When Shifting Strategies, Cultural Shifts Must Follow

For a law firm to practice Great Law, its attorneys must not only understand the difference between strategy and culture, they must pursue them both separately and deliberately. A heavy emphasis on strategy cannot make up for a lack of attention to culture cultivation.

Raghu Krishnamoorthy, vice president of executive development and chief learning officer at GE, understands this concept well. Krishnamoorthy’s recent article in Harvard Business Review explains how the conglomerate has continuously updated its strategy and culture in tandem throughout changes in leadership, industry disruption and unexpected external factors.

“At GE, we have stayed competitive for more than 130 years because of our relentless quest for progress on all fronts, including culture,” Krishnamoorthy said. “We believe that there is no such thing as a 130-year culture. In our opinion, culture is contextual, and what would have been appropriate in the 19th century, when the company was a one-product, one-country organization, is very inappropriate in today’s far more globalized environment.”

The latest upheaval of GE’s culture is based largely on crowdsourced input from the company’s own employees, in an effort to “drive a culture that the employees wanted to see.” The result is a culture built upon smart simplification, where the comparatively lean management of today’s startups are applied to the multinational behemoth.

Annual strategic planning summits are gone, replaced with a continuous process of evaluation and adjustment that makes GE more nimble. The company invested heavily in developing a new workflow program, FastWorks, which endeavors to deliver faster, better results to GE customers using fewer resources. GE’s IT experts are viewed as valued assets rather than growing expenses. These are all strategic changes, but GE has matched each one with new core values to ensure that its culture keeps pace with its strategy.

Law firms have long held a reputation for being slow to adapt to such changes, but that perception is undergoing its own change as more firms turn away from Big Law and edge toward Great Law. And those forward-thinking firms would be wise to learn from GE’s example – as circumstances force new business strategies, firm culture must respond in sync with the new strategic plan.

The same kinds of factors that have spurred change at GE are also putting pressure on law firms of every size. Founding partners are retiring and firms are merging, resulting in new leaders who will want to take their firms in new directions. Disruption is coming from both inside and outside the traditional legal industry, largely in the form of new technologies that automate or simplify basic legal services. Unpredictable, external events will also continue to squeeze the industry, just as the Great Recession forced corporations to rethink the open-ended hourly legal fees they’d been paying for decades.

It’s easy to see the need for new strategies to respond to these factors. But tomorrow’s most promising firms are those that can see the need for cultural change as well.