“The Competitive Advantages of Scale Have Been Commoditized.”

The more of Nilofer Merchant I read, the less need I see for me. One after the other, she’s making all my points in her new book, #SocialEra, and on her blog. All I have to add is to say, “yeah, and it applies to law firms, too.”

Her post on the blog last week, Our Obsession with Scale is Failing Us , which expands on a tenet of her book, is virtually a pillar of my 21st-Century-law-firm creed.

Listen to this (from Merchant):

 In the industrial era and even the early web era, size was central to scale. People first began to organize together inside centralized organizations to do things “at scale” because the cost of coordinating work otherwise was just too much, and too hard. Over time, the ability to scale and “reach” an ever larger number of customers caused organizations to keep growing and growing until they became “too big to fail.”

The new reality is this: The ability to scale is no longer a direct function of size.

The Social Era — in which information efficiency is taken for granted, and people can easily self-organize without having to belong to a singular organization — dramatically decreases the cost of communication (e.g., finding people and collaborating with them), changing one of the fundamental reasons that centralized scale once created strength. The competitive advantages of scale have been commoditized.

We’re at an inflection point where work and value creation can reach “scale” without having to be done by a large, single firm. We can see today that Social is more than tools, information-enabled efficiency, products, services, or processes. It is not that we have more ways to be social. It is that the cumulative difference of all these ways of being social allows for an entirely new way to scale — through and with connected individuals. The improvement in what is possible creates new economic effects that add up to a new way of doing business. Organizations that get this are changing the way they create, deliver, and capture value — in essence, creating entirely new business models.

The competitive advantages of scale have been commoditized. Wish I’d said that.

I’d add: “in law firms.”

It’s going to be some time before we have all the applications and processes and skills we need. At least, among and within  law firms that’s true. We need some “social skills” that we don’t have now.

I learned two things about that last week.

First, a new breed of companies is emerging in the law world, that will advance this process. I’m talking about firms that vet and select law firms for clients.  And, I’m not talking about those cheesy operations that charge lawyers a fee to get interviews with corporate counsel at resort hotels. Instead, what’s emerging are companies that do  interviews and other due diligence themselves to find firms to suit the needs of clients and their general counsel. These are forerunners of companies that, one day, will find “entirely new ways to scale” for legal projects.

Second, lawyers will  need a new range of skills for collaborating effectively  “through and with connected individuals.” Bill Ross and Adam Crowson (and your humble servant) spoke to this at the Geneva Group International conference in Raleigh this past weekend. Bill recounted his experiences assembling working groups among public and private interests to save endangered woodpeckers. Adam spoke about the continued importance of personal contacts to build trust and confidence among collaborating professionals, notwithstanding the technology.

Yes, doctor Merchant, we can get to scale without size but, for lawyers, operating without the structures and boundaries that have kept us in control before now, requires new skills. Social skills.  And there are both an art and a science to those that are yet unknown — among lawyers anyway.

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  • [...] Over the (apparently, many) years since then, I have become more convinced of my answer. And, in these sources of “inspiration” (that was my interlocutor’s term, not mine) can be found the foundations and future role and functions of law firms. In the 21st Century, law firms won’t be needed as much as they were in the 20th Century, for shared infrastructures and practice support resources. They won’t be needed for scale or efficiencies. [...]

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