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Ron Baker - 01/30/2012
Someone recently asked me which were the best business books I read last year. Since we here at VeraSage are inveterate readers, I’d love to know your best books from last year.
Tom Hood recently posted his, so I thought I’d share my Baker’s Dozen.
Some of these books I’ve already reviewed elsewhere, so will limit my remarks to books not previously discussed.
I’ve also noted my absolute Top Choices, so if you only read a few from this list, start with these.
Also, as always, you can access my shelf at shelfari.com for my complete library, my Top 100 Best Business Books of all time (see tag “bbb” underneath the shelf).
Business Books
Peter Drucker. Technology, Management and Society. Read full review here.
Jim Rains. Target Cost Management. Read full review here.
Top Choice: Thomas Alexander. Stanley Marcus: The Relentless Reign of a Merchant Prince.
He was called “America’s Merchant Prince,” and “the melancholy Plato of retailing.” I consider Stanley Marcus the grandfather of Total Quality Service.
Here’s a man who understood the value of each and every customer, long before CRM and Lifetime Value became management fads.
The founders of Neiman Marcus also certainly understood their “Why” (see Simon Sinek’s Start with Why).
Stanley wrote four books during his lifetime, but this is one of the only ones I’ve seen written about him by an insider, Thomas E. Alexander, who met Stanley in 1965 and served nearly 20 years as his executive vice president of marketing.
This was an incredibly demanding job, since Marcus was the consummate marketer, and many previous men failed in this role. Alexander obviously did something right that made Marcus keep him around that long.
Alexander gives you an insider’s view of the famous Neiman Marcus Fortnights, a Dallas institution until they were discontinued in 1986.
There are many fantastic pictures and other inside stories of how Marcus conducted business, treated customers, his team, and foreign government officials. Many of the pictures come from the Stanley Marcus Collection at South Methodist University, DeGolyer Library.
You’ll read about the first out-of-state store in Bal Harbour, Florida, opened in January 1971, and also the controversy of the San Francisco store opening at Union Square.
The columnist Herb Caen was an vocal critic of Neiman Marcus opening there, and the irony was that Stanely Marcus was farther to the left than Caen ever dreamed of being.
One very amusing anecdote about Marcus are the two things that exceeded his expectations, which were very high. One was Sophia Loren, and the other was the Bohemian Grove in San Francisco.
In the final chapter, “Saying Goodbye,” Alexander tells of Marcus, age 95, reflecting: “Without change, there is no challenge, and without challenge there is only the status quo but no progress.”
Wise words. Stanley Marcus was an amazing man, and his story is compelling on many levels. This book adds another dimension to a man who has left an indelible legacy on the culture. Well worth reading after you read Marcus’s own, Minding the Store, the best book ever written on customer service.
Robert Kanigel. The One Best Way. Read full review here.
Bob Lutz. Car Guys vs. Bean Counters. Read full review here.
Top Choice: Howard Hansen and Steven Geske. Healing Leadership. [Kindle Edition only].
I had the honor of writing the foreword to this book, but it doesn’t change the fact that this book had a profound influence of my thinking. Here is an excerpt from that foreword:
They say any writer should be able to sum up the purpose of their book on the back of a business card. I can do that for this book by using another author’s book:
The colossal misunderstanding of our time is the assumption that insight will work with people who are unmotivated to change. If you want your child, spouse, client, or boss to shape up, stay connected while changing yourself rather than trying to fix them.
As with most ideas and relationships, it is no coincidence that the above was written by Edwin H. Friedman, in his masterful book A Failure of Nerve: Leadership in the Age of the Quick Fix.
Healing Leadership takes a totally different approach, and one that is not very comfortable for those of us used to reading business books. How many books on leadership have you read where the central message is you can’t succeed at affecting change in the people you lead? That you need to get out of the business of needing others to change? The authors even admit they won’t get rich by dispensing this type of advice.
Rather than assaulting the reader with endless platitudes and checklists of “do this and don’t do that,” this book advocates a “way of being,” recognizing that leadership is an emotional process, not a mechanistic science that treats humans like machines.
You are about to explore some very profound, powerful, and simple concepts. But please don’t confuse simple with simplistic. Virtuoso bass player, accomplished pianist, bandleader, and composer Charles Mingus said: “Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that’s creativity.”
Three creative concepts from Healing Leadership have permanently altered not only my worldview, but my behavior. The authors present the “Energy Management Model,” which teaches how we could have greater success in achieving our goals if we tried not so much to control time—an impossibility, as it is outside us—and instead tried to control energy—eminently possible, as it is within us.
You’ll learn the difference between episodic and chronic anxiety, along with the 10 telltale signs of someone who is chronically anxious, and what to do about it.
Finally, the concept of Emotional Triangles—what the authors call “the weather of human relationships.” This framework ties everything in the book together, while offering an enormously effective way to lower your anxiety. After reading about Emotional Triangles you’ll wish you had understood them in elementary school.
But don’t confuse simple with easy. These frameworks are very counterintuitive, and they will no doubt cause some confusion. Don’t despair. That’s a leading indicator that your understanding is deepening. You simply must wrestle with the concepts in this book if you want to achieve real change—transformations that will truly make a difference in your life.
One of my favorite definitions of the role of leaders comes from business consultant Peter Block: “The real task of leadership is to confront people with their freedom.” In Healing Leadership, Steven and Howard do exactly this. It’s not comfortable, it’s vexing, and it goes against everything you were taught in business school. The difference is: it works.
John Kay. Obliquity.
John Kay is an economist who has written many books I highly recommend. He does a good job blending economic theory with business strategy.
This book is all about obliquity, which he defines as “Goals are often best achieved without intending them.” Achieving complex objectives indirectly rather than directly. The real world isn’t like Sudoku, where you can arrive at your objective directly.
Citing many different examples of this concept, Kay does an excellent job of applying it to business. A couple of example of the obliquity route: cities. Jane Jacobs despised the urban planners who believe they can directly create a great city. Great cities flourish when they are unplanned, which leads to creativity.
Creating shareholder value (which Jack Welch called one of the dumbest ideas) is an example of a direct objective, but it’s obtained indirectly by creating great products (think Apple). No one works to maximize shareholder value.
We do so more in line with Simon Sinek’s Start With Why. Kay does a good job dispelling the notion that business is based on greed: “A corporate culture that extols greed cannot, in the end, protect itself against its own employees.”
