Six Sigma for Law Firms: Move Over Client Surveys, Make Way for Net Promoter Scores

As I’ve written about previously, I am proud of my GE pedigree, particularly the invaluable Six Sigma and “Lean” training in operational rigor, analysis, continuous improvement, measurement and repeatable processes. So I was interested and encouraged to see Lisa Damon of Seyfarth Shaw honored as one of the ABA’s 2011 Legal Rebels for her work championing SeyfarthLean, the firm’s Six Sigma-inflected initiative to drive strategy and operational effectiveness that delivers both cost reduction for clients and revenue growth for the firm.

And earlier this week I came across a post by Darryl Mountain on the SLAW blog that discussed how to apply a standard Six Sigma DMAIC tool — the fishbone diagram — to analyze legal problems.

It seems like the time might be right for innovative firms to consider importing another quality and customer engagement tool from the business sector into law practice management: the Net Promoter Score, a customer/client loyalty metric and a operational discipline for using customer feedback to fuel profitable growth. Adopted by companies like GE, P&G, Intuit and American Express, the NPS is derived from a single question posed to customers/clients: “How likely are you to recommend [Company X] to a friend or colleague?”

Survey participants respond on a 0-to-10 point rating scale divided into three groupings:

  • Promoters (score 9-10) are loyal enthusiasts who will continue buying and
    will refer others, fueling growth.
  • Passives (score 7-8) are satisfied but unenthusiastic customers who
    might be receptive to competitive offerings.
  • Detractors (score 0-6) are unhappy customers who can damage your
    brand and impede growth through negative word-of-mouth.

To calculate the Net Promoter Score (NPS), subtract the percentage of Detractors from the percentage of Promoters. In concert with the survey, NPS companies develop an operational model to drive improvements in customer loyalty and enable profitable growth. Key elements of the model include leadership commitment, effective business processes, and systems to deliver real-time information to employees so they can respond to customer feedback.

Studies examining the NPS “loyalty effect” have shown that companies with the highest customer loyalty typically increase revenues at more than twice the rate of competitors.

Know of any law firms that have tried NPS or a similar methodology with clients?

You Can Never Be Too Rich or Too Lean

I am proud of my GE pedigree, particularly the invaluable training in operational rigor, continuous improvement, measurement and repeatable processes that I’ve incorporated into my marketing practice and use to help clients. While developed to improve manufacturing processes, the key principles of Six Sigma and “Lean” have broad and valuable applications — even for law firm management and legal marketing. As the Lean Enterprise Institute puts it:

“The core idea is to maximize customer value while minimizing waste. Simply, lean means creating more value for customers with fewer resources.

A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste.

To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flow of products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.

Eliminating waste along entire value streams, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate….

A popular misconception is that lean is suited only for manufacturing. Not true. Lean applies in every business and every process. It is not a tactic or a cost reduction program, but a way of thinking and acting for an entire organization. [emphasis added]”

Without directly referencing either Six Sigma or Lean, Debra Baker captured their central tenets in a post today on the Law Firm Transitions blog:

“Law firms who understand their business processes — how they lawyer — and use that knowledge to streamline the way they work have a powerful advantage over those who don’t.

When I refer to business process, I’m talking about looking at the discreet [sic] services lawyers provide and understanding what steps go in to providing that service and for what cost. While there may be no “one size fits all” process, there are certain steps that happen every time and there are variables — most of which are known but not always predictable.

With an understanding of how lawyers in the firm work, it becomes easier to assess costs and evaluate ways to improve efficiency and effectiveness across the firm. And, it sets the foundation for sometimes difficult conversations about timelines, communication expectations and fees.”

Streamlining is essentially eliminating waste, or muda in Lean parlance. That waste can take many forms, including:

  • Unnecessary complexity or redundancy
  • Delay in the work product production process
  • Unclear requirements
  • Bureaucracy
  • Slow or poorly managed internal communication

Less waste means more profit per matter, and a reputation for pricing predictability means more business.

Simple to understand, but very hard to execute (I know). Still, definitely worth the effort, and a significant competitive advantage if done well, continually and consistently.

If you’re interested in getting ideas from people who live the lean life every day, check out the iSixSigma Blogosphere. It’s understandable for laypeople, discusses a variety business management and process topics in interesting ways — and even has cartoons.