history and its place in the British story. The network of relationships he built up through successive jobs at the top of Whitehall was not just tactical; he used it wherever he could to enlist support for the civil service as an essential institution.

In Downing Street he set up a History Board with Anthony Seldon and Peter Hennessy to record and preserve No 10’s own story.

But organisations cannot rely on there being people like Chris Martin to take responsibility for learning like this. The range of examples provided in the BBC report show clearly that organisational amnesia is a widespread and pernicious problem. Overcoming it should be a priority. Doing so demands careful consideration of the problem, how best to address it, and proper resourcing of the prescribed remedy. What organisations should not do is avoid good current actions (such as improving diversity), simply because they may lead to future forgetfulness. That approach stands in the way of inevitable progress and is lazy.

Three steps to the future

In the last two blog posts, I looked at the limits on improving productivity compared to growth, and suggested that real changes in yield come with improved working practices and products or services that do not depend on contemporaneous fee-earner input. Coincidentally, yesterday I saw a very good explanation of the issue (defined as ‘the problem of constant cost’) in a guest post by Michael Mills of Neota Logic on the Beaton Capital blog.

…quantity in legal services is not necessarily a good thing. We have the diseconomies of scale—internal coordination costs, quality variation—but not enough of the economies, other than branding and cross-selling (when it works).

In short, law practice missed the industrial revolution. We didn’t build power looms, and we certainly didn’t build Jaquard looms, programmed by holes in paper cards (the model for the 80-column, cropped-corner punch cards of computing’s adolescence).

Forget about billable hours, alternative fees, and ABS’s. The problem is constant cost.

Neota Logic’s systems are good examples of the kind of thing I described in my last post — a combination of knowledge and technology increasing law firm productivity. This and systems like it are an inevitable future for firms. The problem, I think, is not in creating these new ways of working, but in ensuring that when they are developed that they flow into the firm as well as possible. How, in other words, does the innovative become the norm?

New embedded in old at the Royal Exchange Theatre, Manchester

As technology teams have faced this problem for longer, it is not surprising that a model has been created to describe how an IT function might be structured to allow it to deliver new things while continuing to support existing products and services. Gartner has invented ‘bi-modal IT’:

the practice of managing two separate, coherent modes of IT delivery, one focused on stability and the other on agility. Mode 1 is traditional and sequential, emphasizing safety and accuracy. Mode 2 is exploratory and nonlinear, emphasizing agility and speed.

But these are two complete opposites, and the gap between them is cavernous. Unsurprisingly, things can fall into the cavern and never escape. Simon Wardley (whom we have met before) is scathing about Gartner’s idea:

I couldn’t stop howling with laughter. It’s basically 2004 dressed up as 2014 and it is guaranteed to get you into a mess.

Wardley’s alternative is a system with three parts rather than two.

When it comes to organising then each component not only needs different aptitudes (e.g. engineering + design) but also different attitudes (i.e. engineering in genesis is not the same as engineering in industrialised). To solve this, you end up implementing a “trimodal” (three party) structure such as pioneers, settlers and town planners which is governed by a process of theft.

The three roles are summarised neatly in this diagram (taken from Wardley’s blog under the Creative Commons Attribution-Share Alike 3.0 License).

map

The bi-modal model advocated by Gartner only considers the two extremes — pioneers and town planners. Filling the gap with a specified role or function helps to prevent the work of the pioneers being rejected by town planners for being undeveloped. As Wardley puts it:

The problem with bimodal (e.g. pioneers and town planners) is it lacks the middle component (the settlers) which performs an essential function in ensuring that work is taken from the pioneers and turned into mature products before the town planners can turn this into industrialised commodities or utility services. Without this middle component then yes you cover the two extremes (e.g. agile vs six sigma) but new things built never progress or evolve. You have nothing managing the ‘flow’ from one extreme to another.

(In an update to his original post, Wardley adds that a similar model was identified by Robert Cringely in his history of Silicon Valley, Accidental Empires. Cringely’s model used different archetypes — commandos, infantry and police. The relevant passage is in Chapter 12 of the book, published online by Cringely in 2013.)

Whichever terminology is used, the idea is the same.

The first wave of change is the responsibility of highly expert groups who work hard and fast to create products and services that might meet particular needs. Some of these might fail, but the speed of work is such that there is always something new to work on. In established businesses, this might be a dedicated research and development function, or it might be an activity open to all (as at Google, for example, where there was an expectation that everyone could spend 20% of their time on their own ideas).

When complete, the successful experiments might have proved their worth, but that doesn’t make them ready for widespread adoption. There will inevitably be some rough edges to smooth off, and some issues that could not have been foreseen until the idea needs to be scaled up for general use. That process of perfecting a new product or service is the responsibility of the middle group (the settlers or infantry). Some ideas may fail at this stage too — an idea that works in a lab may hit obstacles when it encounters real life and work.

Once a product or service has been proved worthy of inclusion as part of the core business, it still needs to be maintained and developed. That is the responsibility of the third group —  the town planners or police. As their archetypes suggest, this group needs to ensure such things as stability, good governance, predictability and reliability. But their work is not immune from disruption — as Simon Wardley’s diagram shows (click to embiggen):

trimodal

Wardley’s model was designed with technology development in mind, and with the benefit of his extensive experience running successful technology companies. However, I think it is also a valuable template for development more generally in law firms (and probably elsewhere).

