Co-authored with David Clarke, UnitedLex Chief Experience Officer, & David Edelheit, UnitedLex Chief Transformation Officer.
Too often we look at transformation through rose-colored lenses: it serves as the de facto answer to a range of business problems. Yet all too often it's implemented half-heartedly as people go through the transformation motions. But if one thing is abundantly clear in 2021: transformation can be many things, but it cannot be faked.
So how do you know when your transformation is real?
For transformation to ignite in an authentic way, businesses need to experience a catalytic event. For example, think back to when cyber teams were buried deep in the business, overlooked and neglected by the C-Suite. The cyber conversation was focused on risk and responsiveness. Cyber didn’t become a priority until there was an incident.
Then a shift happened, one that opened up the minds, budgets and commitments of businesses, and took cyber to center stage for transformation. That shift was driven by major public breaches. The world’s largest and must reputable companies were publicly attacked and witnessed their brands, customer loyalty, and bottom lines deteriorate as a result.
The most forward-looking companies did not wait to react of potential breaches. They thought beyond digital break-ins. They realized cyber was a critical component for deeper personalized experiences, driving technology innovation and enabling a business to scale and grow.
Businesses don’t go all in and commit to change unless their challenges rise to the highest-levels of concern and become an imperative. When companies and their leadership conclude that their very existence is at stake, only then can wholehearted transformation that fundamentally changes an organization take place.
As we look across business departments, there are four areas that have been underserved and underfunded, and yet their time for hyper transformation has come given the significant opportunity to drive value and preserve corporate interests. Let’s take a look.
1. Intellectual Property from Protection to Prosperity
The IP department is charged with protecting and creating long-term value, but only 5% of the business focuses on the latter. IP primarily focuses on protection, even though IP theft is inevitable. Trying to take a last stand like Custer and fortifying yourself against all enemies is a poor monetization strategyIn-house IP will know their transformation is real when they aren’t just taking a defensive posture, but helping drive real business growth. IP rights and reputation are the future of many organizations, and they don’t even realize it yet.
According to the Aon and Ponemon Institute, for S&P 500 companies, tangibles like real estate and equipment comprise just 16% of company value, while intangibles, such as IP rights and reputation, are 84%.
The imperative to transform will happen not when the CFO questions the cost of protecting assets and wondering what P/L benefits they get, but when one enterprise hits the legal honeypot and publicly celebrates a needle-moving financial mega verdict windfall that hits the bottom line like the lottery. Similar to Cyber, a few big celebrated successes will make leadership look internally at their unmonetized assets. They’ll soon realize that there is “gold in them thar hills.”
2. Empathy-Powered HR, Driven by Emerging Technology
As Peter Drucker said, “most of what we consider management is making it difficult for people to get their work done.” Technology is meant to help manage your employees, but you still need to know your employees. The human quotient is the last – and most important – mile in HR. And the race is about to start.
HR will know their transformation is real when they start to ask the burning human questions. These questions exist in the space between technology and process, and when CHROs are elevated to C-Suite status. These include:
How is a team’s health doing compared to their performance?
Why did three diversity candidates leave?
What university will provide me the best fit talent?
What types of experiences make up the recipe for leadership?
In short, what’s missing is an AI solution that will focus on getting ahead of the very real human challenges that organizations face. We’ve been focusing too hard on how technology products can help our customers, but not focusing on how they can help us improve our internal teams, our culture, and our employee experience.
The imperative for HR transformation will not be when yesterday’s high-flying blue chip company dwindles to the pink sheets because the human element and culture is rotten. It will be the opposite: when investors reward Environmental Social and Corporate Governance (ESG) organizations not based on their quarterly revenue growth, but for their faith and confidence in the human aspirations of a business. After all, the companies with the happiest employees, usually also have the happiest customers, too.
3. Low Friction & High Acceleration Globalization
This is the most complex and challenging area [a bizarre statement with NO context – I do not believe this section at all], as only the largest organizations that need to scale actually want to climb this mountain. “Global” is spread like cream cheese all over a business. But in most instances, it is disparate pieces and part of a disconnected vision. There are so many holes from service to resource management to accounting practices that global is the least mature and highest friction aspect of the enterprise.
“It is just not worth the squeeze” is commonly heard in meetings by mid-level leaders, as they are in the trenches spending more time trying to get things done, than actually doing them. Why? Because it is expensive, time-and-people consuming and needs a long-term commitment since it takes years to see results and even longer to see an ROI.
The imperative for global transformation is already happening as traditional industries are reimagined, building new ways of operating and executing on highly scalable business. They are partnering and outsourcing core functional areas of the business to the cloud. Yes, this might not be a simple answer for complex enterprise businesses as they have much to unravel and change their way of working. Fast scaling new businesses are staying focused on what they do best and what they want to be known for, and functional departments like HR, finance, legal and technology are be trusted to partners that are focused on what they do best and have the innovative vision and commitment to bring more value than can be achieved internally.
It is not often acknowledged, but the legal function sets the pace of business. Whether it is managing compliance risks, protecting your unique assets or how fast you can contract, legal has a direct impact on the financial P/L of a business.
According to a Gartner study, the C-Suite is placing their bets on transforming their law departments into digital machines with boosted tech investments, a three-fold increase by 2025.
The C-Suite expects a return on their dollars. Law departments will know their transformation is real when CEOs freeze hiring and mandate law departments to extract value from automation and make good on those digital investments.
The imperative for legal transformation has been accelerated due to the pandemic. Large cost take out initiatives are the highest priority for many businesses. As legal adoption of technology has increased over the last year, so has the data that is being collected on their performance. In the past, the C-suite might have looked passed legal, however, now CFOs are questioning the legal function’s fitness for growth.
The world of business has its own laws of physics. The fact that organizations actively resist real transformation is as sure as gravity. It’s also true that change is an equally powerful force that always finds a way of breaking through facades. Agitation breeds innovation. But, why wait for a catalytic crisis that sends you careening into the unknown to evolve? Why not use the advantage of time to get a jump on change? These segments of the business can see it coming. Take hold of transformation before it takes ahold of you.
This story was originally published on Corporate Counsel. To read more, visit 4 Areas Ripe For Transformation by David Clarke.