Portrait Of The Customer-Centric Legal Function

This article was originally published on Forbes.com and is reposted with permission from Mark A. Cohen.

Digital transformation is all about customers. It is a paradigm-shifting, holistic journey companies embark upon to capture, retain, and leverage them as corporate assets. Customer-centricity is its North Star, and brand loyalty its prize. An enhanced, constantly improving, end-to-end customer experience is the means of achieving and sustaining brand loyalty and customer endorsement on social media platforms.

Digital transformation guides the corporate mission, goals, culture, workforce, strategic partnerships, processes, metrics, upskilling, investment, data analytics, and technology. A Harvard Business Review article cited three interconnected areas characteristic of digitally mature companies. They invest in: (1) digital assets—hardware, software, data, etc.; (2) digital usage—engaging digitally with customers and suppliers; and (3) digital workforces—agile, diverse, collaborative, upskilled teams that utilize digital across the enterprise and with customers. This has enabled them to distance themselves from digital laggards in performance, profitability, scalability, and brand loyalty.

Digitally mature companies like Amazon, Apple, and Microsoft have emerged as corporate conquistadors in part because they have embarked upon the digital journey early and have never stopped. Their unwavering focus has been on customers. These companies—and a handful of others—have set the standard for customer-centricity. They have replaced a legacy, transactional buy/sell dynamic with a symbiotic one where buyer and seller are aligned as never before.

Technology is the enabler and driver of digital transformation, but customers are its end game. Steve Jobs underscored the centrality of customers: “You’ve got to start with the customer experience and work backwards to the technology—not the other way around.”

Digitally mature companies are fluid, innovative, and data-driven. The digital journey has no finish line. It is an ongoing process, one of focused experimentation, adaptation, data analytics, process, cross-functional collaboration—internally and throughout the supply chain— agility, investment, learning, and constant improvement of the customer experience. It is a team effort within and across all units of the business. That includes legal.

The dynamism of digitally mature companies must be sustained to remain in the vanguard of warp-speed change in the digital age. Competition is no longer limited to sectors, geographies, or known competitors. It can come from anywhere. Amazon’s rapacious growth and dominance of multiple sectors is an example. What is both common and constant among digitally mature enterprises is their relentless customer-focus. Jeff Bezos said his primary focus is on customers, not competition; if you double down on customers—“not just satisfying them but delighting them”—you will be fine.

The legal function has long operated by its own rules, standards, homogeneity, cultural norms, economic models, language, speed, and rewards. In the digital age, the legal function must focus on customers, not lawyers. To be customer-centric in the digital age, the legal function must expand its traditional remit. That means proactively detecting, deflecting, defending, and mitigating corporate risk while also collaborating seamlessly with other business functions to create value for the enterprise and its customers. But how?

The digital journey begins with a cultural reboot. That means viewing legal delivery from the end-user perspective—what structures, models, skillsets, mindsets, tools, metrics, data analytics, diversity, tech tools, and strategic partnerships would achieve optimal customer outcomes and experience? Law has historically measured success by internal metrics—profit-per partner and lawyer-proclaimed “exceptional legal work.” In the digital age, the key metrics are net-promoter-score and an exceptional customer experience.

The legal function as frontline growth leader

The characteristics of a customer-centric legal function are identifiable, but are they realizable? Consider how Spyros Mello, Deputy General Counsel and Chief Compliance Officer of Coca-Cola HBC AG, describes the company’s legal function:

“We are frontline growth leaders. We accelerate the expansion of our business by promoting our organizational values, by engaging fast and creatively with business problems and opportunities and by taking a lean, bureaucracy-free approach to the way we do things.”

How did the legal function of a multi-billion dollar company become a “frontline growth leader?” General Counsel and Director of Strategy Jan Gustavsson instilled a customer-centric mindset in the legal team. He stressed agility, speed, and an innovative spirit, recognizing their importance to achieve the objective of the legal function as value creator. This was the cultural foundation upon which Mello honed a legal team of 100 lawyers, another 20 allied legal professionals, and outsourced resources across 28 countries to become frontline growth leaders.

Mello contends “mindset change”—culture— is the first step towards building a customer-centric, business-integrated, and value-creating legal team. He maintains it is no longer sufficient for the legal function to be a great business partner for its clients; it must go beyond that. That means being proactive, data-driven, “lean and mean,” collaborative, cross-functional and operating seamlessly with other business units to identify and create value. A Functional Reflection Survey measuring how each lawyer spends his/her time reveals that cross-functional partnership work (e.g. agile value creation with other business units) accounts for more than 40% of his team’s time.

