Searching for Value
Paul Hughes of Cranfield School of Management explains about the value proposition - and why GCs need to be in the know.
T H E V A L U E P R O P O S I T I O N
CRANFIELD SCHOOL OF MANAGEMENT
How much can an in-house lawyer affect the value proposition of an organisation?
That’s quite a big question. I would argue “a lot”. If we accept that premise, then we can move on to a far more interesting discussion: how?
But first: why? An enhanced approval-rating for in-house lawyers that deeply appreciate their organisation’s value proposition was something that emerged during research we did in 2011/2012. It became clear that those with insight into this concept – those who fully understood it, were articulate about it and clear in what it meant to those who received it – were typically the lawyers most valued by non-legal colleagues in their businesses.
And the link goes beyond just being valued. Those who deeply understand their company’s value proposition tend to be more influential and are associated with greater positive impact. In short: to get more clout and control, you need to get deeply under the skin of your customers, clients or those who receive your services. Develop an appreciation of the value proposition of your organisation as well as any marketing, sales or customer service professional and you’re already on the road to having more impact than the majority of in-house lawyers.
So what does the term “value proposition” actually mean? To grasp that, start with the question “what does your organisation exist for?” But surely you know that – it is after all a fairly rudimentary question. Yet it might not be as clear cut as you first think. For example, if you’re an in-house lawyer working in an organisation right now, where did you gain your understanding of its value proposition? Because being clear on the source of your perspective is important. To illustrate this, let’s delve a little deeper into the organisation you work for.
So what areas should you be exploring (through dialogue with other stakeholders) to enhance your understanding of your own organisation’s value proposition?
- How well do you understand the universe your organisation sits in?
- What is the ecosystem it is a part of?
- Who owns it?
- How is your organisation financed?
- Where does the money come from?
- Is it debt or equity?
- Where does it go?
- What are the changes at a macro level that would have an impact on your organisation?
- How well do you understand them?
- What does it exist to do?
- What is it that you exchange money with your customers or clients for?
- Why is it worth what is paid?
- Who receives the benefit from the value proposition?
- Is it the same person who is paying the money?
- Why are they paying money?
- Why do you offer this particular value proposition, and not something else? How did this evolve over time?
- What’s the history?
- What might it look like in the future?
- Who does this value proposition compete with?
- Do you have single or multiple value propositions? How does the organisational culture impact the way it delivers the value proposition?
- What assets does it have in order to achieve the value proposition?
- Finally, who would you need to learn about this from, in the most efficient way, so as to best use your time?
- Who are the experts?
- Who would enable you to explore these topics without making you look foolish?
First: is it a private or not-for-profit body? We’ll deal with the latter first. “Not-for-profit” means that it doesn’t exist to make money as an end in itself, but instead exists to serve a different purpose. Donors provide money for it to “do something”. In civil services, those donors are you and I with our taxes. In charities they may still be you, me or others knowingly, or (through tax breaks) unknowingly. NGOs also have donors, as do third sector bodies like the UN, and like all not-for-profit organisations, they exist to do something. Those funding them thought that something was a good idea and they would like their money to be used to get it done. How do you describe that something? That’s the not-for-profit organisation’s value proposition.
So what is the value proposition that the not- for-profit exists to deliver? What “value” does the donor seek? If you don’t fully comprehend what that value proposition is, you are really up against it as an in-house lawyer. So said Geoff Wild of Kent County Council during a fascinating lecture he gave at Cranfield in 2013. If you work in the not-for-profit sector and you haven’t come across Geoff, I recommend that you google him, because what he has achieved there really is quite remarkable. Not to mention incredible. He and his entire team have a fine and detailed grasp of every service-line and offering made by the Council in pursuit of delivering its value proposition. And this grasp is as detailed – if not more so – than that of any non-legal colleague in the Council.
‘If you don’t fully comprehend what that value proposition is, you are really up against it as an in-house lawyer..’
