Disruption is a Killer – Death by Lawyers

UPDATE – just ran across a great article about disruption that had a link to videos of great talks about harnessing disruption. Trendhunter article.

If you are at a big brand and you are not afraid of the exploding crop of startups bent on gutting your business, you should be. They have advantages that you do not have. New technologies enable them to scale faster than ever before and your reliance on legacy technology and legacy thinking will have you walking in wet concrete – soon to stop.

One of the advantages that startups have can also be their biggest blind spot. Startups by their very nature are lean organizations who put all their energy into a killer product or service. Every cent counts, and their blind spot is the exorbitant fees that they think lawyers will charge them for legal counsel. Without debating legal fee structures, let’s just accept it. Unless one of the founders is a lawyer, or they have a friend who will do them a favor, their chances of engaging a lawyer is small.

This gives them incredible flexibility though. They can push boundaries because they do not know there are boundaries. What some find is that the boundary wasn’t a boundary at all. With the right outlook on customer service, mistakes made are quickly forgotten by users. How many of you Zappos customers out there have forgotten about their data breach?

Can your big brand emulate this? With the right partners you can, but you need to find the right partners. In the legal realm, there are too many lawyers that are focused on the risks, enamored with the nightmare scenario, and technologically illiterate. These are not the right partners and will stand in the face of your disruptive innovation. If you work with these types of lawyers, find better lawyers, or be content with your place in the world.

There are good lawyers out there that are the total opposite, though. They are technology hounds, they love a good set of mental gymnastics to justify an approach, and they will take a calculated risk if it is the right thing to do. These are the lawyers you need to find at your big brand. A good place to look for these types of lawyers is in your intellectual property group, if you have one. The lawyers handling your IT contracts may also be a good place to look as well.

While startups may not consult with lawyers, the legal risks they run don’t just go away. They are still there. In some cases the risks they run will put them out of business. There are many more of them, though, then there are of you. Some will survive, and those that survive will marginalize your business. By ignoring the legal risks during the formation of their business, they might be able to find out that the risks really aren’t there, which makes their business more agile than yours.

Now that I have angered many corporate counsel out there, let me say that the lawyers inside your big brand are not the only problem. All those who are content with the status quo are your enemies. Look at the biggest disruptors out there today and invariably they did not come from a big company. Did Bank of America show us how to aggregate our accounts in one easy to use interface? No, that was mint.com. Did any big brand who us how to connect buyers and sellers across the internet without the friction of a flea market? Nope, that was ebay.com. In some cases, the resistance may have been legal, but in other cases your management is the resistance.

Truth be told, I don’t think any big brand can move fast enough to be a disruptive force. All the inertia that keeps them going, keep them on their path. At best, they can be fast followers. You need to be fast enough, though. That requires the best lawyers you can find. Those lawyers need to understand what is happening in the industry almost as well as your business folks. You can’t spend an inordinate amount of time explaining it to them. You may also lose the advantage you have as a big brand with counsel at your fingertips – effective issue spotting. If they need to have the technology explained, they do not understand it deeply enough to spot all the issues.

Is there a happy medium? Maybe. Though the advantage lies with the lean startups, as it always had. No preconceptions and no inertia lend to quicker acceleration. In the aggregate, they also have the advantage of numbers. The chance of any individual one of them disrupting your business is small, but the chance of one of their numbers disrupting your business is too great to ignore.

The solution at your big brand is to not ignore the lawyers and move. Find the right lawyer, engage them early, make them a partner, invest them in your success and step back. They will be a force multiplier, and they will help you get to that fast follower status. Don’t kill the lawyers, please.

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