As an example, knowledge teams in law firms are now an established concept. They commonly work in similar ways when dealing with established aspects of legal practice. The fact that there is a lively market in Professional Support Lawyers between firms, and that many firms have created career pathways for those teams, suggests that this is a ‘town planner’ type of function. But that was not always the case. The first PSLs were experimental. They created their own roles: trying different ways of working, some of which were successful and some weren’t (the pioneer phase). As  firms became more familiar with the concept, they jumped on the bandwagon, perfecting the role in different practice groups and in different types of firm (the settler phase).

The same process can be seen at play in the way firms are adopting concepts like process-mapping and project management. Here, though, the pioneer phase can be massively foreshortened since these are concepts that have been tried and tested in different sectors before finding their way into the law.

Policing and town planning need to change when the context changes. Established knowledge functions need to pay attention to new ideas thrown up by pioneers. That message is at the heart of a recent call by David Griffiths for knowledge and HR functions to start disrupting themselves. When they do, they should consider how the three stages of development might be adapted to their situation.

Firms that cannot identify their pioneers need to consider where new ideas are going to come from. (Without those new ideas, the market will move on without them.) If they can point to a group of pioneers, but they expect ideas from that group to become part of ‘business as usual’ without additional work, they risk failure and frustration with the whole process. The latter situation is probably as bad as having no new ideas in the first place.

As usual, if you are keen to work out how these archetypes of development might work in your firm, we should talk.

Finding different influences

When I was doing my research degree, I was regularly distracted by the many other interesting books in the library. Amongst those, I kept coming back to Robert Merton’s On the Shoulders of Giants. As the publisher’s blurb puts it:

Robert Merton traces the origin of Newton’s aphorism, “If I have seen farther, it is by standing on the shoulders of giants.” Using as a model the discursive and digressive style of Sterne’s Tristram Shandy, Merton presents a whimsical yet scholarly work which deals with the questions of creativity, tradition, plagiarism, the transmission of knowledge, and the concept of progress.

Although I remember little of the detail of the book, its themes (the collective nature of intellectual progress and the forms that imitation takes during that progress) still resonate. As the New York Times put it:

The book really does address itself to the problem of priority, and to the related questions of creativity, tradition, plagiarism, the transmission of knowledge, the social conditioning of science. It forces you to think hard about the notion of progress, and about why there should ever be anything new under the sun. Its very perversity is meant to illustrate the role played by contingency and accident (to say nothing of obstinacy and incompetence) in the history of ideas.

The modern equivalent of Newton’s aphorism is the quote popularised by Steve Jobs:

Good artists copy; great artists steal.

This isn’t intended as a licence to plagiarise. The allusion to theft, I think, is a reference to audacity. Taking an idea and transforming it into something bold is what Jobs (prompted by Picasso) had in mind. Interestingly, an investigation of the genesis of the phrase suggests that it was originally phrased very differently.

Loch Ossian through the treesImitation is an accepted part of progress. But how do we decide who to imitate? I think that is where great artists distinguish themselves. Their audacity isn’t just marked by the result of their copying, but also shows in what they choose to copy.

A long time ago, I railed against the tendency of law firms to compare themselves to each other. Little has changed in the intervening six years. And yet there are so many great things to imitate.

This post was prompted by a brief look at the website of a Scottish architectural practice, Page\Park. There are many similarities between law and architecture. Both apply expertise and experience to a client brief in order to create something. And yet few law firms look to architectural practices for ideas about how they might work. There are a couple of things that Page\Park do that are worthy of consideration for imitation. (I have no idea whether they are novel to that practice or common in the architectural world.)

Business model

It is unusual, and perhaps egocentric, for a firm’s website to describe the business model it has chosen. When that model (a) is different from the norm and (b) has benefits for the client, such egocentricity can be forgiven. Page\Park is an employee owned business, which is presented as a good thing for clients:

In so many fields of life the paramount role of the team, with each contribution being vital, has challenged traditional hierarchical models of management and, in our view, ownership. If society demands that each of us take responsibility for our roles, then surely ownership should respond likewise. So now, when you speak to anyone in Page\Park, you are speaking to someone with a share in the future of the practice, a belief in its values and a commitment to them.

More than that, the firm goes on to describe in detail how it works. This might be a step too far for a law firm, but it makes sense for an architectural practice. Their clients need to be able to see architecture in action, and where better to show it than in careful consideration of the way the firm is structured and how people work.

Time will tell if our model is the right one. However like a good building, if designed well it will flex and adapt to changing circumstance without compromising the architectural concept. That is to bring architecture back together, built on the understanding of the parts as a representation of all who contribute.

How many firms have thought carefully (and continuously) about their structure and activities. How many would be comfortable demonstrating and justifying their choices in the way that Page\Park does, to reassure their clients that they know how to make good commercial and legal decisions?

Learning and Knowledge

What first piqued my interest in Page\Park was the section on the site labelled ‘Thinking’ and the clear statement of intent there:

Creative yet careful thinking is at the heart of the approach of the studio. In the course of professional practice it is important to carve space to reflect and evolve ideas.

Our early Monday morning meetings are a vehicle for that exploration where ideas and approaches are presented and debated.

These themes are encouraged to grow into subjects for seminars where we extend a wider invitation to others to come, share and shape the discussion.

Here’s something that law firms could imitate. The new regulatory approach to learning (continuing competence) is an opportunity for firms to think imaginatively about the way they support the development of their lawyers and clients. The key elements of Page\Park’s approach offer an interesting starting point.

