Lessons from Lexus

Our text this morning is the two-part cover story of this weekend's Barron's, on the creation, rise, and dominance of Lexus in the luxury auto market.

And I select it not because Lexus ownership surely over-indexes among readers of "Adam Smith, Esq.," but for its powerful and focused message about how to enter and conquer a difficult, competitive, high-end marketplace, in the teeth of nay-sayers and doubters.  Consider the situation facing Toyota in 1986 as it began the launch of what would be Lexus:  It was viewed as a chronic lightweight in the industry, amply capable of churning out underpowered econoboxes, but with all the brand cachet among the well-heeled crowd of, say, professional wrestling—or, as one wag put it, as probable as introducing "Beef Wellington at McDonald's." 

Toyota's genius?  Not to take on Cadillac and Lincoln—not to mention BMW and Mercedes—squarely on the turf of luxury and performance, but to stake out a new, essentially unoccupied, position:

"In its rise to the top, Lexus has forced competing auto makers around the world to rethink their own models, especially by the key measure of reliability. Lexus, which largely eschews bold styling and tire-searing acceleration, has demonstrated that legions of luxury-car buyers value reliability above all else. In survey after survey, Lexuses have been shown to have fewer mechanical breakdowns than all other cars in all price ranges. [emphasis supplied]"

"'With a Lexus in your driveway, you knew that your friends knew that you had bought wisely,' recalls Csaba Csere, editor of Car and Driver magazine. Indeed, Lexus has always placed high in long-term quality ranking. This year, for the 11th straight year, the brand was ranked No. 1 by J.D. Power and Associates."

Think of that!  Eleven years in a row—this is, to say the least, no accident.  And emulating it is harder than it looks.  How many PC manufacturers have tried to clone Dell's hyper-efficient supply chain?  How many entertainment companies Apple's bullseye after bullseye in design?  How many airlines Southwest's no-frills-plus-fun business model?

Swell, you're saying to yourself, but haven't we entirely departed the realm of law firms?

Not really:  The Lexus story is the story of an outsider challenging entrenched incumbents by providing something customers would respond to even though the incumbents thought it vaguely beneath them:

• a reliable,
• quality,
• "perfect" customer experience
• without exotic styling, over-the-top luxury touches (the new Rolls Royce has an umbrella holder built into each rear door; need I say more?), or blistering performance.

Now, imagine an AmLaw 50 firm deciding to emulate Lexus.  The mantra switches from things like "best of breed," "biggest deals," and "your most arcane problems solved" to "quality," "reliability," and the "perfect" client experience.  Not "the exotic, the ne plus ultra, head-turning guaranteed," but "here for you, solid, always dependable."

Do you think clients would flock to this largely unoccupied positioning?  Wouldn't it be fascinating to watch someone try?