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Ron Baker - 05/28/2007
Soon after the completion of Walt Disney World someone said, “Isn’t it too bad Walt Disney didn’t live to see this?” I replied, “He did see it—that’s why it’s here."—Mike Vance, former Dean of Disney University
Note: We left off in Part II at the end of day one of The Disney Approach to Customer Loyalty: Creating Service That Keeps Your Customers Coming Back, a professional development program offered at the Disney Institute. This month I’ll conclude with some of the more important lessons I learned.
FROM ZERO DEFECTS TO ZERO DEFECTIONS
To err is human, and Disney is no exception. Anytime you have 86,000 Guests wandering around 30,000+ acres—an area twice the size of Manhattan—you are sure to encounter service problems. How you handle those problems when they arise has a dramatic influence on whether or not a Guest will return. Disney has given its front-line Cast Members the ownership they need to rectify any Guest’s particular problem, since the front line is usually the one closest to the Guest and best equipped to deal with them.
It’s well known that customers’ intent to return will increase dramatically if they encounter a problem, and the problem is resolved immediately to their satisfaction. Marriott has discovered the following regarding a customer’s likelihood to return in each scenario:
- No problems encountered during stay—89%
- Had a problem during stay, and it was not corrected to customer’s satisfaction—9%
- Had a problem during stay, and it was corrected to customer’s satisfaction—94%
This is precisely why customer complaints are such valuable kernels of information and wonderful opportunities to increase customer loyalty and goodwill.
During the Customer Loyalty course, an amusing incident occurred to one of the participants. On a break, he sat down on a bench outside of the classroom. When he got up, he noticed his pants were soaked—apparently, the victim of a nearby sprinkler.
Just as he was wondering what to do, a Disney Cast Member passed by and asked him how it was going. He said fine, “but don’t sit on that bench.” When the Cast Member asked why not, he showed him his soaking-wet pants. Instantly, the Cast Member made a call from his cell phone and a hair dryer was delivered. The Cast Member then proceeded to take the participant into the bathroom and blow-dry his pants. This story became somewhat of a legend in the class, but it is typical of Disney’s approach to Guests’ problems. They spend an enormous amount of time on training the front line to take ownership of the Guest’s problem and correct it immediately. The payoff is enormous.
In any service business, you will encounter problems in dealing with people—zero defects is not an attainable goal. If you go the extra mile in correcting these problems, you will earn increased loyalty and goodwill among your customers. They will remember the satisfying outcome long after the original error has been forgotten. In fact, most extraordinary service experiences you hear about deal with a service recovery issue and not about a company “getting it right the first time.” I’m not advocating that you deliberately make mistakes, only that you give your associates complete ownership of customer problems and the authority to correct them.
WINNING THE HEARTS OF EMPLOYEES
During day two of the course, we all traveled to the Yacht and Beach Club Resorts and got a chance to go behind the scenes with a designated guide. My group went with Steve, the Greeter at the Yacht Club. He’s responsible for greeting people as they walk in, helping Guests with directions, making suggestions, and any other task he’s called to do in order to make the Guests’ stays memorable.
He gave us a tour of both resorts as if he owned them. He pointed out details that I’m sure the average guest would never notice—I certainly wouldn’t. Features like alabaster lighting, marble stone from the sea that houses the world globe as you enter the lobby, an antique boat docked by the lake, etc.
If you’ve ever been to Disneyland or Walt Disney World, I’m sure you’ve noticed the fanatical attention to detail. Visit 100 times and you will notice something different each time, even if you visit the same places. I began wondering about why they do this, especially if the average Guest never notices or appreciates it. For instance, in the Hall of Presidents, where they have Audio-Animatronic figures of all 42 president of the United States, the Seal of the United States is in the lobby. There are only three Seals on display in public in the country—it took an Act of Congress to authorize Disney to display it. In the show, FDR is wearing leg braces, and Clinton has on an Ironman Timex watch.
