Disruption and professional service firms

What I’m about to say about NetGain and disruption in professional service firms isn’t important.  It’s just an illustration of a pattern that, in turn, illustrates how disruption makes us uncomfortable and makes us better.

Disruption has a pronounced effect when change is being resisted.  Pent up pressure makes it seem dramatic when the full onslaught of a change is felt. Disruption occurs when emotions and desires for change become greater than the fear of changing.

Look more closely at disruptions and you’ll see that the same steady pressure for change was always in force.  The underlying conditions for change and the validity of arguments to change course, are present long before we engage with the process of change.

This habit of habits, this resistance to all but irresistible change, is odd because it is an emotionally weighted counterbalance to a cultural preoccupation with the future.  At least in business terms, where the idea of disruption has gained much of its currency, it calls our corporate planning obsession into doubt.

Planning, after all, especially strategic planning, is most useful when there is an intention to change.  After all, change is ubiquitous and inexorable.  When everything around is in flux, it is rarely advisable to do the same thing, in the same way.

That’s what’s interesting to me about disruption.  The natural human tendency to resist change is well documented.  What’s surprising is how soulless organizations mimic and sometimes amplify the emotional and psychological behaviour of individuals.

The prevalence of this behaviour struck me at an evening of The Walrus Talks last week.  Seven speakers each had seven minutes to talk about disruption, and, in less than an hour, I’d heard stories from quite unrelated enterprises, each dealing in a consistent way with resistance to change and the triumph of disruptive forces.

What is being disrupted?  Systems.  They're formed either by statute, contract, or repetition over time and are extremely resistant to change.  A common theme on this site is how systems tend to resist the changes necessary for their relevance and renewal, their gradual failure, and sometimes their reversal into 'antisystems'.  (See, for example, my discussion about the City's registration process for recreational programs, or my diatribe on absentee landlords and the lack of affordable housing.)

Until now, I have despaired.  Antisystems, which produce results that are contrary to their intent, expend more energy on defending their flaws than on necessary improvements.  Examples abound.  We’ve all experienced them: policies, priorities, and practices that claim one objective but all too consistently deliver the opposite.  You’ll find them in corporations, government, and charities.  For stand-up comedians, they are grist for the mill.

There's a great article in the Harvard Business Review that describes the way smaller firms are able to upset antisystems through disruptive innovation, which, when geared specifically to social change, are termed 'catalytic innovations'.  What's clear is that, in many cases, larger firms are geared to maintaining the status quo, even when it is problematic.  And, often, the best solutions come from smaller businesses on the periphery which aren't invested in a particular antisystem and are able to offer something different.

Now my despair is giving way.  Disruptors are smaller competitors who overturn better resourced incumbents by focusing on key areas of advantage and applying leverage.  In change terms, they are the thin edge of the wedge.

Here’s another weird contradiction in the way people think about change generally.  The longer a bad practice is defended, the more objectionable it becomes.  As objections become more widespread over time, more drastic remedies are considered.  Whereas an institution might have confessed weaknesses and strived to improve, with stakeholders content with repair, a more defensive organization invites destruction by resisting change.  You’ve heard corporate and political change makers talking about breaking something in order to fix it.

Disruption seems like a more benign process; it is a release of a change already in motion.  There's something comfortingly organic about creating irresistible alternatives and letting society choose a better way.  Offer something better or simpler, offer it cheaper, and keep looking for opportunities to demonstrate its merit to a wider audience.  Like tai chi, it’s a method of using a competitor’s weight and strength against them.

Maybe this is appealing to me because I recognize NetGain in this pattern.  I’m not saying that we’ve ever focused strategically on disruption.  However, I would say that we’ve been faithful to a superior alternative form of consulting and have sought to contrast that with conventional practices, at considerable cost to ourselves, and considerable benefit to our clients.

We stay poor at NetGain by being disruptive.  We state it plainly on our website.  We stray outside our terms of reference.  We reframe the central question and challenge the client with the answers.

This upsets the assumptions underlying conventional transactions between consultants and their clients.  The way it normally works, the client identifies a challenge or an opportunity and engages a consultant to help overcome or exploit it.  If they seek competitive bids for the work, they often demand a very specific service, based on a very narrow range of possible responses to their self-diagnosed need.

I’m not sure how this ever made sense.  It’s analogous to someone developing a funny lump on their arm, deciding how dangerous it might be, prescribing themselves treatment for it, and then asking physicians to bid for a contract to deliver the treatment.  If a doctor’s expertise has any value other than administering treatments, it’s lost the minute the patient delivers their own diagnosis.

Yet that’s what happens all the time in our business, and rival consultants happily drain their clients of fees without first verifying that they need what they want.  Given the innate human reluctance to change, it’s natural for clients to seek the most comfortable and superficial treatment first.

Continuing with the medical analogy, the risk of getting the diagnoses wrong is exacerbated by the time and money spent on consultants who have agreed to deliver the wrong medicine.  Not to mention the side effects of the wrong medicine, and the worsening of symptoms caused by the actual (undiagnosed) condition ailing the organization.

The NetGain approach has always been to resist the cure until the cause is understood, even if it means the client endures some risk and uncertainty.  However, we share in this risk, tying our fees to progress milestones.  We’ve managed this by operating for decades with extremely low overheads, creating teams and melting them away as projects require, and by keeping deliberately unimpressive offices, where NetGainers and close clients go to get work done.

I know that there’s nothing innovative about this, unlike some of the technological disruptions normally associated with large scale changes of fundamental social, political, and corporate assumptions.  Yet I will return again and again to our experience with this microcosmic disruption to help me understand the upheavals I see, imagine, or hope to see in the antisystems around us.  And maybe, just maybe, we can find a way to replace dysfunctional systems without wholesale devastation and rebuilding first.

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