Riding Schumpeter’s Gale
Fast-evolving industries and tech-driven disruption means modern jobs can defy categories. We find GCs coping… and sometimes thriving.
Storyteller. Ninja. Scrum Master. Brand Champion. Evangelist. The modern commercial world has created many new genres of work, but sometimes it’s hard to know what they mean. As the London School of Economics’s headline-grabbing anthropologist David Graeber once wrote, ‘It’s as if someone were out there making up pointless jobs just for the sake of keeping us all working.’
But, argues Nathan Furr, professor of strategy and innovation at INSEAD in Paris, the phenomenon of ‘bullshit jobs’, as they are increasingly derided in popular culture, is not a simple tale of corporate indulgence, but one of confusion and insecurity afflicting some of the world’s most established businesses. ‘A lot of chief executives are wrestling with a very basic question: What do we do? It just isn’t that obvious what many established businesses’ core activities are anymore. The knock-on effect of this uncertainty is a large amount of internal reorganisation and new roles to “deliver end-to-end customer journeys” and “communicate across silos”. The senior executives I work with are wrestling with the question of how they can respond to the challenge of disruption and continue working profitably.’
As many of the world’s largest companies search for the essence of their corporate purpose, general counsel inevitably see their roles changing. Orange Business Services’ newly-appointed GC Dirk Naumann says, keeping on top of the increasingly disruptive landscape is now central to his role. ‘Our competitors are becoming blurry. Suddenly we are competing with the cloud, Amazon, HP, all sorts of businesses we did not traditionally compete against. In-house teams in the telecoms space have felt like experts in the field since the 1990s, but suddenly established procedures are disrupted. We need to be more agile, more customised to the matter we are dealing with. To stay ahead, it is important we don’t continue to act as we have in the past.’
So entrenched has this movement become, the in-house community back in 2016 formed its own group for counsel working in tech-driven new ventures, the Disruptive GC group, but this spirit is rapidly spreading throughout the in-house community.
For Novartis’ chief legal innovation officer, Maurus Schreyvogel, evangelising creative disruption is not to be taken lightly. ‘The pharma business is undergoing rapid change with a flux of new players squeezing themselves in between manufacturers, patients, insurers and healthcare professionals. We need to define more effective ways to communicate with all those parties. Having people within the organisation who perform non-traditional roles is becoming very important and it is mission-critical to get our heads around disruption if we want to stay relevant to our customers.’
It is an increasingly familiar narrative in an age when Clayton Christensen, the father of disruption theory, has become the most influential business thinker of the day. On this reading, the future will be bleak for those unable to adapt. Since 2000, over half of the companies listed on the Fortune 500 have gone bankrupt, wound up or been acquired, and the rate of attrition is likely to increase. But, says Furr, there are reasons to be optimistic. ‘When you strip away the fear of disruption, a lot of customer needs don’t go away. The big question is how you continue to serve those needs in the best manner possible. Digital transformation is a risk to a lot of businesses, but it is also an opportunity to transform core activities and unlock opportunities. There are important lessons for all companies. Find partners instead of trying to do it all yourself as an independent unit. Whether those partners are start-ups or other big companies, find your place in a wider ecosystem.’
‘It is critical to get our heads around disruption if we want to stay relevant to our customers.’
This new ecosystem is shaping the M&A market, says Morrison & Foerster partner Andrew Boyd. ‘A lot of businesses that have not historically been tech-enabled are dipping their toes in the water right now to get a sense of how things are changing. They are aware of the risk of being disrupted and are using smaller, targeted deals with start-ups to understand how the process works. There has been a definite uptick in M&A deals involving disruptive businesses. These acquisitions are functioning almost as a proxy to R&D and buyers are far more concerned with getting hold of IP or bolting on new products than with generating revenue.’
In this sellers’ market the usual rules no longer apply, adds Alistair Maughan, co-managing partner in Morrison & Foerster’s London office and co-chair of the firm’s technology transactions group. ‘If you really want a technology, you have to accept that you’re not going to get the same liability cover. That means GCs need to think more laterally and do a genuine assessment of the risks – they can’t just stand behind an insurance provider. You also need to be aware that because disruptive businesses have developed very rapidly, there will be gaps in the documentation. Quantifying that type of risk is new and unfamiliar to many GCs.
