The Concept of Optionality

Insights Into Practice

Have you ever been curious as to what goes on in the minds of other legal practitioners? Have you ever wondered whether you measure up?

It’s only natural, after all it’s human nature to be curious about the world and the people around you – how do they do what they do?

With that in mind, join us as we investigate frequently discussed topics, with the aim of discovering innovative approaches to the practice of a law in an ever-changing and evolving world.

Take this blog’s topic – the concept of optionality – How does that even apply to law firms?

What is Optionality?

As one may suspect the definition of optionality – according to Merriam Webster – is something “not compulsory”.

That doesn’t help us very much for we can assume, in part, that it has something to do with having an option, something from which to choose and something that isn’t compulsory. For more clarity we turn to Taylor Pearson, –

“Optionality is an idea advanced by Nassim Taleb in his book Antifragile.
At the most basic level, optionality just means having lots of options.
If you develop a skill with many possible job opportunities, you have more optionality than someone who develops a skill that only has one or two job opportunities.
The advantage of optionality is that as the world grows increasingly difficult to predict, you can thrive in spite of not knowing the future.”

And that’s something we can understand. Especially in light of the current state of world affairs. The world is moving at an unprecedented pace, and we are doing our level best to move at the same warp speed. We have our fingers in many pies, all working on our side hustles – because that is, quite simply, the way of the world. Weeks fly by, months, the year and before we know it, we are celebrating another New Year, making resolutions before we have had a chance to tackle our old resolutions.

Everything is happening so quickly. And with time moving so quickly, it often feels like you need to chop and change and make decisions on the fly. Or at least need to change your mind, reevaluate, refocus, rethink, redo. It’s all very fluid and for those of us that like to plan ahead it kind of has us in a tizz. Because this is far from ideal when it comes to proper planning.

But this is where optionality comes in. It sounds like a subtle way of saying a disorganised fly-by-night, but it couldn’t be further from the truth. Optionality is, in fact, a way of describing a business that isn’t reliant on a single market, sector, or product to generate revenue.

A perfect example of a company that has optionality is Amazon. Amazon has it’s ecommerce business, it’s Amazon Web Services (cloud services) and now has its online advertising at Amazon Ads. Three major platforms that they can rely on simultaneously or – if there’s a slump – that can be relied on individually should one platform take a dive.

There’s flexibility in that and in that flexibility, there’s certainty that Amazon will be up, and running come what may. Optionality provides the opportunity not only to pivot but also to upsell, to upgrade and potentially grow a business from a startup to a multinational company, simply because there are options.

Call it strategic optionality.

How to apply optionality to your law firm

Rather than simply protecting current business models, law firms need to be agile and flexible enough looking for the opportunities that others don’t see, making hay while the sun shines. They can do this by addressing these key areas –

1. Evolving Culture – generally speaking, teams especially within law firms are accustomed to adopting a plan and sticking to it. Now, keeping optionality in mind, we are asking teams to be continuously monitoring progress and adapting to evolving dynamics. It’s vital to build a law firm with people willing to make course corrections and embark on entirely new routes, even when in mid-flight. Through advanced value stream management (VSM) and strategic optionality practices, teams can begin to support this cultural shift.+

2. An Open-Minded Leadership Approach – to lead a team that embraces optionality at its core, leaders need to have a blend of courage, optimism, open-mindedness, and realism. These characteristics are vital when fostering not only buy-in from their teams but the commitment from various stakeholders that may think them rash. Leaders need to keep their ears to the ground and be open enough to listen to many perspectives, engaging with as broad of a range of stakeholders as possible. It’s also important that they keep an open mind, particularly in rethinking past approaches and decision-making processes.

3. Intelligent, Data-Driven Planning and Decision Making – as we are aware, optionality means having a number of strategic options available to choose from. However, to make it work, teams need to leverage off data to gain improved insights into opportunities and threats and how to respond to them. Leaders need intelligence to gain a clearer picture of the options available and to choose among those options based on concrete data rather than conjecture.

At the end of the day, in a world that doesn’t wait for you to catch up, law firms need to stay – not only on top of things – but ready to move, to change direction, to rethink, to reinvest, reimagine and adopt new mindsets, new goals and new directions all at the drop of a hat. All while maintaining good standing with their clients and the Law Society. And still attracting new clients and potential new avenues of business.

It’s a lot.

Having options and thinking in a way that promotes optionality, flexibility and agility is key. Because the aim here is to encourage a law firm that isn’t fragile, one that’s not scared of change or upset. Instead, the aim is to build a law firm that does the opposite – one that’s constantly open to change, embracing disorder and chaos in a way that is orderly, that is principled and one that takes the changes in its stride.

And AJS can help you here – with our system that provides a variety of “options” allowing for the flexibility and agility needed to remain pliant to differing and changing requirements, one is given space to breathe. Able to move with current – it’s the very definition of optionality.

(Sources used and to whom we owe thanks: Forbes here, here and here; Taylor Pearson; Faster Capital; The Good Investors and LinkedIn)

– Written by Alicia Koch on behalf of AJS