Having stubbornly resisted disruption, the professional services sector is under significant pressure for a myriad of reasons – namely the need to put purpose before profit.
Technology is innovating established business models and clients have grown wise to the ways legal firms make money. It’s also increasingly difficult to tell companies apart. Against this backdrop, what should a firm do? The answer can be found in a simple question that is often difficult to answer.
Put purpose before profit
Understanding your customers’ needs and expectations has become a crucial concept as more people seek to foster relationships with brands. And for the avoidance of doubt – the answer is never just money. Purpose has become a key differentiator, with clients seeking repeat business from companies that match their own values. As Simon Sinek commented: “Increasingly people don’t just buy what you do, they buy why you do it“.
Purpose drives action
Take, for example, when the US grappled with the consequences of Hurricane Sandy in 2012. The storm took 85 lives and left 8m people on the east coast without power. Businesses chose to respond in different ways.
American Apparel offered a 20 per cent discount for 36 hours. Detergent brand Tide, on the other hand, sent mobile launderettes into the worst hit communities so people could wash their clothes free of charge. Similarly, Duracell deployed mobile charging points to boost connection. Both brands happen to be owned by a purpose driven business – P&G, which claims to, “Touch and improve more consumers’ lives with P&G brands and products every day“.
How many legal firms could truly respond in such a moment of crisis? And as a post-script to this story: American Apparel filed for Chapter 11 bankruptcy in 2014. That same year, P&G delivered $7bn in cash dividends to shareholders.
Being meaningful will help increase your value
Behavioural economist Daniel Pink has emphasised the point of putting purpose before profit. He said: “When the profit motive gets unmoored from the purpose motive, bad things happen.” That includes the destruction of financial value. According to UBS, the “Dieselgate” scandal could cost Volkswagen $4.3bn.
Meaning is something that should also be offered to customers and employees alike. While senior partners may not agree to the concept of putting purpose before profit, the younger generation is increasingly calling for far more than a good salary. That’s why it helps to offer a degree of autonomy, not to mention the opportunity to develop skills.
On the customer side of things, a 2015 study by Havas Media Group found that “meaningful businesses” gain 46 per cent more share of wallet and outperform the stock market by 133 per cent. Just like consumers, professional buyers use the vendor’s reputation as a shortcut to reducing risk and simplifying their selection.
How to be more purposeful
To truly put purpose before profit, you need to consider the financials and the societal impact of your business. At the same time, keep focused on what matters most to the customer. For a car manufacturer, one of the biggest issues would be air pollution. That’s why Nissan, which has invested in electric vehicles, stands out above the rest as an environmentally friendly brand. Likewise, be prepared to stand up, stand out and stand firm – discussed below.
IBM is a great example of a business that “stands up”. It was founded in 1911 with the stated purpose of using: “Information technologies…to benefit mankind”. Having a clear purpose that transcends a single product has helped the business stay relevant and adapt to changing technology.
When it comes to standing out, just take a look at Metro Bank. Unlike most UK high street banks, it focusses on what matters most to customers – flexible opening hours and staff trained to say “yes” as a reflexive action. Metro Bank now has £6.6bn in deposits, £4bn in loans and its customer experience is driving growth faster than advertising could.
So what about standing firm? Timpson the shoe mending and key cutting business is a great example in that it actively recruits ex-prisoners. They turned out to be among the most loyal and effective members of staff. Homeserve also deserves a spot on the list for its focus on delivering “good” as opposed to “fair” outcomes to holders of policies.
One engineer visiting the home of a 90-year-old man (in order to fix his tap) realised the man hadn’t showered for two years as it was also broken. Although not covered by the policy, the engineer sought approval for the parts and fixed the shower in his own time. How many law firms go beyond what is deemed the industry standard?
The future of law will belong to firms that put purpose before profit. Additionally, those firms will drive a distinctive and sustainable culture that will survive and prosper in the long term. With that in mind, your best years could be ahead of you!
Simon Bailey is a partner at The Caffeine Partnership, specialising in the law sector.