  • A focus on ideas. Rather than going straight into the detail (new developments in cladding materials, or the latest case on limitations of liability), looking at more general themes gives people the intellectual tools to deal with detail on their own terms.
  • Specified time for reflection. Many law firms have regular know-how or training sessions. These are usually arranged by practice group or sector, and are scattered through the week. As a result, they are easily avoided. In setting aside time early in the week for the whole practice, Page\Park sends a clear message about the significance of this activity. Reflection becomes part of ‘the way we work around here’ rather than being something that people might try to squeeze into a crowded work-week.
  • A direction of travel. Although ‘ideas’ and ‘reflection’ appear a bit wishy-washy, the firm suggests a much harder-edged set of outcomes. Whilst the starting point might be open-ended (this week’s was about ‘Good’), the intention is that ideas are refined and discussed further in a seminar involving external contributors (such as one on learning spaces in schools). Ultimately, that discussion is distilled into a briefing that is useful for clients and fellow professionals (on office/working culture, for example). The cycle repeats itself as the briefing becomes the foundation for a future Monday morning discussion.

The simplicity of this process allows it to become a habit. Once the habit is embedded, the culture of learning and development of ideas becomes an integral part of the firm’s practice.

Again, how many law firms have thought this carefully about how to develop knowledge, expertise and insight across the firm? As long as they look only at the way other firms do things (or the way things have been done in the past) they won’t be able to make meaningful progress.

So, great artists steal and great scientists stand on the shoulders of others. In doing so, they choose carefully who to steal from and whose shoulders to mount. They don’t just adopt like-minded models. They seek out influences that others ignore. Great law firms do the same. They look beyond the law for inspiration.

 

Improving work with better relationships

There is a growing body of people bringing new perspectives on the way organisations are structures and how work gets done. Amongst these, I have recently found a podcast, Reimagining Work, presented by John Wenger and Rogier Noort. It has now been running for 14 episodes, and I listened to a few of these on my walk this morning.

Roosevelt and Churchill at Chatsworth HouseThe presenters have very different backgrounds, which makes their conversations more interesting than if they came from the same direction. Rogier’s experiences are more rooted in technology, whilst John’s come from helping businesses with people issues. In the first episode they talked a little about their previous work, and I was struck by John’s description of something he offers as part of his consulting work — sociometry. John described this in the podcast as follows:

Sociometry is a word that literally means ‘measure of social relationships’ — connections between people. One of the themes of sociometry — teachings of sociometry — is that the quality of an outcome is directly related to the quality of relationships between the people who are trying to generate that outcome. Therefore, if you have better relationships, what you try and do together will be more productive, more satisfying, more life-giving.

There is also a later podcast dedicated to the topic (which I have yet to listen to), and John has a blog post on the topic. But John’s description made me think about teams and crews.

I have mentioned crews before. For now, the important point is that unlike a team, which has an existence of its own, a crew is a temporary group of people brought together for a particular job or task and then disbanded. In sociometric terms, the members of a crew may not have a relationship of any sort prior to coming together. There is value in both approaches to work, but does the lack of a pre-existing relationship mean that a crew-based approach is at a disadvantage against a team focus?

I am not sure that it does, as long as the organisation is not bound to traditional models of work and management. The classic crew might be a group of fire-fighters, police officers, paramedics and road managers brought together to deal with a serious motor collision. Each member of the crew brings their own professional expertise, which is respected by the others and which the others have no interest in challenging. As a result, they all do their work as a group and achieve most effectively what needs to be done — often without a lot of command and instruction. Discipline and practice takes the place of strong relationships.

By contrast, an organisation that depends heavily on hierarchy and command-and-control management probably could not use crews to get work done. Instead, teams arise and are managed more or less well (depending largely on the quality of the relationships within and between them. They therefore miss out on the possibility that a crew might bring a better outcome by introducing new expertise and experience. By contrast, I think that an organisation which uses social technology to build relationships where there isn’t necessarily an existing working connection (along the lines of Mark S. Granovetter’s “Strength of Weak Ties”) can use those relationships as the basis for task- or activity-based crews. The outcome would be a much lower dependence on managed structures, more autonomy for people working in groups, and improved value for the business.

Building on the relationships theme, John and Rogier spend some time in a later podcast discussing empathy and its power to improve the way people work together. This leads to a conversation about the way organisations tend to dehumanise people when they think of them as assets or resources. Coincidentally, I have been reading a paper summarising critiques of the resource-based view of the firm. I was led to that research by my concern that organisations were treating knowledge as an asset and that this didn’t reflect the reality of how knowledge flows and how it is valued.

In the paper, the resource-based view of the firm is described thus (I have removed the references for ease of reading):

The resource-based view (RBV) has become one of the most influential and cited theories in the history of management theorizing. It aspires to explain the internal sources of a firm’s sustained competitive advantage (SCA). Its central proposition is that if a firm is to achieve a state of SCA, it must acquire and control valuable, rare, inimitable, and nonsubstitutable resources and capabilities, plus have the organization in place that can absorb and apply them. This proposition is shared by several related analyses: core competences, dynamic capabilities, and the knowledge-based view.

The paper summarises eight ways in which this view has been challenged, but doesn’t offer an alternative approach (reasonably, as it is a literature review). In listening to John and Rogier, I wondered whether a better way of understanding the strength of a business might be an evaluation of the strength of its relationships (internally — within teams and more generally across the organisation — and externally — with clients/customers, suppliers, competitors, and the wider market) and the merit of the work it does (in terms of social value outside the organisation and personal value within it). A business that was well-connected and whose people enjoyed their work and knew that it added value to the world would be in a stronger position than one which demotivated its employees by keeping them in unjustifiable silos producing things of no particular worth.