It occurred to me after meeting Steve: Disney does it not so much for the Guests, but for the Cast Members. Steve said at the end of his tour: “I care about this place because they do” (meaning the company). How many associates in businesses around the country take that type of pride in their workplace and work?
On the last day of the course, our field experience was a trip to the Magic Kingdom to see the Legend of the Lion King puppet show. The puppets in this show are specially made and cost between $23,000 and $79,000 each. They have been modified many times, as Disney discovered that the audience will react with more emotion if the puppet can roll its head and blink its eyes. The Cast Member who gave us the tour again displayed the same pride in ownership of the entire show that Steve had displayed at the resort.
After the show, which is excellent and left most of the audience in tears, our group was discussing the emotional impact of the show—the music, the reactions of children in the audience, etc. Karen, one of our facilitators, made perhaps the most poignant point. As she was watching the show, she thought: “That’s my company that did that!” Cast Members all understand how their work—no matter how menial it may seem—contributes to the overall happiness of the Guest experience.
WHAT’S THE DISNEY DIFFERENCE?
I challenge you to walk around your firm and ask your associates why they work there? Do they all have a single-minded dedication to a shared purpose? Do they understand how their jobs contribute to the success of your customers? Or do you get uninspiring answers like, “putting in my two years” or “I do auditing and tax returns”? If more firms had associates who were totally dedicated to their customers, morale would be higher, firm profits would be higher, and jobs more secure.
Next, visit the Disney store, and ask the Cast Members the same question. What’s the difference? The difference is culture, which is handed down through education. I mentioned that all Disney Cast Members attend the one-and-a-half day Traditions course, in which they learn the company’s history, about Walt, and why their jobs are important.
Most CPA firms invest in education, but it tends to focus on the technical aspects of the job, not the human elements of taking care of the customer. Then we wonder why staff morale is so low and turnover so high. As a profession, we have not invested enough in our people. I’ve even heard CPAs say that they don’t want to invest in educating their associates, who will then become more skilled and eventually leave and become a competitor. I ask: But what if you don’t train them and they stay?
Before we can win the hearts and minds of our customers, we first must win the hearts and minds of our associates. The way we treat them is the way they will treat our customers.
WHAT MAKES A CULTURE?
According to Mike Vance (former Dean of Disney University) and Diane Deacon, in their book, Break out of the Box, “cultures that engage in the most original thinking leave behind the richest legacies.” They offer the following areas that will help your firm “establish (or reestablish) a creative culture in your workplace”:
- Your special traditions—your standards, values, what you uphold consistently
- Your rituals—routines and ceremonies that make your firm unique
- Your symbols and language—logos, terminology, or ways of communicating that set you apart and help inspire people to high levels of achievement
- Your special ways of celebrating victories—Do you celebrate achievement and reward success rather than just punish failure?
- Your work habits—How do people work? Must they work that way? Are your rules too rigid to allow flexible time or working from home or virtual office?
This is perhaps the one idea that Disney’s Professional Development Programs will make you realize more than any other—the difference lies in the culture. What standards and values do we have? What behavior do we expect and what behavior will we not tolerate? What is the shared vision of the company? You can’t motivate people with a zero-defects campaign, or profit and return on investment goals. True leadership requires that you offer people a vision of a preferred future. Martin Luther King, Jr. didn’t say from the steps of the Lincoln Memorial, “I have quarterly objectives!” In what ways have you developed your firm’s culture?
CUSTOMER FOR LIFE
In the Spring 1997 edition of Disney Magazine, I read a letter from a parent that sums up the entire Customer Loyalty course and epitomizes the Disney approach to creating Guests for life:
I brought my three-year-old daughter, Merri, to Disney World in September 1996. She asked me every day if she could meet Peter Pan. The only place that we saw him was in the afternoon parade at the Magic Kingdom. We asked every person that was escorting the characters if Peter would be appearing anywhere, and day after day the answer was no.
