As the role of the general counsel has evolved from a company’s lead lawyer to a company’s trusted business advisor, so too has the role of the modern law department similarly developed.
In this installment of In Practice, Ros Ors, the CEO of Clientsmart, spoke with Bjarne Tellmann, Senior Vice President and General Counsel at GSK Consumer Healthcare and author of Building an Outstanding Legal Team, about why corporate law departments should develop a strategic plan and the critical steps in the process.
Rose Ors: Why is it essential for a law department to have a strategy?
Bjarne Tellmann: The overarching goal of having a strategy is to articulate how the department will add value to the enterprise. The process by which the plan is developed is the most disciplined and data-driven exercise to align the legal department’s goals with the company’s strategic objectives.
The product of the exercise — the strategic plan — is the roadmap that guides and keeps the legal team on track by memorializing the department’s goals, while identifying the types of resources needed to meet the goals and the metrics to gauge performance against the goals. The plan also provides the legal team with a detailed picture of how their role matters.
Rose Ors: What is the crucial “success” factor in designing and executing a legal strategy?
Bjarne Tellmann: Alignment with the business. The first step towards alignment is to understand the company’s strategy. Most high-performing companies have a layered strategic planning process that starts on the macro level and identifies the significant trends that are likely to impact the business over 10 years. Next, they translate how these trends are likely to affect the next three years, then the next 12 months. So, to be aligned with the business, the legal leadership team must be deeply versed in how their company develops its strategy and how it defines success at each level.
Alignment also requires the legal leadership team to understand the success metrics of each of the business units they support. One of the best strategic planning processes I’ve been part of included a calibration exercise where my leadership team met with our counterparts from other functions for an off-site that was the equivalent of two days of speed-dating. Each day, my team and I met with counterparts from sales, procurement, HR, and several other groups to discuss their priorities and objectives, and how they would like us to help them. They, in turn, learned what we needed from them. It was an eye-opening and highly effective alignment exercise.
Rose Ors: An increasing number of law departments now have a legal operations team. What role should the head of legal operations play in the strategic planning process?
Bjarne Tellmann: It depends on the experience and capabilities of the person in the role. Our head of legal operations is part of my leadership team and is the head of strategy, so he plays a vital role in the entire process. There is a great deal of information and input that needs to be collected and organized before we meet to develop our strategy. He leads the day-to-day efforts to ensure all the foundational work is done well and on schedule.
Rose Ors: Who needs to be in the room during the strategic planning sessions?
Bjarne Tellmann: The General Counsel, the legal leadership team, and key clients should all be at the first meeting. The principal role of the GC is to chair the session by setting the tone, articulating the department’s vision and purpose, and asking questions of the group that allow her to make informed decisions on the future direction and focus of the department. At the first meeting, members of the leadership team share feedback from clients and other business units that support legal. Of course, the involvement of key clients is essential to ensure the alignment of objectives and expectations.
Once the strategic plan has undergone several iterations, the strategy team should meet with the external partners — key among them, outside counsel and alternative legal service providers. I need to underscore the importance of having these providers at the table. As our partners, they must have a clear picture of our vision, priorities, and how we measure success. We also need to learn what they need from us.
Rose Ors: Is scenario planning part of the strategy process or a separate exercise?
Bjarne Tellmann: Strategic and scenario planning are separate exercises that can be done in tandem. The purpose of scenario planning is to identify and mitigate risks. Strategic planning, as we’ve been discussing, has a wider aperture. What both processes consider are “unknown” risks — what Donald Rumsfeld called “known unknowns” and “unknown unknowns.”
Rose Ors: How do you plan for the “known unknowns” and “unknown unknowns”?
Bjarne Tellmann: Planning is crucial, but what is required to withstand an unknown shock is an organizational operating model that is highly adaptable, resilient, and agile. In an ideal world, you would develop what Nassim Nicholas Taleb, author of The Black Swan: The Impact of the Highly Improbable, calls, an “anti-fragile” organization model. Such a model would react like a muscle that gets stronger in response to tension and pressure. This state is tough to achieve, however, so resiliency is the first step. The pandemic is a perfect example of how resilient organizations have adapted — some have even displayed elements of anti-fragility in that they have not just adapted, they’ve thrived.
Rose Ors: How do you ensure the strategy is executed as planned?
Bjarne Tellmann: The plan should incorporate key performance indicators (KPIs) and other metrics that enable the leadership team to measure progress made in achieving strategic objectives. The team should meet regularly to determine what changes must be made when the metrics show you’re off target.
Rose Ors: How does the annual budget process align with the strategy process?
Bjarne Tellmann: The budget process should be linked to the strategic planning process. In budgeting, it is important to distinguish between costs and investments. The latter yield a return over time and are often closely tied to strategic priorities. For example, rolling out a process optimization and technology project is an investment that yields a return on investment (ROI) over time, whereas headcount is a cost.
Rose Ors: My last two questions are about the legal strategy’s impact on culture and purpose. How does having a legal strategy impact the department’s culture?
Bjarne Tellmann: They are co-dependent. A department anchored by a clear purpose and strategy has specific cultural characteristics, including a commitment to the company, a deep understanding of the business, and a willingness to learn, experiment, change, and adapt. Without a clear strategy, you risk having a chaotic and reactive culture that succumbs to the tyranny of the urgent.
Rose Ors: What is the correlation between purpose and strategy?
Bjarne Tellmann: Strategy flows from purpose. A department’s purpose answers two foundational questions: Why do we exist? What unique capabilities and skillsets do you bring to the table that add value? The strategy is the roadmap that ensures the department delivers on that purpose.