Tim Williams’ Landscaper Story

I hope you enjoy this video I recorded late last year recalling a story I was told by the great Tim Williams of  Ignition Group. Below the video is a slightly edited transcript if you prefer to read it.

The Video

The Story

About a year ago, I heard this great story from a fellow VeraSage Institute colleague, Tim Williams.

Tm is a brilliant strategic mind and he shared this story with myself and a group of VeraSage folks and I’ve been meaning to put this down on video now for quite some time but finally got around to it after a year. (So yes, I have stuff on my to-do list for a year.)

But here’s the story. Tim owns a rental property and one of the things that is always concerning about a rental property is the maintenance of the yard. It has got a small little yard in front of it – perhaps a goat could really take care of it – but what he wanted was a landscaper and he called up, of course, three people to come out and take a look and give them him an estimate or price on what it was going to take to take care of the property.

I need a landscaper

The first guy comes out and says, “Hey listen, I’m gonna be 50 bucks an hour and will probably take me somewhere between two and three hours a week, sometimes longer, if I’ve got to do something else that’s {not in scope]. That’s what I’m going to charge you. Tim was like, “Okay.”

The next guy came out and instead of giving an hourly price, he gave a list of things that he was going to do. He’s gonna mow the grass and he was going to take care of the bushes and edging and you know throw down some fertilizer and whatever was needed to take care of the property in yard.  He listed out the services he was going to do and he said, “That’s going to be a hundred and fifty dollars a week for me to do that.” Tim said, “Okay.”

The third guy came out and he actually asked Tim some questions. “So tell me a little bit about this property?” Tim replied, “Well it’s a rental property I’m not here very often just want to make sure that it’s nice for people who are coming and staying here.”

The guy said, “Here’s what I’m going to do. I’m going to make sure that your property here has the best curb appeal in the neighborhood. I’m going to charge two hundred dollars and it includes absolutely everything. You’re gonna have the best curb appeal in the neighborhood. If I have to change out the bushes or the flowers. Bush dies, I’ll fix it. Change the flowers seasonally. Best curb appeal in the neighborhood. Two hundred bucks a week.”

Tim’s Decision

Which one do you think Tim went with? He had us all waiting with bated breath and most of the folks in the room clearly the third and he said, “Actually I went with the second.”

We’re like, “Well why is that”

He said, “Because the third one doesn’t exist. It was what I had hoped for, but nobody would give that to me, so I had to go with somebody who ended up giving me the second one.”

When you think about this, what Tim is describing here is three different ways of viewing delivery of stuff to a consumer – in this case someone who’s got a rental property. One is by charging for the inputs. The first guy was going to charge for the inputs at 50 bucks an hour. The second was going to charge for the outputs and there was a list of outputs. This is what you’re going to get. This is more menu-type pricing. He was charging for a series of outputs. This is the output that you’re going to get from whatever it is that I have to do.

The third guy, who of course only exists in Tim’s mind, was going to charge for an outcome – the best curb appeal in the neighborhood.

The point

I think that is precisely what professional organizations across the board: lawyers, accountants, engineers, architects, media, bookkeepers, all people who offer professional work should be looking to position themselves as selling and providing an outcome.

Not outputs, and not certainly not inputs, but an outcome. As a professional you are responsible for delivering an outcome, not outputs. but an outcome and that’s what your customers want from you.

My advice is charge for the outcome.

Prediction for 2017

If you thought the celebrity death toll was a “bad” in 2016, just “wait ‘till next year.” This may sound crass, but in a very odd way the increase in celebrity deaths is a very good thing indeed. Please note this is not in any way meant to disparage or disrespect those that have passed on. I am always saddened by the lose of human life, well, maybe not for people like Fidel Castro, but I digress.

Two main reasons exist for this increase in morbitity among the (sometimes rich and) famous:

Demographics

First, it is simply a matter of demographics. The baby boomer generation, of which many of the famous are a part, has for decades wreaked havoc with many of society’s institutions. For example, many schools, now abandoned, were built to accomodate their ballooning numbers in the late 1950s. It only stands to reason that as this generation reaches their average life expectancy the number of those who die will continue to increase.

