Innovate Today With Disruptive Business Practices
By It is interesting to see how disruptive business models can impact a market. Southwest Airlines is a good example. With its focus at first on smaller markets, flying only one type of aircraft, and simple fare structures, Southwest dramatically altered the airline market. In technology, Amazon and Craig’s List both changed their markets forever. Are there lessons for law firms regarding disruptive business models?
The answer is that there surely must be lessons. But there is so much competing information, it is hard to synthesize what those lessons might be. Even from a single Harvard Business School professor, there is conflicting advice. There is advice about how to get started with designing a disruptive business (http://blogs.hbr.org/sviokla/2009/10/getting_started_with_disruptiv.html). From the same source, there is advice about how to decide whether a particular innovation is too disruptive for your company (http://blogs.hbr.org/sviokla/2010/01/is_this_innovation_too_disrupt.html).
I would characterize the ends of the spectrum like this. At the most disruptive end of the spectrum, it is a worthwhile exercise to have your firm deconstruct itself. You know your own weaknesses better than anyone. If you had the opportunity and means, how would you out-compete your own firm? Any firm that can’t answer that question pretty quickly is not spending enough time thinking about the future. To be disruptive to the market, take the list of ways that you would defeat yourself in the market to heart, and use that list to innovate at your firm.
At the least disruptive end of the spectrum, the admonitions at the second link above should be kept in mind. The premise of that article is based on the Pulitzer Prize winning 1977 book The Visible Hand by Al Chandler. An idea from The Visible Hand is that there are five ways to diversify a business. They are by customer, by distribution channel, by service or product, by geography, and by competency. The argument regarding disruptive business models is that, if your innovation is “close” to your core business model on these five scales, the innovation should be successful. The more different the proposed innovation is on these five scales, the more risky the innovation is.
There is tension between these concepts. To focus only on low risk innovation may leave too much on the table. To focus on innovation, no matter how radical, may undercut your core business. To me, there probably is no single right balance. I think the first step is being honest about the strengths and weaknesses of your firm. Just having that conversation, and having the commitment to become stronger, is half the battle.
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