This post originally appeared on the LexisNexis Future of Law Blog under the title, Lessons from Blockbuster: re-engineer, don’t disappear

http://dealbook.nytimes.com/2011/02/24/blockbusters-fall-and-netflixs-rise-in-pictures/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1

In a recent session at LegalTech NY, I spoke about what I consider to be the great myth of disruptive technology; that we need to be on the hunt for the next big thing to set our firms apart and leave our competition in the dust. This is a fool’s errand. As I said in my talk, there is no technology that you can buy, build, or even imagine that you can simply drop into your existing workflow and reasonably expect it to disrupt anything other than your existing workflow.

To illustrate my point I presented the old war-horse of disruptive technology fables, Netflix vs. Blockbuster. At the height of their success Blockbuster Video had 9,000 stores, 60,000 employees, and nearly 6 Billion US Dollars in revenue. Six years later they filed for bankruptcy, and in January of this year they finally closed the last of their US stores. Meanwhile, Netflix video streaming today accounts for more than a third of all US internet traffic during prime time hours, and Netflix is the darling of Wall Street. The moral of this story, as it is generally told, is that streaming video is a disruptive technology that brought down Blockbuster, catapulted Netflix to success, and up-ended the entire video rental industry.

But like most fables, that’s just a little too simplistic. In fact, far from being a primary disruptive force, streaming video was just the last piece of a large disruptive puzzle that Netflix had been putting together for years. The primary disruption actually took place long before streaming video across the internet was even a viable distribution method.

When Netflix burst on the scene in the late 90s they had a DVD rental by mail business. You went to their website and signed up for a monthly subscription that entitled you to a number of simultaneous movie rentals. Then you looked through their catalog of available movies, selected those you’d like to see and the order you’d like to see them in, and they mailed you the first few DVDs on your list. When you were done watching one, you slid it back into the envelope, mailed it back to Netflix, and they’d send the next movie on your list. The best part was that you could keep movies for as long as you wanted and there were never any late fees.

This was a huge departure from Blockbuster’s model of 9,000 stores and 60,000 employees, charging a fee at the point of rental, and collecting massive late fees when you forgot to return the movie by the time you promised you would. In fact, a substantial portion of that $6 billion in revenue was directly attributable to those late fees.

It was common knowledge in the late 90s that streaming video would one day be the norm, even if it wasn’t entirely clear exactly how it would work or what it would look like. The technology was out there; it was just waiting for bandwidth and computing power to catch up. While they were waiting, Netflix built a video rental engine that could accommodate a faster distribution method, or indeed, any distribution method that came along. And Blockbuster just kept raking in the dough with the old model that had served them so well for decades. That model continued to work beautifully, right up until it didn’t and Blockbuster went out of business.

The moral of the story is not to go out and find the next big thing before anyone else does, but to re-engineer your business now to accommodate what you already know is coming. We know what the next great innovations in legal service delivery are, even if we don’t know exactly how they are going to work or what they are going to look like. Now is the time to build a legal service delivery engine that can accommodate project management, automation, artificial intelligence, and extreme transparency to clients.

The sad truth of the Blockbuster tale is that despite their market dominance, and their vast resources, they had no way to adopt streaming video without completely undermining the rest of their business. Sometimes I wonder how many law firms are in the same position now.

http://www.susskind.com/images/book-tomorrows-lawyers.jpg

During the first week in February every year e-discovery vendors descend on the New York Hilton for E-Discovery Week LegalTech NY.  The rest of the legal technology vendors set up shop in nearby hotels and pilfer attendees away for customer forums and individual demos. It becomes increasingly difficult to find people who admit to coming to New York that week to actually attend LTNY.  They may go to a session or two, or breeze through the vendor hall, but most of the people I meet claim to come for one on one vendor meetings and other festivities taking place away from the Hilton.

This year’s LTNY was followed by ReInvent Law NYC, a TED-style event presenting forty or so short presentations about new approaches to legal services and technology, created and hosted by Michigan State University law professors, Daniel Katz and Renee Knake.  I was not able to attend all of the talks, but I saw enough to know that THIS is the way to give presentations; 6 to 10 minute sessions.  All of the presenters I saw were great, but even if the topics didn’t interest me, I didn’t have to sneak out or grind my teeth through an hour of Windows 9 installation hurdles, I could just check my email for five minutes until the next topic was introduced.  I have been fortunate to be a part of similar sessions at ILTA last year, and LTNY this year, and I heartily encourage those organizations to follow ReInvent Law’s lead and expand the use of these short sessions going forward.

Despite the slick presentation style of ReInvent Law, I came away with the same question that often plagues me after forward thinking LTNY or ILTA sessions. Who are we trying to convince?  The self-selected audience for an event like ReInvent Law already gets it.  These are the people that are already changing the way law is done, or attempting to change their firms, or writing (or blogging) incessantly about the need to change the way we do things.  The same goes for this blog. If you read 3 Geeks more than once, there’s a pretty good chance that you already agree with our progressive approach to doing things differently.

I am certainly not the first to point out the existing echo chamber in the legal blogo-conference-sphere, but I want to be the first to present a solution to break out of it. It is time to embrace the time-honored traditions of growing religious organizations everywhere.  They understand that you can’t grow your following by simply preaching to the people who show up week after week, you have to go out and proselytize and evangelize.  You have to go to where the heathens live and browbeat them convince them with logic and reason of the fundamental truth of your beliefs. It’s time to send the young presenters of ReInvent Law on missions to visit the upper management of our largest firms, the people who don’t come to ReInvent Law, but actually have the power to (you know) reinvent law firms once they are successfully converted.

I see hordes of young, recently graduated, Michigan State lawyers knocking on the doors of BigLaw Managing Partners everywhere, not to beg for work, but to raise high their dog-eared copy of Tomorrow’s Lawyers and ask, “Have you accepted Richard Susskind as your Legal Savior?”