He talks about how measurements can cloud judgment. Using [Benjamin] “Franklin’s Rule” (drawing up a list of Pro and Con to make rational decisions), Kay illustrates that real decisions aren’t made this way—though we think they should be.
Robert McNamara’s tragic management of the Vietnam war by the numbers illustrates the flaw in this thinking.
Kay also discusses the “teleological fallacy,” which infers causes from outcomes, and how it’s one of the oldest mistakes people make. Today we call it the Halo Effect.
Kay explains why business autobiographers can describe their success, but not explain it. Sort of like John Paul Getty’s advice: “Strike oil.”
Kay also explains why it’s more important to be right rather than consistent (unlike, say, in legal matters, where precedent is more important).
The book validates much of my own thinking in Measure What Matters to Customers, especially the Seven Moral Hazards of Measurements.
Numbers give a false sense of precision and it’s no way to build a great business. Think Six Sigma when Kay writes: “The process in which well-defined and prioritized objectives are broken down into specific states and actions whose progress can be monitored and measured is not the reality of how people find fulfillment in their lives, create great art, establish great societies or build good businesses.”
Top Choice: Tim J. Smith. Pricing Strategy.
I met Tim Smith at the Professional Pricing Society conference in Chicago in April 2011. He told me he read my book (Pricing on Purpose) while in Prague, which kept him from getting into trouble...LOL.
He does cite my book in his, as a justification for pricing discrimination. Although this book is more like a textbook, and is very quantitative, it’s still very readable and enjoyable.
He’s got plenty of thought-provoking exercises (there’s a companion workbook for this text). Smith understands that pricing is not just about the numbers; that it’s more art than science, but he does discuss both, and even has a chapter on behavioral economics.
Overall, this book needs to be in every serious pricer’s library.
William Taylor. Practically Radical.
I enjoyed William Taylor’s other book, Mavericks at Work.
This book is also good, with three major themes: 1) Transforming your company; 2) shaking up your industry; and 3) challenging yourself.
A lot of it is profiles of change agents from a wide swath of sectors, some of whom you’ll find fascinating. Most change fails because it focuses too much on what’s wrong while undervaluing what’s right.
The book advises not to benchmark your competitors for new ideas (stop looking in the same places) and gather as many “zero-gravity” thinkers as you can—folks who are not weighed down by the baggage of industry expertise.
Taylor also understands the importance of a company’s “Why” or purpose, and provides many thought-provoking examples and research supporting this concept.
He’s wrong about the housing crisis at the start of the book, but other than that, this is good journalism, along with some important lessons. If you enjoy reading about entrepreneurs and change agents, this is well written and very interesting.
Dan S. Kennedy and Jason Marrs. No B.S. Price Strategy. Read full review here.
Andreas Widmer. The Pope & The CEO.
This is a great book by a former Swiss Guard, who are charged with guarding the Vatican.
Adreas Wedmer spent two years (1986-88) in his early 20s guarding Pope John Paul II, and this book discusses the leadership lessons he learned, which helped him become a successful entrepreneur.
He met Ronald Reagan at the Vatican in June, 1987, two days before Reagan delivered his “Tear down this wall” speech in Berlin. There’s a great discussion of ethics in the book, with the point being made that utilitarianism is the framework behind pornography.
Also, how firms are not moral agents because they have no soul. Hence, a person-centric framework is what the Pope espoused. Other lessons from the Pope apply to business as well, since business and faith go together.
I found the inside look at the Swiss Guards fascinating. A very worthwhile read.
Joseph Maciariello and Karen Linkletter. Drucker’s Lost Art of Management.
This is an incredibly deep book, which contains a wonderful idea: Management is really a liberal art—not a science or a profession—and should be a humanities discipline.
This would lead to a more humane and moral society. The idea that business is a science has always seemed strange to me, since we are dealing with human beings, not machines. This is an idea Matthew Stewart discusses in his excellent book, The Management Myth.
A liberal art is defined more by what it’s not: vocational training. Its purpose is to educate citizens to be society’s leaders, by emphasizing judgments and values.
Drucker first mentioned this idea in 1988, but he didn’t clearly define it. The two authors of this book both knew Drucker personally, and they are scholars, one from business and the other a historian.
They have researched all of Drucker’s writings on this link between liberal arts and management, shedding light on how this could be accomplished.
Drucker defined himself as a social ecologist—someone who creates and maintains a society of functioning organizations that anticipate change, and manage both continuities and discontinuities.
The book is a deep look at which philosophers, political scientists, economists, and other thinkers influenced Drucker’s worldview. It discusses his concept of the knowledge economy and knowledge workers. It’s a bit long, but still a very worthwhile read.
I now believe society would be better off closing its business schools and folding them back into the humanities. On average, I rather be led by someone with a liberal arts degree than an MBA.
Inder Sidhu. Doing Both.
Why do we build such beautiful bridges, such as the Golden Gate? After all, the military build utilitarian bridges all the time, capable of handling extreme loads. It’s costly to achieve the aesthetic appeal of the Golden Gate, so why bother, especially since the Bay Bridge right across the way does the job just as well without the flocks of visitors or suicide jumpers.
The premise of Inder Sidhu in this book is you can do both most of the time. He’s a veteran of Cisco, the 1984 startup that is now the 14th most valuable brand in the world, according in Intrabrand, and part of the Dow Jones Industrial Average.
This book was recommended to me by a colleague who suggested it would shed light on the “efficiency vs. effectiveness” that we have been engaged in over at VeraSage for years. It didn’t really help settle that issue, but actually reinforced the view that effectiveness everywhere and always trumps efficiency. But it’s an interesting book nonetheless.
Doing both is not a balanced compromise between two objectives but rather a mutually reinforcing multiplier. Each chapter provides an example in broad categories, such as:
Sustaining and Disruptive Innovations. A company doesn’t have to choose between one or the other, but should strive for both.
Multiple business models. Cisco embraces new business models either by acquisition or internal development. This is not easy, but it’s often necessary in order to capture new markets and not be cannibalized. Software as a Service and Subscription based pricing, as with WebEx, are examples of how they have changed their business model.
From volume to value with partners. Cisco evaluates its 55,000 partners not based on volume, but on value contributed—new customers, solving difficult technical problems, entering new vertical markets, etc. Rather than just providing discounts that can be used by bigger partners against smaller ones, Cisco changed the criteria to evaluating value, a great idea.
