By Conrad Saam
Special to the Legal Technology Blog
"What is Strategy," by Harvard Business School professor Michael Porter, is at the beginning of the curriculum of almost every MBA "Strategy 101" class. I reread my copy while cleaning out my garage this weekend. The foundational business principles Porter discusses are almost universally overlooked by law firms. As a result, many lawyers find themselves struggling with the business of law. Most focus on operational effectiveness (i.e., improving the efficiency of their work) as the source of law firm success. Porter would argue this is a misguided strategy and instead, the business of law should focus on differentiation.
Businesses (even law firms) frequently focus on improving the way business is done -- either streamlining efficiency to maximize output or adding exceptional value to deliver extremely high quality. In the furniture industry, consider the spectrum between low cost, mass-produced Ikea brand and custom, one-off, artisan-crafted furniture. To survive, every furniture maker must have the appropriate mix of cost-effectiveness and quality, so there is room along that spectrum for Crate & Barrel and Ethan Allen to co-exist.
Porter dismisses efficiency as the end all for corporate success. "Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day." Competing solely on operational effectiveness becomes very difficult -- constantly pushing to deliver an appropriate spectrum of efficiency and value-add. Instead, Porter counsels businesses to focus on unique activities that provide a differentiated positioning. "The essence of strategy is choosing to perform activities differently than rivals do." He outlines three platforms on which business can create a long term positioning:
1. Variety Based Positioning -- defined as producing a subset of an industry’s products or services. This is the common way in which attorneys differentiate -- by practice area: divorce, Immigration, etc. Indeed, the general practitioner has becoming increasingly rare as attorneys become increasingly specialized.
2. Access Based Positioning -- a function of anything that requires a different set of activities to reach customers in the best way. This can be a factor of geography or scale. Due to the localized nature of law; most attorneys have naturally embraced this level of positioning (obvious outliers would be nationwide tax attorneys like Roni Deutsch, or firms that focus on international law.)
3. Needs Based Positioning -- defined as serving most or all of the needs of a particular set of customers. It arises when there are groups of customers with differing needs and when a tailored set of activities can serve those needs best. Most large corporate focused firms try to occupy this position -- delivering a skill set so vast they serve as the single solution for all of their clients’ needs.
Most law firms combine variety and access based positioning -- Seattle DUI Lawyers, Texas Personal Injury Lawyers, Rochester Business Lawyers. In doing so, they set the lines in the sand and fight competitive turf wars with similar local competitors. Few firms have had the creativity to think outside the box and embrace Porter’s Needs Based Positioning -- serving a unique set of customers in a unique manner.
One attorney who intuitively understood needs based positioning is Jeff Feulner, who established the Men’s Divorce Law Firm to provide a specialized focus on the needs of husbands and fathers. He provides a comprehensive list of services dedicated entirely to men going through divorce, including the obvious ones like custody, paternity and child support, but also the less intuitive ones, like business valuation and relocation. Jeff is an example of a firm who understands the needs of a specific subset of customers. Interestingly, those firms who can master needs based positioning will often build stronger and deeper connections with their clients.
Instead of struggling to maximize the efficiency of your firm, consider focusing on a shift in your positioning. For the traditional law firm, moving towards a needs based positioning is a huge strategic mindshift. To explore the potential, try the following exercise:
1. Segment all of your customers into groups. Now select just one group you would chose to serve if you had to. Repeat this exercise two more times using different segmentation criteria.
2. Look at the groups you selected and map the entirety of their legal needs. What services would you have to add to meet those needs?
For most law firms, needs based positioning entails contracting the market that you serve and expanding the services that you offer. The result just might be more business with deeper, entrenched relationships.
Conrad Saam is the senior marketing manager at Avvo. Prior to Avvo, Mr. Saam's experience includes numerous awarding-winning interactive projects for clients including Disney, Nickelodeon, Lego, MTV, Ford, Macromedia, Microsoft, Kraft Foods, AOL, McDonalds, Mattel and Napster. He is a sought after speaker on interactive marketing and has been featured in publications including USA Today and The New York Times.