The Wall Street Journal published Krafts Stale Strategy last Thursday (12/18/03) describing how Krafts line-extension strategy has failed to develop revenue growth. Before I relate this to lessons for law firms, some backgound
Line or brand extension refers to taking an existing brand name and applying it to a similar product. Retailers use this to eke out additional sales and extra space on store shelves. When I was a kid, there was one type of Oreo cookie; now there are many. Thats line extension. As the article says, in inimitable WSJ style, this new cookie crumbled. The failure to develop new products and brands is coming back to haunt Kraft in slow growth.
After reading this, I was thinking if there are lessons in it for law firms. Law firms have increased revenues by merging, adding or creating new practice areas, and raising rates. But they have not created any fundamentally new service or offering. Where is the new concept or brand like a Starbucks or the derivative instruments Wall Street invented?
Its not easy for law firms to create new services, but they can probably do more to enhance revenue growth. And technology can contribute to that growth. Can I.T. Uncork Corporate Growth? , an article in the December 2003 issue of Optimize magazine, is a good read for law firm managing partners and CIOs. The article describes five ways to increase revenue growth:
The authors suggest that customer relationship management software can help across all fronts, but it is, at best a partial solution. Other operational systems and adjustments may be required, including devising new systems that support new business models, for example, Dells direct selling and Wal-Marts mastery of the supply chain.
While the model set forth in the article may be hard to apply directly to law firms, at minimum, firms should think through how to improve the service they provide using technology. Options that could help with top line growth via a better service include
Achieving growth in excess of the overall economy or the legal market takes work and creativity. There are many capable competitors in the legal market and no firm has a lock on business. Technology by itself may not drive growth for law firms, but it is an enabler for many of the most readily available growth strategies. [Strategic Legal Technology]