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Written by Norman Clark
Published: 18 December 2015
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lightning strike on the ocean

For law firms, true innovation requires much more than wishful thinking powered by determination. It requires a solid business rationale. It also can be very hard work.

Most purported innovations by law firms produce a lot of buzz, but very few sustained results. In our firm's experience advising law firms on innovative approaches to law firm management, we have observed a number of factors that explain why intelligent, experienced, strategically sophisticated lawyers frequently fail miserably when it comes to innovation.

This post addresses one of the most basic ones: a failure to link innovation to competitive advantage.

genuine innovation or just more of the same?

Most of what law firms trumpet as "innovation" is really only incremental change. These improvements, although commendable, are still chained to the traditional paradigms and assumptions that have defined the delivery of legal services for decades.

As is explored further in my book, The Innovation Disciplinewhich will be published in March 2016, it is very difficult to identify these intellectual restrictions on our creativity, much less to free ourselves of them.  Sometimes these paradigms are so familiar to our experience that we fail to see them at all. This "paradigm blindness" is one reason why what passes for "innovation" is really just more of the same, only better.

One way around this intellectual obstacle is to consider a specific innovation in terms of the differentiating competitive advantage it can produce. In other words, what can a law firm offer that is unique or virtually unique, and that also produces a clear benefit for the clients? 

unique and virtually unique advantages

A "unique" advantage is one that no other competitors offer. This is sailing in the waters of "Blue Ocean Strategy," as envisioned by W. Chan Kim and RenĂ©e Mauborgne in Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant.  In the legal profession, the opportunities to "make the competition irrelevant" are very limited. We are a regulated profession in most jurisdictions, and this can significantly restrict what we can do. Moreover, when they do arise, true innovations quickly lose their innovative character and advantages due to the intense competition that exists at all levels of the legal market. If an innovation works, others will attempt to copy it.

To use Kim's and Maugorne's metaphor, we have very few paths to swim out into the blue ocean; and when we do, we are quickly followed by our fellow sharks. 

For these reasons, the more feasible approach for most law firms is to create a "virtually unique advantage." This is an advantage that is not truly unique in the market, but which a law firm can deliver at a level that none of its competitors can come close to matching. Usually the creation of such a virtually unique advantage requires significant innovations in a firm's internal structures, processes, and operations, to ensure that the firm can deliver the advantage consistently.

In time some competitors will emulate the innovation and claim to offer the same advantages, but their potential for success will be limited by two factors. First, the innovations that enable the creation of a virtually unique competitive advantage usually are internal, as distinguished from new marketing slogans. These can be difficult to replicate in another firm. Second, the "early innovator" will have the additional advantage of experience, which can sometimes be the decisive factor in a choice between two law firms that appear to be equally well-qualified otherwise.

looking at the innovation question in innovative way 

The critical importance of establishing a differentiating competitive advantage not only should drive innovative inquiry in a law firm, but it also makes true innovation somewhat less daunting. The innovation question becomes better defined. Instead of unfocused brainstorming of ideas -- What can we innovate? --- the innovation question becomes more focused and more manageable: What must we do fundamentally differently in order to establish a specifically defined competitive advantage?  

When lawyers focus their intellectual strengths and problem-solving abilities -- the same assets that make them successful in serving their clients -- they can produce sustainable breakthrough results.

Norman Clark