Lesson from the Salon

I have often spoken about the parallels between software implementation consultants and salon owners. For example, both revenue models have about 50 percent coming from the sale of product (including renewals for software) and about 50 percent coming from service provided.

This morning, this “Suggested post” was in my Facebook stream:

Screenshot_4_16_13_6_48_AM

Notice that it mentions that Julie is salon owner, but what is to stop individual stylists from creating their own App. This way if they leave the salon of their current employ, their clientele can easily track them down and bypass what I understand from my wife and other female colleagues as “the hunt” that takes place when this occurs now.

Of course, the jump to software implementation consulting is easy to see. Individual consultants can set up Apps and away they go.

This enforces the great idea from Peter Drucker that, “In a knowledge society, the most probable assumption for an organization to make is that they need the knowledge workers far more than the knowledge workers need them.”

What are you doing to make you organization a place where knowledge worker thrive and get their knowledge dividend?

Firm of the Future at DFW

Attention my fellow Dallasites and Fort Worthians. Ron Baker and I are delivering our famous (well, in our minds anyway) Firm of the Future Symposium at the Hilton DFW Lakes hotel on February 12 and 13.

This class is for all professionals: accountants, lawyers, IT consultants, architects, engineers, advertising agencies, we have even had a doctor attend.

 

If you are interested here are the details:

Firm of the Future Symposium

The Firm of the Future Symposium coming to a city near you will feature Ron Baker of the Vera Sage Institute. The symposium will feature Ron Baker of the VeraSage Institute and Ed Kless, Sage senior director, partner strategy and development. 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 registration fee for the first attendee is $2,000. The fee for additional attendees is $1,000.

Download the agenda for this event .

Location

Date

Sage University

Hilton DFW Lakes Executive Conference Center
1800 Highway 26 East
Grapevine, TX 76051

Feb. 12-13

Register Today
Path: Login >
select Academies & Workshops >
Mid-Market ERP

 

The registration site is not the friendliest, so if you have any problems, please just let me know and I will take care of it.

If you have any questions, let me know.

 

A Post On, Egads, Effort

images-5Regular readers of this space will know I am not a fan of the cult of efficiency that enraptures most businesses today. In my project management classes I stress that duration is the more important metric both the the professional and the customer.

That said, I would like to update the idea of comparative advantage as originally put forward by economist David Ricardo, but updated for the knowledge worker, especially the small firm. This idea seems to be about efficiency, but if one looks deeper, one will see that it is truly about effectiveness.

Adam Able is the owner/operator of a small IT consulting firm. Adam has been working in his industry for over 20 years and has a wealth of knowledge and domain expertise with the products with which he works. Because of this Adam, can slam out a new customized report in an average of two hours. He can also do an average migration of data in one hour.

Igor Egit is relatively new his profession; he has been at it a little over a year. Igor is not the brightest bulb in the drawer. On average it takes him three hours to deliver a new custom report, 50 percent more than Adam. While Igor does not suck at reports, he is a migration moron and it takes him four hours to develop a workable data migration, 400 percent longer than Adam.

This table shows the comparison.

  Igor Adam
Report 3 2
Migration 4 1
Total 7 3

 

If each does one report and one migration the total is 10 hours and the yield is two reports and two migrations.

Comparative advantage says that while Adam is better at both, and could theoretically do it himself in six hours, he is better off specializing in migrations and allowing Igor to do the reports, even though this runs counter to the idea of efficiency.

This table demonstrates the results of specialization.

Igor Adam
3 1
3 1
6 2

 

Notice again, that the yield is still two reports and two migrations, however, each received an hour of additional discretionary time. In addition, the total effort decreased to eight hours.

Now, some may argue that from an efficiency standpoint, it would be better to have Adam do both, since the total would be six hours not eight. What would that do to Adam’s leisure time? It would reduce it by four hours.

Looked at in this light, we can see that the question is: does it make sense for Adam to trade four hours of discretionary time in exchange for two reports from Igor. This is a value tradeoff that only Adam (and in a sense Igor) can make.

The trap is set, however, if we introduce the idea of a billable time rate to this example. Since it is unlikely that Adam’s rate would be three times that of Igor’s. Adam’s customers will either a) insist that they pay a reduced rate for Igor, or worse, b) insist that Adam himself do the work.

