This session will be dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone. It requires us to think differently than we have in the past about what it is that we do.
In pricing guru Reed Holden’s latest newsletter and blog post, he drives home the point that while IT buyers tend to look like are buying on price they really are not. They just use low price providers (rabbits) to drive down the prices of others.
The way to call them on this is to offer options, including a bare bones option. Once the prospect reject the idea of the lowest price, they are no longer a price buyer. We need to call them on this.
Also, IT providers need to lead with a strategy of distinguishing themselves as knowledge firms, not service firms. This means positioning themselves more like insurance companies do. With insurance (healthcare excepted, but do not get me started), we pay for things we do not want. With IT, we do not want problems.
Recently he participated in an UnConference of FileMaker Pro developers and consultants. He has been kind enough to share the video of his presentation. I think you will agree that Kirk did a great job. Here is his introduction to the session:
At DevCon 2009 I participated in a business panel discussion as an advocate for hourly billing. Since then I researched value pricing and found it to be superior in several ways. Would you like happier clients? More profitable projects? Less administrative burden? I’ll explain why I have adopted this model for my company and what the advantages are. Also, I’ll address the different challenges implementing value billing for a sole proprietor vs. a company. I’ll show how I have adapted it to our company including an overview of the sales and proposal process. One thing I have learned and am anxious to discuss with the group, is whether you use value based billing or not, thinking about it will improve how you do business.
First, I received word that an online comment I made on a Harvard Business Review blog post would be printed in the magazine.
For those of you that can’t make it out, my 15 seconds of fame reads, “Business ain’t science.” I told the copy editor that I had more to offer than that and that I usually am grammatically correct, but they did not seem interested. “No, your thought really says quite a lot.” Uh-huh.
Next, my article on using project management to replace the timesheet finally made it into the Journal of Accountancy. Please comment there as I would love to get a big long string going.
Could it be that the Mets getting out of the gate strongly? I can only hope!
You know who you are. You LEAN, six sigma, black belt, ninja turtles.
Explain to me (and the world) how any of you and your methodologies would have come up with the idea of putting a piano in the atrium of the Mayo Clinic where this could happen?
On Friday, February 12, I conducted an 8-hour CPE course for the California CPA Education Foundation: Measure What Matters to Customers: Using Key Predictive Indicators.
There were approximately 25 people in the live audience, and for the first time (for me), it was Webcast to approximately 65 people.
This course explains:
The essential and critical difference between efficiency and effectiveness.
The Business of the Past versus The Business of the Future—a new business model.
The difference between a performance and predictive indicator.
How to establish KPIs for your business.
KPIs for knowledge workers.
Other interesting issues raised by the audience.
The Foundation Team did a wonderful job handling the technology, and moderating the questions from the Webcast audience. Since we show video clips, it has always been a challenge to pull off a Webcast, but this went smoothly.
You can view the entire program here. (Be sure to fast forward through the lunch hour, as they keep the camera rolling).
I hope you find it valuable and thought provoking.
And as always, any and all feedback is more than welcome.
Regular readers might remember a post I did a few weeks ago entitled Instead, I’ll Let You Be the Judge, in which I published my deleted comments from a bog post by a FileMaker programmer.
This morning, I was thrilled to receive a mention in post entitled Passing the Torch of Value Pricing by a consultant in the FileMaker community named Jonathan Stark. To Jonathan, I wish to express my thanks for the mention. I had trouble posting a comment, so I thought I would just mention it here.
In addition, a shout out to Kirk Bowman, another FileMaker consultant who I met for lunch shortly before his presentation at a FileMaker un-conference. I hope to post his slides and the audio from his session in a future post.
Jonathan and Kirk, thanks for advancing the cause!
My wife, Christine, and I have recently become devotees of the AMC Original Series, Mad Men. For those of you not familiar the shows follows the personal and business life of a Madison Avenue creative who goes by the name of Don Draper in the early 1960s.
Small spoiler alert if you are planning to watch the show!
In Season 3, Don happens upon an elderly gentleman in the back unused bar of a country club named Connie. It turns out, he is Conrad Hilton. In this later scene, Hilton asks Don for his opinion on a new ad campaign. What follows is a terrific lesson on providing a free sample without giving away too much.
