We have just discussed Red jobs and Blue jobs. It's helpful to map these jobs onto our "functional anatomy of a business organisation" that we encountered earlier, in order to understand that there are certain patterns. As a quick reminder, here are the Red and Blue risk profiles, now shown on the same graph.
Red jobs are process-oriented, efficiency-driven, and prize repeatability, scalability, and low error rates. Blue jobs offer big rewards, and are more tolerant of violations of process and policy. They are less structured, but also less stable.
If you were building an accounting department at a company, how would you design the roles within it? How would you hire for those jobs? What kind of values would you showcase? Chances are, you'd lean towards "Red". You don't particularly want your tax returns to be constantly filled with novel ideas about tax avoidance versus tax evasion. You don't want your financial results to be released to the market on a vague and shifting schedule. And so you hire well-qualified, process-minded, risk-averse people to carry out a well-defined set of activities, according to strictly defined rules.
If you were building a marketing department, how would you design it? Probably very differently. The market is a constantly evolving organism, and marketing teams need to keep up. You want a constant inflow of fresh information, and new ideas about how to use it. You want to reward people for taking some risk, and you are willing to tolerate some experiments that don't yield results. And so you hire energetic, entrepreneurial people who don't necessarily accept the status quo, and you give them the freedom to try things out.
The pattern is visible across an organisation: The closer you are to the market, the more dynamic you have to be. Sales, marketing, account management, and to a degree product design and R&D, are in my view "Blue" departments. Support functions such as finance, legal and human resources, risk and compliance are "Red".
Is this always true? Certainly not! A finance department can be run in a very entrepreneurial way, for example by pursuing an aggressive tax strategy, or by engaging in so much financial engineering that it starts to look like a hedge fund. And a marketing department can be run in an extremely conservative way, for example if it is responsible for a handful of venerable global brands. Such companies can have brand guidelines and playbooks that are as detailed as the tax code.
What does this mean for your assignment?
All very well, you say... but how is this useful for a young lawyer who is servicing the client? Here's how:
- The matter you are working might be relevant to specific departments within an organization. Having a good model for the way those departments think, will help you calibrate the advice you give. It will also help you navigate the organisation, and get the co-operation you need from the people in it.
- Management is always balancing the needs and priorities of each department against the needs and priorities of other departments, and against the organization as a whole. You need to understand how the management thinks, and what it is trying to achieve, in order for your advice to align with those objectives.
I should pause here and acknowledge that this seems like an awful lot of extra thinking to do for a junior associate doing due diligence document review in the basement of a warehouse. But it's worth it. At some point, someone will ask you what you think about the assignment, and if you can respond with some sense of the big picture, you will make an impact. And who knows, you might also add some extra value!