One interesting example of this shifting corporate ecosystem is BBOXX, a renewable energy provider that seeks to connect rural populations in the developing world to the grid via solar panels. Formed by three electrical engineering graduates from Imperial College London, the company has built up large operations in Rwanda, Kenya, Togo and Democratic Republic of Congo (DRC). While this segment of the market has been neglected by established energy companies, the potential for growth is dramatic. For example, only 1% of rural inhabitants in the DRC have grid electricity, making BBOXX’s recent agreement with the Congolese government to provide 2.5 million rural inhabitants with off-grid electricity by 2022 a potentially significant development to the country’s infrastructure.
McGuireWoods partner Simon Cox first encountered the company in 2013. At that time it consisted of 12 shareholders, a solid prototype and not much else. The idea of bringing rural populations in the developing world onto the grid appealed to Cox and a long relationship formed. He has since supported its series-A, B and C funding rounds as well as various financing matters before joining as BBOX’s first general counsel and head of compliance in June 2018.
‘I enjoyed the story and message of BBOXX,’ Cox says. ‘We are providing people with an on-grid experience in an off-grid environment they can access all the technologies we take for granted. The challenge is there’s a lot of work to do and we’re in a hurry. People want electricity and they want it fast, particularly with the World Cup driving demand for electricity from several African nations.’ In response, BBOXX has introduced a specially adapted television that can be powered by solar cells.
As with most start-ups, much potential for growth lies in data. ‘Through the remote monitoring of our pay-as-you-go system we are collecting three billion data points a day globally,’ adds Cox. ‘That gives us information on everything from peak use to how and when users are paying for electricity. This type of information has not been systematically collected in the markets we operate in, which makes it a potentially very valuable resource. A lot of the larger companies BBOXX works with want to get into the renewables space. They like the green credentials of what we’re offering but they’re not as nimble as we are, particularly in emerging markets. We bring technology and on-the-ground expertise. We are one of the first off-grid renewables companies in a lot of places. They bring their own expertise and, frankly, a large balance sheet.’
Finding untapped potential in the developing world is also driving London-based start-up what3words’ business model. By dividing the world into 57trn (trillion) 3x3 metre squares, the company has developed a universal addressing system that can assign a precise location to anywhere in the world with just three words.
‘If you are being brought in by founders, remember they are driving the bus.’
‘I’m sure everyone has experienced a delivery driver not being able to find your front door,’ says Rachael Carolan, who joined as GC in early 2018. ‘In the developed world, being able to communicate in three words your exact GPS co-ordinates shaves off extremely costly minutes from last mile delivery times for couriers or other logistics companies.’ But it is in the developing world that the system really becomes useful. With more than 75% of the world’s population lacking a reliable mailing address, what3words hopes to open up e-commerce to locations that were previously impossible to send deliveries to. Because each three word referent is unique and takes up very little data, the entire system of co-ordinates can be downloaded onto a device. For example, the mountain-top rainforest of Monte Licó, Mozambique, recently discovered via Google maps by a team of UK researchers, can be found at – 15.790833 degrees latitude and 37.363889 degrees longitude. If reception is poor and GPS is not working, its summit can be located by searching for the code ‘fictions.stow.pest’.
what3words customers include Mercedes-Benz, which is about to launch the world’s first car with built-in what3words voice navigation, global logistics giant Aramex, which has integrated what3words to optimise its last mile operations in the Middle East and South Africa, and Domino’s Pizza, which is using the system to make deliveries on the island of St Maarten. It has also been used to find set locations on Steven Spielberg’s Ready Player One.
Supporting a business that is creating a new market comes with challenges. ‘I see my role as facilitating rapid but smart and consistent growth by figuring out how we can do something that initially seems impossible or risky,’ says Carolan. ‘Often this involves operating with limited information, so I also work to figure out what additional information we need to make a smarter decision.’
Carolan has pedigree at start-ups, having previously worked at Deliveroo and GoCardless. However, she cites her experience working at consultancy Accenture as most directly relevant. ‘I like to think that my business development team is closing deals faster with me around. When you’re negotiating deals with large corporates [which have] a big legal team and lots of steps in their contracting process, it can help get things across the line faster if you’ve got someone with experience of working in that environment. There could be clauses in the contract that are causing the client’s legal team to sit on a matter for weeks. By identifying them, an experienced GC may be able to step in and offer an alternative that still works for both sides.’