Let’s look now at the private sector. The commercial world actually has a similar model to that of the not-for-profit world, although the money comes from investors (who may also be owners), rather than donors, who want the organisation to “do something”. But instead of that something solely being the delivery of an outcome, the investors are interested in that outcome as a tool for giving them what they really want: a return on their investment. The value they want to achieve is a financial return. But that’s not the value proposition. The value proposition is how the organisation provides value to customers through goods or services. And this is conceptually the same as the not-for-profit model. The value proposition is what an organisation does that benefits the recipients of its goods or services.
So how do you go about understanding this value proposition? Interestingly, our research showed that the methods employed are actually quite important. Desk work is involved, often using tools and techniques that you’d expect to see an MBA using. Though not widespread, PESTLE [a tool used by companies to track the environment they are operating in, or are planning to enter], Five Forces [a framework developed by Michael Porter to determine the level of competition and resultant attractiveness of an industry] and so on made an appearance in our findings. But it was the level of understanding gained through investigation and questioning, by actively engaging and involving other stakeholders in the inquiry, that really stood out. Those that gained their insight in this way were perceived as far more impactful in affecting the value proposition of the organisation. And lots of evidence was gathered to support this perception.
Yet, sadly, our ongoing research shows that the habit of probing and investigating the business is often absent from the daily practice of in-house lawyers. There are a myriad of reasons for this, to be examined another time. But it is important to grasp that those who actively seek to find out what they don’t know are the ones perceived most positively by other stakeholders, and as “understanding how things really are” the most. Those who spent their time just “getting on with doing the work” were viewed less positively. And, please note, this does not refer to conducting surveys or questionnaires. We’re talking good old-fashioned conversations.
Doing this without looking foolish is crucial, of course. But I’d argue that not questioning how to deepen your insight would make you look even more foolish.
For the in-house team to affect the value proposition, the concept, once understood, must be stitched into the fabric of the legal service. It must connect – and be obvious to everyone that the value proposition is what you exist to support.
At Kent County Council, Geoff Wild and his team use their understanding of the Council’s value proposition to influence their own choices and actions. How did they do this? From the outset, Geoff set out to identify “the real people, their real problems and from that, work out the real solutions” that were needed. He and his team are constantly checking and scanning the internal and external environment to understand the organisational challenges the Council is dealing with. Doing this means that they are clear that what they do is fully aligned to serving this greater organisational purpose. Geoff’s legal team has been so successful that – through a shift in legislation – it now provides services to other county councils keen to take advantage of this higher value service. The team is generating fees in the millions, in addition to the work it does for Kent. Who says there is no enterprise in the public sector? And there is innovation too. Spend time talking to Geoff and those in the Council and you’ll realise that the legal function is genuinely seen as a partner that “gets” what other departments are trying to do.
‘to get more clout and control, you need to get deeply under the skin of your customers.’
Another instance of an in-house team with strong insight into the value proposition that emerged from our research was that of Premier Foods under Suzanne Wise [Suzanne is now group general counsel of Network Rail]. The hard work the department invested in understanding the value proposition was partly responsible for a recovered and stronger share price, despite a business model saddled with huge debts. Working closely with the commercial team it developed new and innovative ways to manage a challenging customer base by fully appreciating the value proposition and using it to create a common language. And if anyone gets the chance, I strongly recommend reading the article about Suzanne Wise’s Network Rail team in the first edition of GC again through this prism. You’ll see all the evidence of how hard she is working to understand the organisation she is working for, from a value proposition perspective.
And there are just two examples, although they illustrate why I answered the question about how much an in-house lawyer can affect the value proposition of an organisation with “a lot”. If you want to add a lot of value too, then make some time to revisit how well you understand your own organisation’s value proposition.
GC considers more examples of in-house teams doing just this in the regular feature From Client to Colleague, which in this issue looks at how The John Lewis Partnership’s commercial legal team operates within the company’s unique model.