Lately I have been interviewing a great many people for a book my partner Dr Alicia Fortinberry and I are writing. It’s about what lessons we can learn about strategy from the latest research in psychology and neurogenetics.
From the interviews, the studies we have read, and our own research we have reached a number of conclusions:
1. Humans are generally very bad at strategy (over 80% of strategic initiatives fail); and
2. Law firms find strategy more difficult than other enterprises.
It’s fascinating talking to people such as Herbert Smith Freehills CEO Mark Rigotti; Ashurst (QLD, Australia) managing partner Ian Humphreys; and Bill Henderson, Professor of Law at Indiana University, about their views on how law firm leaders go about forming strategy and whether they even ought to.
Professor Henderson believes most law firm leaders are not good at strategy. ‘Some are,’ he says. ‘Kirkland and Ellis or Littler Mendelson developed and implemented a clear focused strategy [but] most law firms just follow the herd and try to do what their large successful competitors are doing.’
‘The main problem,’ Henderson says, ‘is that there’s very little testing of assumptions. Very few are willing to take the risk that a “new”strategy requires.’
Rigotti also recognises the difficulties law firms have in arriving at a strategy. His answer is not to have one: ‘We have a number of what I call “rolling priorities,’ he told me. ‘There are currently five, including a push into China. But we’re aware that any one or more of these might not be the primary idea at any given point in time. Thus we revisit these priorities every 12 months or so.’
‘One of the problems all law firms have,’ Rigotti says, ‘is to keep people’s eye on the ball. Law firm partners don’t understand strategy.’
‘When partners do consider long-term strategy, they fall into group-think,’ says Ian Humphreys, managing partner of Ashurst in Brisbane. ‘They feel their capacity to challenge is limited. They see it as bad for their career. They feel the need to fall into line with each other.’
Which brings us to a different set of problems to do with human neurogenetics. Humans – even lawyers – are very bad strategists.
Not long ago, an international group of scientists got together and devised a strategy game in which individual homo sapiens (100% of those reading this article) and pan troglodytes (common chimpanzees, none of whom are reading this article) played against each other. The chimps won hands down. In fact, they predicted the correct next move by their human opponents almost 100% of the time – way beyond the capability of humans.
Why is this? The answer, according to the researchers, is simple: many hundreds of thousands of years ago, humans traded the ability to marshal strategic thought (accurate long-term decision-making and goal-setting) for collaboration (being able to work together to achieve a usually short-term objective: hunter-gatherers had little need for long-term planning so it’s not really in our design-specs). Specifically, we invented language which made collaboration faster and more effective.
This gave us a huge advantage that enabled us to become the most populous ape on the planet.
Language and increased collaboration were our survival tools. We became increasingly reliant on the other members of the band that we lived and worked with. They could protect us, nurture us when we became ill or injured, feed us when we became infirm. Disagreeing or competing with other members of our tribe (or firm or practice) was not a good individual survival strategy. It still isn’t.
We also came to rely on another evolutionary trait which we acquired – very fast decision-making. To avoid being eaten we had to reduce the number of decisions we could make to three (fight, flee, or freeze) and to make up our mind which action to take almost instantaneously. What we lost in the process was the ability to make good, rational, and considered long-term decisions. When faced with danger, we didn’t have time to think things through or weigh the pros and cons.
This is why research has shown that the longer we take to come to a decision – or formulate a strategy – the worse it will be. ‘Gut decisions are the best,’ said Gerd Gigerenzer, author of Gut Feelings: The Intelligence of the Unconscious.
A chimp can quickly climb a tree or run fast enough to avoid predators or use his teeth and strength on prey. A sapien can’t. So, a chimp has the luxury of taking the time to use facts and reasoning to decide what the prey or predator is going to do next. In other words, to strategise. We don’t. We must use emotions – mostly fear and reward – to make decisions quickly. Emotions are processed faster than thoughts in the brain which is why our decisions are emotionally generated rather than factually based.
The science definitely says HSF’s Rigotti is right. Unless done extremely well, long-term strategy for lawyers is, probably, a waste of time.
Chimps are rational; we aren’t. Chimps can strategise effectively; we can’t. Not even lawyers.