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How do GCs thrive amid disruption?

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In The Economist’s recent General Counsel US Insight Hour, “The Resilient GC: Rolling with Disruption,” we heard from Shannon Thyme Klinger, Chief Legal Officer and General Counsel of Moderna, a biotechnology company that went from $800 million US in sales in 2020 to more than $18 billion US in sales in 2021; Terry Theologides, General Counsel of Fannie Mae, a government-sponsored mortgage financing enterprise with $22 billion US in annual revenue; and Dev Stahlkopf, Chief Legal Officer and General Counsel of Cisco, a digital communications technology conglomerate corporation with $52 billion US in annual revenue.

What did these three leading General Counsels from three disparate industries have to say about thriving as the clock speed of change accelerates around them and their companies?

Here are the top five strategies that we heard in the session, along with some post-script commentary. (Note: comments have been edited for length and clarity.)

1. Be bold during disruption

Lawyers need the ability to not only adapt, but also to lead, influence, and operate in an environment that will continue to evolve, often without a clear path forward. In the face of disruptive changes ranging from department reorganizations to global health crises, the General Counsel advised: “Be bold.”

Terry Theologides (TT): The slow drip of incremental change and evolution is tougher to manage than those moments of externally driven transformational change. In moments of disruption, the organization is forced to think boldly and creatively. There is a common understanding that incrementalism won’t suffice. There is a mandate for transformational approaches which opens up the possibility to think differently about how to approach a problem or a body of work, and stakeholders are more willing to embrace the risk of bold change.

Crisis conditions make it easier to capture the energy and intensity of the moment and to mobilize teams. There’s an openness within departments and stakeholders that makes it easier to embrace more risk.

Shannon Thyme Klinger (STK): There’s no such thing as incremental change at Moderna — we are in massive change management in what we do as a function and a company. The company didn’t expect to be commercial for some years. What’s missing is what we as a legal function spend our time on — the infrastructure, the governance, the processes, the systems — not much of it existed as we leaned in to do everything that we could as a company to be part of the solution with the pandemic. All we see every day is change. That led to bold actions.

2. Build a culture of experimentation and fail – or win! – fast

An adaptive challenge is one for which no expertise about how to solve it currently exists. Making progress on an adaptive challenge requires leaders to create and sustain an environment where people can listen, learn, manage disagreement, experiment, and continue to focus on the work at the center of the problem.

The leaders all agreed that establishing this culture is critical to keep pace with the changing needs of the business and to be best positioned to take constructive action when disruption hits.

 TT: It is important to seize those moments of disruption, and to do so requires fertile ground and preparation. That is something I learned in the pandemic when my team at Fannie Mae was called upon to develop and deploy at massive scale forbearance, deferred payment, and modification programs to address the needs of homeowners and tenants in economic distress due to COVID. Rather than create approaches from whole cloth, the team looked back to tools we had piloted for other purposes or used in much more localized settings such as hurricanes. Those tools had been tried out and refined in a much smaller context, but that created less risk and greater certainty when totally unexpected events required us to come up with nationwide solutions in a matter of weeks.

Dev Stahlkopf (DS): Today you have to try new things, experiment, and fail fast. Not every risk or approach that we experiment with or pilot will be the right answer, pausing as you get to that inflection point to identify what works or doesn’t. Fail fast and move on. In the world that we’re in, it’s imperative that that’s how we operate.

STK: My team is well aware that I am perfectly imperfect. As we build this organization from a legal department perspective, and most importantly from a business perspective, as we try and fail in interactions that we have with governments and customers around the world, I try to bring that back and start the discussion of where I would do things differently. Innovation is at the cutting edge of wild success and catastrophic failure. If we’re not talking about those places where we tried, we failed, and we won’t go again, I don’t think we’re the best version of ourselves as leaders and as lawyers.

 But be thoughtful about areas where you can experiment and fail in a microsystem that allows you to do that before it becomes an issue you have to talk to the board about. When experimenting and potentially setting yourself up in a risky situation to fail, be very clear about your decision-making process, what advice you got (internal and external), and what alternatives you considered before landing on the recommended path of action. Be open in a timely fashion if things go a different way than expected.

3. Adopt an enterprise mindset (start with why)

When decision-making is consistently tied to the purpose of the organization, communication among legal and other business stakeholders is united and streamlined — all towards the common goal, the Why.

