In a very interesting workshop at LegalWeek 2018, Langdon Morris, Innovation Labs, talked about innovation; why it’s so important and why so many innovation projects fail.
Today, we are living in a new kind of economy, where we are moving from an industrialization economy towards an era of digitization, from mass to meaning, from production to knowledge, from the industrial process to an innovation culture. But still 70% of all change initiatives and 90% of all innovation initiatives fail. The five main reasons for this, according to Langdon Morris, are
- Bad alignment of innovation strategy
- Wrong portfolio (products/services not demanded by the market)
- Bad innovation processes (how ideas are captured, evaluated and implemented)
- The “culture of no” (a corporate culture that fears change)
- Lack of tools
Put in numbers, 5% of employees are idea creators, 10% are idea promotors and 85% are idea killers. The role of management in the industrial process is to eliminate variety, to keep status quo. But for innovation to succeed, you need to reward a behavior that is completely the contrary to the industrial corporate culture. You need to accept, even promote, failure. To innovate is to fail and to be excited about being wrong. For example, Thomas Alva Edison allegedly failed 6,000 times until he got the light bulb right, not regarding the failure as a problem but as an answer that the problem had to be solved in another way.
However, when it comes to the legal profession it is known for its risk adversity and its focus on status quo. To create an innovation culture in law firms is therefore an even harder task than in other industries. Nevertheless, many law firms understand the need for innovation also in the legal sector. As quoted by Mark Zuckerberg, “The biggest risk is not taking any risk.” In preparation for the annual list of law firm R&D and Innovation Initiatives, Ron Friedman, Fireman & Company, noted that 35 Chief Innovation Officers (CINO) work at major law firms, including slightly different titles. Read more about this list and how to get your firm on that list here: “Law Firm R&D and Innovation Initiatives List”. An example of how hard innovation can be can be read in this interesting Legal Futures article: “Lessons from the failure of an innovative law firm – “It’s harder than it looks” which tells the story about Clearspire, an innovative law firm that sought to provide a low-cost model of legal services delivery through a law firm and associated service company that could raise capital, but which closed its doors after just four years in operation. “[It’s] a bit like life: sometimes you do your best but don’t succeed-in the short term, anyway.”
In a panel discussion at LegalWeek with the title “Is the Future of M&A in the Hands of Machines?” it was debated whether clients want law firms to be innovative or not. All panelists (Edward Braum, Ice Miller, Gavin Williams, Holland & Knight, Yan Pecorano, Portolano, and Oz Benamram, White & Case) agreed that clients want law firms to perform M&A tasks “faster, cheaper and better”, but that they are not really that interested in how the law firm achieves that as long as the process is safe and the work produced is of high quality. As Oz Benamram pointed out, sometimes clients say that they want the law firm to be innovative, or the firm think the client says so, but in reality that is not the case. Clients want law firms to be efficient, correct and fast to a reasonable price. They do not want the firm to start spending money on risky innovation projects and they certainly do not wish to be the guinea pig of any such risky projects. The use of AI tools in due diligence helps the law firm to produce a better product to the client, but it is still not a replacement for lawyers, i.e. the use of AI tools for due diligence could hardly be classified as innovation in the true sense. DD tools is more like a GPS helping the lawyer to drive the car better, it is not turning legal services into a driver-less car.
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