Sunday, 1 April 2012
Yesterday, I was driving along Jamaica Road in South East London. In the space of one mile, I counted no less than twelve fried chicken takeaways. No major brands and nothing to distinguish between them. Every single place had the words "tasty" and "hot" displayed on their signage or in their windows.
Anyone in "need" of fried chicken has no reason to choose one place over another.
This weekend, Brian Inkster (@TheTimeBlawg) tweeted that a search on Google had revealed 8,310,000 mentions of the exact phrase "leading law firm". Words such as "professional", "expert" and "commercial" all are similarly sprinkled with liberal abandon across the websites of most law firms. Like the purveyors of buffalo wings in South East London, the legal profession do little to distuinguish themselves from their competitors.
The custom of sticking to tried and tested formulas and the fear of stepping out from the crowd means that those legal service providers who have a genuinely differentiated offering fail to advise their customers of this.
Porter's Five Forces analysis, assesses the competitive intensity of a market through analysing:
> competitive rivalry within an industry;
> bargaining powers of suppliers;
> bargaining powers of customers;
> threat of new entrants; and
> threat of substitute products.
Looking at these, why would anyone open up another fried chicken business south of the Thames?
Similarly, why would anyone start up a law firm? Competitive rivalry is high, RBS tell us that there are at least 6,000 too many solicitors in the market. This directly impacts the bargaining powers of suppliers, supply outstripping demand. Setting up a law firm is relatively simple, and therefore new entrants are always being established further oversupplying the market.
Customers, however, hold the upper hand in terms of bargaining powers. The market is oversupplied and the cost of switching from one supplier to another is minimal (when compared to IT suppliers or financiers).
Last week we saw ABS day, the first three Alternative Business Structures were authorised by the Solicitors Regulation Authority. Now, law firms have to deal with the threat of substitute products too.
Law firms can no longer avoid changing what they do. Maintaining the status quo is no longer an option. Strategies and offerings need rethinking. Lawyers need to move themselves into a market space that has fewer suppliers and where the opportunity for new entrants is much tougher.
They need to invest in creating intellectual property and new products and services that customers will value. Lastly lawyers need to tell their customers why they are different from the rest of their market (rather than why they are the same as the rest of it).
So, as ABSs join the market and we see the fusion of new businesses from different industries combining to offer clients a more integrated service, I have one question - who's for Fried Chicken Street Law?