Whenever I have 15 minutes free at an airport, I love to log onto TED to see what smart people are saying about almost anything. I recently stumbled upon the following talk given by Clay Shirky in 2005 on the move away from closed institutions to networks that foster collaboration.
Part of what Clay Shirky is talking about is the “network effect”—the idea that a product or a system gains more value overall through its adoption by more and more users. Telephone companies understood this early; as more individuals owned more telephones, telephones became more valuable to each. Since this TED talk in 2005, we have seen an explosion in companies that have taken advantage of the enormous value inherent in the network effect (e.g., Facebook, Twitter).
Fast forward to 2011 and the New Normal. Paul Lippe’s recent piece in the New Normal touches on the evolution of networks in the legal realm and highlights Pfizer’s “model of intense firm ‘Collaboration.’ ” Pfizer’s Legal Alliance Program consists of outside law firms working together with Pfizer to foster collaboration across the firms and the company. Some specific examples: (1) firms offer “secondees” to Pfizer; (2) firms across the alliance share best practices in commercial transactions; and (3) Pfizer conducts training “boot camps” for law firm associates across the Alliance to learn more about Pfizer’s business practices. The result? Pfizer gets the best out of its law firms, and the law firms deepen their relationship with an important global client.
Pfizer’s program, while forward-thinking, is a closed network focused on the company’s own legal needs. At the other end of the spectrum, some corporate legal departments are initiating a dialogue with customers and the outside world. Cisco System’s legal department has launched a novel program to share data security and privacy best practices not only with its customers but anyone interested in these issues.
Cisco’s approach is compelling. Its lawyers facilitate data security best practices through the portal and engage in effective marketing for the company. With this portal, Cisco’s legal department demonstrates a core element of Cisco’s value proposition: that it is a trusted partner to its corporate clients.
Large corporate legal departments, like those at Pfizer and Cisco, have the resources necessary to take advantage of the network effect. Others, though, can rely on simpler collaboration methods, like kaizen. Roughly translated as “improvement for the better,” kaizen’s genius is in getting employees to solve simple problems together.
Let’s take a real life example of how kaizen works. At one plant, assembly line workers took an afternoon from the line to work on improving cycle time. They realized too much valuable production time was spent searching for tools. This team created a peg board with a place for each tool outlined and labeled. The result? At least 30 minutes a day of production time was freed. Their teamwork resulted in a simple solution to an expensive problem. Senior management neither couldn’t nor hadn’t seen how a simple peg board could improve cycle time because they weren’t on the shop floor every day.
What can kaizen principles teach lawyers about collaborating to address business challenges? Let’s take another real-world example. My last company provided Internet marketing services to thousands of restaurants every year. As part of the sale, an account executive had to review a complex contract at a restaurant with an owner distracted by multiple deliveries. Our task: how could we make it easier for the sales team to explain the contract, get the owner comfortable with its language, and shorten cycle time?
In our own version of a “kaizen,” we rode with the sales team to understand their work environment. In light of how the sale was actually made, did the contract process address risks that were relevant? Did the process make sense? It didn’t. It took walking in the shoes of a salesperson to see that. As a result, we simplified the process. If we had stayed behind our legal walls and didn’t collaborate with sales, we couldn’t have seen that the contract process was outdated and unnecessary. That year saw a double-digit growth in the marketing services product.
While the old normal maintains walls between lawyers and clients, the New Normal is taking collaboration and innovation to another level.
Capitalizing on the network effect may seem challenging to lawyers who have been trained to be careful about how and when to share information. Similarly,“legal kaizens” may be uncomfortable for in-house lawyers who are used to addressing any manner of risk, even if those risks are outweighed by the burden to their business colleagues of compliance.
But in a world where networks create value by connecting people and information with agility and ease, isn’t it time for corporate legal departments to breach the walls separating ourselves from our business colleagues, outside law firms, and the greater public? Pfizer and Cisco show us how forward-thinking legal departments are doing exactly this in the New Normal.
Roya Behnia was senior vice president, general counsel and secretary of Rewards Network Inc. (NASDAQ: DINE) until December 2010 after completing the sale of the business. She led the legal, human resources, and compliance functions and served on the company’s executive management committee where she was centrally involved in developing and implementing business strategy for the company. She has been an in-house lawyer since December 1998, working with Brunswick Corporation and SPX Corporation. Before that, she was a partner at Kirkland & Ellis.
Editor’s note: The New Normal is an ongoing discussion between Paul Lippe, the CEO of Legal OnRamp, Patrick Lamb, founding member of Valorem Law Group and their guests. New Normal contributors spend a lot of time thinking, writing and speaking about the changes occurring in the delivery of legal services. You’re invited to join their discussion.