Strategy Journal #4

7-S Alignment Analysis for Baker & McKenzie-Amsterdam

Last year I spent the summer working for the international law firm, Baker & McKenzie in Amsterdam. Baker & McKenzie is a leading global law firm, which provides sophisticated legal advice and services to many of the world’s most dynamic and global organizations for more than 50 years. It has a network of more than 3,000 locally qualified, internationally experienced lawyers in 68 offices and across 38 countries, but my focus is merely on the Amsterdam Office of Baker & McKenzie.

1. Strategy

In Amsterdam, Baker & McKenzie’s strategy is to provide full range of services for sophisticated clients. Baker & McKenzie is not worried about cost (its billing rates are the highest in the city/country), but it attracts clients and deals that require a very detailed and comprehensive level of expertise. Ultimately, the strategy is not focused around cost, despite the soft legal market; rather, it continues to focus on the providing top quality legal service at a premium rate.

2. Structure

Like most large law firms, Baker & McKenzie divides their activities according to specialties (e.g., tax division, mergers and acquisitions division, corporate litigation divisions, etc.). Additionally, each of these divisions are further broken down into smaller groups or specialties (e.g., value added tax group, tariff groups, etc.). Ultimately, people are highly specialized and organized in divisions and groups traditionally with a managing partner over the division and additional partners over each of the groups. This structure aligns with the company’s strategy because it allows people to specialize (no one has to be a generalist since they can just go over to the next group and get the expertise needed on a deal) and allows people to work on multiple projects.

3. Systems

The formal systems seemed slightly misaligned from its strategy. Specifically, people are constantly told to “build their business” by attracting large clients/firms, but there was no compensation system if you did attract clients at an associate level. There was a small amount of additional compensation if attracted at the partner level, but I wasn’t privy to that information and it seemed odd that they would constantly require associates to build their business but not provide any financial incentive to do so.

Other than the lack of bonus to attract new clients (which allegedly supported the strategy of seeking large deals by constantly approaching new companies and business for deals), the compensation system was aligned with the strategy and structure. Specifically, the starting salary for associates in the Baker & McKenzie office was one of the highest in the country. Additionally, if you performed well within the firm you were given end-of-year performance bonuses (although, it seemed as though everyone received the same amount). Consequently, it attracted some of the best and brightest lawyers from all the different universities in Amsterdam and internationally. Baker & McKenzie pays tops dollar for its associates because it expects a high degree of expertise.

4. Style

The leadership style is a very top down approach with little input from the bottom. Additionally, hard work is expected and long hours are expected from all workers and associates. There is some competition among the associates to see who is able to make partner in the firm, but overall it is a collaborative environment that focuses on solving complex problems for sophisticated clients. This competitive atmosphere aligns with the other S’s because it provides the impetus for bonuses that are doled out on performance and ensure that high quality work is the norm among the associates.

5. Staffing

Staffing is very aligned with the overall strategy and other S’s of the organization. As mentioned previously, Baker & McKenzie pays top dollar to recruit some of the best attorneys internationally. Additionally, few people end up making partner because of the structure, so more people are weeded out along the way because of the competition. Thus, traditionally Baker & McKenzie has the requisite expertise in the Amsterdam office to address pretty much any of the legal questions it is presented.

Additionally, the department I worked in had training each week on new tax topics to help us keep up to date. Furthermore, new associates are given a “mentor” and shared an office with the mentor for the first few years. This allows new associates to have someone they can talk to and get additional information. It also helps them in their training and development in the firm.

6. Skills

Skill level is very high for the reasons mentioned previously (e.g., a lot of recruitment and high salaries). However, because of the size of the Amsterdam office, they did not have all the skills that were needed to complete deals, but they are able to overcome this impediment by relying on other offices and attorneys throughout the world to help them complete their deals. Thus, their skills are ultimately aligned with their strategy because they can look outside of the Amsterdam office for additional skills if needed.

7. Shared Values

The shared values focus on providing answers to complex and sophisticated problems. This value attracts the same type of attorneys and peoples and helps the organization remain competitive in the legal market. Additionally, it is aligned with the other S’s because it fosters competition while keeping an eye on quality.

In conclusion, it seems that the Baker & McKenzie Amsterdam office is well aligned, despite a few system issues.

Strategy Journal #3

Tim Cook Speech Reveals Passion for Apple Products

February 14, 2012

(Available at http://www.macobserver.com/tmo/article/tim_cook_speech_reveals_passion_for_apple_products/)

This week I decided to look at a key Apple decision and whether it fits within Apple’s overall strategy under the Hedgehog Concept discussed in Good to Great. Specifically, Apple recently hired Tim Cook as the CEO to follow Steve Jobs and Tim Cook’s leadership must be compatible with Apple’s overall strategy. As we read in Good to Great, we are faced with three circles or questions under the Hedgehog Concept:

(1) What can you (the company) be the best in the world at?;

(2) What drives your economic engine?; and

(3) What are you deeply passionate about?

