Competition vs. Cooperation

I posted this on Texas Business 411 today and thought it was worth posting here as well because I believe that the future success of a law firm depends on its ability to create customer (not "client") teams that develop a deep knowledge of the customer, its business model, and its market so that the team (and therefore the firm) can provide more value to the customer than can currently be done profitably on an hourly-rate billing model.

Here is the post:

I am currently reading a book I should have read years ago: The Seven Habits of Highly Effective People by Stephen R. Covey. It is on the shelf in this blog's Reading Room which you can access here. One of the stories told by Mr. Covey is about the president of a corporation who was "trying to get the fruits of cooperation from a paradigm of competition."

The goal of the company was to work together for the good of the company but in realty what was set up was a competition among the people who worked for the company. At the end of the year the person with the best numbers won a free trip to a tropical paradise. This "reward" did not foster a spirit of cooperation among the president's employees but rather a fierce competition. This created a lose-lose situation for the company and its customers.

Unfortunately, I see this in a large number of businesses that I represent as well as a large number of businesses that I patronize. Rather than sharing information and working together to increase the value proposition of the company the employees tear the fabric of the company because the paradigm is flawed. To address the problem, Mr. Covey created a paradigm that rewarded cooperation rather than competition.

Many professional service firms are starting to understand the importance of this paradigm shift as well. In order to create more value for customers professional service firms are increasing the value of the firm to their customers by creating a paradigm of cooperation by creating customer teams.

Customer teams are slowly becoming recognized by professional service firms as a way to increase the value to their customers. Accountants are doing a much better job than law firms at this but I believe the future of law firms depends on the ability to do the same. That would necessarily require a shifting from hourly-rate billing to value billing - which accountants are doing a better job than lawyers at as well. Value billing and shifting to a team approach to solving customer problems is the future of law firm success.

The fact that professional service firms can and are employing internal cooperation rather than internal competition is proof that Covey is right. If your business is still using a paradigm that awards competition and not cooperation (for example, among your sales representatives) than your company is sure to be left behind by those that are.

The central point is that by creating a paradigm of cooperation rather than competition is a win-win for both the company and it's customers.