This combined relationship/activity-based value probably wouldn’t appeal to traditional economists, because it has the benefit of being additive — a business that is successful by this measure does not succeed at the expense of another. Good relationships and social value are like knowledge in this respect — if they are shared they grow rather than being diminished. As the authors of the RBV review put it:

Another characteristic of knowledge, hardly taken into account in the RBV, is its nonrivalrousness—meaning that its deployment by one firm, or for one purpose, does not prevent its redeployment by the same or another firm, or for another purpose. On the contrary, deploying knowledge may increase it.

That sounds like a powerful reason for organisations and individuals using knowledge well, in addition to building relationships and generating real value for society. In short — doing great work.

Do you have the capability to differentiate?

As the global financial crisis started to hit law firms half a decade ago (coupled in England and Wales with major regulatory change), there was a sense that this would see off more than a few firms. In fact, whilst there have been some notable failures, and some smaller firms have collapsed or been swallowed up, my sense is that the BigLaw landscape looks much as it did ten years ago (allowing for mergers). Within that group, however, there are significant differences in performance. Some firms have merely survived, but others have thrived. Survival, often on lower profit margins than before, is not a sustainable business model. But what causes the difference — how can firms thrive instead?

Crags, Palace, ParliamentThe short answer is that the most successful firms stand out for some reason. And, crucially, the market must value that.

The marketers call this differentiation. Being different alone is not enough — the difference needs to be attractive.

That just pushes the problem to the next level — how can firms differentiate? And more importantly, how can they sustain the advantage they get from standing out?

While the market was good to firms (which was probably true for most of the last century), it was enough for lawyers to be good at the law and well-connected with clients. That is no longer true.

Almost any form of differentiation depends on good use of the firm’s knowledge. This is not simply knowledge management as firms have traditionally understood it, but development of the firm’s knowledge capability. This is defined by David Griffiths as:

…the ability to deploy knowledge to constantly design, develop, deliver and maintain products and/or services that its current and future stakeholders will find valuable – put another way, an organisation’s Knowledge Capability is an indicator of its adaptive capability (its ability to anticipate (sense) and react to change).

This is more forward-looking than traditional knowledge management, which in law firms tends to concentrate on gathering and redeploying what is already known. That work is still necessary, but it is only sufficient to support survival — no firm will thrive merely by doing what it currently does more efficiently.

Importantly, the knowledge needed for an organisation to thrive is not just that which is known by the leadership. In fact, those at the top are likely to have such a partial view that their knowledge is actually suspect. Hayek made this point in a very different context as long ago as 1945 in his essay, “The Use of Knowledge in Society”:

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.

Hayek’s response to this problem in economics was to argue that only the market can coordinate and value knowledge properly. The alternative for him, a single controlling mind, could not do the job. Unlike Hayek, however, we can see other mechanisms for drawing out what is known and applying it. We can address this as a social problem, rather than an economic one.

This approach requires the firm to use the knowledge of as many people in the firm as possible, as well as to engage with those outside (clients and suppliers). This insight will help define first of all what is important — which things are valued most or will have the greatest impact. Once that is understood, the firm needs to learn about itself — what is it capable of? Only then is it possible to decide what actions might be taken. Those actions need to be testable, so that the firm knows what works and what doesn’t.

It isn’t enough simply to ask direct questions to draw out this knowledge. Lawyers are particularly prone to entrained patterns of thinking, which means that the leadership will only hear what people expect them to want to know. Direct questioning also risks people putting a gloss on their experiences in order to make sense of them. It is more important that decision makers are able to see and evaluate for themselves the experiences reported by a wide variety of people. I use a variety of Cognitive Edge methods, rather than traditional facilitation techniques, as they are much better at showing decision makers what is really going on.

Firms that take this approach, rather than merely copying others or being browbeaten by their suppliers, are likely to find a better niche for themselves and so thrive for longest.

If you are interested in knowing more about the methods that can be used, please feel free to get in touch.

Knowledge as a foundation for innovation

The relationship between knowledge and innovation is an interesting one. Good use of knowledge (in the broadest sense), coupled with openness to novel influences, is essential for successful innovation.

Innovation basics

Innovation is no different for law firms than it is in other sectors. With that in mind, consider David Hepworth’s view (expressed in the context of commentary on the music and magazine industries):

This is a classic case of Hepworth’s Law Of Improvement, which I developed over years of watching people trying to improve magazines. There’s improvement, then there’s the kind of improvement which is recognised by the user and finally there’s the kind of improvement which is both recognised and valued by the user.

Only the third sort is worth the trouble.

The same is true for innovation in law — only value marks out truly useful changes. So, my working definition of ‘innovation’ is ‘an improvement that meets a real need’. That need might be external (improving client service, for example) or internal (where a change in working practices results in improvements to profit).

Law firms might be able to make major improvements by changing the way they work with clients, but I think this is much easier for new entrants to the market (no firm can yet match Riverview or Axiom in this regard, for example). They may also innovate at a much smaller scale by creating new products or services at the practice group level. And then there is innovation in the law itself — providing a new answer to a legal or business problem. This might give rise to a new practice — in the past, IT law, PFI projects, and Islamic finance might have fallen into this category.