Excellence and Relevance. “By zeroing in on what matters most to customers, Cisco became excellent by focusing on customer pain points. But it became relevant by moving from customer frustrations to their aspirations.”
Superstars and winning teams. You can have both in your company. I think this one is tougher to achieve than the author leads us to believe.
Westpoint and Woodstock. This deals with the governance model of authoritative vs. democratic leadership. Cisco has both types, and it is a very interesting model, including councils, boards and working groups for decentralized management, and the traditional functions, geography and countries for centralized management. This has potential for professional firms as well.
Overall, this is a short book and a good read. But I still remain convinced that efficiency and effectiveness cannot be “balanced” as they are different things, and this book supports that view.
Honorary Mentions
Two of my VeraSage colleagues wrote books that I read in 2011.
Tim Williams. Positioning for Professionals.
Even with all my bias, this is a fantastic book—a concentrated, yet cogent, look at how professional knowledge firms can position themselves based upon value creation.
Tim dispels many myths in this work, from size being the path to profit, and why going broad is not really as profitable as going narrow.
Tim also takes on “commodity” thinking, debunking this myth as well. As he writes, “Service is a commodity. Smart thinking is not.”
If you are a leader of a PKF, you will profit immensely from Tim’s intellectual capital on how to position and differentiate your firm. As Tim argues persuasively, this is the only way to capture more of the value you create and command premium pricing. A fantastic read.
Jay Shepherd. Firing at Will.
This is an excellent guide to everything an employer needs to know in protecting its legal rights, and avoiding costly litigation and other legal issues. Written beautifully, and very non-lawyerly, it’s easily accessible to everyone. You will get the benefit of Jay’s 17 years of practicing law on the management side. Indispensable. (Ignore the foreword).
Ron Baker - 01/10/2012
Nearly ten articles have been published on Holland & Knight’s Lobby Division saying bye-bye to the billable hour.
Actually, they are saying bye-bye to timesheets, as most of the revenue from H&K’s lobbying group was already on a fixed-price basis.
The first article was in Politico on December 13th. It quoted Rich Gold, head of H&K’s public policy and regulation group:
I think if you look out 10 years, this will be a very large trend...and we could either lead or follow.
Our favorite line from this article is from Ivan Adler, a headhunter with the McCormick Group:
This has the potential to be a real game breaker in law firm recruiting because it opens up a new vein of talented folks who have previously shunned law firms like a fruitcake at a Christmas buffet because of the billable hour.
Another telling fact from the article is:
Several former aides-turned-lobbyists said they opted for consulting firms and lobby shops over law firms for two reasons: Nonlawyers are treated like second-class citizens at firms, and they didn’t want to have to keep track of their time.
One of the issues that must be addressed when moving away from timesheets is how will the firm allocate revenue per person going forward if there are no timesheets.
Another article, dated December 14th, from The Washington Post explains how H&K will account for revenue:
Now, instead of billing hours to a matter, Holland & Knight will allocate upfront a portion of the monthly or yearly retainer to each individual working on the matter, based on estimates of how much they’ve charged in the past.
Ed Kless and I were privileged to be involved with H&K’s transition, working with Rich, Friedrich Blase, and several other partners from the PPRG group.
The group innovated the “Client Value Share” KPI. Since the price to the customer is already fixed, this KPI is a way to allocate, prospectively, that value amongst the team members who will work on the matter.
The beauty of this KPI is it forces the team to collaborate, upfront, on who will handle what, and decide what the value contribution will be from each person.
Someone may bring incredible value to the engagement but have relatively low billable hours. The CVS KPI will now account for that discrepancy.
And since the CVS is decided upfront, there will be less conflict regarding write-downs and allocations that are a normal part of the timesheet culture.
If someone on the team doesn’t pull her weight, the CVS can be adjusted, and reasonable people should be able to agree on that process.
This is a momentous change within the culture of H&K, and we applaud the vision, leadership, and courage of Rich, Friedrich, and the other partners, who understand what an enormous competitive advantage this will bring to the firm’s ability to attract top talent, while providing a better level of service to its customers.
It is one more data point that the naysayers, who believe it’s not possible for a law firm to eliminate timesheets, will have to contend with.
Ron Baker - 11/20/2011
Dan Morris and I will be conducting the Sole Proprietor’s Retreat this December 9-10 for the California CPA Education Foundation. This 1.5 day program was designed as a way to give sole props the opportunity to have a retreat with their peers, since they don’t have partners.
It was a predecessor program to the Firm of the Future Symposium, but designed specifically for sole props and all the issues they face.
Ric Payne has agreed to offer a 12-month membership to the Principa Alliance, which provides access to its Practice System (a $1,295 value).
If anyone is interested, don’t hesitate to contact me, or Dan. We always limit the participation to 7-12 to make the group more intimate.
Also, if you could help spread the word that would be much appreciated.
Ed Kless - 09/14/2011
Unemployment numbers notwithstanding, the US economy has picked up ever so slightly in the past few months based on the anecdotal “evidence” from people I talk to. With that there has come a bit of a resurgence of the concept of benchmarking. Notice no one benchmarks in a down economy.
The problem as I see it, is that benchmarking promotes what Jonas Ridderstroale and Kjell A. Nordstrom call Karaoke Capitalism-a propensity to imitate rather than innovate. Their message is essentially, “Look, no matter how drunk the audience (prospects and customers) gets, you are still not Elvis (Apple).” Benchmarking kills innovation and this is a death knell for most companies. Do you think Apple benchmarks?
In the past, I was a disciple of this kind of thinking and attended dozens of benchmarking sessions at business conferences until I noticed one of two universal reactions in both myself and the other participants.
- If my company outperformed the average, I thought, “Well, I guess I am OK there. There is no reason to make any serious adjustments. After all, we are better than average.” The result-inaction on my part.
- If my company underachieved when compared to the mean, I thought, “Hmmm, I think there might be something wrong about this data.” I would begin to ask questions, not about how I could improve, but rather about the data set. “How many companies including were under X number of people? How many companies also did software development? How many did not have a training center?” The result-inaction on my part.
Now that I have seen the light (thanks mostly to Ron Baker) I have been a constant bane to the existence of those that attend these session. I share my story and ask the participants as they exit the room, “What specifically are you going to change about your company now that you know this information?” The usual response is stuttering followed by an expression of either or both of my observations noted above. I want to be clear, I do not think action should be taken based on this data in the first place. Why? Because ultimately we (myself and those attending the sessions) were right about this data-it is not scientific! In many cases the data is not even a valid statistical sample set from the pool of companies that is attempting to be benchmarked. Comparing ourselves with a mean means nothing. On average every person on the planet has one developed set of mammary glands and one testicle. So what! Who cares?