On the fourth day, we met a man named Toby at the character festival tent. He made a special arrangement for Merri to meet Peter after the parade. We went to City Hall, and they took us to a room behind the counter. When we opened the door, a dream came true for Merri. She ran right up to Peter Pan and jumped into his lap. She was so amazed that she didn’t say anything for about 15 minutes. He talked to her the whole time. Then, he told her that they would go get into some trouble.
He took her by the hand down Main Street to Peter Pan’s Flight, and rode it with her, narrating all the way through. Then he took her to Cinderella’s Castle and said good-bye. He spent about 30 minutes with her and made a wonderful dream come true. I know we will always remember the magic.
Not only will she remember the magic, she’ll become a customer for life, bringing her kids and grandkids to Walt Disney World many times. How much did it cost Disney to create that type of loyalty? Where is that captured on an income statement or balance sheet? How “efficient” was it? Where do you log that on a timesheet? What is the value of Merri as a customer for generations to come?
IS LOYALTY DEAD?
Pick up a business book today and you’ll most likely read about loyalty being dead—the average customer only stays for five years, the average associate only stays for four years, and so on. I disagree. If you observe human behavior—again the revealed preference—you will discover that people, by and large, are very loyal to their spouses, families, neighborhoods, schools, churches and synagogues, and the nonprofit institutions where many volunteer.
No, loyalty is not dead in the business world. What’s dead is a reason to be loyal. You must earn customer loyalty. You have to invest in the relationship, not just satisfy existing needs. You must move your firm from the Passive (satisfaction-based) to the Interactive (commitment-based) side of the Customer Relationship Scale and develop a long-term partnership with your customers. That is how Disney creates “Moments of Magic” and superior financial results. And you can do it, too.
Author’s note: No one at Disney tried to control the content of this series, and any errors it may contain are my fault alone.
Ron Baker - 05/28/2007
This is the hardest post I’ve ever had to publish. The following email from Paul O’Byrne was sent out on May 14, 2007 to his VeraSage colleagues.
Many of you know Paul, have heard him speak, read his case studies, or just know about the incredibly innovative things that his firm, O’Byrne & Kennedy (OBK), are doing.
This email demonstrates Paul’s indomitable spirit. Everyone wishes him well and a speedy recovery.
Dear fellow Fellows,
I know I don’t write much (but Hey, I talk a lot!) but
there’s something I need to tell you. Sorry about the
impersonal method of a bulk email, but I’m sure you’ll
understand.
I’ve not been feeling well since I came back from my
two weeks in Australia in March. I mostly put it down to
doing too much on that trip; it was jam-packed.
Anyway I’ve been to my family doctor practice a few
times and three weeks ago I got impatient and found a
consultant who gave me some tests (failed!) and
referred me for an ultrasound scan...then a CT scan.
The CT scan confirmed that I have advanced renal cell
carcinoma with metastasis (secondaries) in my liver.
Not good.
Not at all good. My right kidney is doing sterling
work on its own but some of my liver function is badly
impaired. Everyone is surprised how advanced it all is
given I have none of the classic symptoms. They say
I’m special! So special, neither surgery nor full-on
chemotherapy is on offer. Instead, I’ll be starting a
drug treatment, Sutent, that is aimed at getting me
into remission and holding there.
Apart from that, I’m very well! I look well; I feel
very positive and energetic and am looking forward to
a reasonable quality of life once I get used to the
drugs. I’ve always followed a carpe diem philosophy—waaaay before it was fashionable. This has happened,
what matters now is how I deal with it. I’m choosing
to be determined to do what I want and not be a
victim. Strong-willed I call it (my wife says:
stubborn)
I decided from the start that once I told my family
(also magnificent) I would be very open with everyone
about all this and hope they don’t (to use an
accounting term) write me off. Obviously, as I have
no clues at present how I am going to be, when I might
be back fit after the initial effects and what will
happen long-term. But I really want to continue
doing what I have come to love these past seven years:
travelling all over and engaging with fellow
professionals and helping them change their way of
working, to the benefit of themselves, their firms and
their clients as we have done at OBK.
