A blog by Joel Barolsky of Barolsky Advisors

Posts Tagged ‘business’

Are your practice groups primed to win?

In Articles, Commentary on 26 April 2017 at 8:23 am

If each of your practice groups is primed to win, then there’s a pretty good chance your firm will win as well.

With this in mind, there’s much benefit to be derived by assessing all of your practice groups on two dimensions:

  • A winning strategy – from strong to weak, and
  • Execution capability – from strong to weak.

If most of your practice groups are in the weak-weak quadrant, perhaps it’s time to take that call from the headhunter. If all the groups are strong-strong, don’t change a thing! If you have a mix of everything, it’s time to get to work…

A winning strategy

There is a range of factors to take into consideration to assess whether a practice group has a winning strategy for the next three years:

  • Does the practice have clear aspirations to win? Is there a stretch intent?
  • Are they competing in sizeable, growing and profitable market segments?
  • Does the practice have a compelling value proposition, that is, clear reasons why clients should choose them over others?
  • Does the practice have a profitable and sustainable business model? Bonus points if the model is scalable.
  • Is there a Plan B if non-traditional competitors strengthen?
  • Are there pilots and experiments in place creating options for future growth?
  • Is there a clear implementation roadmap with accountabilities, measures and timing?
  • Is it clear what they say ‘no’ to, and why?

Execution capability

On paper, the practice group might have a world-beating strategy but it may not have the skills, resources and systems to implement it.

a cup of coffee on the wood table.cafe latte with tulip latte art pattern on the wooden background.

Source: fotolia

The first, and most important, the question is whether you have the right practice group leader. Is she a true leader or merely a convenor? Does she lead or just manage? While she might seek to lead, does she have loyal followers? Does she have the ability to inspire and support team members to be their best? Is she strong enough to stand up to the recalcitrants?

Other questions to ask around execution capability:

  • Is the team a real team or just a loose coalition of colleagues?
  • Does the team generally follow-through on their commitments?
  • Does the team own its strategy and take accountability for it?
  • Does the team have the right talent necessary to win, now and in three years time?
  • Does the group have access to the right technology, processes and systems to underpin its business model?
  • Is there sufficient open-mindedness to adapt to new inventions and work methods?
  • Are there mechanisms in place to regularly review progress and tweak their plans?

The portfolio

While it’s important to assess the competitiveness of each practice, there’s also a lot of value in assessing the inter-dependencies, synergies and gaps across the portfolio. Another portfolio overlay is the amount of partner equity allocated to each group and expected ROE (return on equity).

A review of the portfolio should indicate which practices require investment, divestment or just be maintained. Handling the politics of these decisions is a topic for another post, or three.

In conclusion

While a firm is more than just the sum of its parts, the parts play a critical role in sustaining success. Your firm’s strategy needs to reflect firm-wide themes like overall market positioning, culture, brand, strategic clients, talent, R&D, infrastructure and support. It also needs to deep dive into the practice portfolio, making sure each plays its part and leverages the strengths of the whole.

Firm purpose. Seven options.

In Articles, Commentary on 5 April 2017 at 12:45 pm

I’d highly recommend Jordan Furlong‘s new book, “Law is a Buyer’s Market – Building a Client-First Law Firm”.

Furlong argues that firms should answer ‘the why?’ question with a statement around creating client success. He states that this approach is congruent with the pursuit of professionalism and will enable the firm to withstand the challenges of increased competition and rapid technology change. Furlong suggests that firms adopt a client-centric purpose statement, something like, “our firm exists to serve the interests of clients in our chosen markets by addressing their legal challenges and opportunities so that those clients can achieve their objectives”.

Cups of coffee on blue background

Source: fotolia

Last weekend I had the opportunity to road-test Furlong’s recommendations in a client strategy workshop. It became clear quite early on in the workshop that while there was strong resonance with a client-centric purpose, it didn’t tell the full story for this firm. They felt that defining purpose solely on clients risked making them client-compelled in areas like pricing and write-offs, and, interestingly, less likely to innovate. They cited numerous examples of innovative ideas that didn’t come directly from clients expressing their needs, but rather from an intrinsic desire to do better than competitors.

