In my previous post, I talked about the requirement that we juggle short-term and long-term considerations as we manage our business. That means managing our short-term profitability by carefully watching our expenses and working vigilantly to cut unnecessary costs. And, at the same, it means identifying long-term growth opportunities and developing the products and services we will need in order to meet the future needs of the market.

Another way to think about this is to ask, of the changes we are seeing in the markets we serve, which are "cyclical" and which are "structural"? That is, to what extent are these changes short-term in nature, driven primarily by the economic downturn? And to what extent are the changes longer-term in nature, and not likely to return to normal when the economy recovers?

These are crucial questions and the answers are far from obvious. That's why I appreciate the time that some of our editors and business managers have spent recently looking at the legal marketplace and trying to separate the cyclical from the structural. If you and your team have not been reflecting on the nature of change in the markets we serve, then perhaps you should consider doing so. One way to do so is to use the P.E.S.T. approach.

Political -- To what extent are changes in the political or regulatory environment having a positive or negative impact on our business? Is increased bank or other regulation coming from Washington going to be good for our markets? Is it short-term or likely to have a long-term impact? What about changing views on transparency--is that just a short-term issue or will it have a long-term effect on regulation and public notice requirements, for instance?

Economic -- Because of the down economy, we can see certain changes in behaviour by market players. In the legal market, inhouse counsel are in a more powerful position to dictate the price they pay to outside counsel, and the terms of payment (hourly billing vs. other ways to calculate fees). Is that a short-term, cyclical change or will it have a long-term impact? What about outsourcing? What about the way deals are financed--how will that impact transactional lawyers or commercial real estate professionals? What about economic development in Asia--how will that impact our business in the short and long-term?

Social -- We've all seen the rise of social media over the last few years--what does that mean in terms of information distribution, relationships and marketing both in the short-term and looking farther down the road? We know that there has been an increase in diversity among our customers--is that cyclical or are the resulting impacts likely to be felt for several years to come? Thousands of lawyers and other professionals have been laid off during this economic cycle...are those staff reductions permanent or temporary. And, if permanent, what will those people do in the future, and how will work within law firms, for instance, be organized?

Technology -- To what extent is our business feeling the impact of new technology, and how is the recession speeding up or magnifying that impact? For instance, we know that book sales are down this year--is that just because librarians are temporarily cutting back in order to keep within tighter budgets, or because we're seeing a permanent shift from print to digital content delivery? And will technology impact the practice of law or the way in which commercial real estate is marketed?

The point of these questions is that we need to know how the world is changing--and which changes will be with us for a long while--in order to plan our future. Our relative success to date in weathering this recession has been built on our diversification, the fact that we are not overly reliant on any one kind of revenue, or any one geography. I think that our success in the future will depend on the bets we'll be making in the next year or so on new product development to meet the future needs of our customers. Knowing how those needs will change--and which ones will remain constant--has become critical to charting our path.