My latest interview on value project management and pricing

I’m excited to share with you a recent interview I did with the Growing Your Firm Podcast with David Cristello. 

  • This interview is filled with actionable insights on: 
  • The trap of focusing on effort over duration
  • How to implement value pricing and management for your clients
  • And even why I prefer the term “customers” over “clients”

You can listen to the entire interview (for free!) here: http://jetpackworkflow.com/value-billing-ed-kless-verasage/

About Some Webcasts

Over the next few months I will be delivering some webcasts that are aimed mostly at accountants. However, most of the material is applicable to all knowledge workers and professionals.

The webcast belong to one of two series: Tax Free Tuesdays and $5 Fridays. As you might guess the Tuesdays sessions are free, while the Friday sessions will cost you $5.

Here are the details of the first three sessions:

  • Friday, February 28 at 1:00pm ET – Creating Strategy in a Small Firm – This session will be dedicated to the possibility that even small firms can create and execute meaningful strategic plans. Creating a well defined strategy is hard work and not for everyone, as it requires us to begin to say “no” to stuff we usually say “yes” to. You are hereby invited to open a dialogue about how best to go about creating a strategy for your small firm.
  • Tuesday, February 25 at 1:00 pm ET – Top Ten Business Myths – This session is dedicated to the possibility that many myths exist about business and it would be better to rid ourselves of these ideas. Thinking about these myths is hard because it requires us to examine some of our most deeply held beliefs and either dismiss them or at least think differently about them. If you are interesting in having a conversation about business myths, you are invited to attend this session.
  • Friday, March 7 at 1:00 pm ET – Introduction to the Professional Knowledge Firm (aka Firm of the Future) – 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 and capturing value in a professional firm. We will explore two business models: the firm of the past and the firm of the future. We will also begin a conversation about the four transformations that need to occur in order for firm to make the transition successfully.

Once you click on the class, please click either Request for the Tuesday free webcasts or Add to cart for the $5 Friday classes. If you have any questions, you can email me at ed.kless @ sage.com or comment below.

Comment on The Value of Timesheets by PM Hut

In a post entitled The Value of Timesheets, PM Hut offers this, “The data being tracked by timesheets is used in several areas: for project costing/estimating future phases or projects; for the purpose of time management; and most importantly, for billing and payroll.”

My comment in full:

Using timesheets to measure doneness of your project is like using a smoke detector to measure the doneness of your toast, by the time the alarm goes off it is too late.

In addition time spent is not costing because it is based on the faulty assumption that all hours are equal. We know this to be false, yet ignore it. It is like still saying “but what if we fall off” even though you know the Earth is now round.

Lastly, more often than not, timesheets are lies. I have asked hundreds of professionals if they have ever falsified a timesheet (up or down by the way) and every single one has admitted that they have done so. In many cases, they say almost all of their timesheets have at least one falsehood. Folks do not put actual time time spent, they put what the believe is should be, sometime more, but more often less. To base future work on these figures is crazy.

My Sessions at Sage Summit 2013

I have had a number of requests from Sage Partners about my sessions at the upcoming Sage Summit.

Here is a quick view of all of them.

Name Day Time Co-star
The Salesatative Consultant Sunday 1pm-3pm Rob Johnson
The Salesatative Consultant (repeat) Sunday 3:30pm-5:30pm Rob Johnson
A Complete Waste of Time – Redux Monday 2pm-3pm The Attendees
Creating Access Level Agreements Monday 3:15pm-4:15pm
Avoiding Iatrogenic Consulting Monday 4:30pm-5:30pm
Introduction to the Firm of the Future Tuesday 11:15am-12:30pm
Long Distance Customer Relationships Tuesday 2pm-3:15pm Judy Thornell

Wayne Schulz

Making Your Business Anti-Fragile Wednesday 8:30am-10am
Creating Strategy in a Small Business Wednesday 10:30am-12pm
Top Ten Business Myths Wednesday 2pm-3:15pm
Initiating a Project in a Small Business Thursday 3:15pm-4:15pm John Shaver
In Defense of Business Thursday 4:30pm-5:50pm

 

If you have any questions about the details please feel free to comment or email me.

