In 1996 Kodak was in its prime. It dominated photography and film, with a market cap exceeding $28 billion, and 140,000 employees. In 1976, 20 years earlier, Kodak actually invented the digital camera. They owned its intellectual property and had the advantage of being first to the marketplace. Kodak should be thriving today, but instead it went bankrupt in 2012.
What happened?
Kodak thought that it was in the paper and chemicals business, when in fact, it was in the memory business. Back when the digital camera first came on the scene, it was a cost line-item in the financial statements, buried in the research and development category. Kodak saw digital cameras coming, but was convinced that digital would be for die-hard professionals, not the common point-and-shoot customer. Kodak didn’t even want to put its name on the digital camera.
Fatal Mistake
The digital movement killed Kodak, when in the early 2000s digital photos overcame analog photos as the preferred method. As we all know, digital photos are faster, cheaper and more efficient than are analog photos that must first be developed before we know how they turn out. By 2011 analog photos were limited to 4 billion compared with an estimated 380 billion digital photos in the same year. Analog was out — digital became the new norm, and a former Fortune 500 company was no more.
Peter Diamandis, international innovator, author, and holder of degrees in molecular genetics and aerospace engineering from MIT along with a medical degree from Harvard, points how exponential development seems to begin slowly but quickly overtakes those who don’t see the trends developing. He refers to it as the 6 D’s of exponentials: digitized, disruptive, demonetized, deceptive, dematerialized and democratized. I suggest watching his fascinating TED Talk on the subject.
While early industry disrupters have transformed industries from how we book travel (airline, hotel and rental car sites), buy music (iTunes), shop retail (Amazon), publish and buy novels (Amazon) and even get around town (Uber) — the traditional financial, tax and legal service industries are now just feeling the first wave impacting their future.
Through artificial intelligence (AI) clients can now enlist a robo-advisor to plan portfolios, prepare online tax returns for free and download wills, trust and estate forms. Early programs have been clunky, time consuming and not very intuitive. As artificial intelligence exponentially improves along a similar growth curve to that which digital photography experienced, these software programs will eventually thin the ranks of financial advisors, tax return preparers and one day in the not too distant future, estate planning attorneys.
While it will always remain true that software programs and web sites cannot build relationships, as the present clients who did not grow up with the Internet dies off and are replaced by those that are far more comfortable working in the virtual world, the challenge of attracting those clients will rise to the forefront, especially as the software capabilities improves.
These same technologies, however, can be harvested to create increasing client value for those of us practicing in these fields. Our document drafting software programs enable us to prepare wills, trusts and ancillary documents in a fraction of the time that it took a few years ago. Communication tools enabling us to record and broadcast videos and podcasts and publish books and blogs are better, faster and cheaper than ever before. We have more opportunities than ever to create top-notch educational content for our clients and our prospective clients.
But many of us don’t. Why is that?
I believe that it is due to many reasons. First, we’re so busy working on the commodity side of our practice — the documents — that we fail to see what our clients really want from us, and that’s our wisdom. We can transmit that wisdom in many forms. Base knowledge can be distributed through our websites, letters and email communications. A follow up meeting with more specific direction can then fill in all of the necessary gaps enabling our clients to make informed decisions.
Second, we see our leadership, relationship and creativity through the lens of our legal work product, when in fact it is delivered through our continuing interactions with the client. We’ve all heard from our malpractice carriers that a client is less likely to sue, even if a true problem arises which is our fault, if the client felt attended to. Clients all realize that we’re human, and that mistakes happen. When we hole ourselves up in our offices to tend to the legal work product, we’re not paying attention to our clients.
Yet the work product is ultimately most important to achieve the clients’ goals, isn’t it? To that end, building a team around yourself that allows you to spend the face time necessary to satisfy the client’s expectations of personal advice and relationship, coupled with the use of today’s technology to “touch” the client, even if it’s an electronic touch, goes a long way.
The number of clients who value your wisdom and services is not scarce, in fact, they are abundant. Sometimes the amount of choices only serves to confuse rather than simplify. Consider when you enter a good ice cream shop where several dozen flavors entice. You can’t decide which one to pick, and want someone to give you a taste of this flavor or that before deciding. Especially with something as complex as estate planning, leadership and creativity are highly valued attributes.
Just as Kodak didn’t realize that they were in the memory business until it was too late, you need to identify what business you’re in before your practice is disrupted, digitized and demonetized by technological forces. Once you identify your clients’ true needs and desires, the rest of it falls into place. You can then use technology to your advantage, and reap the rewards of providing unique client value that they can’t find on the Internet, or anywhere else for that matter.
