Learning to Fly: Helping Companies Embrace Change
Source: https://www.torbenrick.eu/blog/culture/changing-organizational-culture-is-daunting/

Learning to Fly: Helping Companies Embrace Change

Convincing companies, especially large ones, to embrace change in their ways of working and their corporate culture is a tricky proposition at the best of times. It has been described as attempting to steer an oil tanker with a canoe paddle. In my experience this is particularly true of law firms, an industry where I have spent the bulk of my career working as a consultant.

Now hang on, I didn't say ALL law firms (responding immediately to the cries of outrage that I can almost hear as I write this!) - though I don't think it will come as a surprise to anyone who has ever worked in a law firm that they are an oil tanker that tends to be very difficult to steer. It is worth noting that, according to a 2017 Deloitte CIO survey, the number one reason ERP projects fail is resistance to change.

That resistance is of course entirely understandable, because change is disruptive, but in my opinion disruption is the parent of innovation. Dan Fox, founder of Johnson Hana International, a Dublin-headquartered Alternative Legal Services Provider (ALSP) puts it this way:

"[Law] is an industry that is in desperate need of disruption. It is very traditional, extremely inflexible and ridiculously expensive."

If ever there was an industry ripe for disruption it is surely the legal profession. And it is true that some law firms are beginning to make the changes they need in order to future-proof their success - these firms have recognised that they simply have no option but to embrace change (and even encourage innovation!). But even the firms who are moving in the right direction are struggling with how to manage the changes they know they need, to ensure that those changes deliver the desired results.

Another fact that won’t surprise anyone reading this is that change across an organisation doesn’t just happen by itself - it needs a thoughtfully strategic approach, as well as buy-in from all stakeholders (or as many as possible, anyway).

Resistance to change is a very human response, and increasingly, companies are focusing on the human side of technological and organisational change. This is where the psychology of change management can offer some valuable insights.

The need for change can result in industry-leading innovation, but in practice it often meets with internal resistance, as it means that people have to modify their ways of thinking - and abandon their ingrained (and comfortable!) habits.

On my software projects with large law firms, I've often encountered the 'Doris from Accounts' or the 'Bob from Wills & Probate' (names have been changed to protect the guilty) who are very good at their jobs, but have been doing those jobs in the same old way for the best part of 20 or 30 years and see no reason why that should have to change.

Or as my American friends might put it "if it ain't broke, don't fix it." Of course, the very reason why my clients invest large chunks of time and money into these projects is that they've identified areas where things are indeed broken - or at the very least areas where things could be done better.

In the case of law firms, market conditions have changed in recent years, with an increasing number of ALSP's like the big accounting houses hot on their heels for new business opportunities. The advent of machine learning and usable AI's now allow the smaller firms to 'punch above their weight.' The traditional hourly billing model is also weakening.

In response, law firms are forced to change just to stay competitive. Mike Abbott, the Vice President of Client Management & Global Thought Leadership at Thomson Reuters, says this about change:

“The willingness to make transformative changes is essential for ensuring long-term success"

Transformative change is not easy. In order for any large company to move with the times, there needs to be a change in the mind-set of individuals across the entire organisation.

One of the ways law firms are now transforming their business models is through innovative use of new technology such as AI, but to successfully manage the change from old technology to new is a challenge that not every firm is handling as well as it could.

According to a 2016 article from McKinsey & Company (The Four Building Blocks of Change), the following four principles are essential to managing effective organisational change:

  1. If employees see the point of the change and agree with the reasons for it, they are more likely to get on board – so to secure a wide and deep buy-in, the firm needs a clearly communicated vision.
  2. The new behaviour requested of the employees needs to be accompanied by relevant, formal reinforcement and reward systems – in other words, offer people good incentives. Strike a balance between the carrot and the stick, as I always say.
  3. The skills that employees need to help them adapt to the change need to be prioritised – firms must invest enough time and resources into developing training, especially when it comes to using new software. The key lesson here is to train your employees well.
  4. Role models within the firm also need to display the desired new behaviours – key leaders and influencers need to lead by example.

All the way back in 1987, Dr Mary Lippitt came up with a formula for successful change within an organisation. It is as valid today as it was then:

Vision + Skills + Incentive + Resources + Planning = Change

If any one of these elements is missing, or not properly supported and managed, problems will inevitably arise:

  • If there is no clear and effectively communicated vision, people won't understand why things are changing and won't see the point of adopting the changes to their ways of working.
  • If people are not trained well, they will not be confident with the new technology and will see it as a barrier rather than a benefit. Everything takes more time and effort if you don't really know what you're doing.
  • If people are not incentivised to take part in the change, test the new solutions for business readiness, and get enthused about training, the resulting delays and 'scope creep' will kill your budget.
  • If the company does not commit adequate resources to the project, there will again be delays - and important elements of business readiness will not be tested or will simply be overlooked.
  • And if the whole project is not well planned out from end-to-end, including proper change management, people will get confused about what they are supposed to be doing and key inter-dependencies will be missed.

Resistance is not just about the employees - it's also about the corporate culture. We all know that long-term investment and increased spend can be a “tough sell” with COO's, CFO's and partners at most law firms, and new technology can be a steep learning curve, too. But the firms that are the best at managing the challenges in the legal services market actually increase their indirect spending/overhead in two key areas:

  • Business development (to increase and maximise direct client interactions)
  • New technologies (to reduce staffing costs, improve workflows and better analyse data)

To invest in new technologies means having to manage the changes required to make those technologies work best. It is important to let people know that their jobs aren't at risk because you're implementing an AI solution, for example - the AI is there to complement, not to replace. The same is true for any new technology that introduces efficiencies. It frees up time for people to do more intellectually rewarding and engaging work.

My advice to the many law firms with whom I've spent the last 15 years doing ERP projects has always tended to be fairly blunt (if my accent didn't do so, my bluntness would certainly hint at my South African upbringing!) If I ask "why do you do it that way?" I don't ever want to hear you reply "It's the way we've always done it." That is a recipe for failure.

Don't get left behind, slowed by the headwinds of resistance to change, while the rest of the world races ahead.

So let me leave you with this final thought:


Joanne Redgrave FCCA

Global Finance Transformation Project Manager currently taking a well earned break

4y

I have worked on projects at three different law firms & I agree that they do tend to have high levels of staff retention which can make for excellent SME’s in the support functions when implementing a new ERP. I also agree that there is usually an acceptance that change needs to happen. Where I have seen resistance to change is in the areas that always think this won’t work for them because they have special requirements but isn’t that true of most industries? I would certainly say I have seen it elsewhere.

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