Sorry to write at such length, and to drop such a
bombshell, but I want to be honest—and I don’t want
to be written off before my time.
I hope to be irritating fellow professionals around
the globe for a few more years yet, though I may have
to cut down on all my blogging activity!
Don’t be shy to say Hi!
Paul
Ron Baker - 05/13/2007
Reed Holden is a genius. I’ve said it, written it, and mean it. He is a graceful, patient and effective scholar.
I have learned more from him about the practicalities of pricing than anyone else, through his teachings, presentations, and book. Reading his book was a huge epiphany, and it changed my life. One doesn’t easily forget that type of impact.
I first met Reed at a Professional Pricing Society program, and then attended his pricing seminar, Pricing: Strategy and Tactics, at the University of Chicago Graduate School of Business. In short, he’s taught me a lot. He further honored me by writing the Foreword to Pricing on Purpose, and has since read and provided feedback on all my books.
Reed is currently working on his next book, along with his colleague Mark Burton: Pricing with Confidence: 10 Rules to Stop Leaving Money On the Table. It is due out in February or March of 2008. I can’t wait to read it, since Reed graciously let me provide feedback on the title and the ten rules.
It was during that process when I was confronted with a conundrum: how does one disagree, in this instance quite vehemently, with one’s mentor? In an email challenging him on one of his proposed rules, I wrote this:
Reed, this is hard for me, especially when I challenge my mentor, not an easy thing to do. But it’s done in the spirit of learning, which I’ve concluded comes more from dissent than consensus. It’s also done with incredible humility.
This is how Reed responded, which I think proves how intellectual honest and curious he is:
Ron: This is great feedback. Challenging people is about what an intellectual debate should be about. When you can’t challenge a mentor, you have a problem but the mentor has a bigger problem. I think it was back in the 1980’s, a JAL 747 was landing at SFO. It landed short—in fact, it landed right in about 6 feet of water. The entire cockpit crew, who knew that he was landing short, was afraid to challenge the captain. Nuff said?
Then in early May, Reed sent out the final ten rules to be included in the new book. I promised him I wouldn’t disclose them, but I had a vehement disagreement with the explanation for rule #9, which read:
There is nothing wrong with cost-plus pricing as long as it does a good job of leveraging the financial value you create for customers.
What? Did I read that right?
After all Reed has written about the deleterious effects of cost-plus pricing, and with all I’ve written about it—which is far more scathing and probably goes further than Reed may be comfortable with—how could he write this? But I know we are in essential agreement that cost-plus pricing is an inward-looking method, and if it does correlate with value, it is purely by accident.
In fact, my personal opinion is the chances of cost-plus pricing correlating with external value are about the same as finding bird shit in a cuckoo clock.
In any event, once again I was forced to challenge my mentor, writing:
Hi Reed,
This is great [the final ten rules to his book], I can’t wait to read it.
The only reservation I have is your Rule #9, particularly in the context of professional knowledge firms. I can just hear all the bean counters saying to me: “See, even YOUR mentor believes cost-plus pricing is okay.” You’ve provided a loophole they will drive their antiquated truck through. They’ll cling to anything to support their outmoded belief in the billable hour.
I just fear it lets executives off the hook from looking outside the company at value, keeping their focus internally on costs and efforts. That scares me. I suppose I’m the reformed alcoholic zealot, given my CPA background. It took me years to learn the damage historians with lousy memories can wreak on companies (aka CFOs). Peter Drucker, in one of his last public appearances, talked about exactly this, which I posted on my blog.
That said, if we agreed on everything one of us would be unnecessary—me, I’m afraid!
Thanks for letting me participate in the birth of the book.
Your faithful student,
Ron
Here is Reed’s reply:
Ron: Great feedback—we’ll see what others say and might move that one a bit. The point we’ve found is that companies don’t know how to move off of cost plus pricing—especially professional services firms. We’ve nudged them in a better direction with a “better” cost plus program that looks at high value activities and managing the real scarce resources of the firm better. If you look at the article in the Journal on Parker Hannifin, that’s what they did—still cost plus but different formulas to reflect the value of the product.
