Yesterday, Bruce MacEwen, author of Adam Smith, Esq., wrote one of the most trenchant, insightful articles I've ever read about strategy. And his point, which I wrote an entire article about for Law Practice magazine last year (and won an award for, by the way) is that people in general, and lawyers in particular (although those two categories aren't mutually exclusive) tend to think about strategy sort of sideways. They think about static strategy, rather than dynamic strategy. The focus on the way things are now, rather than they way they're going to be.
In his article, MacEwen extensively quotes a guy named Richard Rumelt, who's a professor at UCLA's business school. Rumelt, and MacEwen (and I) believe that the fatal flaw in a lot of strategic thinking is that it's reactive. People get all hung up on the current state of the competitive landscape, and do not take any time to think about what's coming. Lawyers are particularly prone to this, because, as an intellectual discipline, law relies almost completely on an analysis of the past -- that's what precedent, for example, is all about.
However, laws, and cases, keep changing. Sarbanes-Oxley, for example, didn't exist a decade ago, and I've heard it described as the "Lawyers and Consultants Full Employment Act." The lawyers and consultants who got in early, and now have big, thriving SOX practices are perfect examples of the rewards of dynamic strategy. If you want to develop a competitive advantage, there are two ways -- the hard, and the easy. The hard way is to muscle your way to the front by overpowering your competitors. The easy way is to spot a trend, or a change, or something new or different before anyone else, and to go after it.
The easy way works, and examples abound. Steve Jobs doesn't try to overpower Microsoft or try to win a war of attrition through execution. To quote Animal House, "We could fight them with conventional weapons. that could take years, and cost millions of lives." Instead, he waits, and watches, until he spots a change or a trend that creates an opportunity, then he goes after it.
Jobs noticed that music downloads were incredibly popular, and -- this is a big "and" -- he also realized that something that was done illegally on such a massive scale would sell like crazy if it was legal and reasonably priced. Result: iTunes, and the iPod.
iTunes and the iPod are examples of another brilliant concept: value denial. Or (heh) "VD" for short. VD occurs when there is a product or service that customers, or clients, clearly would pay for, but aren't being offered. In the music business, it was a clear value denial that it was impossible to buy just a few tracks from an album. You had to buy the whole thing. Apple fixed that.
In law, an example of this is e-discovery consulting. Fenwick & West, among other firms, has created a thriving practice in advising clients on the ins and outs of computer forensics as they relate to potential litigation and risk management. Thanks to a few key appellate court decisions, a lot of warehoused data -- even data that has been "erased" has become admissible evidence. Which data you retain as backup, and which you destroy, is no longer simply a question for the IT director -- it also major, and increasing, legal implications. Fenwick saw this coming, addressed it, and is reaping the rewards.
I am willing to unconditionally guarantee that in the next two years, some new area of law is going to spring up. It will create a lot of revenue for the handful of firms who were paying attention to the signs everyone else ignored, and got in early. They will take the lion's share of the money, and everyone else will be slugging it out for what's left over, which won't be much.
Someone has to get there first. Why not you?