Lastly, also almost all benchmarking data is based on numbers available from the financial system, which by definition are accounting for what happened in the past. None of these numbers is a indicator or predictor of future success.
Instead of filling out forms and attending benchmarking sessions, I suggest thinking about how to innovate and create value for your customers today and in the future!
Ron Baker - 08/24/2011
Ron Baker - 08/23/2011
Ed Kless recently reminded me of one of Peter Drucker’s last live appearances. It’s worth revisiting, especially in the context of a book I just read by Bob Lutz: Car Guys vs Bean Counters: The Battle for the Soul of American Business (review coming in my next post).
On December 21, 2006, my mentor, George Gilder, wrote on his blog about the last time he saw Peter Drucker live. It is such a profound piece that goes to the heart of how accounting is becoming increasingly irrelevant to the spirit of enterprise, it is worth quoting in full:
The last time I saw Peter Drucker, he was keynoting a Forbes conference in Seattle for CEOs. In the auditorium at the International Trade Center next to the bay, they had wheeled out the great man to the middle of the stage in a great fluffy easy chair.
Close to 90 years old—at the end of the previous century gazing toward the next—he was the numinous name and Delphic presence at the conference. Everyone leaned forward to hear what he had to say.
Then a gasp shook the rows of CEOs. The conference management stood there stricken, unable to move: “For the Love of Malcolm’s motorcycle...What is this?” The CEOs sat popeyed.
The hoary sage’s balding pate flopped back in the chair as if he had fallen asleep...or worse.
Perhaps Forbes had erred in staking a major conference on an aging guru seemingly well over the hill and in parlous health.
Then his entire body fell forward. I was ready to run up to catch him if he should tumble toward the crowd. But he somehow caught himself. His eyes opened, and he looked out intently at the throng of CEOs. Everyone sighed with relief. He was awake. He had their attention.
Drucker growled: “I have just one thing to tell you today. Just one thing...”
Wow, I said to myself, it better be good.
“Noone,” he continued, “but noone in your company, knows less about your business than your See Eff Oh.”
Huh?
This was the era of the heroic Chief Financial Officer (CFO). Scott Sullivan of Worldcom, Andy Fastow of Enron, clever, inventive folk like that.
You remember them. Across the country, CFOs were in the saddle. CEOs would not move without consulting them.
What could Drucker have meant?
He was stating law number one of the Telecosm.
Knowledge is about the past. Entrepreneurship is about the future.
CFOs deal with past numbers. By the time they get them all parsed and pinned down, the numbers are often wrong. In effect, CFOs are trying to steer companies by peering into the rearview mirror. Past numbers do not have anything much to do with future numbers.
Moreover, CFOs tend to focus on internal problems. But most internal problems cannot be solved internally.
Determining business outcomes are decisions made by customers and investors and both are outside the company and not directly managed by the company. Their views can change in an instant, casting all the existing numbers into oblivion.
To reach customers and investors takes outside vision and leadership, not internal problem solving.
Tech companies should not try to solve problems. Solving problems sounds good, but it is a loser. You end up feeding your failures, starving your strengths and achieving costly mediocrity.
Don’t solve problems—that’s the CFO’s forte and pitfall. Pursue opportunities.
A Deteriorating Paradigm
Approximately 70% of the average company’s value cannot be explained by traditional GAAP financial statements.
Adding more arcane and picayune rules to GAAP, or converging existing GAAP with international accounting standards, will not solve this problem.
The accounting model is suffering from what philosophers call a deteriorating paradigm—it gets more and more complex to account for its lack of explanatory power.
In all fairness to accounting, it never was meant to predict value prospectively, only to record transactions retroactively. In effect, accounting can only measure the price of exchanges after they have taken place.
This is why accounting can only record the “goodwill” of a business until after is has been sold. Accounting has no way to place a value on that goodwill until a transaction takes place. That is why our late colleague Paul O’Byrne said goodwill is the name we give to our ignorance.
The best an accountant can do is to extrapolate the past into the future, and unless one’s theory is that the future is going to be the same as the past, this technique is fraught with hazards. This was Drucker’s point at the CEO conference in Seattle.
CEOs have to create the future, not relive the past, and the only way to do that is with a theory of the business, and to get outside of the four walls of their organizations and connect with external reality—where all value is created.
Ron Baker - 06/04/2011
Hat tip to Eric Fetterolf for passing along this blog post from Harvard Business Review’s The Conversation, People Are Not Cogs.
This goes right to the heart of what Ed Kless calls the “E’ffing Debate"—that is, efficiency vs. effectiveness.
Since efficiency is always a measurement, and effectiveness is always a judgment, is there any doubt which is more valuable.
As Stephen Covey wrote: “We are efficient with things; we are effective with people.”
Based upon the comments to this HBR post (47 at this writing), I’m encouraged that maybe some businesspeople are beginning to see the importance of judgment, and the moral hazards of measurement.
Ron Baker - 05/23/2011
In general, there are four defenses for maintaining timesheets:
- We need them to price.
- We need them for project management.
- We need them for team member performance evaluations.
- We need them for cost accounting.
We here at VeraSage have proven, without a doubt, that every one of these defenses is incorrect, and that there are superior methods and tools for each of these objectives.
First, prices are set by value, not hours, even within the context of competition. After all, none of us buy the cheapest of everything, which proves there is room in all markets for price searching by sellers to take place.
Second, anyone who spends a day listening to Ed Kless teach project management cannot possibly come away thinking that “time spent” is more important than “duration"—that is, turnaround time—from a project manager’s perspective. Duration is where the bottlenecks occur, not time spent.
Third, anyone who has studied nearly every single private business, or a Results-Only Work Environment (ROWE), knows timesheets are not needed to conduct performance evaluations for team members.
Yet, it’s the last defense I really want to bury, once and for all, in this post, which was inspired by an excellent article by legal consultant Allison Shields in the May 2011 issue of Law Practice Today.
“Thaaaar She Blows”
When it comes to customers and profitability, another adaptation of the Pareto Principle applies. Run a Pareto analysis on your customers, ranked by revenue and you will most likely find approximately 20 percent of your customers generate 80 percent of your revenue. But what about profitability?
