Monday 11 November 2019

The Forum’s annual technology summit, hosted by BCLP, presented the interim findings of a Government-funded business school research project to help mid-size law and accountancy firms adopt artificial intelligence (AI) technologies through collaborative design. This was a two-hour session, so this report selects some key themes from a comprehensive report and discussion.

Forum CEO Richard Chaplin introduced the session and outlined the rationale and purpose of the research project, which relies on the Forum’s adaption of Moore’s ‘Crossing the chasm’ technology model into a world of ‘visionaries’, ‘pragmatists’ and ‘conservatives’. Forum surveys has confirmed that most professional firm leaders are ‘pragmatists’, and therefore mainly interested in exploring how their peers are using AI, and its potential to improve their business, rather than in being pioneers. The £1m AI adoption research project is designed to help leaders understand what works and how best to implement it.

Phil Godsiff of Exeter University Business School, who is conducting a separate collaborative R&D project, and Professor Tim Vorley of Sheffield University Management School who is leading the ‘AI Adoption’ research project in which the Forum is a co-investigator, outlined government support, and project aims and deliverables. They described in detail the research methodology and its interim results. This was followed by a panel discussion, bringing in Ian Jeffery, partner and until recently CEO of Lewis Silkin, and innovation specialist Rosemary Nunn, who offered a practical business perspective, before discussion was opened up to the floor.

Government support for services sector R&D

Phil Godsiff commented that the starting point is the four Grand Challenges in the Government’s Industrial Strategy white paper, one of which is ‘AI and the data economy’.

The 2018 Blackett report on growth opportunities for the service economy, which constitutes 80% of the UK economy highlighted the sheer scale of automation’s potential: reflecting the suggestion that 50% of workplace activities could be automated in the next 30 years.  Although professional services ranked close to the bottom of the list of sectors that were seen as ripe for automation, it is encouraging that Government (through UKRI) has instigated £20m of pioneer research and development funding for law, accountancy and insurance under an initiative called ‘Next Generation Services’. 85% of the funding is for collaborative R&D projects, with 15% (£3 million) for three multi-disciplinary research projects led by business schools:

• Tech-driven change in insurance (led by Loughborough University)
• The potential of AI for law (led by Oxford University)
• AI adoption through collaborative design (led by Sheffield University Management School)

Turning to his own project involving 20 law firm interviews, Godsiff shared three interim findings: the conservative approach of many mid-size firms; some processes being easier to automate or apply AI to than others; but surprisingly, most lawyers (barristers and solicitors) not considering any of their processes ripe for automation. On a positive note, participating in the interviews had helped raise awareness of automation’s potential.

Finally, Godsiff highlighted Innovate UK’s free-to-join ‘AI for Services’ online community.

An interdisciplinary approach to AI readiness

As the principal investigator, Professor Tim Vorley commented that mid-sized professional firms are too big to ignore the potential benefits of AI in terms of productivity, efficiency and innovation, but they lack the resources to lead from the front.

The overarching goal of the project is helping mid-sized firms get ‘AI ready’. It is a collaborative effort between Sheffield, Lancaster and Manchester Business Schools; the University of the Arts, London (UAL); the Forum; and scenario planning consultancy Normann Partners in three phases - academic insights, futures, and design sprints - working toward the following goals:

• Advance understanding of the non-technical factors influencing the uptake of AI technologies and how to overcome these barriers;
• Explore how AI technologies are transforming business models and the role of sector stakeholders as catalysts for change;
• Develop scenarios with business and key stakeholders about the future of the sectors to engage firms to think about the need to change;
• Undertake design sprints to identify and develop strategies to enable the effective adopting and implementing AI technologies that deliver high value client services – getting AI ready.

A key output of the project will be a report, co-produced with the Forum, that will form a framework for strategic direction, decision-making and implementation.

Getting AI into the business is about creating an innovation culture and a ‘quick win’ strategy of deploying narrow AI technology to automate specific tasks and processes. Vorley and his research team applied an interactive approach from the outset, combining multi-firm design sprints on shared challenges and design sprints for individual firms on more specific topics. Shared challenges included understanding where they can effectively integrate technology into their business and incentivising partners to invest in their firm’s future.

Rather than explanations of advanced technologies like machine learning, mid-tier firms are looking for practical solutions. They recognise that they will not be revolutionised by AI any time soon, but it can make a difference. There is huge scope for improving productivity and profitability, but this is not just about technology: it is about overcoming cultural resistance to change and challenging established norms.

Many firms feel constrained by regulatory and governance challenges. Although regulators have produced various reports about AI, there is insufficient information and guidance about its implications for regulations and standards. The sector needs to engage with regulators, societies and sector groups in order to unlock the value of AI.

In terms of business model innovation, clients are leading the way, but firms are concerned about AI business risk around outcomes – will their professional indemnity insurance cover an algorithm getting something wrong, or a problem with the data?

Most mid-tier firms are right at the start of the AI journey. Normann Partners’ scenario planning exercises are designed to help key stakeholders envision possible futures for the services sector. For example, more open access to data will open up opportunities for smaller firms and service providers to deploy intelligent systems and applications. However, these rely on data quality, which again raises the issue of standards. In terms of market share, focusing on data highlights the possibility of consolidation at the top end of the market, with the Big Four and Magic Circle facing competition from the likes of Google and Amazon. The point of both these exercises – scenario planning and design sprints – was to bring together firms and regulators to think about how they need to adapt to an AI future and become more productive and profitable in the process.

The T shaped lawyer

Taking a deeper dive into the research, Vorley turned to the T-shaped professional, whereby human advice is augmented and enhanced by AI, enabling firms to deliver services differently and create new service offerings.

Automation expedites service delivery by speeding up processes, enabling professionals to work faster and better by giving them instant access to the information they need and more time to focus on more challenging judgement calls.

Technology has wider implications beyond transforming tasks and processes. It may not replace people, but it impacts career structures, roles and functions, and changing the skills required of individuals and teams. Importantly, it impacts the professional services revenue model.

Design sprints – reconfiguring the services model

Vorley believes that the services sector is on the threshold of structural reconfiguration driven by technological and market forces’ pressure on business models. AI changes the revenue model and this has huge implications for the partnership model in terms of valuation, remuneration and status.

In this context, it is important to consider the challenges as well as the opportunities AI presents and the positive aspects of an innovation culture. Another misconception is that innovation is all about technology. First and foremost, innovation in the services sector must add value, and this means taking a long hard look at the business model.

Vorley explained in some detail how the research project is using interactive design sprints as the first stage towards a roadmap to support firms looking to become AI ready. He highlighted the application of a business modelling tool to engage participants in bespoke design sprints in developing a blueprint for organisational change.

However, it is important to recognise that sprints are tools and their output is the beginning not the end of a process. Design thinking uncovers challenges, opportunities and ideas that are a springboard for practical action: they are the first step towards reconfiguring an AI ready business model.

The talks were followed by a panel discussion which included questions from audience members representing a wide variety of professional services organisations.

Joanna Goodman