The traps is sprung! Adam, in the name of good service, will acquiesce to the customer. Likely, Igor will be out of a job; and Adam will miss more Little League games.

On Chunking

For those of you who struggle with ensuring that delegated tasks are completed on time, I have some good news for you. New work by some behavioral economists has shed some light on this difficult situation.

Most of us are familiar with the psychological concept of chunking in large part because of a famous paper published in 1956 by George A. Miller entitled The Magical Number Seven, Plus or Minus Two: Some Limits on our Capacity for Processing Information.

The idea is that our short-term memories can only remember 7 +/- 2 items in a list, such as number, unless we chunk it down into groups of numbers. Some common examples would be phone, credit card and social security numbers.

More interestingly, some behavioral economists have demonstrated that the same concept can be applied to the assignment of tasks. When an assignment is given to a person to complete, it is far more likely to be completed if it is chunked into two or three sub-tasks, rather than just assigned as a single task.

Rory Sutherland refers to this in many of his presentations. Here is one from the APA. He talks about this concept beginning at 2:45, but watch the whole thing it is great stuff!

The lesson here for professionals is this – whenever you give an assignment break into at least two parts, even if it seems somewhat artificial. Some examples:

  • “Enter this data, then call me.”
  • “Review this document for clarity, then email it back to me.”
  • “Create the report layout you want, then convert it to a pdf.”

I believe this will work when you assign tasks to fellow team members, but, more importantly, I believe it will help with tasks that you assign to your customers.

I have begun to experiment with it and it seems to be working.

My “Why” – Latest Edition

Two years ago, I posted twice about my Why statement. (See those posted here and here for further explanation.)

Since I am convinced that one’s Why is a ever emerging concept, I thought it would be appropriate to share my latest Why, which is:

I believe that entrepreneurs continue the work of creation. I help entrepreneurs (mostly Sage partners and customers) understand how they create value for their customers  and better capture that value through the prices they set.

Please note that the first sentence is the key. I have been testing this at gatherings such as cocktail parties and even PTA meetings when I am asked the usual obligatory opening question, “So, what do you do?”

I have been replying with my Why. This is usually followed by a quizzical look, but after a brief moment, some variation of the phrase, “Tell me more,” is uttered. This leads to some great conversations. Conversations I never would have had, if I did not start with Why.

Great SCA Class in Vancouver

I just finished a terrific session of the Sage Consulting Academy in Vancouver today. While I always find teaching this class invigorating, this session was notable for a few reasons.

Sage Academy Jul 23-26

First, the majority of folks who were attending were originally there under, errr, duress. In other words, they needed to maintain their certification. While it was a bit rough going at first, to everyone’s credit, by the end of the week they had truly bonded as a and were very open to new ideas and even excited about the possibilities for the future.

Second, one member of the class, José A. Lomelí, is from Mexico and has already translated some of the documents from the class into Spanish. He planned on using one of them today during a phone meeting scheduled for after class. For example, this is the Change Request.

image

Third, many have agreed that they have adopted the goal of killing their timesheets in the firms. This, of course, is music to my ears.

My thanks to them for a fun and fruitful week!

ET HORA LIBELLUM DELENDA EST

Well Done Hilton Vancouver!

Those of you who follow me on Facebook may recall that I complained a few weeks ago when the Hilton Vancouver Airport did not have wireless Internet access available in my sleeping room.

In what was a key moment of truth, the Hilton turned the bad situation into a great customer experience.

Upon returning to my room after teaching all day, the following note was slipped under my door:

image

And, on my desk sat this:

image

Well done!

Needs Assessment vs Needs Analysis

One of the most common conversations I have with professions is regarding when should they begin to get paid for what they do as compared to what should be considered part of the sales process.

I usually begin my response by showing this video.

Great stuff!

I think the answer to the question of when should I start getting paid is another question, “When do you begin to provide value?” Let me give a very specific example.

Many professionals will provide a free needs analysis. OK, fair enough, but what if the prospective customer has not developed a complete list of needs. Should the professional give away an engagement in which they help a customer develop such a list? Isn’t that providing value? I believe it is.

So here is my new answer to this imponderable question: When you are confronted with a prospect who thinks that the needs analysis should be free (i.e., part of the sales process), I would say, “Fine, the analysis of your needs will be free, however, we charge a fee of $X to develop a needs assessment.”

Thoughts?