Water mill: innovative, then common, now redundantOf these three types of innovation, the last depends on real client need and requires an imaginative lawyer to spot the opportunity. As such, it could occur in any firm (apart perhaps from firms that suppress such imagination…). The other two require the firm to be supportive of experimentation (not all ideas succeed) and change (successful initiatives require old ways of working to be put aside). Experimentation and change are hard for traditional law firms to tolerate, especially when they depend on an annual cycle of budgeting and investment. (This is one reason why new entrants, which can often take a longer view, might have the upper hand.) It also explains why a small number of business-focused changes (legal project management, different pricing models, use of paralegals and other resourcing models) occur in a large number of firms. These improvements are based on business practices outside the law, and so are proven in use. As firms see them introduced elsewhere, they can see the benefits in action and will copy their peers.

Innovation shortcomings

The point about copying was well-made today in Jeremy Hopkins’s analysis of the reported intention of Freshfields to open an office in Manchester as a lower-cost base for some support services and legal work. Jeremy rightly challenges the logic behind this kind of cost-reduction exercise.

It follows that these associates have over the years being doing lower value work than perhaps they ought to have done. More significantly, if these alternative models are successful in achieving their objectives then the result will be less work for them.

This tempts the question how will this work be replaced ? I’m sure the aim will be to win more higher value work, but as more and more firms adopt this model it will become the norm, not a differentiator. They can’t all increase their share of a finite market.

As more firms take this course, the result is likely to be a reduction in numbers of lawyers. And there is little doubt that this kind of resourcing change is fast becoming part of the standard toolset for law firm management. As Jeremy points out:

As firms follow the crowd and join the queue to set up their “near-shoring” and flexible resourcing operations, you have to wonder whether they are really looking any further ahead than the firm in front of them ?

Bruce Macewen came to a similar conclusion in one of his Growth is Dead series of articles.

The history of responding to pricing pressure in BigLaw through “innovation” has been almost exclusively the story of labor market arbitrage. We have never gotten serious about changing the way we work.

By “labor market arbitrage,” I mean finding (a) cheaper people; (b) cheaper locales; (c) cheaper career paths; (d) cheaper offices, or some combination of all of these, to be able to deliver a service of indistinguishable quality for less. This works, and for awhile it gives clients what they want. But it has a few intrinsic limitations:

  • These savings are one-off’s. You can only move certain people out of midtown Manhattan once, and you can only introduce the non-partner associate track once.
  • There are virtually no barriers to entry in the labor market arbitrage business. If AmLaw firm A can do it, so can AmLaw firm B, C, D,…—not to mention the Pangea3’s and Integreon’s of the world.
  • Finally, “arbitrage” only succeeds as a profitable strategy, in equity and fixed income markets and in lawyer labor markets, so long as there are inexplicable price differentials. Once those “inexplicable” price differentials have been ironed out of the system and all that remain are fair, supply/demand driven, price differentials (based on quality, responsiveness, consistency, reputation, or other variables clients will pay for), there is no further profit to be made.

I challenge you to name one so-called innovation in our industry, introduced in the name of cost-cutting and efficiency, that has not at root been an exercise in labor market arbitrage.

Real innovation in law firms is, I think, fairly rare and poorly understood. Firms also seem to be oblivious of the shortcomings of their logic in pursuing the kind of development that Bruce MacEwen so neatly skewers. My suspicion is that their vision is too narrow — they think only in terms of the impact of the changes they make. They aren’t considering wider market changes in the way that Jeremy Hopkins does so succinctly.

Using knowledge and insight to improve innovation

I find it intriguing that law firms appear to be constantly surprised by the novelty of things that other professions have been doing for some time. If I were responsible for conferring innovation awards, I would take a dim view of lawyers reworking something that accountants or management consultant have been doing for years.

I think this lack of imagination is a result of firms being inherently poor at understanding how they fit into the wider legal and commercial world. This is not to say that individual lawyers lack that insight — quite the opposite, in fact. Rather, few firms have any mechanism for accessing and using the knowledge that their people have.

The historical position of knowledge management in law firms (generally expressed in resources like precedents, training programmes, and know-how repositories) was to make sure that lawyers could do work of the same type more effectively the second/third/fourth… time. That is still important, and is itself the subject of innovation (by using established knowledge more intelligently in the form of automated documents, client self-service products and so on). However, these activities are inherently backward-looking. A firm that wants to do something genuinely new must learn to access knowledge that is less visible and combine it with other insights to create something that hasn’t existed before..

One example: the development of PFI contracting in the 1990s meant that lawyers had to combine a range of knowledge sets — long term commercial contracting, public sector advice, finance, and so on. Few individual lawyers could cover these topics, so the firms that managed to build successful practices in this area over the following decade tended to be ones where someone spotted the opportunity (a knowledge skill in itself)), could find and combine the relevant expertise (knowledge location within the firm (and possible externally)), and present it meaningfully to potential clients (requiring client insight). Similar processes apply to other novel areas of practice. (And of course, the novel soon becomes commonplace — many firms now have a capability to support major projects, not just those that were early to the market.)

Sometimes it is simpler — a client wants to do something novel with their business and so they will push their lawyers to develop new legal instruments to make that possible. Those lawyers need to be able to identify and make use of the most sensible components from the knowledge that exists in the firm (and possibly make some new ones up). The easier it is to do that (which is one of the purposes of knowledge management) the better the result for the client.

Left to their own devices, good lawyers will come up with good new ways of working with their clients. Better, more consistent, results come when the firm has established tools, techniques and processes to make it easier for good lawyers to follow their instincts and for others to reach the standard of the good ones. That’s why knowledge management is like farming — left to their own devices, livestock will breed and produce useful progeny. Carefully managed breeding will improve the quality of the herd or flock, so no modern farmer allows nature to take its course. No modern law firm should rely solely on the instincts of their people — they need to intervene to improve performance.

