With a rising tide there is a real focus in professional services firms on chasing and managing growth. Growth is good of course, but we also know not all growth is profitable.
At the same time consolidation in the legal market is predicted to continue - no one firm holds more than 1% global market share. Scale leadership is very much up for grabs.
And yet this Business Times article quotes an interesting finding of recent Bain & Co. research. The best performing companies in the study share four critical attributes: Valuable assets, superior capabilities, the most attractive customers and the benefits of scope. They achieve superior economic returns by linking these elements together to develop an ambitious strategy that explicitly targets higher performance rather than scale.
A lot of corporate strategy revolves around building scale, and for good reason. The largest companies enjoy huge advantages: They can spread costs over the widest base, wield the most market influence and benefit from the most accumulated experience. But a recent Bain & Company analysis of 320 companies across 45 markets worldwide demonstrates that scale alone is often not enough to confer real economic leadership. In fact, 36 per cent of the scale leaders in our study didn't even manage to generate a positive return on capital. And 40 per cent of the economic leaders, such as Continental, weren't the largest companies in their industries.