Professors Robin Cooper and Robert S. Kaplan of Harvard Business School have shown the result of their analysis of an insurance company’s customers, resulting in what author Matthew Stewart in The Management Myth calls “The Whale”:
The_Whale.pdf
Kaplan then explains:
The shape of the curve occurs in virtually every customer profitability study ever done, in which 15 to 20 percent of the customers generate 100 percent (or more) of the profits. In this case, the most profitable 40 percent of customers generate 130 percent of annual profits; the middle 55 percent of customers break even, and the least profitable 5 percent of customers incur losses equal to 30 percent of annual profits.
There’s an old joke about the perils of hourly billing: You work 12 hours, bill for 8, and get paid for 6. My good friend and colleague Ric Payne (Chairman of the Principa Group of Companies) has added this to make the joke even less funny: “and you actually make a profit on 4.”
Ric has confirmed Kaplan’s finding with empirical evidence from accounting firms. Using historical timesheet data, Ric constructed a macro in Excel that allocated actual costs—not the inflated “hourly rate” of the firm because that rate includes a desired profit, and hence is not cost accounting—to each customer based on hours.
At least Ric has used the timesheet as it was originally intended—as a cost accounting tool. Since most firms have this data, why aren’t they utilizing it in this manner to determine which customers to fire, or at least increase price?
Most firms simply use the time and billing system to invoice customers, not as a profitability tool. I have yet to see a firm fire a customer, or increase their price, because of timesheets, for if they did, realization rates would not consistently be below 100 percent.
When confronted with an analysis such as this, most partners will dismiss it by saying something to the effect of, “Oh, we know we lose money on some of our customers. But they are acorns who will grow into great opportunities one day.”
This is not bad logic, per se, as a firm should look at the total profit from a customer over its lifetime. The problem is, if this is so, then why the pretense of timesheets being used to measure profitability? What decisions do you make as a result of timesheets? Do the benefits exceed the costs? Once again, this is the illusion of control.
I argue that firms already know where their customers are on the Whale, without even looking at the analysis. However, if the analysis provides impetus to leaders of the firm to shed their unprofitable customers, then by all means it is worth undertaking (Ric has kindly offered to make his Excel Macro available on his Blog).
Timesheets are a Cost Allocation Tool
When we show the Whale, people claim the only way to calculate profitability per customer is with timesheets. Really?
First off, you don’t need timesheets to know your firm’s costs. Look at your income statement. Don’t confuse total costs with cost allocation.
Give me half a day, maybe less, with your income statement, revenue per customer, and allow me to interview your team, and I will allocate your costs over any time period you want, and the result will be the Whale.
Let’s get over the idea that any cost accounting—be it timesheets, Activity Based Costing, or any other method—requires 100 percent accuracy. The simple truth is, cost accounting is full of arbitrary allocations and errors, and if you don’t understand that, you’ve never been a cost accountant.
Cost accounting just has to be close enough, and the important point is that your costs need to be known before you do the job, not afterwards.
This is why Japanese manufacturing (especially automobile) companies utilize Target Costing, not standard cost accounting. They are about 40 years ahead of American companies with this practice.
This is an enormous difference, since value drives price, and price drives the costs you can incur to earn a profit you can live with. It does no good to know your cost allocation to the penny if the customer doesn’t agree with your value and/or price.
Further, costs are largely fixed in professional firms. This is why airlines, cruise ships, hotels, etc., do not engage in low-value cost accounting, but rather concentrate on yield management—that is, pricing for value, not to cover arbitrarily allocated costs.
Why Your Hourly Rate is Not Cost Accounting
However, I want to dive deeper on this issue, because the above logic doesn’t seem to convince many CPAs.
Your hourly rate is not even an accurate cost allocation method. Here’s why:
- It includes profit. There’s no such thing as allocating profit in cost accounting. That’s profit forecasting, not cost accounting. Opportunity cost has no place in cost accounting either, as that is an economic concept, not a cost accounting concept.
- Even if you remove the profit component from your hourly rate, it still bears no relationship to your firm’s actual costs. Since most firms establish their hourly rates based upon reverse competition—that is, what your competitors chare—the cost component is completely arbitrary. I have yet to encounter more than a handful of firms that tie out their cost per hour to the General Ledger.
- With the timesheet, you are attempting to run a Profit & Loss statement on every hour of work logged. This is absurd, since your firm is an interdependent system, and cannot be atomized into a series of recorded hours.
- The hourly cost allocation gives no weight to the lifetime value of the customer—and the lifetime value of the firm to the customer. Our colleague Paul Kennedy has illustrated why this is so more brilliantly than anyone I have ever read.
These are egregious errors for CPAs to commit, given our supposed fastidiousness when it comes to numbers.
And when you compare this costing method to target costing—or price-led costing—you realize timesheet allocation is suffering from what philosophers call a deteriorating paradigm—the theory gets more and more complex to account for its lack of explanatory power.
This is why many firms will allocate the same dollar of revenue three or four times, based upon different criteria—from origination to realization to cash collections—which is overly complicated and not a great use of limited executive attention.
But Wait, There’s More
Here’s a Gedanken (thought experiment).
Assume you’re a sole proprietorship, and have $100,000 of fixed overhead this year (rent, wages, pencil lead, etc.).
Further, let’s assume you plan to work 3,000 hours, and expect one-half of this to be “billable,” and the other half “nonbillable.”
The first question is do you divide the $100,000 of costs by 1,500 or 3,000 hours? Forget adding your desired profit, as that’s not cost accounting but profit forecasting.
The theory of hourly rates says you’d divide by the number of hours you expect to bill, not work, so that’s $100,000/1,500, or $66.67 per hour of allocated costs per hour worked.
Let’s also assume that you’ve billed 1,500 hours between January and November 30th of the current year, and you’ve completed all of your work, looking forward to your month off (you were able to get all your work done early because you took Ed Kless’s excellent project management boot camp).
Now, on December 1st, a new customer engages you to perform 100 hours of additional work that month.
Your cost allocation now becomes $100,000/1,600, or $62.50. Therefore, you’ve been over-allocating your costs by $5 per hour for eleven months of the year.
[It’s even more absurd if you originally divided the $100,000 by 3,000 hours worked (not billed), even though you no longer have the $5 per hour over-allocation issue. Why? Because, then, to which customers do you allocate the 1,400 “nonbillable” hours? And how do you determine that allocation? This is why cost accounting is full of arbitrary assumptions].