Economics

Second, and more importantly in my mind, is the increase in wealth and standard of living that have occurred over the last 50 years. Simply put, many of the celebrities including sports figures are famous because we have more discretionary income to create more fame. Despite all the the-sky-is-falling rhetoric from politicians of all ilks, we (as in all of us collectively) are much much better off than we were a few generations ago.

Furthermore, the increase in “healthcare” spending is partially due precisely to this same reason — we can afford to spend more on healthcare.

But back to my main point, if it were not for this increase in the world’s wealth, a goodly number of those we know as famous would have likely died in obscurity. So in 2017 when someone famous passes on, just remember it is partially a sign of our increasing standard of living.

And in a year from now when people are talking about 2017 being the “worst year” for celebrity deaths, remember it is only likely to continue to increase until 2032 and beyond.

Without the Conversation, There is no Value Pricing

For over ten years I have been on a quest – along with Ron Baker and the Fellows at the VeraSage Institute – to assist professionals in implementing value pricing in their organizations. In working with firms of all shapes, sizes and sectors, one of the most common challenges I hear about is that of professionals’ ability to engage with a customer or prospect in what we call “The Value Conversation.”

The trouble is that without the ability to have this conversation, value pricing is dead on arrival. This may be obvious, but let me explain why.

We define value pricing as “a price wherein the primary, but not sole determining influence in the development of that price is the perceived value to the customer.” If one accepts this definition, then it is clear that without knowing what the perceived value is, there is no way to use it as the primary influence in the setting of that price. Without the value conversation, there can be NO value pricing.

So why do professionals not engage in the value conversation? The answer is simple – it is difficult to do. There is no question that the value conversation requires a high level of skill, the ability to focus deeply, and lots of practice.

Dan Morris, one of the co-founders of VeraSage – and someone I consider to be at a Jedi Master level in regard to the value conversation – says he does an adequate job only 30 percent to 40 percent of the time. It would seem then that, like a Major League Baseball hitter, a .300 lifetime batting average is grounds for inclusion in the Hall of Fame. Like the .300 hitter, the skill of the value conversation is within reach of all professionals.

To conduct an effective value conversation one has to hone one’s skills in the following three areas: inquiry, moving off the solution, and getting to value. The rest of this article will consider the first two.

Inquiry

First, let me define inquiry as the skill of balancing one’s ability to deeply listen and ask effective questions. It is beyond a mindset. Rather, it is a state of being. One must be relaxed and genuinely curious. One’s motivation must not be about getting the sale, but a true and intense curiosity about the prospect’s or customer’s situation. One’s intention must be to develop questions that will help the person make the best possible decision for them, even if that decision is notto continue the relationship with you.

Deep listening, or what psychoanalysts call active listening, requires an enormous amount of concentration. We must try to dial down our own thinking about what the customer is saying and instead be more attuned to understanding and clarifying what he or she is saying. As both Stephen Covey and St. Francis have said, we should, “seek first to understand before we seek to be understood.”

Value Pricing

The key skill in inquiry is the ability to think about, and process in one’s mind, the best next question to ask as the customer is speaking, instead of allowing ourselves to think about how we will go about solving the customer’s problems at this time.

If you can’t ask good questions, you have nothing to listen to. If you can’t truly listen, you can’t ask good questions.

Move Off the Solution

Second, one must be able to deftly “move off the solution,” as Mahan Khalsa says in his great book, Let’s Get Real or Let’s Not Play: Transforming the Buyer/Seller Relationship. In many cases, this requires professionals to fight their inner desire to talk about and even solve the customer’s problem during the initial conversation about the problem.

The idea of moving off the solution is to gain insight into the true nature, and eventually the perceived value, of the problem. Solutions have no inherent value – instead they derive their value from the problems that they solve. The trouble is, professionals really like to solve problems, even though the problems might have low or no value to the customer. Professionals tend to have the “disease” of solutionism.

Solutionism is very much akin to a substance abuse problem. In fact, the brain function is almost identical. Professionals get a “high” – a rush of the hormones oxytocin and dopamine – when they solve a customer’s problems. We become addicted to it. The trouble is this interferes with our ability to have the value conversation. Like any addiction it comes at a significant price.

Moving off the solution is the antidote to this disease.

