Outstanding article on innovation in services, insightful for law departments and their firms

Everyone who cares about innovation by lawyers should read the article in Cal. Mgt. Rev., Vol. 50, Fall 2007 at 174. It usefully and lucidly explains why innovation – “the combination of creativity and implementation” – by services providers differs from innovation by product providers. The latter get much more attention, but the former – services, which include law firms and law departments – account for most of the value created in our US economy. The three authors, one of whom is the Chief Knowledge Officer at Goldman Sachs and a former business school professor, draw on a case study of investment bankers, but their conclusions and recommendations apply well to lawyers.

They posit several cultural features of successful services innovators, which they describe as “fundamental enablers.” The authors then expand on five characteristics of service innovation, with many ideas that should stimulate managers of lawyers.

Law firms ought to take to heart the lessons of this article: innovation should be distributed throughout the firm; innovation is fluid and continuous; and innovation ties in closely to personnel practices and leadership. Law departments ought to recognize and encourage new thinking in the firms they use and, even more, should apply the same learning to their relations with their own work and clients.