Right now, adoption is more important than invention.

We are at the end of the beginning of one of the most terrifying periods in modern economic history.  An unexpected outside event has created massive unemployment, acute under-production, and isolated instances of tragic over-production all at once.  We are creating a fiscal crisis and waiting for a financial crisis.  With luck we will avoid a monetary crisis.  Nobody knows what next month will look like.

If necessity were the mother of invention, we could at least look forward to a flowering of invention during this time of such great and widespread necessity.  Sadly, necessity is not the mother of invention, as economic historians know. Normal Borlaug’s high-yield grains were not more necessary when he invented them than they would have been 100 or 1,000 years before.  Alexander Fleming’s penicillium was not more necessary when it came about than it would have been at any point in human history.  Necessity and invention just don’t relate like the aphorism suggests they do.  True inventions – things that are really new – are too complex and evolutionary to arise in response to a moment of necessity.  (For more on this, and much else, I commend Joel Mokyr,  The Lever of Riches (1990) (fine history of technological creativity).)

But surely necessity is the mother of something, for we all need solutions right now. Indeed, we have already started to create them. And in the legal market as everywhere else, innovators desperately need a road map for the present time: what will work now, as now is so different from any prior situation.  What should we be developing, and what should we be selling?

I want to discuss what’s really going on here, how it’s likely to play out, and the implications for legal services.  At a more basic level, I want to make some observations about how to survive the crisis.  I believe there are three key points to make here:

  • Crisis conservatism. Far from becoming more inventive during a crisis, leadership teams become more defensive and conservative.  There are several identifiable reasons for this, and they have implications for how a successful innovator should position her solutions in front of increasingly conservative clients.
  • Necessity, the mother of adoption. That said, even conservative leadership teams will readily adopt solutions that they feel are necessary to solve new problems.  Moreover, decision cycle-times are compressed, so those who aren’t frozen out entirely may discover that a ten-month sales cycle can happen in a week. Cf. Post 032 (financial crisis accelerated adoption of Pangea3); Post 036 (financial crisis accelerated adoption of Axiom).
  • Old tools for new problems. The firms that thrive in this crisis will almost certainly do so by reconfiguring old tools to solve new client problems.  They will cook with the ingredients they’ve got.  That’s not invention, strictly speaking, but it is a way of innovating that creates enormous value.

1. Crisis conservatism

There are so many reasons why management decisions become more conservative during a crisis that I will offer only a short list of the most important ones:

  • Solo decisions become group decisions. Groups revert rapidly to familiar solutions because the process of convincing others to adopt something new consumes energy and political capital that could be expended elsewhere.  During a crisis, more issues become group decisions – in every organization, the last three months have been a metronome of recurring team meetings, status checks and checklist reviews.  Cf. Post 008 (adoption least likely under “collective” decision-making). Once-small issues are now under the gaze of a leadership team.
  • Simple matters become CEO decisions. Otherwise simple things can easily reach the CEO’s desk or even the boardroom during a crisis.  As those decisions float upwards, decision-making criteria again become more risk-averse and solutions revert to the familiar.  This conservatism is always a feature of senior decision-making, but the range of issues touched by the CEO and board broaden considerably during a crisis.
  • “One-shot deals” yield a reflexively conservative mindset. Novel solutions are as unwelcome in a bet-the-company lawsuit as they are in your mother’s heart surgery or your daughter’s wedding.  Cf. Post 138 (discussing usual calculus for high-stakes work). During a crisis, more decisions take on that “one-shot” nature, as leadership teams realize that making what would formerly have been a small mistake could now be a company-killer.  Risk-aversion follows naturally.
  • Intensified loss-aversion. Crisis itself intensifies a leadership team’s sense of loss-aversion, the well-documented tendency of humans to fear losing $100 more than they value gaining $100.  As thousands (or millions) of businesses fail, decision-makers the world over will see themselves in danger.  They are primed to stick to the familiar.

So what do management teams focus on during a crisis?  For better or worse, the overwhelming focus is on not being blamed for mistakes.

We have all been involved in dozens or hundreds of conversations in the last three months in implicit or explicit pursuit of that goal.  Of course this is economically irrational and probably terrifically unhealthy.  But it is also unsurprising.

Unfortunately, boards focus on blame-avoidance even more than management teams.  Because more issues reach the board’s attention during a crisis, the overall effect is a powerful organizational allergy to anything that feels truly innovative.

For the innovators, the entrepreneurs and the giant-slayers, this is all very bad news.

2. Necessity, the mother of adoption

Yet innovators can still succeed in this crisis.  One major favorable change is the accelerated pace of a client’s decision and adoption cycle.  Non-critical decisions disappear, making way for rapid consideration of the day’s pressing questions.  An adoption process that may have taken years of negotiating under normal circumstances can rush through in a matter of days during a crisis.  (The analogy to Congress is irresistible, as it should be.  At some level, group decision-making is group decision-making, whether it’s twelve Sheldons in Silicon Valley or 535 professional fundraisers in Washington, D.C.)

But this describes adoption, not invention.  Necessity causes us to cook with the ingredients we have, literally and figuratively.  Flourless and egg-free recipes saw unprecedented levels of adoption around the world in March of 2020, but those recipes already existed.  Necessity did not cause us to invent a whole new cuisine.  Zoom was not invented in March of 2020, but I, like most Americans, adopted it on the same day I first heard of it – in March of 2020.