Firms that can find ways of pooling and using the knowledge that all their people have — of their clients and their markets, of the legal market, of legal change on the horizon, and of the capabilities and limitations of the firm itself — are much more likely to be able to develop a coherent strategic response to the challenges they face. That response is likely to have innovative components, in that it results from the unique combination of factors present in that firm and its client base.

My sense is that firms are only slowly waking up to the possibilities presented by a more forward-looking approach to understanding and developing their knowledge. For some law firms, this is a very different way of thinking about knowledge management for law firms. Unsurprisingly, it is not unknown in other sectors. For example, this weekend I came across an interesting summary of 64 different ways for news sites to present their stories. How many firms could come up with 64 ways of working with their clients (they don’t all have to be sensible)? How many firms would open up such a process as widely as they possible, to attract insights from as many different people as possible? How many firms could actually express their need for change in such an easily understood way? (As always, get in touch if your firm is interested in getting better at this.)

Good innovation comes from a broad perspective on the world, an openness to novel insights and influences, reliable access to knowledge and insights across the firm (and from outside — clients and suppliers), and an organisational expectation that these should all come together coherently. That demands forward-looking knowledge management coupled with processes to support experiments in doing things better.

Knowledge insights from Atul Gawande’s Reith lectures

Annually since 1948, the BBC has broadcast a short series of lectures named in honour of its founder, Lord Reith. This year’s series is being given by Atul Gawande. Although his subject is the nature of progress and failure in medicine, the two lectures delivered thus far resonate way beyond that field. I want to pick out a few points here from those two lectures in that they relate to the way we deal with knowledge in our work. The remaining two lectures have a slightly different focus, so I may look at those in a later post.

Lecture 1: Why Do Doctors Fail?

(Audio | Transcript)

At the heart of Gawande’s first lecture is an article published in the first issue of the Journal of Medicine and Philosophy in 1976: “Toward a Theory of Medical Fallibility” by Samuel Gorovitz and Alasdair MacIntyre. As Gawande summarises:

They said there are two primary reasons why we might fail. Number one is ignorance: we have only a limited understanding of all of the relevant physical laws and conditions that apply to any given problem or circumstance. The second reason, however, they called “ineptitude”, meaning that the knowledge exists but an individual or a group of individuals fail to apply that knowledge correctly.

In addition to ignorance and ineptitude, however, Gorovitz and MacIntyre identified a third cause of failure:

they said that there is necessary fallibility, some knowledge science can never deliver on. They went back to the example of how a given hurricane will behave when it will make landfall, how fast it will be going when it does, and what they said is that we’re asking science to do more than it can when we ask it to tell us just what exactly is going on. All hurricanes are ones that follow predictable laws of behaviour but no hurricane is like any other hurricane. Each one is unique. We therefore cannot have perfect knowledge of a hurricane short of having a complete understanding of all the laws that describe natural processes and a complete state description of the world, they said. It required, in other words, omniscience, and we can’t have that.

This necessary fallibility is akin to, if not the same as, the complexity that I described in an earlier blog post here.

Interestingly, Gawande chooses not to focus on necessary fallibility, but on the other two components. In particular, he is concerned that there is an uneven distribution of capabilities:

But the story of our time, I think, has now become in a unique way as much a story about struggling with ineptitude as struggling with ignorance. You go back a hundred years, and we lived in a world where our futures were governed largely by ignorance. But in this last century, we’ve come through an extraordinary explosion of discovery and then the puzzle has become not only how we close the continuing gaps of ignorance open to us but also how we ensure that the knowledge gets there, that the finger probe is on the right finger.

There’s a misconception I think about global health. We think global health is about care in just the poorest parts of the world. But the way I think about global health, it’s about the idea of making care better everywhere – the idea that we are trying to deploy the capabilities that we have discovered over the last century, town by town, to every person alive.

I think something similar is at foot in relation to legal knowledge. Those of us who work on improving knowledge within law firms often focus on the things that look hard — understanding new cases and legislation, for example — but in fact clients would get better value if their lawyers thought more carefully about the laws and processes that they take to be straightforward. Reducing ineptitude within firms is arguably more important than attempting to eliminate legal ignorance. Equally, there is much to be gained from spreading awareness of the law more widely outside law firms. This is an area where I see a number of technology-based enterprises at work, as well as the work of the National Archives in opening up the UK’s legislative archive.

Lecture 2: The Century of the System

(Audio | Transcript)

Atal Gawande’s second lecture draws heavily on his book The Checklist Manifesto. I thought I had already written about this book on the blog, but it turns out I haven’t. It is probably too late to do that at length now, since the concept has found its way deep into business culture. For example, we put it at the heart of some of the risk and quality work that I supported in my last firm.

What the lecture brings out is an emphasis on the checklist as a systematic tool, rather than a personal guide. This is present in the book as well, but when one hears Gawande speak the focus is unavoidable.

One of my colleagues said that “we are graduating from the century of the molecule to the century of the system.” And by that what he meant was that we’ve gained an enormous amount in the last century by focusing on reducing problems to their atomic particles – you know discovered the gene that underlies disease or the neuron that underlies the way our brain works or you know the super specialist that can deliver on a corner of knowledge – but what we’re discovering is that we graduate into the future, we are faced with a world where it’s how the genes connect together that actually determine what our diseases actually do. It’s how the neurons connect together and form networks that create consciousness and behaviour, and it’s in fact how the drugs and the devices and the specialists all work together that actually create the care that we want. And when they don’t fit together, we get the experience we all have – which is that care falls apart. The basics end up being known, but they’re not followed.

