Price Options for a Newspaper

A Sage Partner and friend of mine, Steve Bond from TAG, sent me an example of pricing options he received from the a local paper. The options were as follows and presented in this exact order:

  • 1 Year Online & Print Subscription $149.00
  • 2 Year Online & Print Subscription $385.39
  • 6 Months Online & Print Subscription $148.34
  • 3 Months Online & Print Subscription $83.74

Two questions: 1) Do you think this was intentional or just haphazard? Why or why not? and 2) Which option would you have chosen?

Note: This post has been altered from its original per a request.

Building the Knowledge Worker Organization

Today, I welcome a guest post from Gary Crouch of CS3 Technology in Tulsa, OK. He wrote this article in the wake of the Firm of the Future session at Insights 2010.

Gary’s thoughts are flashes of brilliance and will take some effort to embrace and even more effort to fully understand and implement. His most profound insight is, “My function then as the leader of a team of knowledge workers is to attract intellectual capital to my team.”

Thanks, Gary for allowing me to post this.

Leader: someone who guides or directs others

Team: a number of people organized to function cooperatively as a group

Sometime back I read a book or article describing how the knowledge worker can and should maximize their own potential by playing the part of the hired gun (unfortunately I cannot locate the article to give credit where credit is due). For the knowledge worker, the author explained, it is in their best interest to manage their career path by hiring out to the highest bidder at every opportunistic step. This could be accomplished by promotions within the current organization or moving through various organizations that have an increasingly higher need for his/her services. Either way, the number one priority is to promote their skills and experience to the marketplace.

As I have personally benefited from implementing many ideas shared by Ed Kless in my business, I attend as many of his speaking sessions as possible. At Insights 2010, I heard Ed describe our employees as knowledge workers, our most important assets, who walk out of our doors each evening. As I had heard this before, my tendency was to get depressed thinking about just how fragile the culmination of my life’s work, our business, really has become. Then, a thought occurred to me and everything came into focus.

Earlier in the day, we reviewed the building blocks for a successful knowledge worker firm as the following formula:

Profits = Capital Management * Effectiveness * Pricing on Purpose

My thoughts focused on the capital management element of the equation. Capital is made up of various resources that the knowledge firm must manage on a continual basis. These resources include the following:

Financial Capital = Operating capital and cash flow

Intellectual Capital = The ability to maintain and grow knowledge within an organization such that it can be applied to solve customer problems

Structural Capital = The environmental components that allow an organization to function effectively such as processes, systems, methodologies, physical plant, communications facilities

Social Capital = The brand of the organization that includes relationships with vendors, customers, external influencers, product and service awareness, and so forth

It dawned on me; in many cases the ability of the knowledge worker to monetize their intellectual capital is limited. Most knowledge workers need to work within an organization for various forms of capital that they either do not possess, or do not have the ability to properly manage. For instance, they may not possess the cash flow for marketing themselves or for investing in new equipment; they may not be able to build systems to manage projects, bill their services, perform Q&A functions while chasing the next job; they may be great technical resources, but not know how to approach social networking effectively so they have a new project waiting for them when their current project is completed. These limitations of the hired gun are answered by participating in a team environment. When the knowledge worker’s specific expertise is combined with varying forms of expertise brought by other knowledge workers and multiple capital resources, only then does the application of intellectual capital bring value to the buyer.

My function then as the leader of a team of knowledge workers is to attract intellectual capital to my team. I can do this by providing the benefits of various forms of capital that the intellectual capital owner does not possess or does not have the ability to manage. If my team is effective to the point of profitability, then I am able to demonstrate the ability to monetize the knowledge worker’s intellectual capital.

Of course, money is not everything. If I also can help the knowledge worker grow in experience, knowledge and capital management abilities, then I have provided value beyond money. As long as the knowledge worker remains with the team, I also have built additional intellectual capital accessible to my team.

To be sure, the process will always be fluid. As the team gains additional experience and knowledge individually, we must recognize the additional value requiring either additional compensation or opportunities to grow. However, the combined growth inherent in the team provides even more reason for the team to remain intact.

