“Some people see innovation as change, but we have never really seen it like that. It’s making things better” – Tim Cook, CEO of Apple
Having held the position of Moore Legal Technology’s operations director for over five years, I have learnt a tremendous amount about what it takes to plan and implement a culture of operational excellence.
Many of the insights we have gained and indeed use in practice for our agency to help our clients and our business succeed are relevant to the law firms we work with, so we thought we’d give something back by writing a series on our ‘Operational Excellence Insights’.
We aim to publish new operations-related insights regularly, with topics ranging from culture, organisational structure, outsourcing, project management and processes to time tracking, resource management and training.
We hope that these insights pieces will be of interest to law firm leaders and indeed decision makers at all types of professional services firms. Not only will we be sharing these on Legal Futures and our blog but will also be sharing to those who have connected with us on Twitter and LinkedIn.
Why you should improve your firm’s operations
“Operational excellence is the difference between inefficient execution and streamlined output at scale” – John Fildes
If you are in a leadership or decision-making position in your firm, you should aim to achieve a state of operational excellence for the following reasons:
- To grow your business;
- To maximise the resource you’re paying for (i.e. employees/contractors) – you wouldn’t want to be paying for more resource than you need due to any inefficiencies in your processes;
- To allow you to be much more focused on the numbers, so that every important decision made is based on stats/numbers, not guesswork;
- To ensure you’re not unreasonably demanding too much of your people, in which case you can work out where resource needs reallocated or brought in from elsewhere;
- To maintain and improve on a healthy net profit margin;
- To increase efficiency across the team to the highest possible point to be generating the biggest possible return; and
- Ultimately to allow your firm to succeed in extremely competitive markets.
Top 10 tips for operational excellence
In this first blog in the series, we explore 10 of the best tips to improve your firm’s operations:
1. Know your firm
How much do you and your team know your business? Your vision, mission, culture, brand, business plan etc?
Are these written down and shared with relevant people in your team or closed off to all but the most senior key stakeholders? Or indeed, does this information exist only in their heads?
Ask all of your staff to deliver an elevator pitch for your firm, for instance, to find out if everyone is singing from the same hymn sheet – the results may be surprising.
If all of your employees aren’t pulling in the same direction, you will be less likely to achieve your goals. In a discussion with Dharmesh Shah, Elon Musk provides a great analogy of every person in a team being a vector. They each have direction and magnitude. When everyone is focused on the same direction, their magnitudes add up and show how much progress your company is going to make.
On the other hand, when people have degrees of variation, these can decrease the maximum amount of productivity that can be achieved.
2. Know your clients and their needs
Knowing your clients inside out give you a real competitive advantage. Why are they choosing your services? How can you add value?
He writes: “[I]f my clients give me the message, unless I am terminally stupid, I sit up and pay attention. A hallmark of the most successful firms is that they engage constantly with their clients to develop a forensic understanding of what great legal service looks like to them.
“I am unashamedly evangelical about this. At the forefront of client engagement when I was in practice, and now helping many different firms, I have seen at first hand how it strengthens relationships, fends off competitors and creates new opportunities.”
For us, helping law firms to grow, we need to know the legal sector inside out, with many of our team having worked in or for law firms previously. But relying on that alone isn’t enough. Developing relationships and meeting and speaking to our clients regularly gives us the required insights into their firms to assess their needs – particularly at the outset of an engagement.
For example, we knew from visiting a client’s offices that their enquiry-handling processes didn’t appear to be up to scratch – so if we generated significantly more enquiries for them, it would probably crush their existing processes and lead to a high number of leads not being converted into clients for the firm.
Knowing this to be the case, we took pre-emptive measures to deliver sales/enquiry-handling training to the firm to remedy their processes before really increasing the amount of new business being brought into the firm.
3. Adapt to change quickly
Speed in adapting to change and in improving your main products/services is of the utmost importance. As Eric Schmidt and Jonathan Rosenberg of Google note in their book How Google Works: “Product development has become a faster, more flexible process, where radically better products don’t stand on the shoulders of giants, but on the shoulders of lots of iterations. The basis for success then, and for continual product excellence, is speed.”
Focusing on the quality of your offering to the extent that you provide an outstanding product/service that delights your clients means they will be much more likely to buy from you again and refer you to their friends and family.
In today’s competitive environment, providing a mediocre quality of product/service that doesn’t generate results and doesn’t wow your clients isn’t likely to produce repeat business or valuable referrals.
As per a blog from GE Automation on many businesses’ operational excellence journeys: “[P]roduct quality [is] one of the top strategic objectives for so many companies surveyed…
“Both ISO 9000/9001 and Six Sigma are specifically focused on quality and are two of the three most broadly adopted management systems across industries today. In each case they provide a set of measurement, continuous improvement, variability reduction, and accountability tools to ensure quality is being addressed in operations, and are a critical component of a company’s overall Operational Excellence program.”
To improve your firm’s services, one of the first steps to take is to ask your clients regularly for feedback and act on such information quickly.
5. Improve constantly
Whenever a new employee joins Moore Legal Technology, the first book they have to read is Legacy by James Kerr (a book about the secrets of success of the All Blacks, the world’s most successful sporting outfit).
One of the lessons this teaches for how to build a high-performing team is that you should embrace the aggregation of marginal gains: “Don’t try to do one thing 100 per cent better — it’s about doing 100 things a small degree better.”
Some law firms tend to be resistant to change, to the extent that changing even one thing can be a significant hurdle. In a particularly challenging legal services market, those firms that can build a culture of constant improvement and constant change in line with the expectations of their clients are those most likely to thrive.