Moving off the solution has three elements:

  1. Assuaging – the professional must make the customer feel good about the question that is being asked.
  2. Pivoting – the professional must pivot the conversation away from talking about the solution.
  3. Closing – the professional must ask the customer permission to have a conversation about the problem and not the solution.

This is often done in just a few sentences. For example, a customer emails saying, “We are interested in adding CRM capabilities to our system. How much will that cost?”

A successful move would sound something like this: “Thanks for your email. As you know we have a number of customers using CRM. However, what we have found is that CRM means something a little bit different in every organization. Would it be okay with you if I scheduled a call to talk a little bit about what CRM means to you?”

Notice that all three elements are addressed.

  1. Assuaging – “Thanks for your email. As you know, we do have a number of customers using CRM.”
  2. Pivoting – “However, what we have found is that CRM means something a little bit different in every organization.”
  3. Closing – “Would it be okay with you if I scheduled a call to talk a little bit about what CRM means to you?”

Of these three, I cannot over emphasize the importance of the third, and that it be formed as a closed probe question. A closed probe question is one designed to solicit a “Yes” or “No” answer. Too often, I have heard professionals immediately jump to asking an open probe question such as, “Why do you think you need CRM?”

More often than not the customer feels slighted, at best, or intruded upon at worst. This shuts down even the possibility of a value conversation. The closing is important because the professional is asking permission to not answer the prospect’s question, “How much does it cost?” Please note that we are not doing this to be manipulative, but rather because we truly seek to help the customer make the best possible decision.

What’s Next?

After the successful move off the solution, the professional must then gain an understanding of the perceived value to the customer. The methods needed to do this are beyond the scope of this article, so I will instead recommend again that you read Mahan Khalsa’s Let’s Get Real or Let’s Not Play.

Having the value conversation with a prospect or customer is a non-negotiable step in the path to value pricing. It is not easy to do because if requires us to change our way of thinking about how we listen and what we say in the earliest conversations we have with them.

That said, it is not beyond the ability of any professional to learn these skills. As demonstrated here, they are simple, but they are just not easy. It takes patience with oneself and practice, but once one gets comfortable with these skills, value pricing will be within your reach.

Shut up and eat your french fries: Asking Effective Questions

I suck at marketing. There I said it.

One of the best received sessions I have delivered in the last two years has been one about asking better questions. The trouble was, few people attended. It sounded way to boring. I tried a few different titles:

  • Asking Better Questions
  • Asking Effective Questions
  • How to ask better more effective questions

IMG_3966Then I came across a comedy routine performed by Louis CK about his daughter asking him, as daughters are want to do, over and over again, “Why?” The routine ends with him muttering, “Shut up and eat your french fries.” It is hysterical, but also makes some great points. Inspired, I renamed the session, Shut up and eat your french fries. Voila! People started showing up!

A few months back I had the honor of presenting it at the Los Angeles Accounting and Finance show at the LAX Hilton. Coincidently, my daughter, Éirinn, happened to be in LA at the time and was able to see me deliver this.

Abstract

This session is dedicated to the possibility that professionals can greatly increase the value they provide to their customers if they hone their skills at asking better, more effective questions. Developing an enhancing this skill is not easy because it requires us to rethink the paradigms and prejudices of the past. If you would like to contribute to a conversation about this topic, please join Ed Kless, Sage senior director of partner development and strategy.

Video

Slides

My Sage Summit 2016 Sessions

Sage Summit 2016 invades the McCormick Center in Chicago next week. Below are a list of the sessions I will be participating in:

  • The Future of the Accounting Profession with Daniel Susskind. Monday, 2:30pm,  The Commons, 4th Floor, Room S404. Do not miss this one! If you are a mid-market Sage Partner and have multiple folks attending Sage Summit you might want to split up as this pertains to you as well.
  • Panel on The Future of the Professions. Monday, 3:45pm to 5:00pm, The Commons, 4th Floor, Room S404. In addition, to Daniel Susskind, I will be moderating a panel which includes: Ron Baker, Gary Boomer, Garry Carter, William Nahum, Doug Sleeter, and Joe Woodard.
  • Do you want fries with that? Fundamentals of strategic pricing. Tuesday, 2:00pm, Commons 304B, GN-7403
  • The invisible handshake: a new take on corporate social responsibility (with Ron Baker). Tuesday 4:45pm and Wednesday 3:30pm, Commons 305A GN-8498
  • Shut up and eat your french fries: asking effective questions. Wednesday, 2:00pm, Commons 305D, SA-7420 
  • Innovation beyond technology. Thursday 12:30pm, Commons 304C, GN-7419
  • Again with the trusted advisor. Thursday 2:00pm, Commons 302D, GN-8500

