Friday, June 2, 2017

Forces, megatrends, and black swans - oh my

This week's readings on analyzing the external strategic environment and evaluating industry dynamics were timely for me, as I sat down with a potential new client on Tuesday who was asking for just this kind of analysis and forecasting.

This person is a partner at a large law firm that specializes in personal injury. They're not the ambulance-chasing, bus-stop-bench-advertsing folks that first come to mind; rather, they're a reputable firm with a long history of good and meaningful work for clients. Anyway, the partner, who is retiring within the next year, had noticed that the number of personal injury cases the firm handled - and the number of referrals - had been modestly decreasing every year. Listening to him, I began building a list of questions in my head, aimed at identifying whether the problem was with the firm itself, when the partner asserted: "if we keep doing personal injury cases, this firm won't be around in another 10 years." I sat back, surprised; certainly, modest decreases could be addressed. "This isn't just an issue with our firm," he said. "I've noticed this with personal injury firms across the country." I started to get interested, wondering what the forces behind this could be.

Then he made a leap. "If we keep doing personal injury cases," he repeated," this firm won't be around in another 10 years ... because of self-driving cars." A majority of their business involves automobile incidents, and the theory behind self-driving cars is that they'll be devoid of human error. Now I was really interested. I had been at a national summit on autonomous, urban mobility a few weeks earlier, and while it was clear that the time to tackle autonomous mobility policy had arrived - I frankly hadn't considered all of its implications, or considered that the implications could be that imminent. Will we not need personal injury law in 10 years?

Whether this partner is right or wrong (or eventual engagement will add some depth to both our understanding, hopefully), it's a fascinating example of how an organization might consider forces and/or megatrends, and respond to those in the form of strategy. In this case, the partner wanted a strategic plan that would pivot the firm away from personal injury and into other areas. But the trouble with trends and forces - or any kind of informed prediction, really - is that there's tremendous room to get things wrong, focus on the wrong thing, respond in the wrong way. Even with a solid market analysis or evaluation of industry dynamics, there's room for error and need for organizational  agility.

In diving into readings, I wondered what framework would best serve as a tool to help this organization. With some modification, Porter's five forces may be helpful as the firm considers new markets. However, I'm not sure what to substitute suppliers for. Additionally, I've used positioning matrixes for marketing analysis, and am somewhat a fan, but see limitations such as wanting a broader range of criteria for comparative analysis.

After reading the 2030 trend report, and anticipating that an autonomous vehicle revolution will not completely remove injury from the equation, I wonder whether the anticipated governance gap - along with a move toward individual empowerment - might mean that personal injury law will still be needed, just in a slightly new form. Figuring that out feels like a black swan in and of itself.

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