To help things along, I presented SEVEN related, yet distinct, purpose statement option:

  1. Client-centric: our firm exists to make our clients more successful.
  2. Business-centric: our firm exists to maximise returns to shareholders.
  3. People-centric: our firm exists for our partners and staff to practise their craft, earn the respect of their clients and peers, and make a good living. In short, the firm is about fun, fame and fortune.
  4. Community-entric: our firm exists to add value to the communities we serve.
  5. Benefit-centric: our firm exists to reduce and manage risk.
  6. Quality-centric: our firm exists to make all other firms look second-rate.
  7. Innovation-centric: our firm exists to set precedent, break new ground and pioneer new products and processes.

I’m happy to report that we came up with a hybrid version that everyone was very excited about. Sorry, I can’t share it here in this post.

Which one of these options, or combination, best describes YOUR firm’s purpose?

Is 2017 the year the fat smoker quits?

In Articles, Commentary on 19 December 2016 at 12:38 am

Eleven years ago David Maister published a brilliant article on the barriers to strategic change in professional service firms. In Strategy and the Fat Smoker, he stated…

Much of what professional firms do in the name of strategic planning is a complete waste of time, no more effective than individuals making New Year’s resolutions (to lose weight or give up smoking).

David argued that most firms were far too successful to seriously consider any radical shifts in strategy. He stated that unless partners faced imminent existentialist threats, equivalent to cancer or a heart attack, they were just going to pay lip-service to a strategy that involved any sort of change.

Much of what I’ve read and experienced as a strategy advisor affirms David’s proposition. But is 2017 going to be the year the fat smoker quits?

Early signs

Over the past six months I have been involved in a significant strategy project in a 100+ partner law firm. One thing that has struck me about this project compared to many others, is the degree of partner engagement in the process. They’ve all turned up. What’s more they all turned up with their their phones turned off. They’ve all seriously tackled the questions of where they will play, how they will win and what change is needed. It’s still a bit early to see if they will execute on their plans, but the early signs are positive.

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Source: Shutterstock

In undertaking the research for the 2016 Thomson Reuters Peer Monitor Melbourne Law School report, I counted more than 25 case studies of established Australian BigLaw firms launching new services, business models or joint venturing. Each one of these changes would have had to pass through a vote of partners. This points to a resolve to innovate AND, more importantly, the ability to follow-through.

The typical resistors to change are very well document, but I think there are three factors that might make 2017 the year of slimmer, healthier professionals.

#1 Transformed leaders

“Company transformations accelerate when a critical mass of leaders transform themselves… Insight is the first step. Choice is the second step. Practice is the third step.” Carolyn Aiken

It’s a big call, but I think many of Australia’s professional service leaders have begun to transform themselves. They are going through the personal change journey of rejection and denial, through to acceptance and commitment. Many have seen the writing on the wall, challenged their beliefs and sought to reinvented themselves. This has in turn has led them down the path of changing the people around them and crafting a new strategy and culture for their firms. With a stronger guiding leadership coalition, firms themselves are in a much better position to embrace change.

The evidence for my transformed leader assertion is not definitive. It’s based largely on the tone and content of discussions at recent conferences, retreats, panels, media comments and blogs. The dialogue at this fabulous Chris Merritt-hosted panel is a clear case in point.

#2 Hip pocket

The 2016 Peer Monitor report indicates lower overall profit per equity partner due, in part, to declining client demand, increased discounting and rising expenses. The data also suggests a wider variation between top- and bottom-earning firms.

For many partners, there is increased pressure to justify their equity status and share of profits. Even a small drop in earnings or a delay in distribution payments, signals the reversal of a long-term trend of growth and abundance. The misfortunes of KWM in Europe have also raised more than a few eyebrows. The hip pocket is now in play, even though at this stage it’s more symbolic than catastrophic.

#3 Client pressure

Leadership guru, Simon Sinek, has a very simple but compelling message: start with why! His view is that success comes from finding an authentic purpose for the firm. The answer to the “why” question in most professional firms is about helping clients succeed, that is, saving clients money, reducing their risk, solving their problems and realising their opportunities sooner. The voice of the client is a big deal in many professional firms. How clients think and feel is a key catalyst for change.

