How the Balanced Score Card story started at Deriş

Deriş, founded in 1912, is a family intellectual property firm based in Turkey with 80 employees. It is managed by the founders’ third and fourth generation.

Deriş' Balanced Score Card journey began 10 years ago with the intention of reviewing the positioning of newly promoted people and the performance system. At this point, we could see that the promotion system linking performance and potential was not clear enough. In particular, there was not a clear link between the performance system, business processes, clients and financial results.

Our conclusion was that a structure that is not hierarchically associated with productivity, client satisfaction and financial results cannot establish a link between personal and business results.

The existing structure prevented lawyers from going beyond their primary areas of responsibility, legal affairs, and from gaining the holistic perspective or business acumen that is so necessary today.

This awareness led us to examine and implement a strategy leveraging the Balanced Score Card system, which amalgamates human, business processes, client and financial perspectives, and recognises that they are all interrelated.

Reflections from this perspective took us beyond measuring attorney performance traditionally measured in billable time, and opened up the opportunity to measure and evaluate other criteria.

The road map: strategic altitude – the 30,000 feet concept

Strategic altitude is generally associated with the 30,000 feet metaphor, which describes the difference between what a person on a plane can see when the plane is at full altitude and what they can see when it is on the ground.

When you view situations from 30,000 feet, you see a very wide perspective but when you look from ground level, you can only see what is happening immediately around you. This difference explains the distance between strategy, vision and action. The stages between 30,000 feet and ground level represent the order of strategy formation.

1.  Who is in the cockpit?

The main players in the group that shapes the strategy are company owners, employees, clients, solution partners, and other players in the market. A strategic initiative that does not include the expectations of these stakeholders and does not include them in bringing expectations to a common ground may either fail to yield successful results or may coincidentally yield productive results.

Task 1: Conducting SWOT analysis, client expectation analysis, employee perception measurement, market analysis to predict the expectations of strategy drivers.

2.  Mission

The question of whether mission or vision comes first is often debated. However, in the logic of the corporate scorecard, mission comes first. Mission covers our firm’s raison d’être and the tasks we currently cover, geography, services we provide, and our client profile. If we cannot first determine our area of specialism, it may be difficult to decide where we want to be in the future. 

Task 2: Define your mission

Deriş example: We are a family company founded in 1912, providing services focused solely on intellectual property, based in Istanbul, mostly representing international clients.

3.  Vision

The vision is where we want to be in the future. Articulating the objective in actionable terms should provide the environment that can lead us to this vision. It is often possible that very generic expressions are used in the vision statement and cannot be linked to measurable indicators.

Examples of some common vision statements are:

• Being the sector leader - putting the definition and indicator of the sector leader here is essential to understand how far you are from sector leadership.
• Growing in different business lines - which business lines?
• Being the client’s first choice - how can we understand and how can we measure this? In other words, the vision must be grounded and linked to key performance indicators.

Task 3: Define your vision

Deriş example: Working with the companies with highest number of patent applications and with the most valuable companies in the world.

Data and statistics for both types of companies can be found from open sources.

4.  Perspectives 

In line with the mission and vision, it is essential to look at the company's strategy from four different perspectives and establish relationships between them. These perspectives are:

1) Financial

2) Customer

3) Business processes

4) Human capital and infrastructure

The relationship between perspectives can be established top-down or bottom-up. For the first option, it is necessary to proceed with the question "what". For example, from a financial perspective, let’s say your focus is to increase the turnover from the new client.

Now let's move down the perspectives. In order to gain new client turnover, you need to produce unique selling points to reach the new client and encourage them to choose your firm. Let's say that you have committed to fast response and cost effective service in this perspective, so that the client chooses you.

Now let's take the third perspective - business processes - what will you improve in your processes to provide the speed and cost effective service you promised above? What needs to be done here is mostly focused on lean management and therefore efficiency.

Now we come to the lowest but most important of the perspectives. Employees are the ones who carry out business processes to ensure efficiency in the process. To fulfill the commitments made to the client, what kind of investment should be made in people in order to obtain turnover from the client onboarded through this means?

When we read perspectives from the bottom to the up, we need to proceed with the question "why?". For example, a unit manager stated to human resources that his team needed training. The questioning should proceed as follows:

1) What / approximately how much will be improved in which process when this training is provided?

2) Is this improvement among our commitments to the client?

3) How do we connect the effectiveness of this training to excellence in business processes, gaining new clients and ultimately the turnover target?

4.1. Financial

Company goals are determined from a financial perspective. Within the finances there are focus points such as turnover, profitability and market share. However, these generic concepts may not be sufficient to shape subsequent perspectives of the corporate scorecard. Expressing these concepts with clearer breakdowns sheds light on where to focus later. For example, turnover and profitability are the “raison d'être” of business organisations - but when you classify this according to business units, new clients you want to add to your portfolio, and growth in sustainable areas, the path becomes clearer.

Task 4: Define the priorities through your financial perspective

Deriş example: To grow in low-risk areas with high sustainability. High and low-risk areas were defined and the turnover target was set accordingly. In determining high-risk areas, areas whose sustainability is at risk through AI (e.g. translation) or areas where competitors offer services at lower prices were taken into account in the market analysis. The good news is that Deriş has achieved its growth target in low-risk areas during its 10-year period.