Video: Creating Strategy in a Small Business

Earlier this week I had the honor to deliver a session at AccountEX in the UK. Here is the video:

And below are the slides:

Some random thoughts on the trip:

  • I was on the ground in London for 30 hours total. As a result, the jet lag was not so bad. I think I caught up with it on the way home.
  • Of the 30 hours on the ground, three of them were spent going from/to Heathrow and the ExCeL Centre. London is not set up for automobile traffic. The 26 mile trip took 90+ minutes each way. That included one half a leg via the Heathrow Express train to the centre of London.
  • On the way back to the airport I passed by Buckingham Palace. My Über driver informed me that the Queen was not at home. Good for her.
  • I am sure the is not reflective of the country in general, but I can honestly say that the best meals I had were on the plane coming and going.
  • I had about 45 people attend the session. I think they liked it. The English are a tough crowd.

Your Cancer Is Called a Timesheet

Dividing cancer cells
Timesheets: the cancer of the professions

I stood silently among a group of a dozen managing partners of regional firms as I hooked up my MacBook to the projector to begin my talk about becoming a firm of the future.

They had just been presented a state-of-the-profession address by an MP of a Top 100 firm. I have heard much of the content of the presentation before at other gatherings of professional accountants.

The litany of “challenges” repeated the narrative that has been well documented and continues to grow for over the last decade:

  • While there are more people graduating with degrees in accounting, fewer of them are sitting for the CPA exam. This is leading to fewer new hires for firms.
  • The new hires they do have are “millennials” who desire a challenge and think they should be made partner sooner rather than later.
  • Attrition, especially at the mid-career level, is over 10 percent and is mostly initiated by the professional, not the firm.
  • The loss of people in the middle and bottom of the pyramid is eroding the traditional economic model. Non-equity partners are increasing and funding for partner buyouts is disappearing.
  • Cries of “We must become more efficient,” and/or, “We must embrace new technology,” and/or “We must hold people more accountable,” reverberate in meetings.
  • Compliance work continues to flat line and while new offerings are growing revenue, they are not growing fast enough. Worse still those that do this work are often not even CPAs!

After my presentation was successfully displaying on the projector – the modern equivalent of the campfire in this narrative. I paused to get their full attention.

“Here is what I heard,” I began.

“Our profession is sick, even dying. We might have cancer. We really don’t know, but it is bad.”

After another pause and with no one disputing my summary, I continued, “I think you are right. I think you do have cancer. The good news is, I believe I know the cause and it is curable.”

They all looked at me in hopeful, but suspect anticipation.

“Your cancer is called ‘a timesheet’ and you must cut it out completely before it kills you.”

There were a few barely perceptible nods and even some smiles and hushed chuckles from the two “younger” people in the room. The chuckles quickly morphed into coughs as they remembered their MP was seated among them.

I proceeded to dismantle all the arguments (there are only four) in favor of the timesheet before anyone else could say anything. I even went so far as to do something I rarely do in a public live event. In fact, I call it the nuclear option.

The brief exercise is so stinging, so devastating to the timesheet argument that I fear that it could cause emotional damage to everyone in the room. Because of this I usually reserve it for online anonymous events so that folks have some time to themselves to recover.

“How many of you have ever filled out a timesheet?” I boomed as I raised my hand in the air. All hands joined mine in pointing heavenward.

raised hands“How many of you have put down on your timesheet the incorrect number of hours you worked on something, be that too many hours or too few hours with full knowledge that it was incorrect?” As is the case everywhere I have done this exercise, all hands remained with mine in the air. One participant, I do not know who, meekly mumbled, “Every week,” under his breath but audible to all.