Mello contends “mindset change”—culture— is the first step towards building a customer-centric, business-integrated, and value-creating legal team. He maintains it is no longer sufficient for the legal function to be a great business partner for its clients; it must go beyond that. That means being proactive, data-driven, “lean and mean,” collaborative, cross-functional and operating seamlessly with other business units to identify and create value. A Functional Reflection Survey measuring how each lawyer spends his/her time reveals that cross-functional partnership work (e.g. agile value creation with other business units) accounts for more than 40% of his team’s time.

Business unit expectations of the legal function’s remit to problem solving and generating value are put to the test in an annual internal client satisfaction survey. Initiated by the legal team in 2015, the legal function is rated annually by all business functions in 6 performance areas:

1. 1.Business understanding and cross-functional mindset
2. 2. Availability and accessibility
3. 3. Clarity of communication
4. 4. Timeliness
5. 5. Risk management
6. 6. Proactiveness and innovation

The survey results—drawn from thousands of employees, multiple business units, and 28 countries— reveal consistent legal team improvement year-over-year. In 2020, the team sought feedback on its response to COVID-19 and received a 4.54/5.00 score. The survey data are followed-up and reviewed with each business unit by function and matter category. The goal is to elicit actionable information and insight that enhances performance and customer satisfaction.

Data and customer-centric metrics play a key role in the Coca-Cola HBC’s legal function focus and success. The team measures its success according to five key areas: (1) talent and engagement (legal has been the #1 company function in the company-wide engagement survey 8 consecutive years); (2) client management; (3) speed and standardization of procurement and commercial contracts; (4) compliance; and (5) cost-competitiveness (i.e. total legal spend in absolute numbers and as a percentage of net sales revenue).

Data is collected and analyzed on an incoming and outgoing basis. The legal function shares its relevant data with other business units and it is entered into the corporate data lake. The team collects data from across the organization to inform its strategy and operations. For example, the team reviews the reasons for litigation and regulatory violations and then introduces prophylactic measures and specific process and policy improvements to minimize the risk of new incidents.

The legal function has expanded its portfolio in recent years, requiring  team members to acquire new skillsets. It has assumed the Risk Management function in several countries and public affairs in others. The agility of the legal team is the byproduct of the “mindset change” and its unwavering focus on customer service and value creation. It also reflects its fluid organizational design that eschews bureaucracy,  hierarchical structure, rigid job descriptions, and tunnel vision.  As Mello puts it, “our lawyers must be open to adding to their responsibilities to meet the needs of our clients. This takes precedence over a corporate blueprints or formal job descriptions.”

The team constantly challenges itself to improve performance—within the legal function, cross-functionally in collaboration with other business units, and even with key strategic partners. For example, it regularly collaborates with The Coca-Cola Company as well as other key bottlers. It has introduced exchange programs, consultation forums, and practice groups across the Coca-Cola system. This further evidences the group’s central objective: to create value for the company, the brand, and customers.

Conclusion

Ben Heineman, Jr., the former General Counsel of General Electric and prototype of the modern GC, maintained that legal “play offense and defense.” He meant that GC’s and their teams concurrently function as enterprise defenders and collaborate with business to drive enterprise value. Heinemann had the strategic vision of a customer-centric legal function and established its blueprint.

Heineman lacked the powerful tools his contemporary successors can now access. They include:

• Tech platforms that provide a 360-degree view of resources, matters, and key challenges
• Data analytics to predict, identify, and mitigate risk, manage teams and portfolios, monitor high-stakes matters, facilitate proactivity, and many other material use-cases
• Geographically dispersed workforces with the potential to work seamlessly
• A fluid legal supply chain where expertise task/matter-appropriate resources can be drawn from corporate legal teams, firms, law companies, consultancies, or elsewhere
• Tech, processes, and people to scale, accelerate, automate, and productize many former artisanal legal services
• Disaggregation of the business of law from practice

Each requires different expertise and skillsets. Their integration within the legal team and across different business units drives efficiency, speed, transparency, scale, value, and customer impact.

The Coca-Cola HBC legal function has demonstrated—as a handful of others have—that legal can morph from a business opportunity blocker and cost-center to a frontline growth leader and value creator. The transformation begins with a customer focus, and that persists throughout the digital journey. It also involves using the above-referenced tools in the shed.

Customer-centricity is the crux of digital transformation, an existential imperative for business. It is not a buzzword but a corporate raison d’etre. The legal function must integrate with business, and prioritizing customers is a great way to start.