Hear the sledges with the bells - Silver bells! What a world of merriment their melody foretells! How they tinkle, tinkle, tinkle, In the icy air of night! While the stars that oversprinkle All the heavens, seem to twinkle With a crystalline delight; Keeping time, time, time, In a sort of Runic rhyme, To the tintinnabulation that so musically wells From the bells, bells, bells, bells, Bells, bells, bells - From the jingling and the tinkling of the bells.
In a recent paper, ’The Death of Big Law,’ Larry Ribstein, a law professor at the University of Illinois, argued that after decades without changing, law firms are likely to have an outburst of experimentation with different business models: even the venerable and lucrative “billable hour” method of charging clients is in doubt.
It reads like an obituary doesn’t it. We hear at VeraSage anxiously await the wake!
Yesterday, I was forwarded a post from Dwayne Wright who could not be more wrong about project management and value pricing. Please read his post before continuing.
I posted wrote a comment, he rejected it saying, “Well, just rejected the first comment for a blog that wasn’t clearly SPAM. It came from a value billing advocate and was equally harsh, combative and lacking of substance.”
“Harsh, combative," HELL yes. “Lacking in substance,” I’ll let you be the judge.
My comment:
I am probably the original source of the comment about billing by the hour as being unethical. (It is clearly suboptimal and I believe immoral as well, but that is a whole other story.)
First, let me be clear, I do not accuse anyone personally of being unethical; it is the practice that is unethical because it promotes some very bad habits.
It puts the consultant and the customer is an adversarial role. It is in the consultant’s financial interest to maximize hours; in the customer’ interest to minimize hours.
You state, "It also says this (hourly billing) is often used when a precise statement of work cannot be quickly prescribed. Does that sound familiar to you and your consulting business?" Yes, it sure does and that is just plain wrong. Prescription before diagnosis is malpractice in any profession.
While the PMBOK (and PMI, in general) have some good things to say about project management, they are overly obsessed with costs. After all most of this stuff comes from government (think defense contractors and NASA). In business, customers do not care about your costs, nor should they. They care about the results. They pay for results not efforts. This again is a misalignment.
You are arguing that the risks should be borne by both the customer and the consultant. That is just wrong. You are the one with the knowledge not the customer. It is your job to spread diversify your risks across all your customers not put it back on each of them. Your customers hire you because of risk. If what you did was easy, you would not be hired in the first place. To put it back on them is ludicrous.
Lastly, it is not "vale billing" is it "value pricing" or better yet "pricing on purpose." A price is set ahead of time a bill comes after the fact. You bill now, we at the VeraSage Institute, encourage you to set a price beforehand.
By the way, Dwayne Wright, you are free to post any comments here they will not be rejected. You can thank me later for giving you are larger audience then you ever thought possible.
Dan Ariely authored one of the best books I read in 2009 entitledPredictably Irrational. In this brief clip from his TEDtalk he demonstrates the powerful effect of options pricing. Ironically, the subject is The Economist magazine and they completely missed the opportunity to display their pricing prowess. They blew it! Big time!
Congratulations to Mark Bailey and the whole team at Mark Bailey & Co. for being named the Best Accounting Firms to Work For by Accounting Today for a second straight year. The article specifically identifies the trashing of the timesheet as the reason for their tremendous success.
"We threw out timesheets," explained Mark Bailey, the firm’s managing partner. "But the motivation to throw them out is that they didn’t really reflect the value of the service that was being given. What we came to realize very quickly was that a timesheet is a control tool."
The 16-person firm decided that controlling professionals didn’t drive productivity; instead, it hampered innovation and creativity.
I don’t know most of the other Legal Rebels, but I would bet that Chris Marston is the only practicing lawyer among them who doesn’t do timesheets. I don’t know how you can be a Legal Rebel if you still complete a timesheet—the buggy whip of the intellectual capital economy.
Also, check out Exemplar’s new Website and our Australian colleague John Chisholm’s blog post on meeting Chris on his recent tour of the USA.
Congratulations Chris and Exemplar—you are truly a Firm of the Future!
You can also register to receive the newsletter at John’s Web site. Well worth reading if you have an interest in the legal profession, or wine—John’s daughter Kate offers reviews of some fantastic Australian wines.
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