And so we were approached by the World Health Organisation several years ago with a project to try to reduce deaths in surgery. I thought how can you possibly do that? But it was in exactly the same kind of problem – the basics were known but not necessarily followed. And so we worked with a team from … from the airline industry to design what emerged as just a checklist – a checklist though that was made specifically to catch the kinds of problems that even experts will make mistakes at doing. Most often basically failures of communications. The checklist had some dumb things – do you have the right patient, do you have the right side of the body you’re operating on, have you given an antibiotic that can reduce the infections by 50 per cent, have you given it at the right time? But the most powerful components are does everybody on the team know each other’s name and role, has the anaesthesia team described the medical issues the patient has? Has the surgeon briefed the team on the goals of the operation, how long the case will take, how much blood they should be prepared to give? Has the nurse been able to outline what equipment is prepared? Are all questions answered? And only then do you begin.

The outcome of this work was a huge reduction in complication rates (down 35%) and deaths (down 47%). The system has been shown to have saved 9000 lives in Scotland alone.

The lectures are followed by an opportunity for the audience to ask questions, and it is here that some of the most telling points were brought out. In response to a question from an operations manager at Heathrow Airport, Gawande highlighted a point about complexity and the limitations of expecting everyone to know their own job.

In fact in order to even come at how we would attack this question in surgery, what we did was we brought in the lead safety engineer from Boeing to come with us. He didn’t know anything about healthcare, but when he saw the way that we even approached the problem of improving outcomes in surgery, he was sort of baffled, you know, that he would watch how I went into an operating room and I’d go into an operating room and I’d just start operating. And he said, “Hold on a minute. Is this really what you do? You don’t … Have you made a plan with every …” “Everybody knows what to do. They all know what to do. You guys know what to do, right?” “Oh yeah, yeah, yeah, we know what to do.” And then we’d watch one thing fall through the cracks and then another and then another. It took him only a moment to step back and say, “You all need some basic communication systems around the idea that a team has to be effective at what they’re doing.” So I think that there are lessons very much coming from other fields.

Here’s the big difference. There are two people in a cockpit trying to make something happen and in many clinical environments it’s many more than that. My mother went for a total knee replacement and I counted the number of people who walked in the room in three days and it was 66 different people. And so the complexity of making 66 people work together – you know you’d have the physical therapist walk in in the morning and they’d say, “What are you doing in bed? You should be out of bed.” And the physical therapist would come in the afternoon and it would be a different person and they’d say, “What are you doing out of bed? You should be in bed.” This is still where we are.

And responding to a suggestion that checklists might ossify and hinder innovation:

That’s precisely the danger. So there’s the bad checklist and the good checklist, right? So the bad one is one that turns people’s brains off. More often than not, the effective checklist – ask people questions that they have to discuss and get their ideas forward – and that was out of a scientific process that we identified and it’s made in ways to help an expert be even better at what they do.

For me, those are the two lasting insights from the lecture. First, checklists need to be as much about communication as they are about giving instructions. And, second, checklists should be structured to draw out additional thought and contributions by the team using them. Both of these insights can usefully inform practice in a range of areas (including the law) and would be sensibly applied in the generation of knowledge materials — whether those come in the form of checklists or otherwise.

Learning and developing

One of the things that comes across clearly in both of these lectures is a commitment to nuanced learning. Like most of his fellow physicians, Gawande is clearly keen on increasing his personal knowledge within his field and beyond. Both lectures depend on insights from other people’s published research, and Gawande shows how those insights have more general application. However, it is obvious that he isn’t interested just in the knowledge. He wants to be able to to express ideas clearly to others, and he does this really well with a coherent narrative thread running through each lecture (this continues in the later lectures too). Finally, he is alert to the way knowledge informs practice. The second lecture is based on a paper describing treatment procedures for hypothermic victims of drowning. However, Gawande extracts from this highly-specialised situation a set of principles that might be relevant to any complex treatment.

Gawande’s approach thus has the following characteristics:

  • Breadth of input
  • Evidence-based narrative
  • Thoughtful generalisation
  • Relevant conclusions

Each of those factors increases the immediate and lasting value of the final product to the listener or reader.

Thinking back to some of the knowledge content for which I have been responsible in the past, I am not sure that much of it was as well structured as Gawande’s lectures. As a result it probably had much less value than it could have done — certainly not lasting value.

It’s a good standard to aim for.

A little data (and emotion) about musical experience

One of the novelties of our connected world is the amount of data that can be collected. This may be a worry when the collector is unknown or untrusted, but it can also be an opportunity if one has access to the data oneself — especially when one might have no other record available. At the very least, it gives an insight into the way larger datasets might be used.

I signed up to last.fm ten years ago today. From that moment, almost every time I listened to a piece of the music, the fact was recorded by the service (a function they call ‘scribbling’). There are some gaps: I didn’t use it assiduously in the first few months, and the service itself didn’t timestamp scrobbles until later in 2005 (my first timestamped scrabble was on 18 December 2005, but music played before that is still included in the overall statistics). Apart from that, any music played on my iPod or in iTunes was captured. Also, as other services and devices became available (such as the iPhone and Spotify), they also sent data to last.fm. However, I have no record of CDs played other than through iTunes, nor of music heard on YouTube.

lastfm

So, I can say with a degree of certainty that in the last ten years, I have listened to over 134,000 tracks performed by over 5,000 different artists. I can also see which tracks, artists and albums I have heard most frequently.

