Can the Good Guys Win?

post # 49 — April 13, 2006 — a Managing, Strategy post

Adam Smith has commented on my article Are Law Firms Manageable?

There is also a previous blog post of mine with really good comments from other visitors here

I thought I would pick up he conversation and my reply with this new blog post.

In Adam’s summary of my arguments, he asks me a direct question as to whether a group of like-minded people could create a more effective firm, and whether or not that would create a competitive advantage.

As anyone whoever took an economics class knows, you cannot always assume that virtue will triumph. Even if something confers a competitive advantage, that doesn’t mean it will always emerge.

I seem to remember from my economics courses hearing about Gresham’s Law of money, that the existence of counterfeit money will always drive out the value of good money. The bad guys can triumph by destroying confidence.

So, in a competition between trusting partners and untrusting partners, which will win – within a firm and between firms?

My life experience is that, as often as not, disorder triumphs. A trusting partnership can and does exist, but it is a delicate flower, easily torn apart unless it is carefully nurtured.

Civilization will, perhaps, eventually triumph, but in the short run the warlords can and do stamp out what appear to them to be weaknesses.

Trusting, collaborative firms can be sustained, but I am very cynical whether they can be created by transforming today’s firms.

As Clayton Christianson reported in his book THE INNOVATOR’S DILEMMA, innovations almost always come from outside the existing order of things, not by getting established players to change.

If a truly collaborative, competitive firm would have an advantage (which I first suggested back in 1985 with my “One-Firm Firm” article, later included in Managing the Professional Service Firm), then why have collaborative firms not triumphed yet? Why are the internally competitive firms so much more common and getting all the press?

Can anyone show that the few collaborative are, in fact, more profitable or otherwise successful?

I can prove it with data outside law firms (my book Practice What You Preach, and Jim Collins has proved it with corporate entities, but could it be that, when it comes to law firms, I am completely wrong. Could it be that collaboration, trust, effective functioning as an organization is, in fact, not a competitive advantage? I think it is, Mr. Smith, and I think that you think it is, Mr. Smith, it’s just that the lawyers don’t seem to think so! And they’re our clients, right?