Another problem is that some firms have moved into “value pricing” too fast and it blows up on them. Our message is slow and steady.
thanks for the feedback
Reed
To which I replied:
I agree, PKFs should move gradually. But I can tell you most firms don’t invest enough in their Value Pricing programs, which is why they blow up—and I don’t mean money investments but intellectual capital.
They still don’t do project management, After Action Reviews, Change Orders, value marketing and selling, learn and manage customer expectations, and other things necessary to make a VP initiative work. In fact, I’d argue the billable hour lets them off the hook from doing all of these things, which is why it is so pernicious.
It’s a lousy carpenter that blames his tools. VP is sound in theory and practice. PKFs are intellectually lazy, clinging to a past that is dying, and since we humans are guided far more by our beliefs than what we know, changing those beliefs is quite difficult. And it is a gradual process. But I remain optimistic because we have seen hundreds of firms successfully make the change.
But believe me, I know and understand totally what you are saying. We could spend years on this topic (and I have!).
Thanks for letting me rant!
Ron
And the last reply, from Reed:
Funny, I guess I’ve gotten used to the blindness of management. Was at Columbia last week and watched a group of fairly high level managers play with numbers—doing all these calculations and they didn’t have a clue either what the number was or what the calculations lead to—it was quite revealing. Plenty of time to do things, no time to think. Who’s fault is that?
Of course, I’d argue it is the fault of leaders who are more interested in being precisely wrong rather than approximately right. This is precisely why I wrote Measure What Matters to Customers—to counteract the idea that what we can measure and quantify we can manage. What nonsense. Quantifying should never push out intuition, common sense and judgment, but it does, which is why PKFs are in love with the billable hour and timesheets.
Not to mention their constantly confusing being busy with being effective. Knowledge workers need time to think, but when your pricing model is cost-plus, there is simply no code for “thinking.”
What a sad commentary on leadership today.
But what an awesome experience to be able to freely challenge your mentor without fear. I hope these clash of ideas lead to better ones, and I know Reed would agree with that sentiment.
Ron Baker - 05/13/2007
One of the main reasons I wanted to create a think tank is because it can absorb ideas from anywhere. Personalities or differences of opinion don’t matter. Only the idea. We have had the great fortune of so many loyal people who write to us, offering new perspectives and creative insights, which we not only thoroughly enjoy, but they help us refine our arguments and further our Quest.
Tom “Bald Dog” Varjan is one such individual. I’ve always admired his insights, even though I’ve never had the pleasure of meeting him (though Ed Kless has). Returning home from a recent Association of National Advertisers (ANA) conference in Arizona, Tom sent me an email whose timing couldn’t be better.
At the ANA conference, I got to meet the two ladies/consultants who launched the ROWE—Results-Only Work Environment—program for Best Buy’s headquarters in Minneapolis. ROWE is revolutionary, except of course, if you already believed in the concept of no timesheet and utilizing KPIs to measure effectiveness and output. I will write more about ROWE in a future post, and share with you some of the lessons these two extraordinary women shared with us at the conference.
Tom’s email was in the same spirit of ROWE, and I think he has gleaned a fresh insight, which is why I asked for his permission to reprint it here, which he graciously granted. To be precise, his email’s subject title was: “Observation: Why Real Talents Hate Tracking Their Working Hours...” I changed this to “Why people with no talent love timesheets,” for reasons I think will be apparent once you read his entire piece.
Either way, it is an insightful and cogent analysis of why the time tracking, face time at work (just to be there), and other remnants of an industrial era are increasingly irrelevant in an intellectual capital economy. It’s ideas such as these that validate the think tank model. Thanks Tom!
Hi Ron,
Not so much of a question but rather an interesting observation.
The other day I was working with a Vancouver-based firm exactly on this timesheet elimination project. The managing partner has bought into the timesheet-less concept but he was concerned about the other people’s reaction.