Multiply that by more and more employees, account for all the lies in timesheets, the eating of time, non-recorded time, and all the other games played, and you have an egregiously incorrect cost allocation scheme that is incredibly elastic, not accurate.
And, to add insult to injury, timesheets are not helping you price better, conduct project management more effectively (or even efficiently, for you Taylorite disciples), qualify your customers better, predict the performance of your team members, or measure what matters to your customers—and, they are lagging indicators.
All this said, what’s the point of timesheets?
As Ed Kless says, “If you suck at what you do, bill by the hour...”
And I would add, given the logic of the above, “...and keep timesheets.”
If you think the above is flawed, please let us know where.
This debate is getting stale, and we should have moved on a long time ago, since there are many more important issues for the professions to deal with rather than wasting time on a deteriorating paradigm.
Ron Baker - 03/06/2011
Ed Kless - 02/21/2011
MAS 90 Guru, Wayne Schulz, told me about a cool customer service feedback mechanism that 37signals uses. 37signals are the creators of Basecamp, Highrise, Backpack, and Campfire, all web-based collaboration software solutions.
What they do is post, for all the world to see, the rating of there most recent 100 interactions with customers on a simple three point scale: great, just OK, and not so good. They tally the ratings and post them on a real time basis.
This is brilliant. It is simple, easy to understand, and I would think relatively easy to do.
How about doing them one better and posting it on your home page?
Ed Kless - 12/13/2010
Once again, the self-proclaimed Defender of the Timesheet and Champion of the Dissenters, Greg Kyte, is at it again. This time he takes me on rather than Ron.
Dear Ron,
Quite awhile ago, I sent the following letter to the Journal of Accountancy, but apparently they were too scared to print the truth. Enjoy as I expose the falsehood of your co-conspirator, Ed Kless.
In April 2010 the Journal of Accountancy published the article, Project Management for Accountants by Ed Kless. Although the article contained a significant number of words, many of those words created lines, and if one reads between those fabricated lines, one may find the same offensive subtext that I found. The author is waging a guerilla war - not against gorillas, but against the accounting profession. Project management is for ignoble professions such as contractors, engineers, and doctorate-level pharmacology researchers. Project management may be good enough for those and other financial Cro-Magnons. We accountants, however, are the progeny of a dignified tradition, and our collective pecuniary prowess has led us as a community to a near-universal acceptance and usage of the financially sophisticated and elegantly simple concepts of the billable hour and the timesheet.
Mr. Kless’ approach to project management is his attempt to rob our profession of the fringe benefits that accompany the billable hour and the timesheet. In his article, Fast Eddie lists eleven essential components of a scope statement. He advocates the use of a scope statement because it is designed to limit “scope creep”; however, he ignores that fact that under the billable hour paradigm, scope creep creates revenue. Ergo, Fast Eddie is trying to decrease your firm’s revenue, and if you consult your accountant, she’ll verify that revenue is a good thing.
In his opinion, all assumptions between a firm and a client are to be clearly enumerated. Mr. Kless exhorts us to “answer the question, ‘What should we not leave unsaid?’” But since I bill by the hour, there is only one assumption that I can’t leave unsaid-the assumption that if I work on an engagement for an hour, the client is going to pay me for an hour.
I actually liked his idea of maintaining a “future project list.” It’s a list of possible projects and major tasks that will be deferred until the future . like when I need more billable hours.
He argues that constraints need to be brainstormed and specified. Constraints are limitations and restrictions that could hinder the efficiency of an engagement. The article states that constraints are “risks in waiting.” Don’t look at constraints as risks in waiting; look at them as semi-avoidable wellsprings of cash flow.
Possibly the most offensive part of this article was the following assertion made while discussing how to calculate percentage of completion: “Measuring the completeness of your projects by hours billed is akin to listening for the smoke detector to determine when your cookies are done. The alarm only goes off when it’s too late.” This is blatantly invalid. The beauty of using billable hours is that we don’t need to measure completeness. Billable hours and timesheets are actually like cooking with the Ronco Rotisserie and BBQ Oven: “Just set it and forget it!”
Once again, Greg demonstrates that he is quite deserving of his self-developed moniker.
Ron Baker - 11/11/2010
Exact measurements of the wrong things can drive out good judgments of the right things.
The illusion of certainty in our measurements creates—to borrow an important concept from the insurance industry—a moral hazard. If people are insured, they may just act carelessly and cause the very thing they are insured against.
Fire insurance causes arson; unemployment insurance allows people to not be as diligent in finding a job; life insurance causes suicide, or worse, murder; auto insurance can cause reckless driving.
Our current cult of calculation, perpetuated by the infamous McKinsey maxim—"What you can measure you can manage"—creates the same type of risk, offering today’s business executives the illusion of control and mastery of knowledge.
It allows them to substitute statistics for thinking. It gives them a false sense of security where there should exist more doubt.
The United State’s attempt to measure the Soviet Bloc economies during the Cold War was the largest social-science project ever undertaken, yet the various governmental agencies involved consistently overstated the size and growth rate of the communist countries.
In the CIA’s Handbook of Economic Statistics 1989, per capita output in 1988 in East Germany—one year before the Berlin Wall was pushed over—was placed at roughly seven-eighths of the West German level.
But as any Berlin taxi driver crossing through Checkpoint Charlie after the fall of the Wall could have told you, the economy of East Germany was manifestly inferior to that of West Germany, yet somehow—due to the moral hazard of measurement—those in the know got it precisely wrong rather than approximately right.
Efficiency is always a measurement, but effectiveness is always a judgment.
Efficiency and effectiveness cannot be “balanced” like tires, because they are entirely different things.
Taking into account the following seven moral hazards of measures may assist executives in avoiding putting efficiency ahead of effectiveness.
The Seven Moral Hazards of Measurements
Moral Hazard 1: We Can Count Consumers, But Not Individuals
Stalin’s famous remark that “One death is a tragedy, whereas a million is a statistic” illustrates the danger of lumping individuals into aggregate, amorphous lumps as if they did not have a soul.
Because benefits and costs are inherently personal and subjective, aggregation misses the individual. We can measure the objective temperature in a room at 70 degrees, but any one person may feel either warm or cold, and the differences cannot be used to cancel each other out.
We simply cannot mathematically manipulate people.
Moral Hazard 2: You Change What You Measure
Scientists call it Heisenberg’s Uncertainty Principle, which applies to all measures: that the observer in a scientific experiment affects the result.
