To Scale, Or Not To Scale? | Legal Innovation Zone
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Featuring thought leaders from across the innovation economy, Collision from Home took place on June 23-35, 2020. The LIZ was in attendance, and will share some insights and expertise throughout the rest of the summer in a series of blog posts.
Charles Darwin had much to say about evolution and survival.
Natural selection, his often-referenced theory of how Mother Nature weeds out the weak, applies to more than just biology. Replace the animal kingdom with startup companies in the midst of a global pandemic, and natural selection takes on a whole new meaning – one where companies are scrambling to figure out what it will take to both evolve and survive.
As some legal tech startups try to find new ways to cut costs and retain current customers, other firms looking ahead are actively scaling. While the risks associated are unique for each startup, companies positioned for growth are carefully assessing and taking advantage of high leverage opportunities.
Legal Tech, Law Firms, and the “New Normal”
As law firms resume operations, the realization that they can’t afford to overlook the shifts in the external environment has set in; there are changes being made in how firms acquire and interact with clients. The last few months have seen sales pick up again after the pandemic initially put activity between startups and law firms on pause; legal tech startups in a position to scale have been leveraging these shifts in behaviour to their advantage.
COVID has not changed the fundamentals of scaling in legal tech or other sectors. After the product or service has been validated in the market, it’s a matter of expanding market share, continuing rounds of funding, carving your place in the larger legal field as a service provider, bringing onboard new employees, and improving operations while achieving adoption or sales-related targets.
It’s still the same typical playbook, the only difference is the risk factor; in an economic climate such as this, it doesn’t take much to recognize that chasing growth has gotten riskier.
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At this year’s Collision, an annual tech conference held in Toronto, SurveyMonkey CMO Leela Srinivasan stressed the need for entrepreneurs to understand that growth in a time such as this is an experiment. Using even one or two members of your team to pursue an identified opportunity, allocating a few resources, and setting a quantifiable benchmark or metric, is how you chase growth while simultaneously monitoring the external environment and managing risk.
Change Management in Startups
As startups move along the scaling process, the management team should evolve to bring the company through the transition. The systems and processes that need to be implemented for successful growth may not be appealing to members of a small team who favour the “startup culture”.
It’s a mindset shift, and with it comes what business school touts as “change management.” Yancey Spruill, CEO of DigitalOcean, argued that from the act of effectively and efficiently conducting business from home we can see that employees are willing to embrace new ways of working; investing in change management prepares the firm for the organizational adjustments that come with scaling.
Legal Tech: Managing Risk in an Unstable Environment
This pandemic has drastically reduced the room for error, and so these tried-and-true practices have taken on greater significance. Think of it as the two c’s, caution and calculation, that are necessary to manage risk in an already unstable environment.
Continuing to align with your customer’s interests is easier said than done when consumers of legal products are not as engaged given the circumstances. Scaling in legal tech may not look very different, but that sweet spot between team collaboration, execution, results, and customer satisfaction is still there; being more cautious with your money and undertaking that due diligence is more important than ever when weighing growth opportunities.
The thing about survival is that more often than not, you won’t make it unless you evolve. Startup companies, legal tech and others, will need to figure out the path that makes the most sense to them when considering longevity; it may not necessarily be to scale, but the companies ready to take that step will emerge with a team optimized for growth and a culture of constant and measured improvement.