Before we went into the room to meet the troops, I asked him to make a note on each person’s comments regarding timesheet.
Then we went in and I asked associates to express their views for or against timesheet and tracking effort and time.
I’ve always known that most people are fear- and scarcity-driven, but this was amazing.
The main reason why the rebels rebelled against the elimination of timesheet is because they fear that they may do some work and, since they can’t account for the time and effort, they wouldn’t get paid for that piece of work. To me this was strange because they were on annual salaries plus bonuses, depending how the firm as a whole was doing.
When the groups session ended, the managing partner and I sat down and I asked the partner to evaluate each associates’ performance. What emerged was profound but not exactly surprising. There was a direct correlation between loving timesheet and low performance. Peak performers were jumping with joy at the notion of eliminating timesheet. The no-hopers insisted on keeping timesheet.
The partner looked at me rather surprised. Then it hit me...Holy sausage, man! Dr. Mihaly Csikszentmihalyi and his “Flow” concept. This is how Csikszentmihalyi defines the state of Flow:
“Being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you’re using your skills to the utmost.”
Can you imagine to interrupt “Flow work” every 6 minutes to fill in your time sheet and account for your time and effort? If Newton, Einstein and other great inventors had been forced to account for their time, we would would still be living in caves.
Now let’s look at the Flow diagram and see what’s happening here.
* Apathy: Low skill low challenge
* Boredom: High skill low challenge
* Anxiety, stress, fear: Low skill high challenge
* Flow: High skill high challenge
Who are the people who insist on keeping timesheet? People in the Apathy and Boredom areas. David Maister calls these people cruisers and losers.
And who are the people who hate timesheet? Yes, the people who operate in the Flow. David rightfully calls them dynamos. They are the people who have excellence in their DNA’s and do their best work every time they touch something because they learnt this behaviour from their parents. They don’t need timesheet and micromanaging. They are naturally conscientious of their work, and are proud and inspired to do great work.
And what about the anxiety part: In my experience, this area is shared between dynamos as they’re stepping up to the next level of performance but haven’t yet mastered all the newly needed skills, and cruisers and losers who are anxious about being found out.
Back to this partner. When he realised how much time and effort it takes to “manage” low performers, after assessing their contribution to the firm, he decided to offer them a better opportunity somewhere else.
Then I asked him what had blinded him to these people’s poor performance so far. He said: The timesheet. These people have put in plenty of time and—seem to have [my comment]—exerted large amount of effort to do their work.
I think they exerted large amount of effort to cover up their low performance. So, here it is again. Get rid of internal time tracking for your people, and you automatically weed out the ones who you can do without, without any negative effects.
And the timesheet-less culture will attract more people who like working in the “Flow.” And who are the people who like operating in the “Flow?” They are the real talents. These are the people who were born on this planet to do what they do. Let them do it, and let them bring joy and profit to your clients and your firm.
I’ve been reading the case studies section in your Professional’s Guide to Value Pricing book, and I see similarities between those cases and my observation. While it makes perfect sense, I haven’t really paid too much attention. But how can a firm sell and track value outwards while tracking time and efforts inwards?
End of the daily enlightenment.
Cheers
Tom
To answer your last question: it can’t. This is precisely why the best pricers among Professional Knowledge Firms DO NOT HAVE TIMESHEETS. The cause and effect becomes more apparent to me everyday.
Tom also sent an article he had written before he began blogging, along the same theme.
The Flow insight is powerful, and validates another insight of our colleague Dan Morris: Work-life balance is for slackers.
When will firm leaders wake up and realize the methods redolent of the days of Frederick Taylor’s time-and-motion studies are useless for enhancing the effectiveness of knowledge workers? Which raises another observation: stars don’t work for idiots. But cruisers and losers do.
Webmaster - 05/05/2007
Ron Baker was interviewed in December 2006 about using the TIP Clause. Click on the pdf to view the article from Inside Public Accounting.