I paused again, then quipped softly, my hand still in the air, “The ethics session begins later today,” trying to make a bit of joke to relieve their inner guilt.

Why is this? Why, in one of the most ethical and honored of professions, is this not only the norm, but ubiquitous? Why are these good people, moral and upright members of the community, whose commission is, in part, to identify, correct, and in some cases, prosecute financial wrongdoing (aka, getting the numbers right) sitting before me all guilty of that same crime?

The answer, again, is the timesheet.

In my session on Trashing the Timesheet, I speak mostly of how the timesheet is suboptimal as a pricing mechanism. There is no doubt about this, it is beyond dispute. However, my argument goes beyond this mere deficiency in pricing. The timesheet, not the people who fill them out, is immoral and unethical.

Why? Because it – the idea of a timesheet – is based on a falsified idea known as the labor theory of value which was developed in part by Karl Marx. Time/value equivalency is a false notion that causes bad things to happen. As explained by my “nuclear” exercise, it is the timesheet causes otherwise moral people to do immoral things; it is the timesheet causes people in a highly ethical profession to do unethical things.

I realize this is a dramatic statement, but it is nonetheless true. Think about it no one has ever said they have behaved completely honestly. In addition to this reason, my distain for the timesheet and belief it is immoral expands when it is applied inside the organization to judge individuals.

People come to believe that their worth is actually in their hours they “bill.” They start to believe their hours have a specific “worth” not only to the firm but to them as if hours “spent” with children or aging parents must be evaluated against the hours “spent” at work.

Country singer Jamey Johnson recorded a great song a few years back entitled The Dollar. In the video for the song, scenes cut back and forth between a little boy and his father. When the boy asks his mother, “Why does Daddy go to work?” the mom replies, “Your Daddy’s got a job, and when he goes to work they pay him for his time.” The child then goes to his piggy bank and returns to his mom and in the chorus of the song asks:

How much time with this buy me?

Is it enough to take me camping in a tent down by the stream?

If I’m a little short, then how much more does Daddy need,

To spend some time with me?

Cue weeping.

It is my contention that this song illustrates what happens to people who record their time. Over years indeed decades it affects their internal belief system about who they are in essence as people. It robs them of their humanity. This is evil and it must be destroyed.

It is time the profession rid itself of this meddlesome method of malevolence.

New eBook Available (with a chapter by moi)

I am honored to have a chapter in this new free eBook. Here is more from the press release:

Entrepreneurs starting their own businesses now have a little more help. Start with a Profit: Best-Practice Tips for New Entrepreneurs from Top Accounting Industry Leaders is the latest guide to helping new business owners become successful. 

Editor Sandi Leyva, CPA, asked fellow accounting industry thought leaders one question:  “For someone who wants to start a new business from scratch today, what is the most important strategy or tactic you’d tell them about to help them succeed?” One dozen thought leaders along with Sandi provided their answers.  Co-authors include:

  • Alison Ball, Senior Manager of the Global Influencer Program of Intuit, Inc.
  • Sharada Bhansali, Co-Founder of AccountantsWorld
  • Randy Johnston, CEO of Network Management Group, Inc.
  • Ed Kless, Senior Director of Partner Development and Strategy of Sage
  • Sandi Leyva, Founder of Accountant’s Accelerator
  • Monika Miles, President of Miles Consulting Group, Inc.
  • Clayton Oates, Chief Solutions Officer of QA Business Pty Ltd.
  • Edi Osborne, CEO of MentorPlus
  • Leslie Shiner, Owner of the ShinerGroup
  • Doug Sleeter, Founder of the Sleeter Group
  • Sandra Wiley, COO and Shareholder of Boomer Consulting
  • Geni Whitehouse, Countess of Communication of Even a Nerd Can Be Heard
  • Scott Zarret, President of CPA Academy

“To my knowledge, it’s the first collaborative work of thought leaders in the accounting industry,” says Sandi Leyva.  This is Sandi’s 30th book and her first collaboration as editor. 

Although each author’s contribution is quite unique, a few client-centric themes emerged, including how to market most effectively, how to build customer relationships, and how to interact with clients.  Others focused on business models and pricing.  Still others urged the entrepreneur to embrace their passion and their “why.”