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?

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.

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?

New Edition of Flawless Consulting

51Ma9ZgVyHL._BO2,204,203,200_PIsitb-sticker-arrow-click,TopRight,35,-76_AA300_SH20_OU01_Those of you who follow this blog regularly will no doubt recall that I am an ardent adherent of Peter Block and his works. If you are also, I have some terrific news.

Peter has recently published a new (third) edition of his seminal work Flawless Consulting. I am thrilled to add it to my bookshelf next to the first and second editions. They are both terrific!

I am looking forward to reading and comparing this new edition to the first. It is fascinating to see how his thinking has evolved over the past three decades.

In addition, Peter has posted a video explaining the term – flawless consulting.

My Interview of Peter Wolf of Azamba

I am pleased to present the second (of what I hope will be many) interviews with professionals who are on Ed’s List. Once again, these are firms that offer only fixed price agreements, have eliminated timesheets for all professionals, and offer a service guarantee.

This interview is with Peter Wolf of Azamba Consulting whose purpose is to help customers gather and organize all of their business information and turn it into knowledge.

My Podcast

I am excited to announce that I now have a podcast available on iTunes. Currently there are a few episodes available and I plan to add one or two per month on a go forward basis.

This podcast will be a potpourri of interviews, session recordings, and rants. I have marked it as EXPLICIT because I occasional use swear words. Hey, I was born in Brooklyn it is in my DNA. 

Check out this podcast on iTunes:

Cover Art

Ed Kless’ Weblog

Ed Kless

Management & Marketing

Listen to Let’s Get Real for Free

Hit tip to my friend and Sage partner Amjad Khan from AIM Insight.

Product DetailsAs many of you know, I have been a huge fan of Mahan Khalsa’s Let’s Get Real or Let’s Not Play for almost a decade now.

Thanks to what must be a system glitch, you can buy the audio book of Let’s Get Real for $14 or listen to the exact same thing as a podcast for free. Great find!

For those interested the podcasts are available on iTunes by going to Podcasts>Business>Management & Marketing>FranklinCovey SPG. Additional podcast not available on iTunes can be found here on FranklinCovey’s site.

This is both the best sales book about consulting and the best consulting book about sales.

ENJOY!

ET HORA LIBELLUM DELENDA EST!

On Advanced Consulting

In January, I posted about session I am doing on the Sunday before Sage’s annual conference, Summit starts. In the post I called for your ideas and some of you were kind enough to reply.

As we get closer I want to begin to refine the idea so here is a short video on where I am at right now.

 

What do you think about the proposed topics? Are there any others? What songs should we sing? Yes, we, I would love for you to participate.

FYI – Here is the information if you want to sign up.

Session code: P-CHN15 | Ed Kless’ Session on Advanced Consulting (or Beethoven’s Night Out) – Singer Billy Joel recently posted a Q&A session he did in 1996 in which he spontaneously invented a back story to Beethoven’s Third Symphony. It reminded me, how very memorable improvisation could be. Then I got to thinking about this Super Sunday session for Sage Summit. I could write an abstract which would fulfill the requirement but be so obtuse as to mean absolutely nothing. However, I won’t insult you that way. Instead, I’ll tell you the truth—I have absolutely no idea as to what I might talk about during this session in July. It would be presumptuous to even try. I do promise it will be thought provoking and contain material that you have not seen me present before. If you are interested in suggesting topics for the conversation, please email me at ed.kless@sage.com.

A Call for Ideas

I have been asked to deliver a four hour session for Sage Partners at Summit 2011 on some advanced consulting topics. I have a few ideas as to topics including: change and transition and dealing with sabotage, but I am wondering if any of you have some thoughts as to topics. Again, the session is on advanced consulting.

Ideas?