There are some other things that I can do with the data, thanks to various tools  developed using the last.fm API. All this is very satisfying for the side of me that treasures useless information and therefore does quite well at general knowledge quizzes. I can even compare myself with others, and I am sure that information about patterns of listening could be useful to the music industry more generally. (That is one inference that can be drawn from the purchase of last.fm by CBS in May 2007.)

But, on reflection now, all this just leaves me cold.

Last.fm cannot tell you why I was listening to La Traviata, Leonard Cohen and Dave Brubeck in the week ending 21 May 2006, any more than it can say why this week last year resounded to Goldfrapp, Maria Callas and Sidney Bechet. Nor can I. There might be an interesting story there, but it cannot be told without additional prompts (such as might be found in my emails or notebook, and possibly not even then).

That is the problem. The real story — real knowledge — is as much emotional as analytical. And data cannot give access to the emotional truth. Given enough data, we might be able to see that something happened at a particular moment in time, and even what else was going on, but it cannot tell the truth of that moment.

This is the real challenge for data analytics (whether of ‘big data’ or otherwise). The analysis itself may be flawed because of the necessary exclusion of unmanageable information (the human factor). Even if perfect, the way a piece of analysis is received is also unpredictable (another human factor). Some people may react badly to what the data appears to be telling them. Some may react well, but act inappropriately.

I think this imposes a burden on those engaged in data collection and analysis to work carefully on understanding its limitations and its potential impact. I have read many excited articles and heard many breathless presentations about the power of data to make our lives better. I have rarely heard anyone refer to the corresponding responsibility to be sure that things won’t be made worse. That requires emotional intelligence, which is a purely human capability.

Data on its own will solve nothing.

Shown from a different angle

It is rare to be able to have one’s views played back by a professional. I was fortunate to have that experience recently, when I was interviewed by a journalist for a profile in The Partner magazine.

Actually, the interview itself was not the most interesting bit (mainly because I just enjoyed myself talking about the things that interest me about knowledge management and law firms.) The final article, however, was the first chance I have had to see how my views look when summarised and presented by someone else.

The article was published earlier this week — it’s a good read.

partnermag

Many thanks to the folks at Netlaw Media for asking me to do this, and to Grania Langdon-Down for writing a great piece.

Knowledge what (management or capability)?

Earlier this week, David Griffiths published a thought-provoking post summarising the current state of organisational knowledge management. He highlighted some real concerns, but his conclusion is a positive one.

The past needs to be forgiven, treated as a learning experience. The future is about Knowledge Capability. This requires a change in mind set. Knowledge Capability is not about managing a resource. Knowledge Capability is about embedding, developing, sharing and, most importantly, activating a resource by better coordinating emergent conditions.

This means expanding understanding, influence and integration in such a way so as to enable people to develop as sense makers, problem solvers, decision-makers, collaborators, managers and leaders.
People can choose to ignore the inevitable, but, to remain relevant, this is the future. Knowledge Management maybe dying a slow death, but Knowledge Capability is alive and kicking!

The history of KM is littered with the dreary battles about nomenclature. I have no intention of starting another one. (And nor has David, I think.) I am, however, torn between redefining an existing term and inventing a new one. In the end, both demand a similar effort.

I think the best one-line definition of ‘knowledge management’ is Nick Milton’s:

“Knowledge Management” is “Management with a focus on Knowledge”.

Management is what we do to make organisations work; to make them prosper and succeed. And if we don’t manage with knowledge in mind, then they won’t prosper and succeed to the same extent.

This gives a clear message to be delivered when discussing ‘KM’ or ‘knowledge management’. Often, however, people hearing that term bring their own (mis)understanding to it. Typically, they start with an analogy to information, document or records management, where the phrase refers to a thing (which is often understood as being close to knowledge) that needs to be managed. As a result, those arguing for a more nuanced meaning must first wrestle it away from often basic conceptions of classifying, storing, retrieving and organising. Worse: those activities tend not to be highly valued by organisations, and that affects the perception of value that might flow from intelligent knowledge management.

By contrast, organisations also manage with people in mind, or money, or customers/clients. Those functions (HR, Finance, and Sales/Marketing) tend not to use the term ‘management’ at all. People also understand better the value that they provide for the business — often to the point that they are represented directly at the most senior level.

The other business disciplines are better developed and understood than knowledge management. This is an ideal opportunity to reframe people’s understanding of our work. Referring to ‘knowledge capability’ can help to do this — it is much clearer about what will change as a result. It also refocuses away from the possibility of managing knowledge towards making changes in organisational practices and people’s behaviour.

In its early days, knowledge management grew out of information management and technology. It is not surprising that those fields still affect the way people still perceive the discipline. Newer influences — such as psychology and other behavioural sciences, organisational design, strategic management — have given KM a role that should place it much closer to the heart of the organisation and the way people work.

This video by Patrick Lambe illustrates this journey. He describes a project to create a set of competencies that is clearly distinct from historic descriptions that were rooted in information management.

[vimeo 86395864 w=508]

The focus in Patrick’s work was on people and how they worked, whereas the TFPL material he describes is rooted in the way knowledge and information might be treated. (That material appears no longer to be available from TFPL.)

For me, that is the heart of the way modern knowledge activities should be appreciated. They prioritise how people work towards improving the success of their organisation — using knowledge. The older approach (which can still be seen in some places) thinks first about knowledge and what might be done with it, rather than organisations or people.

 If you want to move your firm towards better use of knowledge, please get in touch.