Are You As Good As Apple? Do You Need To Be?

By Marcus Ollig

While the readers of this newsletter (both of you know who you are) are in the professional services industry, there may be some valuable lessons to learn from the consumer electronics/tech industry. We often look at technology as an industry of massive and constant change. Today, the legal profession is undergoing profound changes - changes that may not yet be fully understood with future changes we may not yet fully anticipate.

I remember in the 1970’s to early 1980’s when IBM was king and mainframe computers ruled. With the advent of the desktop computer, IBM and others, like Wang, were soon supplanted by Microsoft and Apple. Microsoft dominated (Apple reached peak market share of 15%) and by the early 1990’s Apple was almost dead. Michael Dell, founder of Dell computers, even went as far as to suggest they shutter the company and return the money back to their shareholders¹. Steve Jobs, who was pushed out in the mid 1980’s, was brought back in 1997. Over the past 13 years he has guided the company to the lofty perch it occupies today: the second most valuable company in the world behind Exxon in market cap.

Apple is highly innovative and possesses a relentless focus on consumers and their experience from purchase throughout the use and servicing of products. They utilize their core strengths to deliver an exceptional experience and superior products to their client base. The iPod music player and iTunes Music store started Apple’s comeback in 2001. They have become the standard for downloading music, games and applications. For example, iTunes has been used to download over 10 billion songs since its creation. In 2007 Apple introduced the iPhone. Today, less than four years later, people are standing in lines to buy one. The latest iteration, the iPhone 4 has been purchased by 1.7 million people in the first three days, according to company data. Not quite three months ago, Apple released it’s tablet computer, the iPad. In just 80 days, Apple has sold three million units of a brand new product (that no one asked for) during a recession. Their products are not inexpensive, they offer no discounts and they face stiff competition. Apple is a technology company that competes with the likes of Dell, HP, Lenovo and others in desktops; with Microsoft’s operating system, browser, and other software; and Sony, HP and Toshiba in laptops. Apple sold zero phones in 2006 when it decided to take on Motorola, Nokia and RIM. Over the past five years, in a rapidly changing industry (technology) with strong and entrenched competitors across several business lines, this company has started to beat all comers and set the standard in every field they enter.

Why should you care? You are in the legal field – a traditional, professional services business - not the fast moving, ever-changing and non-traditional technology industry. The legal field is changing. Over the past few years, many venerable old-line firms have failed. In terms of total revenue and revenue per lawyer, The AmLaw 200 are down for the second straight year. There doesn’t seem to be much agreement on the future of the law firm model, the best structure for law firms, the importance of leverage, the importance of remaining full service, having a coastal presence, how to structure compensation, etc. Yet there are clear trends and the importance of viewing a law firm as a business is now more important than ever.

In the midst of this economic maelstrom, there are a number of firms growing both in terms of revenue and profitability. Three types of firms seem to be excelling: the top quintile of the AMLaw 100; AMLaw 200 firms based in the Midwest; and high-end single focus boutiques. On the surface, these firms don’t have anything in common. While all firms handle sophisticated work, the AmLaw 100 top 20 are predominantly in NY, have an international presence, and are “go to” firms for companies needing the deepest level of expertise without regard to cost, handle the largest deals or trials, and the most pressing domestic and international problems. The mid-western firms leverage a value proposition that has become more important during these difficult economic times. Costs are lower so rates are as well, and most of these firms still offer top-level sophistication and broad geographic capabilities. They are responsible for most of the growth in the second hundred of the AmLaw 200 this year. They can tackle both large-scale work with major clients and local or regional work that opens them up to a larger piece of the pie. Finally high-end boutiques have faired well. They enjoy a structural advantage (one location equals lower costs), more control over who is in the partnership and a perceived best-in-class level of expertise due to their single focus. Finally, these boutiques can both refer work to larger firms and receive work from them.

So why are these seemingly different business models all successfully competing? What are the common threads? The similarity in these firms is their extreme focus, their comfort with who they are and which clients make sense, and a differentiator that aligns incredibly well with their customer base, and what those clients need and want. These firms are best positioned to actually help their particular client base and deliver the services needed in the manner those clients feel comfortable with.

Apple gets its results through relentless innovation, and a deep understanding of their clients and what consumers want. They have a well-defined market focused on consumer versus business users (though this is starting to change). Their products and even service delivery at stores reflects this understanding of the consumer by creating products that look better, are more useful and easier to get more out of. At the stores people linger, learn and even check out differently than at other retailers (no more registers to line up at – you buy right from the service advisor who helped you).

Successful law firms are closely aligned to their customers in a similar way. There is no room to delve into case studies, but here are some things to think about as you work to improve your practice, your department, or your law firm.

Lessons:

1. Know your clients: How well do you know your clients and how well do you leverage that knowledge to help them? Do you have a common set of questions and use surveys to learn about your clients, and how you are doing? Do you train associates to ask great questions? Are your partners consistent learners, asking good questions to really identify how to best deliver legal services to your client base?
   
   
2. Know yourself and your strengths: Do you have a clear vision of your own strengths and is your organization aligned to both market and service toward those strengths?
   
   
3. Innovate or die: Keeping in mind the leveraging of your strengths, what do you think would totally change the game for your firm? Are you delivering legal services in the most efficient way for your current and potential clients? Are your services easy to access and use for your clients? When is the last time you examined the way you deliver and charge for your services?
   
   
4. Communicate: Are there informal or formal structures in place to disseminate the key information learned through points one through three above?
   
   
5. Focus: This is perhaps one of the greatest strengths Apple has displayed. They focus on their consumers and strengths relentlessly. They make superior products that are easier to use and their products’ design and service delivery pull their customers in to utilize more features within those products. Finally, Apple products focus on what people really want. The iPad is a great example. Statistically, most computer users simply use their desktop or laptops for email and for the Internet. Due to their customer focus, Apple understood this. They then applied this knowledge to create the iPad. The iPad is great at email and browsing the Internet while also delivering a superior reading and video watching experience. Once you understand your customers and differentiator, singular focus is the key to growth in any economy.

I have not been able to get my mind off of Apple and how they are so successful in such a difficult business environment. How can I make my business, The Advocates, better? How can we innovate? How can we become more customer-centric, who are our ideal customers?

I hope you will think about the issues above for your firm, department or practice. Then I hope you will share any ideas for how I can improve your experience with us.

Best, Marcus

Marcus Ollig, president of The Advocates, a legal search, staffing and consulting firm, can be reached at 303-825-2600 or mollig@targetedlegal.com.

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¹ Helft, Miguel & Vance, Ashlee,"Apple Passes Microsoft as No. 1 in Tech." NYTimes, Technology section, May 26, 2010