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.

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

On Agile Project Management

Over the past few years, I have been hearing more and more about Agile development project management. For the most part the conversations have not been very positive.

This is not because I think there is something inherently wrong with Agile, but because those that espouse it have always tried to convince me of two things:

  1. Agile Development requires little to no planning
  2. There is no way to do agile development in a fixed price environment

You can imagine that I begin to shake violently at either of those ideas.

In the past month I have had two conversations that have corrected some of these misgivings. Mostly because I have come to the conclusion (confirmed by my conversations) that the folks with which I have had these previous conversations about Agile were full of shit.

Stephen Smith                 05e65fd

The two conversations – one with Stephen Smith, Chief Architect at Sage, the second with Rick Cobb, senior ERP consultant at Blytheco – have enlightened my thinking when it comes to Agile.

Rick had just taken a class and was kind enough to take me through the materials. I found that in many ways I am in alignment with many of the principles of Agile. For example, I really like the idea behind this:

image

Now, I would enhance the idea of customer collaboration to a more broad idea of comprehending customer value. Indeed, one weakness of all of the project management methodologies I have seen is the assumption of customer value. In all fairness, it is difficult to integrate value into any methodology because of it subjectivity, but that is for another post.

My conversations have led me to a few conclusions, all of which I am open to change based on more learning.

  • Agile is probably not for ERP implementations. While I certainly see Agile working in many other places (some noted below) the actual implementation is not one of them. The reason is that ERP projects tend to be more holistic in nature. For example, you cannot get the full value from an inventory tracking process without having first set up a properly structured general ledger. Agile call for prioritizations that make no sense in the context of ERP.
  • Agile makes a ton of sense for CRM projects which a normally more development related than ERP. With ERP, ultimately debits must equal credits (i.e., conform to GAAP), with CRM there are no rules.
  • One area where Agile could make sense for ERP would be in dealing with change requests and change orders. Often, these are mini-development projects and therefore Agile might be quite effective. I say might because on small engagements, some of the change requests might be so small as to only need an adjustment to the statement of work.
  • Another area where Agile excels is in communication. The daily standup meetings and one to two week scrums have some excellent communication touch points built in. I hope that when Agile is implemented that these processes are truly adhered to. There are definitely some things that Agile can teach us about better communications.

Ultimately, I think Agile is very much in line with the concept of results oriented project management that I presented in this space a few weeks back. This gives me some hope for being able to integrate some of the best idea from both methodologies into one more coherent approach.

My thanks again to Stephen and Rick who contributed to my thinking about this post.

Sage City at Summit 2012

To me, the most valuable part of any class, conference, or event is the networking. This year at Sage Summit 2012, we are doing a reboot on the whole idea of networking.

Announcing Sage City at Summit 2012, where “networking” is more than a cliché, and the unexpected is expected. Sage Summit 2012 is about to change everything.

SageCity

Sage City is an all-new collaborative meet-up at Sage Summit that completely reinvents live conference networking and provides a new take on how we make connections. It is a mash-up of the best aspects of networking: small groups, structured topics, and social media.

For more download this FAQ.pdf.

Firm of the Future Another Raging Success Story

imageThis morning I received the following email from a partner who attended the Firm of the Future Symposium last year.

Congratulations to C. and C. and our new Pricing with A Purpose Team!
 
We just received the signed quote on this deal.  Utilizing the tools Ed has been arming us with, we bid this job 100% higher than we would have under our traditional methodology.  We had no push back from the client regarding the price, as we priced it based on the value of the solution to the them.
 
We have 3 more of these new quotes in negotiation with clients now and a couple more that we are actively developing.
 
This is such an exciting change for us.  Looks like 2012 is going to be fun with lots of leads in our pipeline and tools to maximize the profits on each win!
 
Thanks to Ed Kless for his coaching, poking, prodding, nudging and continual course adjustment!

This is truly and HSD for me!

image

If you are interested in attending an upcoming Firm of the Future Symposium, please visit sageu.com.