Central bankers call it Goodhart’s law: Any target that is set quickly loses its meaning as it comes to be manipulated.
People will always find ways to make their numerical targets, even if it leads them to ineffective or, sometimes, unethical behavior.
This is why Boyle’s Law is so profound:
When you use numbers as the basis for payment, they become irrelevant to the broader objectives of the service.
Moral Hazard 3: Measures Crowd Out Intuition and Insight
Once a measure becomes entrenched as part of the conventional wisdom, it is usually impenetrable to logic, intuition, critical thinking, or better ways to do something.
If you have ever been bribed off an oversold airplane—with a free flight voucher, upgrade, or airline money equivalent—you have economist Julian Simon to thank.
Until 1978, and before the airlines were deregulated, travelers were bumped off overbooked planes rather capriciously (the airlines preferred to bump old people and military personnel on the theory they would be least likely to complain) and this caused enormous amounts of customer complaints and ill will.
This caused the airlines to increase bookings even more to ensure decent load factors, which of course were measured very precisely. But the measures didn’t help solving the problem—that took an outsider with a theory.
A flight attendant friend who worked for United Air Lines told Simon of this problem:
The next day when shaving it occurred to me that there must be a better way; indeed, an auction market could solve the problem by finding those people who least mind waiting for the next flight. The practical details fell into place before the shave was complete.
Simon did not analyze countless numbers and statistics, but used his intuition, grounded by the economist’s theory of human behavior being rational, to solve a quite vexing problem.
Daniel Boorstin, librarian of Congress, wrote: “The greatest obstacle to discovery is not ignorance—it is the illusion of knowledge.”
Moral Hazard 4: Measures Are Unreliable
A country’s per capita gross domestic product increases when a sheep is born but decreases when a child is; and divorce actually increases the GDP since almost two of every commodity must now be purchased rather than just one.
Yet these measures mask the joy of a child and the agony of divorce.
We know how generally accepted accounting principles (GAAP) do a pathetic job of measuring—or even acknowledging—intellectual capital.
Why would we want to put so much faith in these numbers? Picasso once said, “Art is a lie that tells the truth.” It seems in some instances, measurements are truths that tell lies.
Another example of the unreliability of measures is illustrated by the consulting firm Bain & Company’s home page on its Web site, where it proudly proclaims: “Our clients outperform the market 4 to 1,” shown over a graph from 1980 to 2009 depicting the S&P 500 Index and Bain clients.
This is the equivalent of the rooster taking credit for the sunrise because he crows every morning. One expects this type of unscientific hyperbole from politicians, not management consultants.
I would be willing to bet that Bain’s clients perform better than the S&P 500, thus have more money to spend on consultants.
Moral Hazard 5: The More We Measure the Less We Can Compare
Engage in this gedanken: You (or a loved one) need(s) heart surgery. You talk to nurses, friends, and other people you trust and respect, and two surgeons are consistently recommended to you.
You go online to do some research on these two practitioners and discover their mortality rates (i.e., the risk of dying from surgery): surgeon A = 65 percent; surgeon B = 25 percent. Which surgeon would you choose?
I have conducted this gedanken in seminars attended by various educated professionals—who certainly have taken a statistic class or two—and, astonishingly, the overwhelming majority select surgeon B.
But wouldn’t you want to know what type of patients the two doctors serve? What if surgeon A takes a disproportionate share of hard cases and thus has a higher failure rate? He or she just may be the better surgeon.
The point is, we simply do not know without gathering more information, both quantitative and qualitative, and making further judgments based on our own risk profile.
Seeing the two numbers side by side seems, though, to give people a false sense of precision and, in this case, could lead to a deadly decision.
The is the major problem with benchmarking studies and best practice reports—you are studying the results of a process, not the process itself.
It tends to confuse cause and effect, and we are back to man trying to fly by strapping on wings and jumping off of cliffs rather than studying the theory of aerodynamics.
We simply cannot compare two doctors, two universities, or two hospitals based on measures alone. It takes subjective evaluation, discernment, and intuition.
History is the science of human biography, not measures, and we can no more compare two countries’ cultures by examining their GDPs than we can compare two people by the size of their bank accounts.
Moral Hazard 6: The More Intellectual the Capital, the Less You Can Measure It
Ideas only come from sentient beings, not inanimate objects or pets.
Since 75 percent of any country’s wealth-creating capacity resides in its human capital, how could it be otherwise?
To complicate matters, a lot of that knowledge is tacit, which is hard to capture in spreadsheets and pie charts.
We may be able to count the physical assets of a Google or a Microsoft, but traditional accounting pays no attention to its human capital, what has been labeled the “invisible balance sheet.”
Traditional book value accounting—assets minus liabilities equals equity—can only explain about one-sixth of the value of the market capitalization on the nation’s stock markets.
Accountants call the difference between market value and book value goodwill; but that is just a label for their ignorance.
Data, reason, and calculation can only produce conclusions; they do not inspire action. Good numbers are not the result of managing numbers.
Dr. Martin Luther King did not deliver the “I have quarterly objectives” speech.
Moral Hazard 7: Measures Are Lagging
Imagine driving your car with your dashboard gauges informing you of last month’s speed, fuel level, temperature, oil pressure, RPMs, and the rest.
This is precisely the status of accounting information: it is like walking into the future backward. It is a lagging indicator—or at best coincident, assuming real-time accounting takes place.
This type of information can only tell us where we have been, never where we are going.
Enron and the other spate of accounting scandals from the early 2000s were not so much about fraud, malfeasance, misfeasance, or other crimes, but rather the increasing irrelevance of the traditional accounting reporting model.
Enron’s legerdemain is not what caused it to fail. Its financial deception allowed it to remain in business for longer than an otherwise similar firm engaged in accurate financial disclosures, but this is a question of timing alone and not causality.
The Future Cannot be Measured
The Danish philosopher Søren Kierkegaard wrote: “Life is lived forward but understood backward.”
Certainly measures help us reflect on past events and aid us in improving our theories.
But they can never take the place of dreams, imagination, passion, and the spirit of enterprise where entrepreneurs toil and struggle to create our future.
No measure is capable of capturing the richness of free minds operating in free markets dreaming of better ways to improve our future, and it is folly to believe otherwise.
It may even lead us into moral hazards, or a world where we are so preoccupied about measuring past performance we do not take the time to dream about the future.