Should a member of the organization find a more beneficial team for their situation, then the process begins again and is costly. However, the relationship has been mutually beneficial. Both the team and the organization have been profitable. In addition, intellectual capital is one form of capital that can be shared. When a knowledge worker shares his knowledge with a customer or a coworker, they do not diminish their own knowledge. In fact, through an exchange of ideas, the knowledge worker’s intellectual capital will grow as well. Concurrently, if our organization’s capital management process includes cross training the team members, the team can retain the exiting knowledge worker’s intellectual capital even as the knowledge worker leaves the team.

Through the process, the organization has gained in reputation, customers, reference sources, finances, experience and any number of other resources. The departing knowledge worker may also add to our social capital as an external influencer or even by bringing the new employer organization to our team as a customer.

Business is the process of providing solutions for others. As we continue to build our organizations, we must recognize the impact of the knowledge worker on our business models. As we provide a valuable package of organizational attributes that the knowledge worker can monetize their intellectual capital, we can help them grow. At the same time, we can increase our retained resources of financial, structural and social capital.

All in all, it is not a zero-sum game; everybody can win.

Proposed Firm of the Future Symposium

Based on the success of the session at Insights on the same topic, we (Sage) are looking at delivering a Firm of the Future Symposium in Dallas on August 23-24.

This experience is dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone as it requires partners to think differently than they have in the past about what it is that they do.

The symposium will feature Ron Baker of the VeraSage Institute, Rob Johnson and myself from Sage and an as yet undetermined industry analyst. It will be held in Dallas at the Hilton DFW Lakes on August 23-24. The price is $3,500 for two people from your organization (or guest if you so choose, there is no price for one person only). Additional attendees are $1,000. If you are a Sage Select Partner, the first two attendees are free. You must pay hotel and airfare.

If you know for sure that you can make it, please let me know. In addition, please comment and submit thoughts and even proposed changes to the agenda! You can always email me at ed *dot* kless @ choosegreat.com.

Tentative Agenda (This is subject to change)

Day/Time

Item

Day 1, 7:15am

Breakfast

Day 1, 8:00am

Welcome and introductions

Day 1, 9:00am

Foundational information

  • How v. What matters
  • Peter Drucker’s knowledge worker
  • Dialogue on value

Day 1, 10:30am

The tale of two equations

  • The Professional Service Firm
  • The Professional Knowledge Firm

Day 1, noon

Lunch

Day 1, 1:00pm

From Revenue to Profit Workshops

  • Where does profit come from?
  • Managing cash flow
  • How the SaaS model effects profit

Day 1, 3:00pm

From Capacity to Capital Workshops I

  • Managing financial and structural capital
  • Developing intellectual capital (Using the knowledge matrix)
  • Conducting an after action review

Day 1, 6:00pm

Dinner

Day 1, 7:00pm

From Capacity to Capital Workshops II

  • Developing social capital (Building community with employees, customers, vendors, and stakeholders)
  • Creating a Results-only Work Environment
  • Developing a knowledge-firm compensation system

Day 2, 7:15am

Breakfast

Day 2, 8:00am

From Efficiency to Effectiveness Workshops

  • Developing and using key predictive indicators (Net Promoter, HSDs)
  • Leadership Development
  • Scope Development Issue List Management

Day 2, noon

Lunch

Day 2, 1:00pm

From Cost-plus to Pricing on Purpose Workshops

  • Pricing a small engagement for current customer
  • Pricing a large engagement for a new customer
  • Using a TIP clause

Day 2, 3:30pm

Wrap up and depart for home by 4:00pm

What I Believe Redux

Two weeks ago, in a post entitled, What I Believe, I put forward a declaration. It went thusly:

I believe in challenging the status quo. The way I challenge the status quo is helping professionals change their business model from a focus on service to a focus on knowledge. It happens to be a better model. Are you interested in changing?

In the fortnight since that post, I have been tweaking it in my mind and I am please to put forward this updated declaration.

I believe that small business is where the vast majority of the wealth of the world is created. I help small professional businesses recognize that they do this through developing and sharing their knowledge. It is a great model. Do you want to know more?

I am curious as to what your thoughts are about this. Did any of you make a declaration? If so, are you willing to share it below? What are your thoughts on my declarations? Do you think the second is an improvement?