Working at a start-up, says Carolan, is almost like being a chief executive. ‘You’re on the ground working with so many different teams on a daily basis. That gives you such a great opportunity to raise things with the exec team that you think could be improved or changed. You’re also well placed to connect people or teams together. You know who needs to be looped into the conversation because you were speaking to them about a similar issue the other week. This can allow teams to operate more efficiently and effectively. The word “processes” can get a bad rap in the start-up world, particularly if it’s a lawyer saying it – but if you don’t have any in place, you’re probably burning cash, not being as efficient as you could and you’ll find it extremely difficult to scale.’
While greater responsibility can be attractive, it comes with drawbacks, reflects former Bank of America Merrill Lynch counsel James Cunningham, who joined cloud-based trading platform Nuvo Prime as GC in 2017. ‘If you are being brought in by founders, you need to remember that they are driving the bus. As GC you need to be comfortable with being a passenger. Sharing their vision is incredibly important.’
Although it has only been trading for a year, Nuvo Prime is about to sign its second customer, taking revenues into seven figures. ‘Our offering is highly disruptive and a lot of banks have shown interest,’ says Cunningham. ‘All of the different hardware you would traditionally have in a bank, along with the support staff, are outsourced to cloud, specifically, Amazon Web Services. Our software runs on that Amazon platform. Because Amazon’s network, computing, database and storage solutions are designed to be compliant with financial regulation, the software we offer has inherent disaster recovery capabilities and is very resilient. The system offers advantages beyond reducing banks’ hardware, people costs and real estate costs. It is effectively infinitely scalable and flexible in terms of geography and data residency requirements. If you’re doing ten transactions a day or ten million transactions a day this software scales up or down without the bank having to buy new hardware.’
Like Carolan, Cunningham has found it a whirlwind journey. ‘My role covers a number of disciplines spanning financial products, legal, IT, data protection and privacy, with the additional burden – because our customers are highly regulated – of always needing to know what they need from us. I pitch in wherever I am needed, whether that’s working on the website or meeting with customers to explain our offering. There is a significant sales process involved. I am even involved in the development of the product to a certain extent.’
Kate Burns, GC and company secretary of online retailer Not On The High Street (NOTHS), has had a similar experience. ‘At NOTHS, if you are good at something you tend to run with it, even if it’s something you’re not specifically trained in. That means everyone works closely rather than in expertise-based silos and decisions are made quickly. I get excited in the disruptive space when I see people trying to teach others. One of my biggest frustrations in law firms is that they are not using their full skillset. They have fantastic business services people or client relationship managers but they don’t work directly on clients or deals.’
‘One of my biggest frustrations in law firms is that they are not using their full skillset.’
Burns, who spent five years as part of Freshfields Bruckhaus Deringer’s management team before joining NOTHS in 2016, says law firms have a lot to learn when it comes to engaging with start-ups. ‘They are working to get it right but in reality there is a huge gulf because many don’t understand the culture of my business, the contractual arrangements or framework that underly our offering either.’
However, the challenge of rapidly emerging industries is also putting pressure on legal teams at the blue chips. As Novartis’s Schreyvogel comments: ‘The new technologies that all companies are facing mean we as GCs are often operating at the borderlands of law. Our immune-oncology therapy, Kymriah, works by modifying and reinjecting a blood sample to fight cancer. Today, we have absolutely no clue from a legal perspective what this therapy will be categorised as. It is therefore crucial to prepare our lawyers in conjunction with the other functions to take bets rather than providing solid legal advice. When I talk about a culture change, this is mostly what I mean. We need to bring legal associates even closer to the value chain in which they are working and make sure they are embedded in it.’
And there you have a rejoinder to criticism of all manner of pseudo jobs the age of disruption has thrown up. Alongside the hangers-on and pursuers of corporate snake oil, some of those working across established roles can be toiling towards results with dramatic real-world impact.
The chance to carve out new territory is certainly appealing to a growing band of in-house counsel who see creativity and improvisation in the chaos. As Orange’s Naumann concludes, ‘Traditionally in the telecoms market we had long-term agreements and commitments from our customers for many years; now everything is moving to on-demand service expectation with flexibility in every agreement. For us lawyers it is becoming impossible to provide legal advice in the traditional sense, because there is nothing we can really hold on to.’