By Marc Totaro, National Manager Professional Services, Business and Private Banking, Commonwealth Bank of Australia
For some, the word innovation has become synonymous with some of the most cutting-edge changes within the legal industry, and a disruptive force in legal circles. For others, the prolific references to innovation have firmed its place as another corporate buzzword.
In today’s rapidly changing legal services market, we think that innovation is an important part of adapting to ongoing change. But to understand its place within business, we first sought to offer a definition that would unearth the common traits of successful innovation in the legal sector and quantify its value to individual firms.
So what does innovation mean for your business, how innovative is the professional services sector, and how can you put it into practice within your organisation?
In our latest research into the state of innovation within the industry, CommBank spoke to firms in the legal sector to understand the state of innovation and how well legal firms were performing.
To first define innovation, we looked to the Oslo Manual – an international set of guidelines used by the OECD and local government bodies such as the Australian Bureau of Statistics to collect and interpret innovation data.
Therein, innovation is defined “as a new or significant improvement in one of the following four key areas – organisation, product, process and marketing”.
This definition is important when compared to what innovation means to professional services businesses, with almost half telling us they equate innovation with improvement or new processes, ideas or products.
While this indicates that many firms have a high level understanding of the tenants of innovation, we also found that many are yet to enter the realm of genuine innovation when assessed against the international standard.
Our research shows healthy levels of innovation amongst professional services firms, with 44% of businesses in the sector qualifying as ‘innovation active.’ This proportion was in line with the national average for businesses across all industries. The top performing industry was manufacturing, with 61% qualifying as ‘innovation active’.
While 44% of professional services firms were genuinely innovative, a further 33% of firms claimed to be innovating but were found to be simply putting in place improvements – a strong foundation to move into the realm of innovation, but nevertheless falling short.
The remaining 23% of firms were either not innovating or had abandoned their innovation plans.
When looking more closely at the four key areas of innovation - organisation, product, process and marketing – we found that firms were more likely to have implemented organisation-based innovation, and less likely to be innovating within their marketing activities.
Business size also appears to factor into firm’s innovation activities with small and medium sized businesses with turnover up to $20 million more likely to innovate than those with greater annual earnings.
3 Key Characteristics of Successful Innovators
Our investigation of the attitudes, behaviours and characteristics of successful innovators shows that there are three breakthrough factors that typically distinguish innovation active businesses from their peers that are only improving:
1. Encouraging employees to ask questions that challenge the conventional approach
2. Adapting products and services to make the most of opportunities, and
3. Running experiments and piloting new ideas to test new ways of doing things
These three factors work to kickstart innovation and generate the initial successes that drive businesses to pursue the benefits that moving up the innovation curve can provide.
One of the largest behavioural gaps between businesses who are innovating and those simply making improvements is their drive to adapt their products and services for a changing market. They also seek to build a culture of innovation and encouraging them to ask challenging questions.
If your firm has successfully implemented an innovative new initiative or is doing something different in response to the changing legal landscape, then enter this project in the 2017 ALPMA/LexisNexis Thought Leadership Awards. Nominations are open until 21 July, and winners will be announced at the 2017 ALPMA Summit gala dinner on Thursday 14 September at the Brisbane Convention and Exhibition Centre.
About our Guest Blogger
Marc Totaro is the National Manager Professional Services, Business and Private Banking Commonwealth Bank of Australia
Marc has over 25 years of experience in professional and financial services in Australia and the UK. He has overall responsibility for Commonwealth Bank’s professional services industry strategy and client experience. Marc has extensive relationship management experience across a broad range of industries.
If you would like to discuss the latest trends impacting the legal industry and your business, feel free to contact me on 0477 739 315 or email firstname.lastname@example.org, alternatively you can read our Legal Market Pulse for the latest developments in the legal industry.