Firm of the Future Insights Session

For those of you who are so inclined (probably only my Mom), I present for your viewing pleasure the video feed from the dialogue session I did at Insights entitled Creating the Firm of the Future.

Here is the session description:

This session will be dedicated to the possibility that a professional organization can be run more effectively when it becomes a knowledge firm rather than a service firm. Creating such an organization is hard work and not for everyone. It requires us to think differently than we have in the past about what it is that we do. You are hereby invited to open a dialogue on a different model for creating success in a professional firm.

And, here, more importantly, is the warning slide I had on the screen as folks entered the room:

image

The video is in two parts.

Part One (runs 1 hour and 25 minutes)

Part Two (runs 1 hour and 40 minutes)

Seth Godin Is Wrong

image I have read most of Seth Godin’s books and am an occasionally reader of his blog. On June 9, 2010, in a post entitled Hourly work vs. linchpin work, he wrote the following:

You should pay people by the hour when there are available substitutes. When you rely on freelancers you can put a value on their time based on what the market is paying. If there are six podiatrists in town, and all can heal your foot, the going rate is based on their time and effort, not on the lifetime use of your foot.

There is no other way to say it, this is just plain wrong.

Once again, a really smart person has fallen prey to Marx’ Labor Theory of Value. Effort does not have value, results do. The value of a podiatrists healing your foot is based on the lifetime use of your foot. This does not mean that the price is solely based on that lifetime value.

All value is subjective, not objective. Assuming a free market for this service (laughable considering it is healthcare), the “going rate” is not based on the time and effort of the doctor, but what a patient is willing to pay the doctor, period. Increased supply does bring price down, but not because any change in time and effort.

Reasons Why I Do Not Like Soccer (and some proposed solutions)

  1. Too low scoring. As a baseball fan I do enjoy the occasional pitcher’s duel, but most Major League games average over 4 runs per team per game. With soccer it is ridiculous, it is always a defensive battle. The solution is three balls in play at the same time. Better two white balls and one red ball, with the red worth three points instead of one! Not only will this increase the scoring, but it will increase the number of breaks in the game, this will allow more beer commercials to be shown.
  2. Too many ties. North Americans do not like vaguery, we want a clear winner and loser especially in a once every four years competition. It really get crazy in the bracket rounds of the World Cup when after a brief overtime, they go to penalty kicks. This would be like a baseball game ending in a tie after 12 innings and then deciding the winner by playing home run derby. Nonsense! I would like to see them keep playing until they fall down from exhaustion except for the goalies. How cool would that be? Goalie on goalie until one of the scores! Of course, adoption my three ball proposal would also help reduce the number of ties.
  3. The clock is not the clock. Again, this is a problem with vaguery. I mean really, only the referee knows when the game is going to actually end. I know they have added the approximate extra time, but still, it is way too arbitrary. Technology must exist to allow the referee to add this time exactly onto the clock. Oh, by the way, the time runs in the wrong direction. We want it to count down, not up. This ain’t track and field!
  4. This one is specific to this World Cup – vuvuzelas. Sorry, they are worse then the insidious thundersticks that occasionally make their way into various North American events. The worst offense being the 2002 World Series between the Los Angeles Angels of Anaheim and the San Francisco Giants. There has got to be a way to filter this sound out of the feeds.

Help Me Understand?

One of the key devices I use as a consultant is something I call the “Help me understand” question. I use this when there is an apparent contradiction between two statements or behaviors of a person.

The structure is this: Help me understand how A (one behavior or statement) is in alignment with B (the other behavior or statement)?

For example: Help me understand how letting one of your best people get away from your organization is in alignment with your company’s stated goal of attracting and retaining great people?

Sometimes this leads me to some very good insight and a much deeper understanding of the issues. Very often, I am convinced that A and B are, in fact, in alignment and that what was lacking was my deeper understanding.

Other times however, the person I am working with is unable to reconcile the dissonance and adjusts their behavior or statement accordingly.

Still other times I receive no feedback from the question, especially if I pose it in email. I can only assume that they make no adjustment and go on living a contradiction.