With a shift to a buyers market, more and more clients are speaking their mind and voicing their pains and gains. Many more are asking for their professional advisors to share risk and justify their fees. While this client pressure is not a new phenomenon, 2017 will seek a continuation of this trend and force many professionals to adapt to new models of service and pricing.

In conclusion

The pace of change is only likely to increase in the years ahead. While many commentators paint a picture of doom and gloom, I have a more optimistic view and see clear signs of firms remaking themselves. There are forces at play softening the ground for fundamental and sustainable change. Yes, there will still be laggards, but as Maister concludes…

If we are prepared to rethink how we view strategy and business life, then people can achieve things they never thought possible. If I can become a fit, nonsmoking exerciser, there’s truly no limit!

Postscript

Thank you all my clients, referrers, collaborators and friends for a fantastic 2016. It’s been the best year yet in the life of Barolsky Advisors P/L.  I hope you have a safe and rejuvenating holiday season and a prosperous 2017.

Two-speed firms: the problem and solutions

In Articles, Commentary on 20 November 2016 at 5:22 pm

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“We have a two-speed firm! There’s one group of partners who are ambitious and willing to spend the extra energy necessary to win new business. And then we have another group, who work hard but are broadly happy with the way things are. In reality, they expend far less energy than the first group. The problem is we’re all rowing the same boat. Rowing at different speeds makes us go in circles, not forward.”

Does this sound familiar?

The expectations of partner energy, commitment, speed, fire-in-the-belly, etc. are missed in most strategy discussions. You might have motivational words in your purpose, vision and values statements. Your goals might include stretch revenue and profit targets. But, if you look carefully, there’s nothing there on how much petrol needs to be spent by each individual partner. It is just ASSUMED that every partner will be equally committed and energised.

Five key reasons

I think think there are five main reasons why energy expectations are not adequately discussed:

  1. Remuneration model: the view in some firms is that those willing to invest more will be paid more, and therefore there’s no need to talk about it. The problem is that discretionary reward, on its own, is a very blunt (and lazy) performance management tool. Over time, it entrenches a multi-speed firm.
  2. Measurement: there’s no easy and accurate measure of energy level. Firms may have proxies like billable hours or hours worked, but these measures can be gamed and do not really capture the temperature of belly fire. As firms introduce different business models and new flexible work arrangements these measures become even less relevant.
  3. Confrontation: talking about energy expectations inevitably leads to heated discussions as to whom is contributing more or less. Firm leaders often prefer harmony over harrowing debates around relative commitment.
  4. Autonomy: in many firms partners believe their autonomy is paramount and should not be questioned. As owners, they should be free of “big brother” accountabilities around how and where and how much time they spend.
  5. Outputs over inputs: some people will argue that assessing energy feels like clock-watching – a focus on time spent rather than outcomes achieved.

#1 Focus on partner engagement

The conventional solution to address a two-speed partnership is to shine the light on the “under-performers” and hope that this will shame them into speeding up. This is often coupled with a stern conversation around accountability and the threat of sanctions. In my experience, this approach seldom has enduring success and often ends badly.

An alternative approach is to shine the light on everyone in the spirit of support and development. The idea here is to frequently check-in with the whole partner group on questions like:

  • What’s going well?
  • What’s causing you the most stress at the moment?
  • How’s your team’s strategy implementation going?
  • What support do you need?
  • What are your key priorities over the next period?
  • What things might get in the way of success?

The logic there is that through greater transparency and a more supportive leadership style there will be a positive impact across the board. This approach is aimed at growing the overall pie and reducing dissonance between the fast and the slow.

The reason this approach is seldom attempted, or, if it is, implemented badly, is that it requires the firm leaders to do some serious heavy lifting. It’s practically impossible to do well in medium and large firms.

Until now…

There are a range of new applications, like Jobvibe (an Australian start-up), Wethrive and Culture Amp, that allows for easy frequent check-ins to assess how people are feeling at work, and to identify and resolve issues quickly. The trick is to tailor the questions for professional services and for the partner group in particular, and to run it out of the managing partner’s office, not HR.

