Value Pricing Twitter Chat

Today, I had the honor and pleasure of participating in a Twitter chat sponsored by my employer Sage. (Honestly, sometimes I think, wow, I get paid for doing this, really‽)

My thanks to the entire team at Sage but especially Mark Redstrom who made this incredibly fun and easy. Thanks also to all who participated in the fast paced banter in 140 characters or fewer.

Below is the “Storified” chat session.

I’ll have a Yogi Berra please

Lawrence Peter "Yogi" Berra (May 12, 1925 – September 22, 2015)
Lawrence Peter “Yogi” Berra (May 12, 1925 – September 22, 2015)

While I was deeply saddened to hear about the passing of Mets (well, and Yankees) legend Yogi Berra this morning. I felt compelled to share a conversation had on my Facebook page during which Yogi gave us one last chuckle.

One commenter suggested that Yogi was the “Arnold Palmer of baseball” to which I responded that we needed to create a drink in honor of him. I came up with the following:

  • Half club soda
  • Half seltzer
  • Half carbonated water

My plan is to order one at a restaurant in the near future. Here is how I envision the conversation:

Me: I have a Yogi Berra.
Server: Never heard of that sir. What is in it?
Me: Easy it is half club soda, half seltzer and half carbonated water.
Server: Okay… Wait… what?

As a youth I proudly wore number 8 in honor of him. He was the manager of the Mets at the time.

Yogi is truly a hero of mine. Not only is he the only person I can think of who bridges the Met-Yankee divide, but his legendary reformulations of quotations are always inspirational.

When speaking I often refer to him as “that great American philosopher, Yogi Berra.” In my book he is up there with Walt Whitman, Mark Twain and Will Rogers.

My personal favorite quote: We made too many wrong mistakes.

Much wisdom in that.

RIP, Lawrence Peter “Yogi” Berra (May 12, 1925 – September 22, 2015)

On Airquotes Firm of the Future Thinking

Firm of the Future BookYesterday, a former colleage of mine sent me this piece by Jim McGinnis of Intuit. In the interest of full disclosure, and as many of you already know, I work for a competitor of Intuit’s, Sage. Please note this is not about me slamming a competitor from a product standpoint, but rather I am calling out errors in Mr. McGinnis’ thinking. I have never met him and I am sure he is an affable fellow.

This is not an attack on him, but the ideas presented (or lack thereof) in the post.

Mr. McGinnis proposes a three step process to becoming a “Firm of the Future.”

  1. Get on the cloud.
  2. Become a trusted advisor.
  3. Get connected.

Needless to say, I find this listicle a bit, err, lacking.

For example, the first sentence of the first paragraph of his first step is:

In the cloud, you can meet client expectations, stay relevant through improved efficiency, achieve greater collaboration, realize more time savings and lower your costs.

Oh where to begin.

Let me offer a listicle of my own as a critique. I shall entitle it Five Ways This Sentence Completely Misses What Being a Firm of the Future Really Is About. (I know, my headlines suck.)

  1. “In the cloud” – The “cloud” is just a technology. It is not a change in a business model which is what moving to The Firm of the Future really is. It is a change to how the organization creates value for and captures value from its customers. Admonishing folks to “get on the cloud” is a akin to saying “use pencils instead of quill pens” or “use Excel instead of an adding machine.” Yes, it is important to do, but it is not a business model innovation.
  2. “Client expectations” – As advocates for The Firm of the Future, both Ron Baker and I suggest using the word “customer” not “client.” Why? Well I wrote whole blog post on that one.
  3. “Improved efficiency” – Customers do not care about the efficiency of a firm, they care about the firms effectiveness. Ask yourself this, if you have a brain tumor, do you want an efficient surgeon or an effective one? Clearly the latter. At VeraSage there is an entire blog category dedicated to the topic of efficiency versus effectiveness. We call it the “Eff’ing Debate.” I believe that great business strategy is the art of staying one step ahead of having to worry about being efficient.
  4. “Time saving” – Time cannot be “saved.” Time is a constraint to which all of us who live in this time/space continuum are subject; it is not a resource. Our time is not “worth” anything. There is not a single customer of a professional firm who wanted to buy an hour of time; they wanted the results of the hour. Peter Drucker said, “Sell what your customers buy.” DUH! Yet, professionals keep putting “hours” on invoices. Nobody wants hours. In addition, when one is billing by the hour what exactly does “time saving” do? It reduces your price. The more efficient you are the less money you make. What a terrible model! Some argue your rate will go up. Perhaps, but the reduced time it takes is sometimes a factor of ten or more. Nobody’s “billing rate” increases by a factor of ten, perhaps even over the entirety of their career. The author even acknowledges this later in the post.
  5. “Lower your costs” – Beside the above mentioned “and your price” if you bill by the hour, this  is simply not true. Costs do not change much in any professional firm since they are overwhelmingly fixed. Cost allocation might change, but again, customers do not care how you allocate your costs. Have you ever walked into a Starbucks and thought, “Gee, I hope these guys have their costs allocated correctly.” I doubt it.

And that is just the first sentence of the first step. Other errors:

  • Using “Trusted Advisor” I do a session on why professional should not use this term in the marketing. Short form of the argument – Saying “I want to be your trusted advisor” to a prospect is like asking “How many kids do you want to have?” on a first date. Quite a bit forward don’t you think. Oh, and another blog post.
  • Use of the phase “flat-fee pricing.”
  • Use of the phrase “value billing.” Again, a post on this subject from 2009.
  • The the choices of “low medium and high” are not meant to be target at “small medium and large clients.” There’s that word again.

I got more, it is an entire two day class.

On the Enterprise Software Podcast

espodcastAt Sage Summit 2015, I had the honor of being interviewed by Bob McAdam, Todd McDaniel, and Darcy Boerio, hosts of the Enterprise Software Podcast. They “talk all things enterprise software a couple of time each month.”

Specifically, they wanted me to talk about value pricing, but the conversation ranges from hanging out at the Mint Lounge (now known as the Spirits Lounge – see photo below) in the Holiday Inn in Fargo, ND to the best pizza place in Allen, TX.

spiritsYou can tell by listening that I was pretty amped up on adrenaline from being at Sage Summit. In fact, I blathered on so long they had to break it up into two episodes. That said, I think I did a pretty good job of sharing some of the basics of value pricing including why timesheets need to be trashed, the need to “move off the solution,” and how to work through Mahan Khalsa’s Five Golden Questions in order to extract the understanding of the value to the customer.

Have a list to both right here:

Part One

Part Two

On Jesus and Redistribution

The following meme was posted on a Bernie Sanders Facebook site:

As a Libertarian and a church-going Catholic I see zero contradiction in this. I personally believe the best way to “justly distribute the fruits of the Earth and human labor” is via the free market or what I prefer to call “market tested innovation and supply” in deference to Dierdre McCloskey.

The Church is a private institution. As long as government is not involved, members of a private institution can work toward whatever goal they wish, so long as they do not impose this belief on others.

In the parable of the Rich Fool (Luke 12:13-14) Jesus says:

13 Someone in the crowd said to him, “Teacher, tell my brother to divide the inheritance with me.”
14 Jesus replied, “Man, who appointed me a judge or an arbiter between you?”

This is a pretty specific rejection of the notion that Jesus (or the Gospel writer) calls for “just redistribution” via coerce force.

Do we as a society have a moral obligation to help our fellow humans? Yes, we do. Furthermore, we get to decide what the best way to do that is for each of us.

Should government be the mechanism to insist upon this obligation? Hell, no!