Originally published in The Legal Intelligencer.
The rise of data—and the associated analytics and tools to turn that data into insight—has been a godsend in the eyes of many. Greater access to precise information to inform decisions? More accurate metrics to gauge financial performance? A means to demonstrate—in numbers—how to invest for greater return? Sign me up! Yet on the path to adopting more data-driven frameworks, pitfalls lurk. From the obvious (poor data) to the unforeseen (a purely analytical approach to motivating change), the data frontier is fraught with perils—dangers that, to the untrained, can have unintended and undesirable consequences.
While one of law firms’ greatest data hurdles comes in the form of siloed data of questionable quality (due in part to input standards put in place in the Cretaceous period before firms had an adequate vision of data’s future utility), firms are increasingly aware of this challenge. Many are tackling it head-on with large scale data clean-ups, new middleware (software that sits on top and aggregates data from multiple existing systems such as finance, accounting and CRM) and training and education to improve initial data capture at intake and elsewhere. The next frontier, then, comes in what law firms—and especially law firm leaders—do with the data. It is here where the perils are less obvious, more nuanced and, arguably, higher-stakes.
It is not uncommon for leaders in any sector to deem themselves amateur data scientists. In law, where abstract reasoning is a more common personality trait according to Dr. Larry Richard’s Lawyer Brain research, this mindset is especially prevalent. And perhaps it is for this very reason that the following more common risks are becoming increasingly widespread:
Head Over Heart
Data is a powerful language. Building a fact-driven business case for why one scenario is more advantageous than another is a validating exercise. It gives one confidence and, done well, can reduce risk and help enhance the likelihood of yielding positive results. In fact, a study of law firm competitive intelligence jointly produced by Acritas and The Tilt Institute reveals law firms with highly rated competitive intelligence functions enjoy faster five-year growth in virtually every key financial metric—revenue, RPL, PPEP and PPL—with a more pronounced effect in the profitability measures.
Change initiatives appealing solely to the “thinking” side of people, however, are less effective than those which resonate with the “feeling” parts, according to change management guru John Kotter. In Kotter’s terminology, one needs heart and head to engage and motivate others. Connecting to people on a visceral level demands more than just a well-researched, data-driven analysis of financial outcome or market share gains. Instead, it requires leaders to dig deeper and to identify the core values, drivers and motivators that appeal to people’s emotional side—to what makes them tick. General Electric captures this notion beautifully in its own mantra, “We bring good things to life.” Law firm leaders have the power to accomplish this same powerful connection by marrying data-driven business cases with clarity of vision.
Enough Is Never Enough
In law school, lawyers are trained to dissect information, leave no stone unturned and mind every last detail whether in prose, speech or action. Many lawyer leaders adopt this same approach when presented with data in support of a business case. They probe, question and re-analyze—and sometimes rightly so. Then, they request more—greater precision, more detail, a body of evidence and degree of certainty that may rarely exist in the realm they are evaluating, e.g., market opportunity, the additive nature of an acquisition or chances of a burgeoning practice area succeeding.
Unfortunately, more in this instance doesn’t necessarily equate to better. Demanding reams of supporting evidence can slow the process at best, provide a crutch at worst, and prevent making any decision that requires risk. It speaks to lawyers highly skeptical nature (hat tip again to Dr. Larry Richards) and is one of the core traits keeping law firms from making the necessary changes to reap future rewards. To overcome this challenge, leaders must improve their ability to interpret and apply data while simultaneously learning how to trust their judgment and live with ambiguity. A tall order, yes. Yet one well worth the required exercise in self-awareness and improvement.
The oft-quoted refrain “data never lies” is, ironically, a lie. Anyone who has worked with data, performed an analysis—or quite frankly, read a headline in the past 12 months—knows data can be manipulated. Sometimes, this manipulation is intentional. At other times, it is simply the byproduct of not understanding the data, analytical tools or source materials. Overcoming this challenge is a bit less complicated than the others—invest in professionals with objective, well-developed analytical skills. Sounds simple, yet the sector has proven itself reluctant to make this investment a priority.