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#2 Agree a partner charter

A complementary approach is to agree the social contract between the firm and its partners. As Nick Jarrett-Kerr explains, these partner codes or charters should agree explicit expectations for each partner in regard to :

  1. their dealings with the firm, for example, to accept the spirit and the letter of the firm’s strategy;
  2. their treatment of the firm’s clients, for example, promoting the highest standards of professionalism, truthfulness, integrity and trustworthiness;
  3. their dealings with fellow partners, junior staff members and support staff; and
  4. their personal learning journey and commitment to ongoing development, improvement and innovation.

I’d suggest adding a fifth dimension which describes the expectations around commitment and energy levels.

#3 Team profit contribution

Some firm’s have shifted focus away from individual revenue targets to team profit contribution. Rather than set individual budgets, the core accountability is for the team to deliver a specific profit outcome. Team members need to work through the optimum approach, roles and requisite energy levels. While there are many positives to this approach, it may further entrench silos and factions. It may also hide enduring aberrant behaviour by some individuals.

Call to action

I don’t think there is a magic silver bullet to address the issue of variations in partner contribution. It’s a complex, politically sensitive problem. The key is not to ignore the problem as it festers rage in the fast, and facilitates a victim mindset in the slow. Without active positive leadership, you’re charting course for a circling boat.

Photo sourced from dreamstime.com

5 takeaways from teaching management at the Melbourne Law School

In Articles, Commentary on 31 October 2016 at 7:30 am

“The best way to learn is to teach.”

Cup of hotlatte art coffee on wooden table

Source: fotolia

I had the privilege and pleasure to present the Management for Professionals subject on the Melbourne Law Masters program over this past week. The course covered the foundations of leadership and management within a legal context. Reference material was sourced from Maister, Porter, Kotter, Beaton, Martin, Susskind and Day, amongst many others.

After road-testing all the material in the classroom, my five key takeaways are…

#1 Maister needs an update

David Maister’s famous practice spectrum outlines a range of business models for professional service firms to consider. These include Rocket Scientist, Grey Hair, Procedural and Commodity, which in turn influence the settings on leverage, utilisation, margin and rates.

Maister’s models are still largely relevant in a people-intensive firms, but less so in technology and data-intensive legal businesses. These latter firms clearly price, operate and scale up differently. Perhaps a better business model map – see below – is to have High to Low Complexity on one continuum and People to Tech-Intensity on the other. The top right position is currently vacant, but has a huge number of aspirants.

#2 NewLaw is no longer new

During the course we studied INSEAD’s new case study on Axiom Legal. We had a great presentation from Jarred Hardman, the founder of Crowd & Co, and explored alternative models such as Keypoint, Lexvoco and Bespoke.

It appears that over the past 12 months, many traditional law firms buying-in or are copying the “new” bits of NewLaw to the point that they are no longer really fresh or compelling differentiators. One student commented that many NewLaw models shifted so much business risk to individual lawyers that they would struggle to attract really top talent.

#3 Love the grey

One of the most interesting class discussions centred around a HBR video on the common myths of strategy execution, that is, success will come from aligning goals, better communication and following the plan. The video highlighted that while the latter approaches are worthwhile there are many nuances and subtleties that need to be considered. It appears there are few absolute truths in management and most things are contingent on context, characters and constraints.

#4 Strategy should be for everyone

“I wish I had done a course like this when I started my career. It would have made sense of all the decisions my firm has taken over the years.”

It is common in many firms for discussions around strategy to be treated as secret partner business. In my view there is a strong case to give everyone in the firm a deeper appreciation of how the firm competes and how it makes money. Better understanding of these key concepts will facilitate innovation and execution.

#5 The world is small

From the class discussions, it appears that cats in Santiago, Perth, Beijing, Milan and Jakarta are equally hard to herd. The Melbourne Law Masters program attracts law students from over 40 countries across the globe. Professors, such as Katharine Christopherson (also teaching last week), come from far and wide to present their classes. Being immersed in this global village for one-week was truly an amazing experience.

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I will be presenting the Management for Professionals course again in October 2017. It is available as a single subject study option or as an elective on the Masters and JD programs.