4.2. Customer/client

Clients fuel companies to achieve turnover targets. From this perspective, in order to achieve financial goals, it is necessary to determine and focus on what will be distinctive about the service provided to the client. These elements could include speed, quality, timeliness, being a solution partner, understanding the industry, and mastering the situations where we will go beyond the client's expectations. The question we ask ourselves here is ‘what should we do for the client in order for them to choose us’?

Task 5: Determine what you need to focus on in order to ensure client loyalty and gain new clients.

Deriş example: Deriş' unwavering focus from the client perspective is to “understand the client's business”. It is imperative to put yourself in the client's shoes and consider how the opinion from the law firm may affect the client’s decisions and future path.

4.3.  Business processes

Here we consider that one leg of the profitability we focus on from a financial perspective is process efficiency; on the other hand, we understand that the privileges we offer to the client are realised in business processes. It is necessary to decide which of the business processes should be prioritised for excellence.

Task 6: Specify the business processes in which to excel.

Deriş example:  This is the phase that will change from simple to complex from year to year as the perspective progresses. Deriş has used lean methods since the start of its use of the corporate scorecard and aims to minimise the complexity in the processes. In terms of KPIs in this field, Deriş has remained loyal to basic indicators such as correspondence response time, invoice disputes, and total lead time of the task. The indicator of quality satisfaction is client loyalty and new clients coming from the priority focus areas.

4.4.  Human capital & infrastructure

If we follow the top-down perspectives, the financial goals of the company are achieved through its client work: processes are improved to ensure client loyalty, and those who carry out these processes are people and infrastructure. Therefore, the subject of this perspective is what kind of investment should be made in human resources and infrastructure in order to achieve the company's vision and goals. 

Task 7:  Determine the indicators that will ensure employee engagement, the ways to access them, the areas in which investments should be made in personnel to perfect business processes, and the infrastructure needs that will enable them to do their jobs more efficiently.

Deriş example: Financial literacy, multi-skills, leadership, performance/potential/career and Deriş-specific and self-developed intellectual property management system infrastructures that have changed over the years.

5.     Reflection on business results

Achieving the financial performance targets and being able to establish a cause and effect relationship. 

In order to establish a cause and effect relationship, it is recommended to start by creating a "simple strategic plan" in Excel format.

Let's design Excel's columns as follows: 1) Perspectives 2) Strategic focuses in the perspective 3) Purpose 4) KPI 5) Target 6) Path to follow.

Periodic monitoring of the indicators in this plan shows us how close we are to the target, whether we are progressing with the right KPI, whether the path we follow is working or not, and allows us to take timely precautions if necessary.

Deriş has been working with the BSC for ten years, and has regularly achieved its planned growth, especially in the areas it wants to grow, and has gained great efficiency in areas where operations are concentrated.

Revealing human potential and keeping the career path filled

The balanced score card "human" perspective is a great tool to establish a performance system. Establishing a connection between the individual's performance and the company's potential and planning the individual's contribution, training and development accordingly is the greatest example of respect for people and the most important focus that makes institutions GPTW (Great Places to Work).

Here, we would like to share a Deriş example showing how that has worked very well. During the training, we noticed the low motivation of two young legal support staff who were fully qualified in terms of education, foreign language proficiency, work discipline and behavioural skills.

When we delved deeper into the issue, we realised that the senior manager responsible for support operations did business and managed people in a way that prevented them from coming forward. This was not done with malicious intent but probably due to the generation gap - young people did not have the opportunity to advance, were given repetitive work, and felt unnoticed. To remedy this, their areas of responsibility were determined, they were supported professionally, and they were given specific goals. The previous manager is no longer with the company, and these two young paralegals manage their departments flawlessly.

Tips: How law firms can get started with the Balanced Score Card approach?

The most suitable period for a law firm preparing to make its strategic plan using the Balanced Score Card method is the last quarter of the year. The plans made in the previous year may or may not have yielded results, and the priorities for the next year may have begun to show themselves clearly at this point.

The healthiest way to step into Balanced Score Card implementation is to clarify the financial expectations of the shareholders, dynamics of the client portfolio, the market and competitors’ situation, and proceed from there as suggested in this article. The key to success here is that a specific member of the senior management takes responsibility for the Balanced Score Card initiatives.  

Tips: How law firms can measure the ROI of investments?

It is possible to explain investment and ROI under the following headings.

1) Corporate communications/visibility investment

ROI: Turnover of the onboarded client in the current period/total corporate communication - visibility expenditure

Even if the ROI is low, corporate communications is not an area to give up in terms of company recognition and awareness.

2) IT infrastructure investment

Paralegal / attorney ratio

Response time

3) HR investment

Revenue per associate

4) Return on entire investment

Fee charged per hour

FICPI’s view

FICPI uniquely combines education and advocacy on topics around patents and trade marks, with a focus on developing the professional excellence of its individual members. FICPI is aware of the stresses and strains that come with being an IP attorney or being a partner in an IP firm and regularly invites speakers and blogs on this topic. FICPI Forums, Congress, committees and meetings are opportunities to gather insights from the international IP attorney community on any issue, whether it be practice-related or topics of patent and trade mark law.

Next steps

• Register for the 2024 FICPI Forum, taking place in Madrid from 25-28 September 
• Consider getting involved with FICPI's Practice Management Committee which focuses on how intellectual property attorneys do business as IP firms 

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