Ron Baker - 11/10/2010
Hat tip to Marc Grubb at fusion IT for passing along an article by David Boyle, a fellow of the New Economics Foundation.
A little background. David Boyle wrote a book called The Sum of Our Discontent, which I read in July of 2001, based upon a stellar recommendation from Paul Dunn.
Paul reads a lot of books, so when he tells you a book is a must-read, you’re wise to listen.
I’m so glad I did, because Boyle’s book inspired me to write Measure What Matters to Customers, which was published in 2006.
It took me about five years to coalesce my thoughts, but Boyle’s book led to knowledge creep: It changed Key Performance Indicators to Key Predictive Indicators and inspired us to question the McKinsey Maxim: “What you can measure you can manage.” This is hokum, but it’s entrenched in our thinking.
In his book, Boyle posited the McKinsey Fallacy: “What is really important cannot be measured.” He presents a compelling argument.
Boyle also inspired my Seven Moral Hazards of Measuring with his 10 Paradoxes of Counting (I will post separately on the Seven Moral Hazards in the future).
In the article Marc sent along—The Perils of Obsessive Measurement—Boyle’s Law is posited:
When you use numbers as the basis for payment, they become irrelevant to the broader objectives of the service
.
How true is this? An article in the Wall Street Journal, ”Stores Count Seconds to Trim Labor Costs,” illustrates how perilous measuring the wrong thing can be, not to mention how a relentless focus on efficiency inhibits effectiveness in customer service, verifying Boyle’s Law.
The WSJ article explains how 185-store chain Meijer Inc. has installed a labor-waste elimination system that tracks how long it takes a checkout clerk to scan a customer’s purchases.
The system was developed by the efficiency experts at Accenture in the “Operations Workforce Optimization Unit.” Sounds inspiring doesn’t it?
If a checker falls below 95 percent of a baseline score too many times, it could lead to lower pay, or even termination.
Put a measurement system in place, and people will game it.
Oh, they’ll deliver what you measure, even if it means ruining your organization in the process. You can see the effect this measurement has on customer service.
Compare it to Ritz-Carlton. If you ask any employee where the conference room is, they will escort you there, not just give you directions, or pull out a map too small to read.
It’s not very efficient to the folks at Accenture, but it’s incredibly effective in terms of providing a world-class customer experience (and pricing at a premium).
I remember reading about Great Britain’s National Health Service creating a measure of how long people have to wait in emergency rooms before being seen by a doctor.
The clock starting ticking as soon as they were brought in to the hospital by the ambulance. The result? The drivers were told to keep the patients in the vans so the clock wouldn’t start.
This is one of the problems with any measurement system. People will game it. People are scamps, which is what makes us humans, not machines.
It’s also why any measure has to be leavened with judgment.
Bad measurements crowd out good judgments, and there is a plethora of examples in Boyle’s book.
As my colleague Ed Kless profoundly points out (call it Kless’ Law): All measurements are judgments.
What we measure is determined by our theories, so if we are more concerned with efficiency than effectiveness, we are doing a disservice to our customers and team members.
People are not the sum of any measurement. Sure, you can count people and their actions, but whether or not that measure means anything that’s tied to results is another issue altogether.
Boyle’s Law exactly describes the perils of the timesheet, which has absolutely nothing to do with the objectives of the services professionals provide.
We seem to confuse measuring activities with producing results. The Scottish have a proverb: You don’t make sheep any fatter by weighing them.
It’s reminiscent of Charlie Chaplin’s protest film against the Scientific Management Revolution, Modern Times.
How many areas of professional knowledge firms does Boyle’s Law hinder the purpose of professionals?
It’s a judgment worth pondering.
Ron Baker - 10/31/2010
Ron Baker - 10/27/2010
Hat tip to Eric Fetterolf for passing along a thought-provoking blog post from Tom Davenport, a writer and thinker for whom I have great respect.
He’s posing the question why judgment is so ignored in organizations, and posits it’s because it can’t be measured. Amen to that.
Judgment is subjective and it seems to scare professional firm leaders to death. They rather be precisely wrong rather than approximately right.
Our stance on this is clear: In a knowledge environment, judgment always and everywhere trumps measurement. In fact, it’s true in all businesses, and certainly in our daily lives as humans.
The comments to the post are very telling. Ed Kless points out that Davenport misquotes Peter Drucker, who never wrote “what you can measure you can manage.”
The closest I have been able to come for the origin of this quote is the McKinsey Maxim, implying perhaps the founder of McKinsey said or wrote it.
It doesn’t matter to me, because it’s not true. We can’t change our weight by measuring ourselves more frequently.
But beyond that, there’s a materialist fallacy to this type of thinking, which I wrote in a comment on the blog:
Isn’t is obvious to everyone here that the materialist fallacy is wrong? The belief that everything can be measured, that you can achieve optimal results—production efficiencies, etc.—simply by running the numbers, much better than those slow and messy humans. The communists tried it, and it failed miserably.
Life is subjective and full of judgment. So is business. Measurements are the illusion of control and knowledge. New innovations can’t be measured, nor Black Swans. To think you can measure everything is to live in perpetual poverty—see the USSR, East Germany, Cuba, North Korea, etc.
We live in a knowledge economy where judgment trumps measurement everywhere. If this wasn’t so, economies could be run by computers and we wouldn’t need human beings. But creativity always comes as a surprise to us, and I defy anyone to measure something that doesn’t yet exist.
The old axiom, “What can be measured can be managed” is specious. You don’t change your weight by weighing yourself more frequently.
And can someone show me where the effectiveness of management has ever been measured? It’s a judgment, is it not?
To Rob Clark who can compute the ROI of children when given a comparison—good luck. You’ll end up with something precisely wrong.
Judgment at least gives you the opportunity to be approximately right. Measurements may feed into our judgment, but judgment is the senior partner.
I wouldn’t want to live in a world—or work in a business—where this wasn’t so. It would be tyranny.
Rob, how would you measure the Declaration of Independence’s goals of life, liberty and the pursuit of happiness?
I think this debate is far more controversial than the billable hour vs. Value Pricing because it relates directly to efficiency vs. effectiveness. The former is ALWAYS a measurement, while the latter is ALWAYS a judgment.
And a judgment ALWAYS trumps a measurement.
I’ll be writing on this theme more in the months to come since we believe it’s critical to understand this difference if firms truly want to become Firms of the Future.
As always, we are interested in your thinking on this topic.
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