Five lessons from five years going solo

In Articles, Commentary on 1 June 2016 at 6:03 am

On 31 May 2011, I left Beaton Research & Consulting and a day later Barolsky Advisors Pty Ltd started trading. The next day I flew to Newcastle to facilitate a strategy workshop for a consulting engineering client. Business has been brisk ever since.

So what have I learned from five years going solo?

Lesson #1: Leave well

coffee beansI started working with George Beaton in 1990 when I first joined the Melbourne Business School as a case study writer. After five years as a part-time contractor, I became a full-time Beaton employee based in George’s home-office in Armadale.

George was a fantastic mentor and coach. I learned the craft of consulting primarily from him and for that I’m eternally grateful.

Leaving Beaton on good terms meant I could get a running start in my own business. Clients felt comfortable and I could start marketing my practice with a clean conscience.

Lesson #2: Growth can take many forms

“So, when are you hiring?”, is one of the questions I get asked frequently. I made a decision early on not to grow in size, but to grow in stature. I’m well aware that one can make a lot more money though leverage, but the stress of managing people and constantly feeding a hungry team was something I preferred to live without.  Partnering with specialist consultants and contracting super smart Melbourne Uni students fills most gaps.

Building a consulting business independent of personal brands is extremely difficult. Barolsky Advisors will cease trading when I decide to do something different. There will be no pot of gold at the end of the rainbow.

Lesson #3: A touch of chutzpah never hurts

Chutzpah is when a man kills both his parents and begs the court for mercy because he’s an orphan. It has both positive (i.e. confidence/nerve) and negative (i.e. cocky/arrogant) connotations, but as a freelance consultant you need a bit of it.

Last year I approached Sue-Ella Prodonovich to assess her interest in co-presenting a public seminar focused on practical BD for lawyers. Sue-Ella in some ways is a direct competitor. She works as a strategy and BD advisor to professional service firms and we share many clients and contacts.

In March 2016, we ran Practice Reboot in Melbourne and Sydney, and based on its success we will be doing it again in September and extending the locations to Brisbane and Auckland. Approaching her took a bit of cheek, but hey, nothing ventured nothing gained.

Lesson #4: Abundance trumps scarcity  

Most of my social media connections know that I curate content daily and blog my own material monthly*. Since starting, I have had over 22,000 views of my blog posts, and thousands more of curated material.

The major benefits of blogging and curating are:

  • Staying top-of-mind amongst clients and prospects,
  • Facilitating sales prospecting and conversion,
  • Developing fresh ideas and refining my thinking through feedback, and
  • Keeping abreast of current trends and research.

There is little doubt that having an abundance mindset has paid off handsomely. The true value of content is in its application and execution.

Lesson #5: Transform fear into fire

In 2012, a very large consulting assignment with Leighton Contractors ended unexpectedly when my main client contact left to become a CEO of another organisation. This left a huge void and a very thin pipeline. The risk of business failure was high at the time but, with the support of my wife Tonia, I was able to transform this fear into positive thinking and energy. Three months later I was back on my feet.

Only around 5% of my business is annuity work. I have to prospect and sell roughly 95% of my annual target. Part of selling is recognising that you win some and lose some. My fear and loathing for losing is a powerful motivator. I use it every day to light the fire in my belly.

In conclusion

The fifth anniversary of Barolsky Advisors will pass without a huge staff party. I felt the need to commemorate this milestone in an manner consistent with other significant experiences – write a blog post about it!

A huge thank you to all my clients, contacts and friends for your support and endless encouragement over the past five years. Apologies to all those victims of my chutzpah. I promise not to kill you and then claim on by business continuity insurance.

* I blog on Relationship Capital and mirror the posts on LinkedIn’s Pulse.

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To coincide with Barolsky Advisors’ fifth birthday, we’re proud to announce the launch of a new public seminar called, MBA IN A DAY. The seminar has been designed for mid-career lawyers to learn more about business and deepen their understanding of clients. Click here for more information.

Note: Barolsky Advisors is now located at Suite 6, Level 3, 350 Collins Street, Melbourne, VIC 3000, Australia. Other contact details remain the same: mobile +61 417 305 880 and email joel.barolsky@barolskyadvisors.com

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