Marines and Mercenaries

post # 228 — November 1, 2006 — a Managing, Strategy post

In 1985, I wrote an article for the Sloan Management Review called “The One-Firm Firm,” which turned out to be one of their best-selling reprints.

It identified a strategy common to leading firms across a broad array of professions – creating instituitonal loyalty and team focus.

The firms named in that article were McKinsey, Goldman Sachs, Arthur Andersen, Hewitt Associates, and Latham & Watkins — still today pre-eminent and fabulously successful firms. (Assuming you accept Accenture as the legacy successor to Arthur Andersen, that is.)

Today, I have added to my website a new article “The One-Firm Firm Revisited” coauthored with Jack Walker, former managing partner of Latham & Watkins. (“The One-Firm Firm Revisited” can also be downloaded in pdf form.)

We examine what has happened to these one-firm firms in the past 21 years — what they have preserved, what they have abandoned and what they have modified.

The one-firm firm approach is similar in many ways to the U. S. Marine Corps (in which Jack Walker served). Both are designed to achieve the highest levels of internal collaboration and mutual commitment in pursuing ambitious goals. Loyalty in one-firm firms, and in the Marines, is based primarily on a strong culture and clear principles rather thanon the personal relations or stature of individual members. The key relationship is that of the individual member to the organization, in the form of a set of reciprocal, value-based expectations.

This, in turn, informs and supports relationships among members — who often do not know each other personally. Everyone knows the values they must live by and the code of behavior they must follow. Everyone is commonly and intensively trained in these values and protocols. Everyone also knows that if an individual is in trouble, the group will expend every effort to help him or her.

Marines have a special bond and a shared pride, built on shared values and a shared striving for excellence with integrity. Critical to the success of the organization is respect for both the past and the future. Every marine grasps the concept of stewardship — the organization, its reputation, and its very effectiveness have been inherited from previous generations and are held in trust for future generations.

A contrasting, and more common, approach to running a professional service firm is the “star-based” or “warlord” approach, which succeeds by emphasizing internal competition, individual entrepreneurialism, distinct profit centers, decentralized decision-making and the strength that comes from stimulating many diverse initiatives driven by relatively autonomous operators. The rainmakers of the firm are the warlords, and their followers, the mercenaries, are doing it for the money.

Which would you bet on to win? In which environment would you want to work?