Customers do not care about your costs

Kodak in a recent open letter to their customers announced changes to their terms of service for their Kodak Gallery on-line service. It has been hailed in the Twitterverse as an example of how to communicate change to customers.

While I admire Kodak for their openness, I have sharp criticism for the core message. Essentially, they are saying that the must raise their prices to offset costs. Who cares? Certainly not their customers, nor should they. It is not the responsibility of customers to cover a seller’s cost. Should consumers pay more for General Motors cars just because they have a higher cost structure than Toyota? (In essence, the government has told you that yes you are and oh, by the way, even if you never bought a GM car you need to pay for one anyway, but that is another post.)

Kodak should instead focus on the value they are creating through the service and create a pricing model that attempts to capture this value. Kodak is attempting to regroup after years of denial that the photo industry was going/has gone digital. They have been somewhat successful, but they clearly still do not get it. Being in business is about value creation, not cost recovery or profit without creating value.

I tweeted this last week – “The problem occurs when companies focus on increasing or maintaining profit while not increasing the value they provide to customers.” I believe the moment a company pays more attention to cost structure and maintaining profitability rather than focusing on value creation is the moment that they begin to die.

The billable hour is about cost recovery not about creating value for customers. Please take heed professional firms. You are dying you just don’t know it.

Insights Session – The Last Roundup

At Sage’s partner conference, Insights, I will be presenting a session entitled The Last Roundup (GEN37) on Thursday, May 14 at 3:15pm.

In order to begin the conversation even before the conference begins, I am posting the abstract and inviting all possible participants to share their ideas and questions.

In this last session of the conference, join Ed Kless in a no-holds-barred look back of what you learned at the Conference and what your intentions are when you get back to the office. Be prepared to submit at least on item for which the rest of the group will hold you accountable.

The idea for this session is simple, we will do a quick after action review of our own individual performances at Insights. We will ask ourselves:

  • What did you hope to gain from participating at Insights 2009?
  • What did you bring to the dialogue?
  • When were you the most anxious or fearful?
  • When were you the most inspired or joyous?
  • What do you learn about yourself?
  • What is the one thing you plan on implementing in the next 90 days?

We will then hold each other accountable for the completion of this one item. In 90 days we will agree to get on a call and say whether we succeeded or failed. We will honor the commitment.

Also, please post thoughts, questions, comments below.

Insights Session – Building Community: A New Paradigm

At Sage’s partner conference, Insights, I will be presenting a session entitled Building Community (GEN16)  on Tuesday, May 12th at 2:15pm.

In order to begin the conversation even before the conference begins, I am posting the abstract and inviting all possible participants to share their ideas and questions.

This session will be dedicated to the possibility that we can create deep meaningful communities among all the stakeholders in our businesses – customers, employees, vendors, et al. Creating such communities is hard work and not for everyone. It requires us to think differently than we have in the past. What has to change is not external. We are the ones who must change. You are hereby invited to open a dialogue on a new model for building community by Ed Kless and business partner Joe Santoro who will co-facilitate this session

The applications of the ideas to be presented in the session are endless, however, you need to be a conceptual thinker.

This is a heady topic, but necessary if we hope to improve both ourselves and society. In order to prepare for our dialogue, I would recommend reading Peter Block’s Community: The structure of belonging. If you cannot read the whole book, please read the chapter headings in italics.

Also, please post thoughts, questions, comments below.

Insights Session – Issues List Management

At Sage’s partner conference, Insights, I will be presenting a session entitled Issues List Management (or How to Replace Time Sheets With Something That Actually Matters to Your Customers) (GEN12)  on Tuesday, May 12th at 11:00am.

In order to begin the conversation even before the conference begins, I am posting the abstract and inviting all possible participants to share their ideas and questions.

This session will be dedicated to the possibility that a professional organization can be run more effectively when people do not have to account for every six minutes of their day. Creating such an organization is hard work and not for everyone. It requires us to think differently than we have in the past about what it is that we do. You are hereby invited to open a dialogue on a new model for measuring the success of a professional firm by Ed Kless and business partner John Shaver who will co-facilitate this session.

Let’s face it, documenting every six minutes of your day is unappealing to say the least, In fact, it is downright insulting. (And we wonder why so few young people want to come into this business.)

Getting rid of time sheets does not mean an end to administration. However, instead of efforts, we should track results. Tracking time is like tracking swings for a baseball or softball player. “He swings a lot, must be good.”

In order to prepare for our dialogue, please read this blog post from Ron Baker at the VeraSage Institute. If possible the related links would be great as well.

Also, please post thoughts, questions, comments below.

Insights Session – The Two As of Consulting: Authenticity and Altruism

At Sage’s partner conference, Insights, I will be presenting a session entitled The Two A’s of Consulting: Authenticity and Altruism (GEN28)  on Wednesday at 9:30am.

In order to begin the conversation even before the conference begins, I am posting the abstract and inviting all possible participants to share their ideas and questions.

This session will be dedicated to the possibility that consultants can improve the life and business success of their customers. Consulting (and this session) is (are) not for everyone. Achieving the goal is not easy as it requires us to look deep into ourselves and examine our beliefs as people. When you distill it down consulting is more about behaviors than technical skills. You are hereby invited to open a dialogue on the two behaviors of authenticity and altruism by Ed Kless who will facilitate this session.

Authenticity will be defined as putting into words what you personally are experiencing. Very often, this means stating your emotions in an emotionally neutral way.

Altruism in the context of this session will be defined as other-centeredness. Our willingness to help others create value is one of the high points of being a consultant, but that does not mean that this is done without recompense. In fact, George Gilder has said that, “Profit is an index of our altruism.”

These are heady topics, but necessary ones to fully understand if we are to be great consultants. In order to prepare for our dialogue, I would recommend reading Peter Block’s Flawless Consulting and George Gilder’s Wealth and Poverty.

Also, please post thoughts, questions, comments below.

Insights Session – Moving Toward the Firm of the Future

At Sage’s partner conference, Insights, I will be presenting a session entitled Moving Toward the Firm of the Future (GEN34) on Thursday at 1:30pm.

In order to begin the conversation even before the conference begins, I am posting the abstract and inviting all possible participants to share their ideas and questions.

Peter Drucker coined the term knowledge worker in the 1950s, but we are only beginning to understand the impact of the transformation on business and society as a whole. This session, delivered by Ed Kless, will walk you through the transformation that you company needs to make from being a professional service firm to becoming a professional knowledge firm. If you are not interested in completely changing the way you look at your business, please do not attend.

Most professional service firms today operate using a variation on the following theoretical equation: Revenue = Capacity X Efficiency X Hourly Billing. This equation is hopelessly flawed in that it confuses causes and effects.

In this session we will create a dialogue around moving to the firm of the future or what I like to call a professional knowledge firm. The theoretical equation for this firm looks like this: Profitability = Intellectual Capital X Effectiveness X Pricing with Purpose.

Specifically, we will have conversations about making the following transitions:

  • From focusing on revenue to focusing on profitability
  • From focusing on capacity to focusing on intellectual capital
  • From focusing on efficiency to focusing on effectiveness
  • From focusing on hourly billing to pricing with purpose

While there are no quick fix answers to any of these transitions, we can begin to lay the foundation for change within our organizations. In order to prepare for our dialogue, please spend some time reading at the VeraSage Institute.

Also, please post thoughts, questions, comments below.