Quality and long-term value are usually more important than low price.
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This is the fifth of a series of sixteen articles that will explore the relevance and, for some law firms the existential importance, of W. Edwards Deming's Fourteen Points, especially for small and midsize law firms.
In an increasingly competitive landscape, law firms, like any business, might feel compelled to make decisions based on price alone.
However, the fourth of W. Edwards Deming's Fourteen Points for better management warned against this practice, arguing that cost should not be the primary consideration in business decisions. Instead, he championed a more holistic approach that weighs quality and long-term value alongside price.
Deming's Fourth Point suggests that awarding business based on price can be a short-sighted approach that ultimately compromises quality and long-term sustainability. While a lower price might bring an immediate cost-saving benefit, it often fails to account for the hidden costs associated with lower quality, such as potential errors, rework, and the impact on client satisfaction.
Low price can be a seductive consideration, especially in an age in which clients have become more price-sensitive.
In the context of a law firm, "awarding business" can refer to a range of decisions, from selecting vendors for legal technology solutions to outsourcing certain services like document review or research. While it might be tempting to opt for the cheapest solution, Deming's Fourth Point encourages firms to look beyond the price tag.
Consider a law firm deciding between two legal research tools. While one might be cheaper, if it fails to provide comprehensive and accurate information, the firm might spend more time and resources correcting errors or looking up additional information. In contrast, a slightly more expensive tool that offers high-quality results could save the firm time and enhance the quality of their legal services, representing better value in the long run.
Similarly, when outsourcing services, a cheaper provider might seem attractive initially. However, if the quality of their work is subpar, the firm may need to spend extra time reviewing and correcting their work, impacting overall efficiency and potentially client satisfaction.
Instead of focusing on price alone, law firms should consider factors such as the quality of the product or service, the reliability of the supplier, their reputation, and the potential for a long-term, beneficial relationship. This shift in perspective does not mean that cost becomes irrelevant but rather that it is only one factor in a broader decision-making process.
Implementing Deming's Fourth Point sometimes requires a cultural shift within the firm, moving away from a cost-centric approach towards a value-centric perspective. It is about recognizing that the lowest price does not necessarily equate to the best value, especially when quality and long-term efficiency are taken into account.
While cost management is crucial, it should not overshadow the importance of quality and value in business decisions. By applying this principle, law firms can ensure they are making decisions that support their long-term success, client satisfaction, and sustainable profitability.
Our next post: Improve Constantly and Forever the System of Production and Service
W. Edwards Deming's Fourteen Points provide a framework for sustained growth, improved quality, and better client service. Their successful implementation will require commitment, leadership, and an ongoing dedication to improvement. The law firms that integrate these principles into their daily operations will be well-positioned for future success in the ever-evolving legal landscape.
To learn more about the Fourteen Points, consult W. Edwards Deming, Out of the Crisis, (Massachussets Institute of Technology, 1982). Future posts in the Walker Clark World View blog, will examine the strategic relevance and practical application of each of the Fourteen Points to law firm operations and management.