6. Appreciate your staff
In any professional services firm, your staff are some of your most valuable assets. Employees who are appreciated are more likely to be engaged in your firm’s mission and goals.
And those who are highly engaged are more likely to be much more productive (as much as 22% in some cases, according to the Harvard Business Review).
7. Avoid complexity where unnecessary
As leading marketing entrepreneur John Fildes notes: “Less is more when it comes to effective marketing operations. The more you can downsize tools, agencies, and process, the more you reduce operational complexity. Your target should be the minimum set of tools, agencies, and process required to do what your team needs to do, at the scale they need to do it – that’s it.”
This has worked well for our team – yes, it’s good to be constantly trialling a variety of tools to see what works, but you can’t take a scatter-gun approach in the long term.
Some might also say that our 150-step standard process for the design, build, optimisation, launch and ongoing marketing of an online business generation platform is overkill, but with comprehensive feedback from our team, the steps we’ve chosen as part of this are what we deem to be the minimum number required for a successful product for our customers.
8. Find the bottleneck(s) and eliminate them
In a blog post on The Military Leader, Philip Gift explains the issue of bottlenecks in any organisation succinctly: “By viewing a problem through an operations research lens and breaking down the assembly line into its key components, the slowest point can be discovered.
“Once this point is discovered, a fix can be put in place that would eliminate this bottleneck and allow the assembly line to increase productivity.”
Or as Tim McMahon, founder and contributor of A Lean Journey Blog, notes: “The roots of a bottleneck focused approach in operations management can be traced back to the days of Henry Ford. He understood that the workstation with the maximum processing requirement, denoted as the bottleneck, would constrain the output of the system.”
The late Eliyahu M Goldratt, a thought-leading business management consultant, goes into great depth on the subject of bottlenecks in his book The Goal.
What The Goal teaches is that you must first start with what your firm’s goals are, then work to see what action is required. Within the book (a work of fiction), the main character discovers that one of his business’ main goals is to make money.
What follows is a sweeping aside of artificial reports that seemed great on the face of it, but which were actually losing the business money, with some tasks being done just for the sake of making management reports look better.
After studying this, we ourselves noticed that one of the biggest bottlenecks in our processes was, surprisingly, some of our own customers – those who weren’t delivering prompt feedback on design mock-ups, new content, new builds etc.
Identifying this bottleneck helped us develop a tailored solution which involved more effective follow-ups and proactive steps. After all, our customers – lawyers and legal marketers – are busy people, so we need to be playing our part to make their lives as easy as possible while still delivering results.
To be able to generate a greater amount of money for our customers using the internet, we needed to get things moving as fast as possible. To track performance of our solutions, we put in place KPIs (such as average time for new platform launches).
Within a law firm, there may be bottlenecks right under your nose without you realising. Even at the outset of a legal transaction, perhaps, money laundering checks involving acquiring ID from your client, may hold up the process by several days.
Or perhaps trainee solicitors may be causing undue delays because of their relative lack of experience, in which case helping them use standardised processes/templates or delivering more effective training could be effectively eliminate a bottleneck.
9. Use metrics to work out how well your teams are performing
If you can’t measure it, you can’t improve it, as Peter Drucker noted. Over time we have created and refined (and indeed are still improving) an operations dashboard for our business which has a wide range of relevant KPIs across all of our core business functions and teams.
Most law firms now use sophisticated case management software. One of the most common KPIs for employee/team performance is the number of billable hours. But there may be other more sophisticated KPIs that are overlooked – such as number of complaints per team (broken down by types of complaints), number of deals done, cases won etc.
10. Outsource more effectively
No one can do everything in a business themselves – indeed, that’s why there comes a point when more senior partners, leaders and even lower-level managers in firms need to take a step back from doing certain types of work themselves.
Outsourcing (i.e. hiring another firm to conduct specific operations) can offer a great way for firms to reduce cost and improve quality across a broad range of types of work, not just legal work (as explored below) but also HR, marketing, branding, IT and more – but only if done in the right way.
In the legal sector, there is a growing trend towards outsourcing various types of legal work, not just certain pieces of highly specialist work, but also more routine work.
Leading commentator on the future of legal services, Professor Richard Susskind, notes that “routine, repetitive, process-based, and administrative work will be conducted through a variety of alternative sources – for example, by legal process outsourcing, near-shoring, off-shoring, sub-contracting to lower cost law firms, and so forth”.
Sometimes other companies are better at delivering a certain product or service than your firm ever could be for the same cost. You could, by outsourcing to a specialist provider, have many people effectively working for your firm for what would be the cost of one in-house employee.
One of the main challenges is to ensure that you regularly communicate with any outsourced supplier to ensure they understand your firm, including your brand, mission, values, strategy etc and to tailor their offering to your specific needs.
When Tim Cook started to improve Apple’s operational processes, he immediately focused on ensuring suppliers had more relevant, better instructions. Apple would even send key people to meet suppliers for months at a time to ensure they could deliver the right product.
You can read more about how he achieved this in this piece ‘Apple, Inc.’s Operational Excellence Is Mind-Boggling’.
As an example from our operations team, when we starting outsourcing a certain repetitive technical process for the building of our platforms, we agreed a detailed specification for what we required.
Then, after several months of trialling the supplier, we sent them an even more detailed, refined specification. We continue to do this regularly to ensure a high quality of final product and to ensure we aren’t wasting any resource going back over work that should or could already have been done by them.