Apple has become one of the best company’s in the world at product design and product maintenance. But how did they get there? What is their Hedgehog Concept? It is through a singular focus on limited products that are a result of great ideas—not just good ideas. Specifically, Tim Cook, when he was the COO, stated the following regarding Apple’s Hedgehog Concept:

“We say no to good ideas every day. We say no thanks to good ideas in order to keep the amount of things we focus on very small in number so we can put big energy behind the ones we do select. This table that you are sitting at today, can probably fit every product on it that Apple makes, yet Apple’s money last year was over $40 billion. ... [it’s] not simply saying yes to the right products, it’s saying no thanks to many products that are good ideas, but just not nearly as good as the other ones. I believe it is so ingrained in our company this hubris you talk about that happens to corporations that are successful and who whose single role in life is to get bigger, I’ll tell you that the management team at Apple would never let that happen. That isn’t what we’re about. We always keep only a little list to focus on.” (emphasis added)

This singular focus has given Apple an economic engine that has made them hugely successful (e.g., Apply has nearly $100 billion in cash on hand). Additionally, not only is it the best in the world at a singular focus surrounding innovative products, Apple also has incredible passion for creating innovative products that improve a customer’s lifestyle yet still have a practical purpose.

Knowing that this is Apple’s Hedghog Concept/Strategy, is hiring Tim Cook the right move? I think it is. In this article, Tim Cook comments that “Steve [Jobs] grilled in all of us that the company should revolve around great products and that we should stay extremely focused on just a few things rather than on so many that we can’t do any of them well. ” Tim Cook continues to say that “[t]hese things, along with keeping excellence as an expectation of everything we do at Apple. These are the things that I focus on. Because I think those are the things that make Apple this magical place that makes smart people want to do not just their life’s work, but their life’s best work.” (emphasis added). Additionally, as the author of this article notes, Tim Cook is a “product guy”—someone focused on creating, improving, and distributing great products. By being a product guy, Tim Cook, like Steve Jobs (who was a product guy), is positioned to keep the company aligned with its Hedgehog Concept/Strategy of singular focus on limited products. Furthermore, in the same interview, Tim Cook, in responding to the question of what Apple planned on doing with the $90 billion of cash on hand, stated “[w]e’re judicious, we’re deliberate, we spend our money like it’s our last penny … We’re not going to go have a toga party or do something outlandish.” This deliberate approach to spending money and growth is a classic example of the hedgehog progressing while the fox falters. It would be easy to justify spending a lot of money, but taking a “deliberate” approach still allows them on keeping their singular focus on great products.

Ultimately, this article (which highlights one of Tim Cook’s first interviews as CEO of Apple) illustrates that Tim Cook looks like someone who will continue Apple’s strategy. Although the article talks about others that could possibly fit this role, it looks like Tim Cook is currently one of the best people to continue Apple’s Hedgehog concept. We’ve seen how new CEOs negatively impacted Apple’s bottom line before (e.g., Sculley, Spindler, and Amelio) by neglecting to continue or follow Apple’s key strategies. However, it seems that Tim Cook is going to continue Apple’s singular focus on a limited, innovative product line, which, in turn, will hopefully strengthen Apple’s position and overall strategy.

Strategy Journal #2

AOL's Huff Post to Launch Live Streaming Network

THE WALL STREET JOURNAL

FEBRUARY 2, 2012, 4:40 P.M. ET

(Available at http://online.wsj.com/article/APf065f68b34754d2d9af547a8273be86b.html)

This article discusses the Huffington Post’s new strategy to move into online streaming and provides an opportunity to evaluate its decision through the strategy canvas/value curve. Below is a potential analysis of its decision with respect to their primary competitor, WSJ (Note: Although the Huffington Post will be competing against Fox, CNN, MSNBC, etc. I merely used WSJ to illustrate the potential comparison on the value curve). Additionally, I used the following factors of competition: price, hours of original online content, availability, guest starts, number of view points, structured schedule, and customer interaction.

Using this value curve, we can see a number of interesting differences. First, the Huffington Post added a new factor of competition to make their online content more appealable to customers—customer interaction. As this article indicates, “[p]eople don't want to have you tell them the news anymore. They don't want to be talked to, they want to be talked with.” Consequently, the Huffington Post is dedicating a third of its screen to consumer interaction and dialogue. Second, Huffington Post’s content is all free (both written and verbal)—unlike the Wall Street Journal—and its hours of streaming content will be triple that of the WSJ and other similarly positioned companies. Lastly, the Huffington Post will have less star contributors and its schedule is going to “mirror the chaos of the web”—meaning, it won’t be that structured and might possibly annoy consumers since they won’t know when their favorite segment will be on. Ultimately, the Huffington Post seems to hope that by adding an additional factor of competition (customer interaction), it will be able to distinguish itself in the online content world and gain market share.