Despite the wealth of sophisticated legal thinkers and highly educated professionals across the legal industry, law firms have been slow to put in place the tools and resources to perform comprehensive analyses of not only the external market but also their own internal data with respect to talent, clients and even financials. Data scientists, analysts and technology specialists are widely underrepresented in law firms. Further exacerbating the dearth of trained analysts is the absence of leaders willing and able to integrate them into their infrastructure and strategic decision-making. Instead, lone analysts or teams of analysts perform one-off, reactive data-crunching to serve the whims of information-hungry partners or savvy, under-supported business leaders.
Everyone Left Behind
A complement to the first point on the list, illustrating the value of “heart” to driving change, is the related principle of over-focusing on the data-proven outcomes and under-focusing on the impact to the individuals that make up an organization. In their effort to become more “data-driven” some leaders lose sight of the subjective aspects of any business that make it successful and sustainable, such as its culture. They use data to support fast-paced decisions and move quickly. While this is not uniformly a bad strategy, sweeping change in a people-based organization can have unintended consequences. An analysis of only the quantifiable outcomes of a business decision can easily overlook negative impacts on relationships and individuals—both with talent and clients.
Disruption, even with the best of intentions and a stellar fact-based business case, is still disruption. Leaders who move to quickly may face backlash. This response, particularly from those who may voice daily frustration with firms slow to change, can be confusing. That is, until one takes into consideration the personal, emotional and psychological effects of change. Fast-paced transformation can be de-stabilizing for many, and undermines the foundational element of corporate culture, safety. Daniel Coyle’s Culture Code alongside Human Synergistics International’s research on culture demonstrates that without a clear sense of safety, culture suffers, employee engagement declines and overall financial performance deteriorates—a persuasive argument for some leaders (myself included) to incorporate a people-oriented approach alongside a goal-oriented mindset.
What Leaders Can Do:
As awareness is the first step to self-improvement, simply reading this article may help some leaders advance their thinking and perspective on how to better leverage data as an impetus for change. Working with clean, consistent data is a must. For many firms, achieving this outcome involves a dedicated, potentially lengthy cleanup and increased stringency and accountability for data inputs (especially at client intake). Other ideas and suggestions for how leaders can get the most from the data revolution:
Envelop data in a broader context and mission—Though currently the sexy and trendy topic du jour, data alone can not a strategy make. Avoid the tendency to allow quantitative insights to overrule experience. Different firms and cultures value different outcomes. Regardless of what the data shows, experience, judgment and a general sense of “fit”— alignment with the core of the firm and its mission—are all essential inputs into an overarching change initiative.
Get comfortable with ambiguity—Perhaps one of the more challenging suggestions to implement, increasing one’s comfort level with not having all the answers is an imperative. No amount of data will yield a foolproof analysis. Data can not supply all the answers. Moving forward demands some degree of uncertainty and education to one’s self and others that this vagueness is normal—and expected—in the context of business.
Use more than a thousand words—Kotter’s research on the importance of engaging hearts as well as minds teaches us packaging matters. How data is visualized and presented, alongside the associated messaging and vision, is critical to turning a powerful business case into an extraordinary outcome.
Soften up—This final recommendation may be the last thing an analytical thinker wants to hear. Yet in order to truly affect change, the most effective leaders will embrace the softer side of change management—people. The good news is empirical evidence supports the notion that leaders who do incorporate emotional intelligence into their styles increase their odds of success. A beautiful irony.
Increased access to data and information has armed law firms and leaders with the tools and resources to build stronger, less risky business cases for growth, mergers, client development, lateral hires and more. Now that firms are investing in these tools, slowly but surely, the next frontier will be for those in charge to learn how to use them. Those leaders who can quickly and effectively master data-infused change management techniques? They will invariably rise—and lift their firms along with them.