To return to the penicillin example, it is true that its discovery happened in the usual way – accidentally-on-purpose – in a lab at Imperial College London in 1928.  But much more invention was required to make it useful, and its adoption only occurred at scale when the U.S. War Production Board forced the issue in 1943.  There again, necessity was not the mother of invention, but adoption – and adoption is what matters anyway.  Penicillin saved no lives in the first half of the war; after Normandy, its impact was powerful.

For a legal sector example of in-crisis adoption of an existing innovation, consider Hotshot, an online lawyer training business reviewed at some length in Post 102.  Hotshot provides something that would be useful enough during normal times – a way of imparting to associates the complex, informal knowledge necessary to run major transactions and other complex legal work.  But associate development becomes that much harder when the office is empty.  There are no hallway conversations, partner drop-ins to associate offices, or practice area lunches.

Hotshot is, in effect, an existing solution to a new problem.  Even in the relatively early stages of this crisis, Hotshot is seeing increased receptivity to their innovative online solution.  They should be thriving during this crisis, and it could be an inflection point for them.

The mistake to avoid, then, is to think that we should be inventing new things to meet the new situation.  Instead, we should be looking around at what we’re already good at and imagining how to creatively apply those capabilities to the new issues our clients face.

3. Using old tools to solve new problems

Genuinely new problems drive adoption of innovations.  It is infinitely harder to sell on merely changed circumstances.  This is a tempting mistake to make, as everyone has changed circumstances during a crisis.  But as discussed above, crisis-type changes only intensify the conservatism of decision-making.

Here is a legal industry-specific example of the distinction between a new problem and a changed circumstance, and how the two differ in their effect on adoption of innovations.

Some organizations accustomed to dealing with a few hundred bankruptcy matters per year could easily now be faced with tens or hundreds of thousands.  (2010 peaked at 1.6m U.S. consumer bankruptcy filings; 2021 looks well-positioned to exceed that.)  A hundred-fold increase is a change in quantity that has a quality all its own – it presents an entirely new problem, not just a quantity change to an old one.

This is the kind of new problem that will drive an otherwise conservative client to adopt a new solution because there’s really no other choice.  Something must be done; the client must cook with the ingredients it has or can find.  In a case like this, it would be unsurprising to see established legal tech and process combined in a different way to solve the new problem of overwhelming volume.  In this way, the crisis is likely to lead to innovations that would otherwise have taken years to develop.

Here is what will not happen, by contrast.  Clients will not adopt new solutions merely because they are under cost pressure.  As discussed above, changed circumstances lead to more conservative reactions overall, and cost pressure is not the kind of new problem that leads to new solutions under conditions of group decision-making and senior-level oversight.  To the contrary, cost pressures are accompanied by a bet-the-company mentality at the CEO and board level, meaning that valuable legal matters will remain with elite and traditional providers even when dollars are very scarce.  (Elite law firms are also well-positioned to slide right in to handle the client’s bankruptcy work, so for them the money actually never runs out and there is, in effect, no cost pressure.)

Friend, prolific author, and sales guru Brent Adamson

So how should would-be innovators find new problems to solve?  For this question, I will recommend an old friend and Corporate Executive Board colleague, Brent Adamson, who points out that it’s actually terrible to ask a client, “How can I help you?” during a crisis like this. Why? Because this simple and honest question turns out to be surprisingly hard to answer.  It requires the client to consider what your capabilities are, matching them up to their own needs.  The client doesn’t know what all of your capabilities are, nor what you’re willing to do with them.  Especially in a crisis, everyone is struggling hard as it is to manage their own complexity; this innocent question may send them over the edge.  More to the point, it rarely results in a productive conversation. See David Brock, “How Can I Help?.” Partners in Excellence, Apr 3, 2020 (discussing and applying wisdom of Brent Adamson).

Here’s the right question: “What do you need?”  At this stage of the crisis, everyone needs things.  Everyone has a list of unsolved problems.  That list is the innovator’s gold mine.  Thriving firms will find those client “new problem” lists and use their existing capabilities to solve them.

I’ll end with a rather old story about using well-known tools to solve a new problem.  The Philistines were not a new problem for the Israelites – they had been foes for at least a few hundred years.  But though we aren’t given any background on Goliath, he appears to be a new problem for King Saul – to the point where the king and his men find themselves paralyzed on the edge of the battlefield for several days.

Once again, the crisis Goliath created did not lead to any inventiveness, but it does seem to have made Saul more open-minded about what solutions to adopt.  David, a teenage shepherd, offers to take on the great man; after some initial reluctance, Saul agrees.  Saul then offers David his armor and sword.  They were too big for David, of course (Saul was a head taller than any man in Israel, we are told), but they were also entirely unfamiliar tools to the young shepherd from Bethlehem.  David wisely chose to work the new problem with his familiar solution – a sling.  (Shepherds naturally have some time on their hands, and one imagines young David picking off locusts with the sling the way we might have targeted hapless neighborhood fauna with a Red Rider.)  In the event, David also made good use of a very large sword – Goliath’s own.

To the entrepreneurial Davids of today’s legal market – I say, good luck slaying your giants.  There is real opportunity now if you know how to find it.