To enable this approach, adaptive leaders must ask some tough questions about the purpose of the organization, team, and functional areas and articulate that reason clearly and frequently so that every team member has a crisp definition of the mission. This becomes the team’s north star and provides a consistent framework to guide decisions and foster an inclusive, experimental, and collaborative culture.

STK: One of our big challenges was hiring rapidly to staff up those key functions that many of us were used to having in prior companies because they had existed for years. We hired a number of people all of whom had their own playbooks and ways of doing things that were steeped and based on assumptions of a ton of infrastructure and bureaucracy. The first change principle we had was: Remember the whiteboard.

If we all understand we are trying to build an organization whose sole goal is to bring the promise of mRNA technology to deliver transformative therapies to patients, then everything we thought we knew about how to execute a well-functioning legal department that drives impact for the business has to change and be re-examined. It first starts with me; have I explained the “why,” including how what we’re trying to achieve and how we as a legal department fit into what Moderna is trying to achieve as an organization? Are we clear, consistent, and repeatable on that message? Are we able to take feedback to make sure we’re consistent in the principles to drive change?

DS: As GCs, we are client-facing in a lot of what we do, sitting at that intersection of law, policy, and business, and so it is just as important to bring the business along with us. When we experiment and sometimes fail, it isn’t a purely legal question; it is in that intersection, which makes it both the most interesting and the most challenging part of our work. Bringing the business along is really important: providing clarity when we’ve got it, acknowledging when we don’t, and then being transparent about where we’re headed.

4. Hire great problem-solvers who embrace new methods and can tolerate risk

Thriving through change requires resilient teams with a high tolerance for risk and an openness to new ideas. As a profession steeped in tradition and that often looks backward and not forwards, the majority of our talent is not trained or otherwise programmed for risk (aside from avoiding it) or new, unproven techniques.

In response, legal leaders are finding novel ways to foster the innovative cultures required, including who and how they hire.

DS: A lot of the problems we face today aren’t problems with easy answers. They are problems with expert answers, if only we could find the expert. That’s an uncomfortable place for lawyers. We tend to be perfectionists at heart; we were trained to find the right answer, to calibrate risk, and give an almost quantitative answer. The challenges we are facing today don’t have those kinds of answers.

I think about recruiting over the last couple of decades and how that’s changed. Ten to fifteen years ago, I was looking for the expert in a particular area who would have the particular answers. Today with the pace of change, I’m more interested in problem-solving skills. I’m looking for the ability for people to reinvent themselves.  [For example, i]f there is a new area of law that we didn’t know would exist, looking for those people to learn alongside us and stretch into new areas that none of us knew would exist on the day we hired them.

STK: I hired two lawyers recently with less than a year and a half of private law firm experience, which is a first for me because I had previously wanted lawyers with some level of experience. I’ve found that they are the best to start the problem-solving process. They assume they aren’t going to have the right answers because they don’t come from a background with answers.

One tool we use to curate good conversations starting with hiring is Moderna Mindsets. We came up with twelve mindsets, some of which are actually in opposition to each other. We use this from hiring to retiring. We pursue parallel paths because optionality for an innovative company is important; we’re never sure which way we’re going to pivot. At the same time, we prioritize urgency. I have new team members come to me and say, “this makes no sense because if I’m pursuing parallel paths, I’m not getting to a decision which means I’m not prioritizing urgency. Which one is it?” The paradox is all about your ability as a lawyer and a leader to balance the “AND.”

TT: As I reflect on the skillset that I value now and try to cultivate in departments, it has evolved. Early on, it was pedigree and domain expertise. Now when I’m interviewing, especially in managerial roles where they are responsible for a body of work, I try to ask for examples of how they solved problems and improved processes — that’s the never-ending process. You have to find people who are dissatisfied with the way we were doing things and are always hungry for a better way.

 5. Capture your knowledge and learnings

A highly pragmatic takeaway: document your experiments and knowledge so you can learn from them and are well-positioned to review and deploy prior approaches as new needs arise.

TT: As we build a more robust legal ops function, we recognize knowledge management is an important tool and having archives more broadly of things we’ve tried, approaches that have worked, even some of the constituent documents can be very helpful. When I was relatively new to the company, I did not come with a toolkit well suited to that time, but fortunately, my team knew how to “put the band back together.” That is definitely one of the lessons I took. What happens if somebody retires or if they aren’t here? We need to preserve their knowledge to serve the department better.

DS: Knowledge management, I think that is the holy grail of technology solutions. The more you can optimize that, the better you are.

Originally published in Legal Evolution, November 3, 2022.