Ron Baker - 05/04/2007
In the April 16-May 6, 2007 issue of Accounting Today, there is an article by Ted Needleman, a former editor of Accounting Technology, a consultant and a freelance writer based in Stony Point, New York.
Of course, the title itself is offensive: “Time and billing software: Do you know where your money is?” But what’s worse, is this totally unsubstantiated, spurious, economically illiterate, and just plain stupid contention by Ted:
While you might argue that it’s the expertise of your staff and the product that you sell, the actuality is that what the client pays for is the time your staff spends on their behalf. Value billing is a great concept, but even after all these years of trying to move clients over to this method of billing, many clients still want to see how much effort, in the form of time, is being spent on their account.
Regardless of the rates and service levels that your staff provides to your clients, one great truism prevails—time is a non-renewable resource. Once it’s spent or wasted, there’s no getting it back.
That makes time a precious commodity and resource, one well worth using wisely. The time component of time and billing is designed to do that. By keeping track of the time spent on practice matters, you can make sure that not only will you bill for every precious minute and second, but you will also (hopefully) be able to see where time is wasted or spent poorly.
This is nonsense on stilts. I wonder if Mr. Needleman asked Porsche how long it took to make his car? I wonder if he cares how long a plumber spends fixing his sink, or is he more interested in results over efforts?
Customers don’t buy time, Ted. If they did, I’m sure they’d buy it from someone cheaper than a CPA. And yes, time is a non-renewable resource. So what? It is for Bill Gates and Microsoft, too, but you don’t see them doing timesheets. You don’t see Pixar doing timesheets. Why not? Because they don’t think they sell time.
Review all the time and billing programs you want. They are the buggy whip of the knowledge economy, and I personally like the idea of you investing your intellectual capital studying dinosaurs, like a paleontologist. We need musuems. But don’t think majorities determine truth, they don’t. At one point, we thought the earth was flat. And today, a majority of CPAs and time and billing software developers think CPAs sell time. They are wrong, and we’ve proven it.
The world around you has changed. Wake up. Study the firms out there that don’t subscribe to your dogmatic faith that customers buy time and are interested in efforts. McKinsey doesn’t. Accenture doesn’t. And every day, more and more accounting, legal, advertising, and IT firms are joining them.
This is not just a theory, it’s also practical reality. And by the way, the billable hour and timesheets are also a theory, just the wrong one. We have replaced them with a better theory. It’s just a matter of how long it will take to reach a tipping point.
You continue to embrace a status quo that is dying. Wealth doesn’t reside in hours, it resides in intellectual capital. This applies to you as a consultant and to a CPA firm. You are what you think. Would you rather follow Microsoft’s pricing paradigm or that of time and billing software vendors?
To ask the question is to answer it. Unless you’re a consultant, apparently.
Ed Kless - 05/04/2007
At a recent industry event, during one of the session, one of the facilitators used an interesting approach to getting infomation from the group. She asked questions and had particpants move from one side of the room to the other depending upon our answers to the questions she posed. In short, the room was transformed into its own sliding scale.
One of the questions asked was, “How many hours a year do you work?” After thinking about it I moved to the extreme postion for most hours — against the wall to one side.
“Do you work over 3000 hours a year?” I was asked.
“Yes," was my reply. “I work over 6,000 hours a year.” The room was stunned.
I said, “Hey, I think for a living, so if I am not sleeping, I am working.” I did a little calculation to come up with the 6,205.
If only I could bill someone for those hours.
Ed Kless - 05/02/2007
Although I am Fellow of the VeraSage Institute, I came up with a pricing question that I thought I should Ask VeraSage.
I hope my fellow Fellows (as Michelle Golden calls us) and you our reader base will provide me with your thoughts.
What is your experience and opinion with pricing options, specifically, the order of presenting those options? For example, if you are offering a customer three distinct levels of service do you position the higher priced option first or last? Do you find that it has an impact on selection?
I look forward to hearing from all of you. Thanks.
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